exv10w5






Exhibit 10.5




EXECUTION VERSION




INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT




dated as of January 28, 2011



among



SCORPIO ACQUISITION CORPORATION



THE POLYMER GROUP, INC.



THE SUBSIDIARIES OF POLYMER GROUP, INC. NAMED HEREIN



CITIBANK, N.A., as Tranche 2 Representative



and



WILMINGTON TRUST COMPANY,

as Collateral Agent and Trustee



 









 





TABLE OF CONTENTSa




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I
	 	 	 	 
	DEFINITIONS
	 	 	 	 
	 
	 	 	 	 
	Section 1.01 Definitions
	 	 	2	 
	Section 1.02 Rules of Interpretation
	 	 	6	 
	 
	 	 	 	 
	ARTICLE II
	 	 	 	 
	OBLIGATIONS AND POWERS OF THE COLLATERAL AGENT
	 	 	 	 
	 
	 	 	 	 
	Section 2.01 Appointment of the Collateral Agent
	 	 	7	 
	Section 2.02 Actions under Collateral Documents
	 	 	7	 
	Section 2.03 Instructions of Directing Creditors
	 	 	8	 
	Section 2.04 Certain Actions under the Collateral Documents and Intercreditor Agreement
	 	 	8	 
	Section 2.05 Other Actions by the Collateral Agent
	 	 	9	 
	Section 2.06 Nature of Duties
	 	 	9	 
	Section 2.07 No Obligations Imposed
	 	 	9	 
	Section 2.08 Inspection
	 	 	9	 
	 
	 	 	 	 
	ARTICLE III
	 	 	 	 
	ACTIONS BY CREDITORS; VOTING
	 	 	 	 
	 
	 	 	 	 
	Section 3.01 Directing Creditors Defined
	 	 	10	 
	Section 3.02 Exceptional Decisions
	 	 	10	 
	Section 3.03 Certificates of the Trustee, any Additional Senior Secured Debt Representative
	 	 	11	 
	Section 3.04 Calculations Binding
	 	 	11	 
	Section 3.05 Directing Creditors Held Harmless
	 	 	11	 
	Section 3.06 Notice of Amendments and Waivers to Finance Documents
	 	 	12	 
	Section 3.07 Events of Default under the Finance Documents
	 	 	12	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	 	 
	EXERCISE OF REMEDIES; APPLICATION OF COLLATERAL PROCEEDS
	 	 	 	 
	 
	 	 	 	 
	Section 4.01 General Limitation on Exercise of Remedies
	 	 	12	 
	Section 4.02 Notices of Acceleration
	 	 	13	 
	Section 4.03 Remedies
	 	 	13	 
	Section 4.04 No Inconsistent Actions
	 	 	13	 
	Section 4.05 Application of Proceeds & Certain Other Intercreditor Arrangements
	 	 	13	 
	Section 4.06 Sharing of Asset Sale Proceeds and Event of Loss Proceeds
	 	 	16	 
	Section 4.07 Credit Bid Rights
	 	 	16	 








 




			
	a	 	The Table of Contents is not a part of the Intercreditor and Collateral Agency Agreement.




i









 










	 	 	 	 	 
	 	 	Page	 
	ARTICLE V
	 	 	 	 
	CERTAIN OBLIGATIONS ENFORCEABLE BY THE NOTE PARTIES
	 	 	 	 
	 
	 	 	 	 
	Section 5.01 Release of Liens
	 	 	17	 
	Section 5.02 Delivery of Copies to the Trustee and
the Additional Senior Secured Debt
Representative
	 	 	18	 
	Section 5.03 No Actions to Address Exceptions
	 	 	18	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	 	 
	THE COLLATERAL AGENT
	 	 	 	 
	 
	 	 	 	 
	Section 6.01 No Implied Duty
	 	 	18	 
	Section 6.02 Appointment of Co-Agents and Sub-Agents
	 	 	18	 
	Section 6.03 Other Agreements
	 	 	18	 
	Section 6.04 Solicitation of Instructions
	 	 	19	 
	Section 6.05 Limitation of Liability
	 	 	19	 
	Section 6.06 Documents in Satisfactory Form
	 	 	19	 
	Section 6.07 Entitled to Rely
	 	 	19	 
	Section 6.08 Events of Default
	 	 	20	 
	Section 6.09 Actions by Collateral Agent
	 	 	20	 
	Section 6.10 Security or Indemnity in Favor of the Collateral Agent
	 	 	20	 
	Section 6.11 Resignation or Removal of the Collateral Agent
	 	 	20	 
	Section 6.12 Appointment of Successor Collateral Agent
	 	 	20	 
	Section 6.13 Succession
	 	 	20	 
	Section 6.14 Indenture Protections
	 	 	21	 
	 
	 	 	 	 
	ARTICLE VII 
	 	 	 	 
	MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	Section 7.01 Amendment
	 	 	22	 
	Section 7.02 Successors and Assigns; Additional Trustee or Agent Joinder
	 	 	22	 
	Section 7.03 Delay and Waiver
	 	 	23	 
	Section 7.04 Notices
	 	 	23	 
	Section 7.05 Entire Agreement
	 	 	24	 
	Section 7.06 Force Majeure
	 	 	24	 
	Section 7.07 Obligations Secured
	 	 	24	 
	Section 7.08 Severability
	 	 	24	 
	Section 7.09 Governing Law; Jurisdiction Etc.
	 	 	25	 
	Section 7.10 Waiver of Right to Trial by Jury
	 	 	25	 
	Section 7.11 Section Titles
	 	 	25	 
	Section 7.12 Counterparts; Effectiveness
	 	 	25	 
	Section 7.13 Intercreditor Agreement
	 	 	25	 
	 
	 	 	 	 
	Exhibit A  —  Form of Joinder Agreement
	 	 	 	 











ii









 








INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT




     This Intercreditor and Collateral Agency Agreement (this “Agreement”) is entered into
as of January 28, 2011 among THE POLYMER GROUP, INC., a Delaware corporation (the
“Company”), the subsidiaries of the Company named herein (the “Guarantors”),
SCORPIO ACQUISITION CORPORATION (the “Parent”), CITIBANK, N.A., as the ABL Agent (as
defined below) (in such capacity, the “Tranche 2 Representative”), WILMINGTON TRUST
COMPANY, as Collateral Agent (“Wilmington Trust” and, together with its successor or
successors in such capacity, the “Collateral Agent”), and as Trustee for the Noteholders
under the Indenture (each as defined below) (together with its successor or successors in such
capacity, the “Trustee”).



     The Company is issuing 7.75% Senior Secured Notes due 2019 (together with any Exchange Notes
(as defined in the Indenture) with respect thereto the “Initial Senior Secured Notes”)
pursuant to an Indenture, dated as of the date hereof (as amended, restated, supplemented or
modified from time to time, as the case may be, the “Indenture”) among the Company, the
Subsidiary Guarantors (as defined below), the Trustee and the other agents from time to time party
thereto.



     In addition, the Company is a party to that certain Credit Agreement dated as of January 28,
2011 (as amended, restated, supplemented or modified from time to time, the “ABL Credit
Agreement”) among the Company, as lead borrower, each other Borrower named therein, Parent,
Citibank, N.A., as administrative agent and collateral agent (the “ABL Agent”), the lenders
party thereto from time to time and the other agents named therein, pursuant to which the lenders
with respect to the Tranche 2 Sub-Facility Loans (“Tranche 2 Lenders”) under the ABL Debt
Documents will agree to extend credit with respect to the Tranche 2 Sub-Facility Loans, and the
Tranche 2 Sub-Facility Obligations will be secured by the Collateral.



     The obligations of the Company under and in respect of the Senior Secured Notes (as defined
below) are and will be, as the case may be, and in respect of certain other Finance Obligations (as
defined below) may be guaranteed by certain direct and indirect wholly-owned domestic subsidiaries
of the Company (the “Subsidiary Guarantors”). The Company and the Subsidiary Guarantors
are herein referred to individually as a “Note Party” and, collectively, as the “Note
Parties.” The obligations of the Company and the other Note Parties in respect of the Senior
Secured Notes and, as the case may be, the other Finance Obligations are and will be secured by a
security interest in the Collateral (as defined below).



     The Indenture permits the Company and other Note Parties from time to time to incur
indebtedness which they are otherwise permitted to incur under the Indenture, including but not
limited to (i) indebtedness in the form of additional senior secured notes issued under the
Indenture (such notes together with any Exchange Notes with respect thereto being herein
collectively referred to herein as the “Additional Senior Secured Notes” and, together with
the Initial Senior Secured Notes, the “Senior Secured Notes”), (ii) indebtedness in the
form of Additional Senior Secured Debt (as defined below), and, in each case, to secure such
Additional Senior Secured Notes or Additional Senior Secured Debt (as defined below) equally and
ratably with the other Notes Priority Lien Debt Obligations; provided that the issuance of
any Additional Senior Secured Notes and Additional Senior Secured Debt is subject to the
limitations set forth in the Indenture and (iii) indebtedness under the Tranche 2 Sub-Facility
Obligations.



     This Agreement sets forth the terms on which the Collateral Agent has undertaken to accept,
hold and enforce the security interests described above and all related rights, interests and
powers as agent for, and for the benefit exclusively of, the present and future holders of the
Senior Secured Notes and Additional Senior Secured Debt Holders and describes the relative rights
and obligations of the Collateral Agent, the Tranche 2 Representative on behalf of the Tranche 2
Lenders and Trustee on behalf of the



1









 




Noteholders and the Additional Senior Secured Debt Representative on behalf of the Additional
Senior Secured Debt Holders with respect to the Collateral.




     Accordingly, in consideration of the mutual agreements set forth herein, the Company, the
Collateral Agent, the Tranche 2 Representative and the Trustee hereby agree as follows:



ARTICLE I

DEFINITIONS




     Section
1.01 Definitions. Capitalized terms defined in the introductory paragraphs hereof have the
respective meanings provided for therein. Terms used but not otherwise defined herein that are
defined in the Indenture shall have the meanings given to them in the Indenture. In addition, as
used in this Agreement, the following terms have the following meanings:



     “ABL Credit Agreement” has the meaning set forth in the preamble.



     “ABL Debt Documents” has the meaning set forth in the Intercreditor Agreement.



     “ABL Substitute Facility” has the meaning set forth in the Intercreditor Agreement.



     “Affiliate” of any specified Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with such specified Person.
For purposes of this definition, “control” (including, with correlative meanings, the terms
“controlling,” “controlled by” and “under common control with”), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise.



     “Additional Senior Secured Debt” means any additional obligations which satisfy all of
the conditions set forth in the following clauses: (i) such obligations are incurred by the
Company in compliance with the Indenture and any other Additional Senior Secured Debt Agreement;
(ii) such obligations are secured in compliance with the Indenture and any other applicable
Additional Senior Secured Debt Agreement; (iii) such obligations are designated by the Company
pursuant to Section 7.02(e) hereof as “Additional Senior Secured Debt” hereunder and (iv)
the applicable Additional Senior Secured Debt Representative thereunder shall have executed a
Joinder pursuant to Section 7.02(d) hereof.



     “Additional Senior Secured Debt Agreement” means any credit agreement, loan agreement,
note agreement, promissory note, indenture or other agreement or instrument evidencing or governing
the terms of any Indebtedness or other financial accommodation which constitutes Additional Senior
Secured Debt under this Agreement.



     “Additional Senior Secured Debt Documents” means any agreements, indentures,
collateral documents and all other documents and instruments entered into in connection with any
Additional Senior Secured Debt, in each case as the same may be amended, modified or supplemented
from time to time in accordance with the provisions thereof.



     “Additional Senior Secured Debt Holders” means the holders from time to time of the
Additional Senior Secured Debt.



     “Additional Senior Secured Debt Representative” means any Person designated by the
Company pursuant to Section 7.02(e) as an “Additional Senior Secured Debt Representative”
for any Additional



2









 




Senior Secured Debt, and any successor Additional Senior Secured Debt Representative appointed
under the Additional Senior Secured Debt Documents for such Additional Senior Secured Debt.




     “Aggregate Voting Credit” means at any date the sum of:



     (i) the aggregate outstanding principal amount of the Senior Secured Notes; plus



     (ii) the aggregate outstanding principal amount of any Additional Senior Secured Debt.



     Noteholders that are Affiliates of the Company or any of its Subsidiaries and any Senior
Secured Notes held by any such Noteholder that are affiliates of the Company shall not be included
in the determination of the Aggregate Voting Credit. For purposes of the definition of “Directing
Creditors,” the Aggregate Voting Credit shall include only those Credit Classes otherwise entitled
to be included therein that are affected by an event or circumstance that gave rise to the action
of such Directing Creditors.



     “Agreement” means this Intercreditor and Collateral Agency Agreement, as amended,
modified or supplemented from time to time.



     “Business Day” means each day which is not a Saturday, a Sunday or a day on which
commercial banking institutions are not required to be open in the State of New York.



     “Collateral” means all of the property which is subject to, or is purported to be
subject to, the Liens granted by the Collateral Documents.



     “Collateral Agent” has the meaning set forth in the preamble.



     “Collateral Documents” means, collectively, this Agreement, the Security Agreement,
the Intercreditor Agreement, mortgages (and any subordination and non-disturbance agreements
related thereto), collateral assignments, deeds of trust and all other pledges, agreements,
financing statements, patent, trademark or copyright filings, mortgages or other filings or
documents that create or purport to create a Lien in the Collateral in favor of the Collateral
Agent for the benefit of the Finance Parties, as they may be amended from time to time, and any
instruments of assignment, control agreements, lockbox letters or other instruments or agreements
executed pursuant to the foregoing.



     “Covered Action” has the meaning set forth in Section 4.05(a).



     “Credit Class” means (i) the Noteholders (as defined below) or (ii) the Additional
Senior Secured Debt Holders, as the context may require.



     “Creditor” means any Noteholder and Additional Senior Secured Debt Holder, and
“Creditors” means two or more of them, collectively.



     “Current Market Price” has the meaning set forth in Section 4.05(g)(1).



     “Debtor Relief Law” means Title 11, United States Bankruptcy Code of 1978, as amended
(the “Bankruptcy Code”), or any similar United States federal or state law or foreign law
relating to bankruptcy, insolvency, receivership, winding up, liquidation, reorganization or relief
of debtors or any amendment to, succession to or change in any such law.



     “Directing Creditors” means, at any time, Creditors holding more than 50% of the then
outstanding Aggregate Voting Credit (including, without limitation, Noteholders providing consents
obtained in



3









 




connection with a tender offer or exchange offer for, or purchase of, Notes Priority
Lien Debt Obligations).




     “equally and ratably” means, in reference to sharing of any Liens or proceeds thereof
as among the Credit Classes, that such Liens or proceeds shall be allocated and distributed to the
Trustee for the account of the Noteholders and to the respective Additional Senior Secured Debt
Representative for the account of any Additional Senior Secured Debt on a pro-rata basis, as
provided in the definition of “pro-rata basis” and in Section 4.05 (it being
understood that nothing in this definition is intended to modify the order of priorities specified
in Section 4.05).



     “Event of Default” means an “Event of Default” as defined in any of (i) the Indenture
or (ii) an Additional Senior Secured Debt Agreement.



     “Exceptional Decisions” has the meaning set forth in Section 3.02.



     “Finance Document” means each Note Document, each Additional Senior Secured Debt
Document and this Agreement, and “Finance Documents” means any two or more of them,
collectively.



     “Finance Obligations” means all Notes Priority Lien Debt Obligations whether now or
hereafter due, owing or incurred in any manner, whether actual or contingent, whether incurred
solely or jointly with any other person and whether as principal or surety, together in each case
with all renewals, modifications, consolidations or extensions thereof.



     “Finance Party” means any of the Collateral Agent, the Trustee, any Noteholder, any
Additional Senior Secured Debt Representative, any Additional Senior Secured Debt Holder, and any
Indemnified Party and “Finance Parties” means two or more of them collectively.



     “Indenture” has the meaning set forth in the preamble.



     “Independent Financial Expert” has the meaning set forth in Section
4.05(g)(2).



     “Insolvency Proceeding” means (i) any voluntary or involuntary case or proceeding
under any Debtor Relief Law with respect to any Note Party, (ii) any other voluntary or involuntary
insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding, with respect to any Note Party or with respect
to any of their respective assets, (iii) any liquidation, dissolution, reorganization or winding up
of any Note Party, whether voluntary or involuntary and whether or not involving insolvency or
bankruptcy and (iv) any assignment for the benefit of creditors or any other marshaling of assets
and liabilities of any Note Party.



     “Intercreditor Agreement” means the Lien Subordination and Intercreditor Agreement,
dated as of January 28, 2011 (as amended, restated, supplemented or modified from time to time),
among the ABL Agent, the Collateral Agent, the Company and each Subsidiary Guarantor, as it may be
amended from time to time in accordance with this Indenture.



     “Joinder” has the meaning set forth in Section 7.02(d).



     “Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise),
pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind
in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable
law, including any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement



4









 




under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction;
provided that in no event shall an operating lease be deemed to constitute a Lien.




     “Marketable Security” has the meaning set forth in Section 4.05(g)(1).



     “Non-Cash Property” has the meaning set forth in Section 4.05(g).



     “Note Documents” means the Indenture, the Senior Secured Notes and the Registration
Rights Agreements (as defined in the Indenture) related thereto and the Collateral Documents, in
each case including all exhibits and schedules thereto, and all other agreements, documents and
instruments relating to the Senior Secured Notes, in each case as the same may be amended, modified
or supplemented from time to time in accordance with the provisions thereof.



     “Noteholders” means the holders from time to time of the Senior Secured Notes.



     “Notes Priority Lien Debt Obligations” means, without duplication:




     (i) all principal of and interest (including, without limitation, any interest which
accrues after the commencement of any proceeding under any Insolvency Proceeding with
respect to any Note Party, whether or not allowed or allowable as a claim in any such
proceeding) on any Senior Secured Note, Additional Senior Secured Debt or any Tranche 2
Sub-Facility Obligations;




     (ii) all fees, expenses, indemnification obligations and other amounts of whatever
nature now or hereafter payable by any Note Party (including, without limitation, any
amounts which accrue after the commencement of any proceeding under any Insolvency
Proceeding with respect to any Note Party, whether or not allowed or allowable as a claim in
any such proceeding) pursuant to the Indenture, the Senior Secured Notes, any Additional
Senior Secured Debt Agreement, the Tranche 2 Sub-Facility Loans, the Intercreditor Agreement
or any Collateral Document;




     (iii) all expenses of the Trustee or the Collateral Agent as to which one or more of
such agents has a right to reimbursement under the Indenture, any Additional Senior Secured
Debt Agreement, the Tranche 2 Sub-Facility Loans or under any other similar provision of any
Collateral Document or the Intercreditor Agreement, including, without limitation, any and
all sums advanced by the Collateral Agent to preserve the Collateral or its security
interest in the Collateral; and




     (iv) all amounts now or hereafter payable by the Note Parties and all other obligations
or liabilities now existing or hereafter arising or incurred (including, without limitation,
any amounts which accrue after the commencement of any Insolvency Proceeding with respect to
any Note Party, whether or not allowed or allowable as a claim in any such proceeding) on
the part of such Note Party pursuant to the Indenture, the Senior Secured Notes, any
Additional Senior Secured Debt Agreement, the Tranche 2 Sub Facility Loans, the
Intercreditor Agreement, any Collateral Document or any Guarantee (as defined in the
Indenture) contained in the Indenture;


together in each case with all renewals, modifications, refinancings, consolidations or extensions
thereof.




     “Notice of Acceleration” has the meaning set forth in Section 4.02.



     “Notice of Exercise of Remedies” has the meaning set forth in Section 3.07(b).



     “Officer’s Certificate” has the meaning set forth in Section 5.01.



5









 





     “Person” means any individual, corporation, limited liability company, partnership,
joint venture, association, joint stock company, trust, unincorporated organization, government or
any agency or political subdivision thereof or any other entity.



     “Proceeds” has the meaning specified for such term in the Uniform Commercial Code as
in effect from time to time in the State of New York.



     “pro-rata” means at any date, as among the Noteholders and the Additional Senior
Secured Debt Holders, in proportion to the then aggregate outstanding amounts of (i) principal
outstanding under the Senior Secured Notes and (ii) principal outstanding under any Additional
Senior Secured Debt (it being understood that nothing in this definition is intended to modify the
order of priorities specified in Section 4.05).



     “Responsible Officer” means the chief executive officer, president, chief financial
officer, treasurer or assistant treasurer or secretary or assistant secretary of a Note Party. Any
document delivered hereunder that is signed by a Responsible Officer of a Note Party shall be
conclusively presumed to have been authorized by all necessary corporate, partnership and/or other
action on the part of such Note Party and such Responsible Officer shall be conclusively presumed
to have acted on behalf of such Note Party.



     “Security Agreement” means the Security Agreement dated as of the date hereof among
the Note Parties and the Collateral Agent, pursuant to which the Note Parties grant security
interests to the Collateral Agent on behalf of the other Finance Parties in order to secure the
Finance Obligations, as the same may be amended, modified or supplemented from time to time.



     “Subsidiary” has the meaning set forth in the Indenture.



     “Tranche 2 Lenders” has the meaning set forth in the preamble.



     “Tranche 2 Representative” has the meaning set forth in the preamble.



     “Tranche 2 Sub-Facility Loans” has the meaning set forth in the Intercreditor
Agreement.



     “Tranche 2 Sub-Facility Obligations” has the meaning set forth in the Intercreditor
Agreement.



     “Trust Indenture Act” means Trust Indenture Act of 1939, as amended, and rules and
regulations promulgated thereunder and interpretations thereof.



     “Uniform Commercial Code” or “UCC” mean the Uniform Commercial Code as in
effect from time to time in the State of New York; provided that if by reason of mandatory
provisions of law, the perfection, the effect of perfection or non-perfection or the priority of a
Lien in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction
other than New York, “UCC” means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection, effect of
perfection or non-perfection or priority.



     “Value Report” has the meaning set forth in Section 4.05(g)(2).



     Section 1.02 Rules of Interpretation. Terms defined in the introductory paragraphs hereof and the
definitions in Section 1.01 shall apply equally to both the singular and plural forms of
the terms defined. Wherever the context may require, any pronouns shall include the corresponding
masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be
deemed to be followed by the phrase “without limitation.” All references herein to Articles,
Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agree



6









 




ment unless otherwise stated herein or the context shall otherwise require. Unless otherwise
expressly provided herein, the word “day” means a calendar day.




ARTICLE II

OBLIGATIONS AND POWERS OF THE COLLATERAL AGENT




     Section 2.01 Appointment of the Collateral Agent. The Collateral Agent has been appointed as
Collateral Agent pursuant to the Indenture and the Collateral Agent hereby agrees to act as
Collateral Agent pursuant to the terms of this Agreement. The Trustee on behalf of itself and the
Noteholders, hereby (i) confirms, approves and ratifies the Collateral Agent’s entry into the
Security Agreement and any other Collateral Documents as have been entered into or otherwise
effectuated until the date hereof and all actions that have been taken in connection therewith and
(ii) directs the Collateral Agent to enter into such Collateral Documents as may be necessary or
advisable to enter into on or after the date hereof. The Tranche 2 Representative hereby on behalf
of the Tranche 2 Lenders appoints the Collateral Agent to act as its agent pursuant to and in
accordance with the terms of this Agreement and the Collateral Agent hereby accepts such
appointment.



     Section 2.02 Actions under Collateral Documents. The Collateral Agent hereby irrevocably
undertakes and agrees, solely on the terms and conditions expressly set forth in this Agreement, to
act as agent for the benefit exclusively of the present and future Noteholders, Additional Senior
Secured Debt Holders and any other holders from time to time of the Finance Obligations, and in
such capacity to accept, hold, administer and enforce all collateral security at any time delivered
to it by any Note Party as security for the Finance Obligations and all rights, interests and
powers at any time granted or enforceable in respect of such collateral security under the
Collateral Documents or applicable law. Without limiting the generality of the foregoing, the
Collateral Agent agrees that it will, as agent for the benefit exclusively of the present and
future Noteholders, Additional Senior Secured Debt Holders, and the other holders from time to time
of the Finance Obligations including holders of the Tranche 2 Sub-Facility Obligations, but subject
to the terms and conditions hereof:




     (i) to enter into the Collateral Documents, receive, hold, administer and upon receipt
of written direction from the Directing Creditors, enforce the security interests granted to
it thereunder, perform its obligations thereunder and upon receipt of written direction from
the Directing Creditors, protect, exercise and enforce the interests, rights, powers and
remedies granted or available to it thereunder or pursuant thereto or in connection
therewith;




     (ii) to comply with the obligations of the Collateral Agent as the Notes Collateral
Agent under the Intercreditor Agreement (as defined therein),




     (iii) to take, upon receipt of written direction from the Directing Creditors, all
lawful and commercially reasonable actions that it may be directed to take to protect or
preserve its interest in the Collateral;




     (iv) to comply with all provisions of the Collateral Documents;




     (v) to deliver and receive notices pursuant to the Collateral Documents and this
Agreement;




     (vi) to sell, assign, collect, assemble, foreclose on, institute legal proceedings with
respect to, or otherwise exercise or enforce, in each case upon receipt of written direction
from the Directing Creditors, the rights and remedies of a secured party (including a
mortgagee, trust deed



7









 






beneficiary and insurance beneficiary or loss payee) with respect to the Collateral and
its other interests, rights, powers and remedies;




     (vii) to remit to the Trustee, the Tranche 2 Representative and any Additional Senior
Secured Debt Representative as required by Section 4.05 all cash proceeds received
by the Collateral Agent from the collection, foreclosure or enforcement of its interest in
the Collateral or any of its other interests, rights, powers or remedies;




     (viii) subject to Section 3.02 and Section 7.01(b), to amend the
Collateral Documents as from time to time authorized and directed by the Directing
Creditors, and amend the Collateral Documents as required by Section 3.02(d); and




     (ix) to release any Lien granted to it by any Collateral Document upon any Collateral
if and as required by Section 2.04 and Section 5.01.



     The Collateral Agent is irrevocably authorized and empowered to enter into and perform its
obligations under, and to protect, perfect, exercise and enforce its interest, rights, powers and
remedies, in each case under and pursuant to, the Collateral Documents and applicable law and to
act as set forth in this Article II or as requested in any lawful directions given to it
from time to time in respect of any matter by the Directing Creditors. Notwithstanding anything to
the contrary set forth herein, however, the Collateral Agent’s duties, obligations, rights and
liabilities under this Agreement shall be subject to the terms and provisions of Section 10.11 of
the Indenture and Article VII hereof.



     The Note Parties acknowledge and consent to the undertakings of the Collateral Agent set forth
in this Article II, and agree to each of the other provisions of this Agreement applicable
to them.



     Section 2.03 Instructions of Directing Creditors. Subject to the terms and conditions of this
Agreement, the Collateral Agent shall follow the instructions of the Directing Creditors from time
to time conveyed to it by the representative or representatives of one or more Credit Classes
pursuant to this Agreement, subject to and consistent with the Collateral Agent’s rights and
obligations expressed in the Collateral Documents and in accordance with applicable law. The
Noteholders’ representative for purposes of delivering notices and instructions to the Collateral
Agent shall be the Trustee, each Additional Senior Secured Debt Holder’s representative for
purposes of delivering notices and instructions to the Collateral Agent shall be the applicable
Additional Senior Secured Debt Representative. The Collateral Agent shall disregard notices and
instructions from any other Person in respect of the applicable Credit Class. No direction given
to the Collateral Agent (whether given by the Directing Creditors through the representative or
representatives of the applicable Credit Classes or by the Trustee, any Additional Senior Secured
Debt Representative or otherwise by any Person) which imposes, or purports to impose, upon the
Collateral Agent any obligation not set forth in this Agreement or any other Collateral Document
shall be binding upon the Collateral Agent unless the Collateral Agent elects, at its sole option,
to accept direction (i) pursuant to the instructions of the Directing Creditors or (ii) from the
Trustee or any Additional Senior Secured Debt Representative or permitted by the Indenture and any
Additional Senior Secured Debt Agreement.



     Section 2.04 Certain Actions under the Collateral Documents and Intercreditor Agreement. Without
limiting the provisions of Section 2.02, the Collateral Agent is hereby authorized and
directed, and agrees for the benefit of the Note Parties, without notice to or consent from any
Creditor: (i) to release (upon receipt of a written certification of a Responsible Officer of the
Company that the Trustee has received all documents, if any, required by the Trust Indenture Act
and the Indenture) one or more Note Parties from their obligations under, and the Liens of, the
Collateral Documents, and to release the Collateral or any portion thereof, as required by
Section 8.13 of the Security Agreement and Section



8









 




2.05 of the Intercreditor Agreement or any other pertinent provision of any Finance Document, in
each case by executing documents in the forms prepared by the Note Parties; (ii) to receive
perfection certificates, and execute control agreements and other Note Party deliverables, in each
case by executing documents in the forms prepared by the Note Parties as contemplated by the
Collateral Documents; and (iii) to deliver such instruments as may be required from time to time,
in each case by executing documents in the forms prepared by the Note Parties to enable each Note
Party to exercise the voting and other rights which it is entitled to exercise under Section
2.06(a) of the Security Agreement.




     Section 2.05 Other Actions by the Collateral Agent. The Collateral Agent shall provide the
Trustee, the Tranche 2 Representative and each Additional Senior Secured Debt Representative
requesting the same with a copy of all notices received from the Note Parties under the Collateral
Documents and from the ABL Collateral Agent under the Intercreditor Agreement (as defined therein).
The Note Parties shall timely file Uniform Commercial Code continuation statements to continue the
perfection of the security interests under the Collateral Documents. During any period when the
Collateral Agent is exercising remedies against any Note Party or the Collateral, the Collateral
Agent shall furnish the Trustee and each Additional Senior Secured Debt Representative requesting
the same with reports of its activities and upon the request of the Trustee and the Additional
Senior Secured Debt Representative.



     Section 2.06 Nature of Duties. Except to the extent otherwise provided in Section 2.05,
the duties of the Collateral Agent hereunder and under the Collateral Documents shall be
ministerial and administrative in nature. The Collateral Agent shall not have by reason of this
Agreement or the Collateral Documents a fiduciary or trust relationship with respect to any Tranche
2 Lender, the Trustee, any Noteholder, any Additional Senior Secured Debt Representative, any
Additional Senior Secured Debt Holder, the Tranche 2 Representative or any other holder from time
to time of Finance Obligations, and nothing in this Agreement, expressed or implied, is intended to
or shall be so construed as to imply such obligations or impose, upon the Collateral Agent, any
obligations whatsoever arising under this Agreement, the ABL Credit Agreement, the Indenture, any
Additional Senior Secured Debt Agreement, any Collateral Document or the Intercreditor Agreement,
except as expressly set forth herein or in the Collateral Documents or the Intercreditor Agreement.
For the limited purpose of holding and distributing or applying Proceeds of Collateral and Cash
Equivalents (as defined in the Indenture), the Collateral Agent shall hold such Proceeds and Cash
Equivalents in trust for the benefit of the Trustee, any Additional Senior Secured Debt
Representative and the Tranche 2 Representative in accordance with their rights and priorities
provided for herein.



     Section 2.07 No Obligations Imposed. None of the Trustee, the Additional Senior Secured Debt
Representatives, any Creditor or any other holder of Finance Obligations shall have: (i) any
responsibility or duty whatsoever in respect of the Collateral or the Collateral Documents or any
other interest, right, power or remedy granted to or enforceable by the Collateral Agent, except in
the event the Collateral Agent receives instructions from the Directing Creditors, the Collateral
Agent shall comply with such instructions, subject to Section 6.01; or (ii) except in connection
with the instructions of the Directing Creditors to which it is a signatory party, any liability
whatsoever for any act or omission of the Collateral Agent, whether or not constituting a breach of
its undertaking and obligations under this Agreement or otherwise constituting wrongful conduct.



     Section 2.08 Inspection. The Collateral Agent shall permit the Trustee, the Additional Senior
Secured Debt Representatives or any Noteholder upon reasonable prior written request, during normal
business hours, to inspect and copy any and all Collateral Documents and other documents, notices,
certificates, instructions or communications received by the Collateral Agent in its capacity as
such.



9









 





ARTICLE III

ACTIONS BY CREDITORS; VOTING




     Section 3.01 Directing Creditors Defined. Except with respect to Exceptional Decisions as defined
in Section 3.02 and except as otherwise set forth in Section 3.06, all instructions
to the Collateral Agent (including, without limitation, delivery of a notice of foreclosure,
foreclosure and appointment of a receiver), shall be given in writing by the Directing Creditors to
the Collateral Agent through their applicable representatives; provided that each Credit Class
shall have acted in accordance with Section 9.02 of the Indenture or any equivalent provision of
any Additional Secured Debt Agreement (or such other pertinent provisions of any other Finance
Document) in directing its representative. For purposes of calculation of the Directing Creditors,
any Credit Class at the time comprising part of the Aggregate Voting Credit may, by the requisite
vote of its Credit Class, delegate instructional authority to any subset of such Credit Class or
its representative, in which event the Person(s) having been granted such instructional authority
shall be deemed to represent 100% of the members of their respective Credit Class. Any such
delegation of authority shall be provided in writing to the Collateral Agent, but may be rescinded
at any time by the the applicable Credit Class by providing notice of such rescission in writing to
the Collateral Agent.



     Section 3.02 Exceptional Decisions. Certain circumstances set forth in Section 3.02(b) and
(c) shall call for “Exceptional Decisions,” as such term is used herein, and
instruction to the Collateral Agent in connection with such circumstances shall be effected as
provided below:




     (a) Amendment of Collateral Documents. The Collateral Agent shall not agree to
any amendment of the Collateral Documents (other than this Agreement or the Intercreditor
Agreement) except upon written instructions given by the representative of each Credit Class
affected thereby, determined by the applicable vote solely within such Credit Class in
accordance with Section 9.02 of the Indenture or any equivalent provision of any Additional
Senior Secured Debt Agreement as determined by the applicable Additional Senior Secured Debt
Representative (or such other pertinent provisions of any other Finance Document);
provided that no agreement of any Creditor or notice of the concurrence of any
Credit Class shall be required for (A) any amendment, modification or supplement to such
Collateral Documents (1) to cure any ambiguity, typographical error, defect or inconsistency
if such amendment, modification or supplement does not adversely affect the rights of any
Credit Class (as determined by the Note Parties) or (2) pursuant to Section 9.01 of the
Indenture (or such other pertinent provisions of any other Finance Document) or (B) such
amendments to financing statements or such other Collateral Documents as are necessary for
the Collateral Agent to comply with Section 2.02(iii); and, provided,
further, that (i) any amendment to the provisions of this Agreement shall be
governed by Section 3.02(b); (ii) any amendment to the provisions of the Collateral
Documents that releases any Collateral shall be governed by Section 3.02(c); and
(iii) certain other amendments to the provisions of the Collateral Documents shall be
governed by Section 3.02(d).




     (b) Amendment of this Agreement. The Collateral Agent shall not agree to any
amendment of this Agreement except upon instructions by the representative of each Credit
Class affected thereby, determined by the applicable vote solely within such Credit Class in
accordance with Section 9.02 of the Indenture or any equivalent provision of any Additional
Senior Secured Debt Agreement as determined by the applicable Additional Senior Secured Debt
Representative (or such other pertinent provisions of any other Finance Document);
provided that no agreement of any Creditor nor notice of the concurrence of any
Credit Class shall be required for any amendment, modification or supplement to this
Agreement (x) to cure any ambiguity, typographical error, defect or inconsistency if such
amendment, modification or supplement does not adversely affect the rights of any Credit
Class (as determined by the Note Parties) or (y) pursuant to



10









 






Section 9.01 of the Indenture (or such other pertinent provisions of any other
Finance Document); and, provided, further, that any amendment to the
definitions of “Aggregate Voting Credit” and “Directing Creditors” and any
amendment to Sections 3.01, 3.02, 4.06, 4.07 and
7.01 will require notice to the Collateral Agent by the representative of each
Credit Class of the concurrence of such Credit Class, determined by the applicable vote
solely within such Credit Class.




     (c) Release of All or Substantially All Collateral. The Collateral Agent shall
not release all or substantially all Collateral from the lien and security interests created
by the Collateral Documents except as expressly provided therein (including, without
limitation, Section 8.13 of the Security Agreement), or in Article V hereof
or except upon notice to the Collateral Agent by the representative of each Credit Class of
the concurrence of such Credit Class, determined by the applicable vote solely within such
Credit Class in accordance with the terms of the Finance Documents.




     (d) Other Amendments to Collateral Documents. Subject to Section
7.01(b), the Collateral Agent agrees for the benefit of the Note Parties that it shall
execute any amendment, modification or supplement to any Collateral Document approved in
accordance with Article IX of the Indenture (and any other pertinent provisions of any other
Finance Document).



     Section 3.03 Certificates of the Trustee, any Additional Senior Secured Debt Representative.
Concurrently with any calculation of Directing Creditors or any Exceptional Decision requiring the
concurrence of all Credit Classes, the Trustee and each Additional Senior Secured Debt
Representative shall certify to the Collateral Agent (i) the aggregate principal amount of the
Aggregate Voting Credit held by the Noteholders or the Additional Senior Secured Debt Holders, as
the case may be, (ii) the votes cast by the members of the applicable Credit Class, and (iii) the
applicable vote within any Credit Class.



     Section 3.04 Calculations Binding. All calculations regarding satisfaction of compliance with the
definition of the Directing Creditors shall be made by the Collateral Agent upon receipt of and in
exclusive reliance upon the certificates described in Section 3.03, and shall be binding
upon each Credit Class.



     Section 3.05 Directing Creditors Held Harmless. In considering how to pursue creditor remedies
against any Note Party or against the Collateral and before initiating any such creditor remedies,
the Directing Creditors (or any other requisite percentage of a Credit Class having an
instructional authority pursuant to this Agreement or any other Finance Document) shall first
determine whether any proposed creditor remedies or other actions create a risk that the remaining
interests of the Noteholders or the Additional Senior Secured Debt Holders (including, without
limitation, the right to seek a deficiency judgment against the Note Parties or the right to pursue
other collateral) will be impaired or prejudiced. To the greatest extent possible, all
instructions given or actions taken by the Creditors concerning the exercise of creditor remedies
or other actions under this Agreement shall attempt to maximize the return for all Creditors and
attempt to minimize (to the greatest extent possible) the risk that the rights and interests of
some of the Creditors (including, without limitation, the ability to seek and enforce a deficiency
judgment against any Note Party or the right to pursue other collateral) may be diminished or
impaired following the exercise of such creditor remedies or actions. Each Creditor agrees that it
shall not provide or cause or vote to be provided any instruction to the Collateral Agent which
would cause or result in disproportionate prejudice or impairment to the other Creditors hereunder,
except in situations where such Creditor is a part of a Credit Class allowed to vote separately
from other Credit Classes, in which case it shall not provide or cause or vote to be provided any
instruction to the Collateral Agent which would cause or result in disproportionate prejudice or
impairment to the other Creditors belonging to its Credit Class. However, subject to the previous
sentence, the Directing Creditors shall be entitled to provide any



11









 




instruction and take any action which they in good faith believe is in the interest of, the
Noteholders and the Additional Senior Secured Debt Holders.




     Section 3.06 Notice of Amendments and Waivers to Finance Documents. The Trustee shall notify the
Collateral Agent if it receives notice of a proposed amendment or waiver of an Event of Default
under the Note Documents. The Additional Secured Debt Representatives shall notify the Collateral
Agent if it receives notice of a proposed amendment or waiver of an Event of Default under any
Additional Secured Debt Agreement.



     Section 3.07 Events of Default under the Finance Documents.



     (a) Notices of Events of Default. The Trustee shall notify the Collateral Agent (with
a copy to the Additional Senior Secured Debt Representatives) if an Event of Default has occurred
under the Indenture of which it has actual knowledge and of the forbearance, waiver or other
termination, if any, of such Event of Default. Each Additional Senior Secured Debt Representative
shall notify the Collateral Agent (with a copy to the Trustee) if an Event of Default has occurred
under an Additional Senior Secured Debt Agreement of which it has actual knowledge and of the
forbearance, waiver or other termination, if any, of such Event of Default.




Exercise of Remedies upon Event of Default. None of the Collateral Agent, Trustee.
the Tranche 2 Representative or any Additional Senior Secured Debt Representative shall,
upon the occurrence of an Event of Default under the applicable Finance Document, exercise
any remedies against the Collateral, unless the Directing Creditors direct such exercise of
such remedies. The Collateral Agent shall determine whether the Directing Creditors shall
have approved such exercise of such remedies. Any calculation of Directing Creditors for
purposes of this Section 3.07(b), shall be made by the Collateral Agent upon receipt
of and in exclusive reliance upon the certificates described in Section 3.03, and
shall be binding on each Credit Class. Upon the calculation of Directing Creditors, the
Collateral Agent shall notify (such notification, a “Notice of Exercise of
Remedies”) the Trustee and each Additional Senior Secured Debt Representative whether
the Directing Creditors approved a proposed exercise of remedies or denied the proposed
exercise of such remedies. Upon receipt of such Notice of Exercise of Remedies, the Trustee
and any Additional Senior Secured Debt Representative, as applicable, hereby authorize the
Collateral Agent to take such action as directed by such Notice of Exercise of Remedies to
give effect thereto in accordance with this Agreement and applicable Finance Documents.
Nothing contained herein shall affect the rights of any holders of any Finance Obligations
and their respective representatives to accelerate the applicable Finance Obligations under
their respective Finance Documents. If the Collateral Agent shall not have received
appropriate instruction within 10 days of any request therefor from the Directing Creditors
(or such shorter period as reasonably may be specified in such notice or as may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain from taking
such action as it shall deem to be in the best interests of the Secured Parties and the
Collateral Agent shall have no liability to any Person for such action or inaction.



ARTICLE IV

EXERCISE OF REMEDIES; APPLICATION OF COLLATERAL PROCEEDS




     Section 4.01 General Limitation on Exercise of Remedies. None of the Trustee or any Additional
Senior Secured Debt Representative shall be entitled to exercise any remedies directly under the
Collateral Documents, but only by providing instructions to the Collateral Agent in accordance with
this Agreement.



12









 





     Section 4.02 Notices of Acceleration. If an Event of Default occurs and any Finance Obligations
are, subject to Section 3.07 of this Agreement, accelerated, the Trustee, the Tranche 2
Representative and/or the Additional Senior Secured Debt Representative, as the case may be, shall
notify each other and the Collateral Agent of such acceleration, certifying: (i) that such
acceleration has or have occurred and (ii) the principal, interest, fees and other amounts owed by
the Note Parties (such certification being herein referred to as a “Notice of
Acceleration”).



     Section 4.03 Remedies. Upon receipt by the Collateral Agent of a Notice of Acceleration from or on
behalf of one or more Credit Classes, or upon receipt by the Collateral Agent of notice of the
commencement by or against one or more Note Parties of an Insolvency Proceeding and subject to the
provisions of this Agreement, including Section 6.10, the Collateral Agent shall retain
legal counsel acceptable to the Trustee and each Additional Senior Secured Debt Representative, and
shall exercise such remedies under the Collateral Documents as it shall be instructed in accordance
with the terms of this Agreement. For the avoidance of doubt, all fees, costs and expenses of such
counsel, and any fees, costs, or expenses incurred by the Collateral Agent in connection with an
exercise of remedies, shall be paid or reimbursed pursuant to Section 7.07 of the Indenture or
Sections 4.05(a) or 6.10 hereof.



     Section 4.04 No Inconsistent Actions. Each of the Trustee, Tranche 2 Representative and and each
Additional Senior Secured Debt Representative agree to take no action in an Insolvency Proceeding
with respect to any Note Party or the Collateral which is inconsistent with the terms of this
Agreement.



     Section 4.05 Application of Proceeds & Certain Other Intercreditor Arrangements.



     (a) Priority. In the event of (i) the realization of Proceeds of any collection or
disposition of Collateral pursuant to the exercise of remedies under the Collateral Documents, or
(ii) receipt by the Collateral Agent otherwise of any amounts from the Company or any Subsidiary
Guarantor following any acceleration of the obligations under the Senior Secured Notes, any
Additional Senior Secured Debt, the Tranche 2 Sub-Facility Obligations or any bankruptcy or
insolvency Event of Default (as defined in the Indenture, any Additional Senior Secured Debt
Agreement or the ABL Credit Agreement, as applicable) with respect to the Company or Subsidiary
Guarantor or any other automatic acceleration event occurs under any Finance Document, in each case
whether received from the proceeds of an asset sale, reorganization, liquidation, sale pursuant to
Section 363 of the Bankruptcy Code, adequate protection payments or otherwise (each, a “Covered
Action”), the Collateral Agent shall distribute such Proceeds to the specified Persons in the
following order of priority:




     FIRST, to the payment of advances made and liabilities incurred by the Collateral Agent
in order to protect the liens granted by the Collateral Documents and the payment of all
reasonable costs and expenses incurred by and disbursements of attorneys, accountants,
consultants, appraisers and other professionals engaged by the Collateral Agent, any
Additional Senior Secured Debt Representative or the Trustee in connection with the
preservation, collection, foreclosure or enforcement of the liens granted by the Collateral
Documents or any interest, right, power or remedy of the Collateral Agent or in connection
with the collection or enforcement of any of the obligations in respect of the Senior
Secured Notes or any obligations in respect of any Additional Senior Secured Debt in any
insolvency proceeding, including all reasonable fees and disbursements of attorneys,
accountants, consultants, appraisers and other professionals (including without limitation
an Independent Financial Expert engaged pursuant to this Section 4.05) engaged by the
Collateral Agent or the Trustee and reasonable compensation of the Collateral Agent and the
Trustee and any Additional Senior Secured Debt Representative and disbursements of
attorneys, accountants, consultants, appraisers and other professionals engaged by the
Collateral Agent or



13









 

\




the Trustee and any Additional Senior Secured Debt Representative for services rendered
in connection therewith;




     SECOND, to the Tranche 2 Representative to be applied as provided in the ABL Credit
Agreement (or the ABL Substitute Facility, as applicable) to the payment in full of all
Tranche 2 Sub-Facility Obligations on the date of any payment or other distribution or other
receipt of Proceeds and the termination of any commitments thereunder, such amounts to be
certified by the Tranche 2 Representative to the Collateral Agent;




     THIRD, pro rata to the Trustee to be applied as provided in the Indenture and each
Additional Senior Secured Debt Representative to be applied as provided in the applicable
Additional Senior Secured Debt Documents, to the payment in full of all Finance Obligations
owing to the Noteholders and the Additional Senior Secured Debt Holders, an amount equal to
all Finance Obligations owing to them in respect of the Senior Secured Notes and the
Additional Senior Secured Debt, as applicable, on the date of any payment or other
distribution or other receipt of Proceeds;




     FOURTH, any surplus then remaining shall be paid to the Company or the applicable
Subsidiary Guarantor or their successors or as the court of a competent jurisdiction may
direct;


provided that any amount received constituting ABL Facility Collateral (as defined in the
Intercreditor Agreement) shall be applied in accordance with the provisions set forth in the
Intercreditor Agreement.




     (b) Distribution According to Priorities. No party hereto shall be entitled to a
distribution on any lower priority pursuant to clauses FIRST through FOURTH above unless and until
all higher priorities have been paid in full.



     (c) Turn Over. Each Additional Senior Secured Debt Representative, the Tranche 2
Representative and the Trustee on behalf of each current and future Noteholder agrees to turn over
to the Collateral Agent any amounts on account of Finance Obligations received by them in
contravention of this Section 4.05 to the extent necessary to effectuate the priority of
payments set forth in Section 4.05(a) above.



     (d) Single Class. The Trustee, the Tranche 2 Representative, each Additional Senior
Secured Debt Representative and the Collateral Agent agree (on behalf of the Noteholders and the
Additional Senior Secured Debt Holders which are deemed to agree) that (a) the grant of Liens
pursuant to the Collateral Documents and any grant of Liens pursuant to any Additional Senior
Secured Debt Documents constitutes a single grant of Liens for the benefit of the Noteholders, the
Tranche 2 Lenders and the Additional Senior Secured Debt Holders and (b) the Senior Secured Notes,
the Tranche 2 Sub-Facility Loans and the Additional Senior Secured Debt shall be classified as a
single class of secured claims (or, if relevant, a single class of secured claims and a single
class of unsecured claims) in any liquidation or plan of reorganization proposed or adopted in a
bankruptcy, insolvency or liquidation case. To further effectuate the intent of the immediately
preceding sentence, the Trustee, the Tranche 2 Representative, each Additional Senior Secured Debt
Representative and the Collateral Agent agree (on behalf of the Noteholders, the Tranche 2 Lenders,
the Additional Senior Secured Debt Holders which are deemed to agree) that, if it is held that the
claims of the Senior Secured Notes, the Tranche 2 Sub-Facility Loans and the Additional Senior
Secured Debt in respect of the Collateral constitute more than one class of claims (rather than one
class of secured claims or, if relevant, a single class of secured claims and a single class of
unsecured claims), any distributions in respect of Collateral in any bankruptcy, insolvency or
liquidation case that are made to any of them will be reallocated among the Noteholders, the
Tranche 2 Lenders and the Additional Senior Secured Debt Holders as if there were a single class of
secured claims (or, if relevant, a single class of secured claims and a single class of unsecured
claims) against the Company and the Subsidiary Guarantors in respect of the Collateral in compliance with the priority of payments
described in



14









 




Section 4.05(a) above. Moreover, the Trustee, the Tranche 2 Representative,
each Additional Senior Secured Debt Representative and the Collateral Agent agree (on behalf of the
Noteholders, the Tranche 2 Lenders or the Additional Senior Secured Debt Holders, as applicable,
which are deemed to agree) not to take actions, and not to initiate or prosecute or encourage any
other Person to initiate or prosecute any claim, action, objection or other proceeding or otherwise
assert any position inconsistent with the intent of the first sentence of this Section
4.05(d).




     (e) Non-Cash Distributions. If, in any bankruptcy, insolvency or liquidation case,
any equity securities, debt securities or other non-cash consideration from the reorganized debtor
is distributed pursuant to a plan of reorganization or similar dispositive restructuring plan after
satisfaction of the Tranche 2 Sub-Facility Obligations, the amount of such non-cash consideration
to be distributed to each of the Noteholders, and the other Additional Senior Secured Debt Holders,
respectively, shall be determined in accordance with the priority of payment provisions set forth
in Section 4.05(a) above and utilizing the valuation methodology set forth below. In
addition, if, in any bankruptcy, insolvency or liquidation case, debt obligations of the
reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed
pursuant to a plan of reorganization or similar dispositive restructuring plan on account of the
Senior Secured Notes, on account of the Additional Senior Secured Debt and on account of the
Tranche 2 Sub-Facility Obligations, then, to the extent the debt obligations distributed on account
of the Senior Secured Notes and on account of the Additional Senior Secured Debt or Tranche 2
Sub-Facility Obligations are secured by Liens upon the same property, the priority of payments
provisions described in Section 4.05(a) above will survive the distribution of such debt
obligations pursuant to such plan and will apply with like effect to such debt obligations.



     (f) Debtor-in-Possession. For purposes of these intercreditor agreements, all
references to the Company or any Subsidiary Guarantor shall include such Person as a
debtor-in-possession and any receiver or trustee for such Person in any bankruptcy, insolvency or
liquidation case.



     (g) Valuation Methodology. For purposes of any distribution hereunder, the value of
any non-cash property, including any equity securities or debt securities (the “Non-Cash
Property”) shall be equal to either the Current Market Price (as defined below) or the Fair
Market Value (as defined below) of such Non-Cash Property and will be determined as follows:




     (1) In the event that, in accordance with the provisions hereof, Non-Cash Property is
to be distributed, the Collateral Agent shall first determine whether such Non-Cash Property
is a security that is listed, admitted to trading or quoted on a national securities
exchange or the NASDAQ National Market System (a “Marketable Security”), and, for
each Marketable Security, its Current Market Price. The “Current Market Price” of a
Marketable Security shall be deemed to be the average of the daily closing prices of such
Marketable Security on the principal national securities exchange on which such Marketable
Security is listed or admitted to trading or, if such Marketable Security is not so listed,
the average daily closing bid prices of such Marketable Security on the NASDAQ National
Market System if such Marketable Security is quoted thereon, in any such case, for the 20
consecutive trading days ending on the trading day immediately preceding the record day set
by the Collateral Agent or applicable court order for the distribution of such Non-Cash
Property.




     (2) Upon determination by the Collateral Agent that the Non-Cash Property to be
distributed is not a Marketable Security (or that it is a Marketable Security, but its
Current Market Price cannot be determined pursuant to clause (1) above), the Collateral
Agent (acting upon instructions from the Directing Creditors) shall (at the Company’s sole
expense) promptly, but in any case within 30 days of receipt of a notice from the Collateral
Agent of such determination:
(i) appoint a nationally recognized investment bank (an “Independent Financial
Expert”) with ex-



15









 






perience in similar transactions (for instance, transactions of a
comparable size and magnitude) to determine the Fair Market Value of the Non-Cash Property
to be distributed, and (ii) cause the Independent Financial Expert so appointed by it, to
prepare and to deliver to the Collateral Agent a written report (a “Value Report”)
specifying such Fair Market Value.




     (3) The Company shall provide, and shall cause its subsidiaries to provide, the
Independent Financial Expert with the same financial and operational information for
conducting their valuation. The Company shall use, and shall cause its subsidiaries to use,
commercially reasonable efforts to ensure that the information shall be complete and
accurate in all material respects and that any forecasts shall be based on unbiased
assessments made in good faith. The Company shall reasonably cooperate, and shall cause its
subsidiaries to reasonably cooperate, fully with the Independent Financial Expert in the
conduct of its valuation, including making management reasonably available and offering
access to the premises of the Company and its subsidiaries to the Independent Financial
Expert during regular business hours and on reasonable notice.




     (4) “Fair Market Value” of the Non-Cash Property to be distributed, as of the
date of determination, shall mean the price that a willing buyer would pay to a willing
seller for the relevant Non-Cash Property, in an arm’s length transaction, with neither
party being under any immediate obligation or need to consummate such transaction. The Fair
Market Value shall be stated in U.S. dollars.



     Section 4.06 Sharing of Asset Sale Proceeds and Event of Loss Proceeds. In any circumstance when
the Company applies any Net Proceeds of an Asset Sale (including any Excess Proceeds) or any Net
Loss Proceeds of any Event of Loss (including any Excess Loss Proceeds) (in each case, as such
terms or any substantially similar terms are defined in the Indenture and the applicable Additional
Senior Secured Debt Document) to permanently reduce (or offer to reduce, as applicable) Notes
Priority Lien Debt Obligations, the Noteholders and the Additional Senior Secured Debt Holders
shall be entitled to receive such Net Proceeds or Net Loss Proceeds, as the case may be, in
accordance with the applicable underlying Finance Documents). In any circumstance when the
Collateral Agent receives any such Net Proceeds or Net Loss Proceeds, as the case may be, pursuant
to any Note Document or Additional Senior Secured Debt Document, and the Indenture and the
applicable Additional Senior Secured Debt Document specify that all or a portion of such proceeds
are to be applied to an “Asset Sale Proceeds Offer” or “Loss Proceeds Offer” (as such terms or any
substantially similar terms are defined in the Indenture and the applicable Additional Senior
Secured Debt Document), as the case may be, the Note Parties shall instruct the Collateral Agent
how to (unless the Collateral Agent is instructed otherwise by the Directing Creditors) apply such
proceeds in accordance with the applicable underlying Finance Documents. The parties acknowledge
that the Indenture provides (and the Additional Senior Secured Debt Documents may provide) that if
the Noteholders and/or the Additional Senior Secured Debt Holders do not accept Excess Proceeds or
Excess Loss Proceeds (as such terms or any substantially similar terms are defined in the Indenture
and the Applicable Additional Secured Debt Document), as the case may be, or Net Proceeds of an
Asset Sale or Net Loss Proceeds of an Event of Loss (as such terms or any substantially similar
terms are defined in the Indenture and the applicable Additional Senior Secured Debt Document) in
the full amount to which they are entitled, the portion thereof which would otherwise have been
applied to the repurchase of the Senior Secured Notes or to the prepayment of the Additional Senior
Secured Debt in accordance herewith may be paid to the Company in accordance with such agreements.



     Section 4.07 Credit Bid Rights.



     (a) If, during the continuance of an Event of Default, the Collateral Agent forecloses any of
its Liens upon any Collateral, whether by public sale or private sale or judicial foreclosure or
otherwise,
and if directed by the Directing Creditors to exercise its credit bid rights as provided in
this Section 4.07,



16









 




the Collateral Agent, acting for and on behalf of the holders of Finance
Obligations, shall be entitled (to the fullest extent it may lawfully do so and subject to any
requirement set forth herein and in the Intercreditor Agreement to first satisfy all obligations
due and owing to the Tranche 2 Lenders under the ABL Debt Documents) to use and apply then due and
payable Finance Obligations as a credit on account of the purchase price payable by the Collateral
Agent for any Collateral sold to the Collateral Agent at the corresponding foreclosure sale for all
purposes related to bidding and making settlement or payment of the purchase price at such
foreclosure sale.




     (b) If, in connection with or, during the continuance of an Event of Default, in anticipation
of any foreclosure of any of the Collateral Agent’s Liens upon any Collateral, the Additional
Senior Secured Debt and Senior Secured Notes representing at least a majority in outstanding
principal amount of the Additional Senior Secured Debt and Senior Secured Notes then outstanding
are transferred to and registered in the name of a single transferee for purposes of facilitating
or executing a bid for such Collateral at the corresponding foreclosure sale, such transferee shall
be entitled (to the fullest extent it may lawfully do so and subject to any requirement set forth
herein and in the Intercreditor Agreement to first satisfy all obligations due and owing to the
Tranche 2 Lenders under the ABL Debt Documents) to use and apply all then due and payable Finance
Obligations outstanding to such transferee as a credit on account of the purchase price payable by
such transferee for any Collateral sold to such transferee at such foreclosure sale, for all
purposes related to bidding and making settlement or payment of the purchase price at such
foreclosure sale, but only if all Noteholders and the Additional Senior Secured Debt Holders
consent thereto or if:




     (i) each Creditor has been offered the opportunity to transfer to such transferee any
or all of the Senior Secured Notes and any Additional Senior Secured Debt outstanding held
by such Creditor on terms equivalent to the most favorable terms offered by such transferee
to any Creditor for or in connection with any transfer of Additional Senior Secured Debt or
or Senior Secured Notes to such transferee; and




     (ii) effective provision is made (or found by order of a court of competent
jurisdiction to have been made) for the pro-rata sharing among the Credit Classes of
proceeds of the Collateral, even if the proceeds received by Creditors other than such
transferee are different in kind (if reasonably equivalent in value with at least equivalent
liquidity) from the proceeds to be realized by such transferee if it is the successful
bidder at the foreclosure sale.



     (c) Each of the Note Parties hereby grants, confirms and agrees to cooperate with and permit
the exercise and enforcement of the rights set forth in this Section 4.07 (subject to any
requirement set forth herein and in the Intercreditor Agreement to first satisfy all obligations
due and owing to the Tranche 2 Lenders under the ABL Debt Documents).



ARTICLE V

CERTAIN OBLIGATIONS ENFORCEABLE BY THE NOTE PARTIES




     Section 5.01 Release of Liens.



     (a) Without limiting its obligations set forth in the Collateral Documents, the Additional
Senior Secured Debt Documents and Note Documents, the Collateral Agent agrees for the benefit of
the Note Parties that if the Collateral Agent at any time receives a written certification signed
by a Responsible Officer (an “Officer’s Certificate”) stating that the Collateral Agent is
permitted or required (x) by the Indenture and any Additional Senior Secured Notes Document and (y)
by Section 8.13 of the Security Agreement to release any property of any Note Party
described in such Officer’s Certificate from any
Lien granted by a Collateral Document specified in such Officer’s Certificate, accompanied by
the pro-



17









 




posed instrument releasing such Lien as to such property, then, subject to both Section
3.02(c) and Article VI, the Collateral Agent will (upon receipt of a written
certification of a Responsible Officer of the Company that the Trustee and the Additional Senior
Secured Note Representative has received all documents, if any, required by the Trust Indenture Act
and the Indenture or other applicable Finance Documents, as the case may be) promptly and in any
event within three Business Days thereafter, release such Lien upon such property by executing (and
if necessary acknowledging in recordable form) such proposed instrument reasonably requested by the
Note Parties and delivering it to the applicable Note Party requesting the same. Any such document
shall be without recourse to or warranty by the Collateral Agent or the other Finance Parties.




     (b) Any Collateral that is released automatically pursuant to Section 8.13 of the Security
Agreement or any other Collateral Document shall be deemed to be automatically released under this
Agreement without any action on the part of the Collateral Agent.



     Section 5.02 Delivery of Copies to the Trustee and the Additional Senior Secured Debt
Representative. The Collateral Agent shall deliver to the Trustee and each Additional Senior
Secured Debt Representative requesting the same a copy of each Officer’s Certificate delivered to
the Collateral Agent pursuant to Section 5.01, together with copies of all documents
delivered to the Collateral Agent with such Officer’s Certificate. The Trustee and each Additional
Senior Secured Representative shall not be obligated to take notice thereof or to act thereon.



     Section 5.03 No Actions to Address Exceptions. Each Creditor acknowledges that actions will not be
taken to address the exceptions noted in Section 3.01 of the Security Agreement and that
the Collateral Agent may not have a perfected security interest with respect to the matters
specified therein.



ARTICLE VI

THE COLLATERAL AGENT




     Section 6.01 No Implied Duty. The Collateral Agent shall not have any duties or responsibilities
except those expressly assumed by it in this Agreement and the other Collateral Documents and shall
not be required to take any action which is contrary to applicable law or any provision of this
Agreement or the other Collateral Documents. Where the Collateral Agent is permitted but not
required to take any action pursuant to any Collateral Document, the Collateral Agent may take any
such action but shall have no obligation to take any such action without the direction of the
Directing Creditors and the Collateral Agent shall not be liable to any party for not taking such
action if the Directing Creditors have not directed the Collateral Agent to take such action. The
Collateral Agent makes no representation as to the existence, validity, value, genuineness,
perfection, priority or the collectability of any security or other document or other instrument
held by or delivered to the Collateral Agent. The Collateral Agent shall not be called upon to
advise any party as to the wisdom in taking or refraining to take any action with respect to the
Collateral.



     Section 6.02 Appointment of Co-Agents and Sub-Agents. The Collateral Agent may employ agents and
appoint sub-agents or co-collateral agents as it determines appropriate in the performance of its
duties hereunder. The Collateral Agent will exercise good faith in selecting any such agent,
sub-agent or co-collateral agent but shall not otherwise be responsible or liable for any act or
omission of any such agent, sub-agent or co-collateral agent.



     Section 6.03 Other Agreements. The Collateral Agent has accepted and is bound by the Collateral
Documents delivered to it as of the date of this Agreement and, subject to Section 7.01(b)
and this Article VI, shall accept and be bound by all Collateral Documents delivered to it
at any time after the date
of this Agreement; provided that the Collateral Agent shall not otherwise be bound by, or
obligated to



18









 




take cognizance of the provisions of, any agreement to which it is not a party,
including any Additional Senior Secured Debt Agreement, the ABL Credit Agreement and the Indenture.
The Collateral Agent shall not be responsible for compliance with the terms of any Finance
Document by any Note Party and shall have no duty to monitor any such compliance.




     Section 6.04 Solicitation of Instructions. The Collateral Agent may at any time solicit
confirmatory instructions, including from the Directing Creditors or an order of a court of
competent jurisdiction as to any action which it may be requested or required to take, or which it
may propose to take, in the performance of any of its obligations under this Agreement.



     Section 6.05 Limitation of Liability. The Collateral Agent shall not be responsible or liable for
any action taken or omitted to be taken by it hereunder or under any Collateral Document, except
for its own gross negligence, bad faith or willful misconduct.



     Section 6.06 Documents in Satisfactory Form. The Collateral Agent shall be entitled to require
that all agreements, certificates, opinions, instruments and other documents at any time submitted
to it, including those expressly provided for in this Agreement, be delivered to it in a form and
upon substantive provisions reasonably satisfactory to it.



     Section 6.07 Entitled to Rely. The Collateral Agent may rely conclusively upon any certificate,
notice or other document (including any electronic transmission) reasonably believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons
and need not investigate any fact or matter stated in any such document. The Collateral Agent may
seek and rely upon any judicial order or judgment, upon any advice, opinion or statement of legal
counsel, independent consultants and other experts selected by it in good faith and upon any
certification, instruction, notice or other writing delivered to it by any Note Party in compliance
with the provisions of this Agreement or delivered to it by the Trustee or Additional Senior
Secured Debt Representative as to the Creditors whose action or consent is required for an
instruction of Directing Creditors, without being required to determine the authenticity thereof or
the correctness of any fact stated therein or the propriety or validity of service thereof. The
Collateral Agent may act in reliance upon any instrument comporting with the provisions of this
Agreement or any signature reasonably believed by it to be genuine and may assume that any Person
purporting to give notice or receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. To the extent an
officers’ certificate or an opinion of counsel is required or permitted under this Agreement or any
Collateral Document to be delivered to the Collateral Agent in respect of any matter, the
Collateral Agent may rely conclusively on such officers’ certificate or opinion of counsel as to
such matter. The Collateral Agent may request an opinion of counsel, a certificate of a
Responsible Officer, or both, at any time when it is required or requested to take any action
hereunder or under any Collateral Document stating that such action is permitted or authorized
pursuant to the terms hereof and of the Finance Documents and that all conditions precedent to the
taking of such action have been complied with and the Collateral Agent may rely conclusively on
such officer’s certificate or opinion of counsel with respect thereto. Whenever the Collateral
Agent shall be required, in connection with the exercise of its rights or the performance of its
obligations hereunder, to determine the existence or amount of any Finance Obligations, or the
existence of any Lien securing any such obligations, or the Collateral subject to any such Lien, it
may request that such information be furnished to it in writing by the Trustee, the Additional
Senior Secured Debt Representative or the Tranche 2 Representative, as applicable and shall be
entitled to conclusively rely on the information so furnished; provided, however, that if Trustee,
the Additional Senior Secured Debt Representative or the Tranche 2 Representative, as applicable,
shall fail or refuse reasonably promptly to provide the requested information, the Collateral Agent
shall be entitled, but not obligated, to make any such determination by such method as it may, in
the exercise of its good faith judgment, determine, including
by reliance upon a certificate of the Company. The Collateral Agent may rely conclusively,
and shall be



19









 




fully protected in so relying, on any determination made by it in accordance with the
provisions of the preceding sentence (or as otherwise directed by a court of competent
jurisdiction) and shall have no liability to the Grantor, any Creditor, any Tranche 2 Lender or any
other person as a result of such determination.




     Section 6.08 Events of Default. The Collateral Agent shall not be required to inquire as to the
occurrence or absence of any Event of Default under the Indenture, the Additional Senior Secured
Debt Agreements or any other Finance Document and shall not be affected by or required to act upon
any notice or knowledge as to the occurrence of any Event of Default unless and until it receives a
notice pursuant to Section 4.02.



     Section 6.09 Actions by Collateral Agent. As to any matter not expressly provided for by this
Agreement, the Collateral Agent shall act or refrain from acting as directed by the Directing
Creditors and shall be fully protected in doing so.



     Section 6.10 Security or Indemnity in Favor of the Collateral Agent. The Collateral Agent shall
not be required to advance or expend any funds or otherwise incur any financial liability in the
performance of its duties or the exercise of its powers or rights hereunder unless it has been
provided with security or indemnity which it, in its discretion, deems sufficient against any and
all liability or expense which may be incurred by it by reason of taking or continuing to take such
action. The Directing Creditors hereby jointly and severally agree to provide such security or
indemnity to the Collateral Agent promptly upon request by the Collateral Agent therefor.



     Section 6.11 Resignation or Removal of the Collateral Agent. (i) The Collateral Agent may resign
at any time by giving not less than 45 days’ notice of resignation to the Trustee, the Additional
Senior Secured Debt Representative, the Tranche 2 Representative and the Company, and (ii) the
Collateral Agent may be removed at any time, with or without cause, pursuant to the instructions of
the Directing Creditors. If the Collateral Agent on the date of this Agreement resigns at any
time, the Trustee shall automatically succeed to all the rights and obligations of Wilmington Trust
Company, as the Collateral Agent hereunder and the Collateral Documents and shall become a
successor Collateral Agent for all intents and purposes hereunder and under the Collateral
Documents without any further action by any party.



     Section 6.12 Appointment of Successor Collateral Agent. Upon any resignation or removal of
Wilmington Trust Company as Collateral Agent, the Trustee shall automatically replace Wilmington
Trust Company as Collateral Agent. Upon any resignation or removal of any Collateral Agent, a
successor Collateral Agent may be appointed by the Trustee and the Additional Senior Secured Debt
Representative, acting jointly, or by the instructions of the Directing Creditors, in each case
with the consent (not to be unreasonably withheld) of the Company; provided that such
consent shall not be required if the successor Collateral Agent is the Trustee or any Additional
Senior Secured Debt Representative. If no successor Collateral Agent shall have been so appointed
and shall have accepted such appointment within 45 days after the predecessor Collateral Agent gave
notice of resignation or was removed, the retiring Collateral Agent may appoint a successor
Collateral Agent, or petition at the expense of the Note Parties a court of competent jurisdiction
for appointment of a successor Collateral Agent, which shall be a bank or trust company (i)
authorized to exercise corporate trust powers, (ii) acceptable to the Trustee and the Additional
Senior Secured Debt Representative, (iii) having a combined capital and surplus of at least
$50,000,000 and (iv) maintaining an office in New York, New York.



     Section 6.13 Succession. When the Person so appointed as successor Collateral Agent accepts such
appointment:



20









 






     (i) such Person shall succeed to and become vested with either all the rights,
powers, privileges and duties of the predecessor Collateral Agent or such other rights,
powers, privileges and duties as may be agreed in writing at the time of appointment, and
upon appointment of such Person as Collateral Agent the predecessor Collateral Agent shall
be discharged from its duties and obligations hereunder, and




     (ii) the predecessor Collateral Agent, upon payment of all amounts owed to it, shall
promptly transfer all Collateral within its possession or control to the possession or
control of the successor Collateral Agent and shall execute and deliver such notices,
instructions and assignments as may be necessary or desirable or reasonably requested by the
successor Collateral Agent to transfer to the successor Collateral Agent all Liens,
interests, rights, powers and remedies of the predecessor Collateral Agent in respect of the
Collateral or under the Collateral Documents.



     Thereafter the predecessor Collateral Agent shall remain entitled to enforce the immunities
granted to it in this Article VI.



     Section
6.14 Indenture Protections. The Collateral Agent shall be deemed to possess all of the
rights and protections provided to the Trustee under the Indenture, including without limitation
all of the rights provided to the Trustee in Sections 7.02, 7.03, 7.04 and 7.07 of the Indenture,
and all of the rights and protections provided in Section 10.11 of the Indenture. Without limiting
the generality of Section 6.01, except as expressly set forth in this Agreement, the
Collateral Agent shall have no duties or obligations to any Note Parties, the Trustee, the Tranche
2 Lenders, the Tranche 2 Representative, the holders of any Senior Secured Notes, any Additional
Senior Secured Debt Holders or any Additional Senior Secured Debt Representative (including,
without limitation, any fiduciary obligations). Each of the Trustee, the Tranche 2 Lenders, the
Tranche 2 Representative, any Note Parties, the holders of any Senior Secured Notes, any Additional
Senior Secured Debt Holders and any Additional Senior Secured Debt Representative acknowledges and
agrees that (i) entering into this Agreement is an arm’s-length transaction among the parties
hereto, and the parties hereto are capable of evaluating and understanding and understand and
accept the terms, risks and conditions of the transactions contemplated by this Agreement; (ii) in
connection with each transaction contemplated hereby and the process leading to such transaction,
the Collateral Agent is and has been acting solely as a principal and is not the agent or fiduciary
of any of the parties hereto, the holders of any Senior Secured Notes or their respective
affiliates, stockholders, creditors or employees or any other party; (iii) without limiting the
generality of Section 2.06, the Collateral Agent has not assumed and will not assume an
advisory or fiduciary responsibility in favor of any party with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether the Collateral Agent or
its affiliates has advised or is currently advising any other party on other matters) or any other
obligation to any party other than the obligations expressly set forth in this Agreement; (iv) the
Collateral Agent and its affiliates may be engaged in a broad range of transactions that involve
interests that differ from those of the other parties hereto and the Collateral Agent has no
obligation to disclose any of such interests by virtue of any fiduciary or advisory relationship;
and (v) the Collateral Agent not provided any legal, accounting, regulatory or tax advice with
respect to any offering of securities or lending transaction and the parties hereto have consulted
their own legal, accounting, regulatory and tax advisors to the extent they deemed appropriate.




21











 





ARTICLE VII

MISCELLANEOUS




     Section 7.01 Amendment.



     (a) This Agreement may be amended or supplemented from time to time by the written agreement
of the Note Parties and the Collateral Agent, acting pursuant to the instructions of the Directing
Creditors if so required pursuant to Article III and in compliance with Section
3.02.



     (b) Notwithstanding anything contained herein or in any Collateral Document, any Collateral
Document or amendment or supplement to any Collateral Document that, in each case, imposes any
obligation upon the Collateral Agent not contemplated by this Agreement or adversely affects the
rights of the Collateral Agent in its individual capacity will become effective only with the
consent of the Collateral Agent in its individual capacity. The Collateral Agent shall promptly
receive copies of all Collateral Documents and all amendments and supplements thereto.



     Section 7.02 Successors and Assigns; Additional Trustee or Agent Joinder.



     (a) This Agreement is legally binding upon and enforceable against the Collateral Agent.
Except as provided in Section 6.02 or in any Collateral Document, the Person acting as
Collateral Agent may not, in its individual capacity, delegate any of its duties or assign any of
its rights hereunder, and any attempted delegation or assignment of any such duties or rights shall
be void. All obligations of the Collateral Agent hereunder shall inure to the benefit of, and be
enforceable by, the Trustee, the Additional Senior Secured Debt Representative, and each present
and future holder of Finance Obligations, each of whom shall be entitled to enforce this Agreement
as a third party beneficiary hereof, and all of their respective successors and assigns.



     (b) This Agreement is further binding upon each of the Note Parties and their respective
successors. No Note Party may delegate any of its duties or assign any of its rights hereunder
without prior written consent pursuant to Section 3.02(b), and any attempted delegation or
assignment of any such duties or rights shall be void.



     (c) The obligations of the Collateral Agent set forth in Sections 5.01 and
5.02 of this Agreement shall also be enforceable by the Note Parties directly affected by
any breach thereof and their respective successors and assigns.



     (d) Upon the Note Parties’ entering into any additional indenture or agreement constituting
the “Indenture” or the “Additional Senior Secured Debt Agreement” pursuant to the definitions
thereof, as the case may be, a trustee or an agent under such indenture or agreement shall become a
party to this Agreement by executing and delivering its written agreement substantially in the form
of Exhibit A hereto (the “Joinder”), for the enforceable benefit of the Collateral
Agent, each Additional Senior Secured Debt Representative and the Trustee, that: (i) all Finance
Obligations shall be and are secured equally and ratably (subject to Section 4.05(a)) by all Liens
and all Collateral at any time granted by the Note Parties to secure any Finance Obligations; (ii)
all such Liens shall be enforceable by the Collateral Agent for all holders of Finance Obligations
equally and ratably (subject to Section 4.05); (iii) such trustee or agent on behalf of the
applicable debtholders consents to and will be bound by the provisions of this Agreement including
those relating to the order of application of proceeds from enforcement of the Collateral Agent’s
Liens upon the Collateral; (iv) such trustee or agent consents to and directs the Collateral Agent
to perform its obligations under this Agreement and (v) such trustee or agent is authorized by the
requisite debtholders (which authorization may be set forth in the relevant indenture or agreement)
to execute the Joinder. Upon execution of the Joinder, such trustee or agent shall automatically
become a party to this



22









 




Agreement with the same force and effect as if an original party hereunder. The execution and
delivery of such Joinder shall not require the consent of any other Finance Party hereunder.




     (e) The Company may from time to time designate, by notice to the Collateral Agent, the
Trustee, and each Additional Senior Secured Debt Representative (such notice, the
“Designation”), additional obligations (whether outstanding on the date of such designation
or on a prospective “when issued basis”) as “Additional Senior Secured Debt,” identifying the
relevant “Additional Senior Secured Debt Representative” which is secured by the Collateral and
entitled to be treated with respect thereto pursuant to this Agreement (it being understood that if
such notice is prospective such designation is contingent upon the issuance or incurrence of the
related obligations in compliance with this Agreement); provided that such Additional
Senior Secured Debt must satisfy the requirements specified in the definition thereof and that the
Additional Senior Secured Debt Representative must execute and deliver a Joinder as required by
Section 7.02(d).



     Section 7.03 Delay and Waiver. No failure to exercise, no course of dealing with respect to the
exercise of, and no delay in exercising, any right, power or remedy arising under this Agreement or
any of the other Collateral Documents shall impair any such right, power or remedy or operate as a
waiver thereof. No single or partial exercise of any such right, power or remedy shall preclude
any other or future exercise thereof or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by law.



     Section 7.04 Notices. Any communications, including notices and instructions, between the parties
hereto or notices provided herein to be given may be given to the following addresses:



	 	 	 

	If to the Collateral Agent:
	 	Wilmington Trust Company
	 
	 	Rodney Square North
	 
	 	1100 North Market Street
	 
	 	Wilmington, DE 19890
	 
	 	Attn:  Corporate Client Series - Polymer Group, Inc.
	 
	 	Facsimile No.:  (302) 636-4145
	 
	 	 
	If to the Trustee:
	 	Wilmington Trust Company
	 
	 	Rodney Square North
	 
	 	1100 North Market Street
	 
	 	Wilmington, DE 19890
	 
	 	Attn:  Corporate Client Series - Polymer Group, Inc.
	 
	 	Facsimile No.:  (302) 636-4145
	 
	 	 
	If to the Tranche 2 Representative:
	 	Citibank, N.A.
	 
	 	390 Greenwich St, 1/F
	 
	 	New York, NY 10013
	 
	 	Attn:: Michael Smolow
	 
	 	Fax: (46) 861-6221
	 
	 	 
	To any additional trustee or
	 	At its address in the Joinder
	agent, joining pursuant to


Section 7.02(d):
	 	 






23









 






	 	 	 

	If to any Note Party:
	 	Polymer Group, Inc.
	 
	 	9335 Harris Corners Parkway, Suite 300
	 
	 	Charlotte, North Carolina 28269
	 
	 	Attention: General Counsel
	 
	 	(Facsimile No.: (704) 697-5122)
	 
	 	 
	 
	 	with a copy to:
	 
	 	 
	 
	 	Simpson Thacher & Bartlett LLP
	 
	 	425 Lexington Avenue
	 
	 	New York, New York  10017
	 
	 	Attention: Igor Fert, Esq.
	 
	 	(Facsimile No.: (212) 455 2502)
	 
	 	 
	If to any Additional Senior
	 	At the address in the Joinder
	Secured Debt Representative:
	 	 





Each notice hereunder shall be in writing and may be personally served, telexed or sent by
facsimile or United States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service and signed for against receipt thereof, upon receipt of
facsimile or telex, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided, no notice to the Collateral Agent, the
Trustee or any Additional Senior Secured Debt Representative shall be effective unless and until
received by its officer responsible for the administration of the transaction contemplated hereby.
Each party may change its address for notice hereunder to any other location within the continental
United States by giving written notice thereof to the other parties as set forth in this
Section 7.04.




     Section 7.05 Entire Agreement. This Agreement states the complete agreement of the parties
relating to the undertaking of the Collateral Agent set forth herein and supersedes all oral
negotiations and prior writings in respect of such undertaking.



     Section 7.06 Force Majeure. In no event shall the Collateral Agent be responsible or liable for
any failure or delay in the performance of its obligations under this Agreement arising out of or
caused by, directly or indirectly, forces beyond its reasonable control, including without
limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military
disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or
malfunctions of utilities, communications or computer (software or hardware) services.



     Section 7.07 Obligations Secured. All obligations of the Note Parties set forth in or arising
under this Agreement shall be Finance Obligations and are secured by all Liens granted by the
Collateral Documents.



     Section 7.08 Severability. If any provision of this Agreement is invalid, illegal or unenforceable
in any respect or in any jurisdiction, the validity, legality and enforceability of such provision
in all other respects and of all remaining provisions, and of such provision in all other
jurisdictions, shall not in any way be affected or impaired thereby. If any provision of this
Agreement limits, qualifies or conflicts with any provision of the Trust Indenture Act of 1939, as
amended (the “Trust Indenture Act”), that is required under the Trust Indenture Act to be
part of and govern any provision of the Indenture, such provision of the Trust Indenture Act shall
control. If any provision of this Agreement modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, such provision of the Trust Indenture Act shall
be deemed to apply to the Indenture as so modified or excluded.



24









 





     Section 7.09 Governing Law.(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.



     Section 7.10 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.



     Section 7.11 Section Titles. The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Agreement have been inserted for convenience of reference only, are
not to be considered a part of this Agreement and shall in no way modify or restrict any of the
terms or provisions hereof.



     Section 7.12 Counterparts; Effectiveness. The parties may sign any number of copies of this
Agreement. Each signed copy shall be an original, but all of them together represent the same
agreement. This Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto and receipt by each party of written or telephonic notification of such
execution and authorization of delivery thereof.



     Section 7.13 Intercreditor Agreement. Reference is made to the Lien Subordination and
Intercreditor Agreement, dated as of January 28, 2011, among Citibank, N.A., as collateral agent
for the ABL Secured Parties referred to therein and Wilmington Trust, as collateral agent for the
Noteholder Lien Secured Parties referred to therein and the subsidiaries of the Company named
therein (the “Intercreditor Agreement”). Each of the Collateral Agent and the Trustee (and
through its acceptance hereof, each Additional Senior Secured Debt Representative) (a) consents to
the subordination of Liens provided for in the Intercreditor Agreement and (b) agrees that it will
be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement.
The foregoing provisions are intended as an inducement to the lenders under the ABL Credit
Agreement to extend credit and such lenders are intended third party beneficiaries of such
provisions and the provisions of the Intercreditor Agreement.



[Signature Pages Follow]








25









 








     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.



	 	 	 	 	 
	COMPANY:	 POLYMER GROUP, INC.



 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Senior Vice President, General Counsel

and Secretary 	 
	 
	GUARANTORS:	 PGI POLYMER, INC.



 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Secretary 	 
	 
	 	CHICOPEE, INC.

 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Secretary 	 
	 
	 	FABRENE, L.L.C.

 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Secretary 	 
	 
	 	DOMINION TEXTILE (USA), L.L.C.

 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Secretary 	 



1









 






	 	 	 	 	 



	 	 	 	 	 
	 	PGI EUROPE, INC..

 	 
	 	By:  	/s/ Daniel L. Rikard
 	 
	 	 	Name:  	Daniel L. Rikard 	 
	 	 	Title:  	Secretary 	 
	 
	PARENT:	 SCORPIO ACQUISITION CORPORATION



 	 
	 	By:  	                         /s/ Jason Giordano
 	 
	 	 	Name:  	Jason Giordano 	 
	 	 	Title:  	Vice President and Treasurer 	 



2









 






	 	 	 	 	 



	 	 	 	 	 
	COLLATERAL AGENT:	

 WILMINGTON TRUST COMPANY,



as Collateral Agent

 	 
	 	By:  	                         /s/ Joshua C. Jones
 	 
	 	 	Name:  	Joshua C. Jones 	 
	 	 	Title:  	Financial Services Officer 	 
	 
	TRUSTEE: 	WILMINGTON TRUST COMPANY, as Trustee



 	 
	 	By:  	                         /s/ Joshua C. Jones
 	 
	 	 	Name:  	Joshua C. Jones 	 
	 	 	Title:  	Financial Services Officer 	 



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	TRANCHE 2 REPRESENTATIVE:	 CITIBANK, N.A., as Tranche 2 Representative



 	 
	 	By:  	                               /s/ Michael Smolow
 	 
	 	 	Name:  	Michael Smolow 	 
	 	 	Title:  	Vice President 	 



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EXHIBIT A




Form of Joinder Agreement






     JOINDER AGREEMENT dated as of _________, 20__ (as amended, modified or supplemented
from time to time, this “Agreement”) among ____________________ (the “New
Collateral Agency Party”), POLYMER GROUP, INC., a Delaware corporation (the
“Company”), SCORPIO ACQUISITION CORPORATION, a Delaware corporation
(“Parent”), CITIBANK, N.A., as the ABL Agent (in such capacity, the “Tranche 2
Representative”) and WILMINGTON TRUST COMPANY, as collateral agent (together with its
successor or successors in such capacity, the “Collateral Agent”), and as Trustee
for the Noteholders under the Indenture (each as defined below) (together with its successor
or successors in such capacity, the “Trustee”). Defined terms used but not
otherwise defined herein shall have the meanings assigned to them in the Collateral Agency
Agreement (defined below).



     The Company has issued 7.75% Senior Secured Notes due 2019 (together with any Exchange Notes
(as defined in the Indenture) with respect thereto the “Initial Senior Secured Notes”)
pursuant to an Indenture, dated as of January 28, 2011 (as amended, restated, supplemented or
modified from time to time and including any one or more indentures or agreements extending the
maturity of, refinancing or otherwise restructuring all or any portion of the obligations of the
Company under such Indenture or any successor indenture, indentures, agreement or agreements, as
the case may be, the “Indenture”) among the Company, the Subsidiary Guarantors (as defined
below), the Trustee and the other agents from time to time party thereto.



     The obligations of the Company under and in respect of the Senior Secured Notes are and will
be, as the case may be, and in respect of certain other Finance Obligations may be guaranteed by
certain material direct and indirect wholly-owned domestic subsidiaries of the Company (the
“Subsidiary Guarantors”). The Company and the Subsidiary Guarantors are herein referred to
individually as a “Note Party” and, collectively, as the “Note Parties.” The
obligations of the Company and the other Note Parties in respect of the Senior Secured Notes and,
as the case may be, the other Finance Obligations are and will be secured by a security interest in
the Collateral.



     The Indenture permits the Company and other Note Parties from time to time to incur
indebtedness which they are otherwise permitted to incur under the Indenture.



     The Company has also entered into that certain Intercreditor and Collateral Agency Agreement,
dated as of January 28, 2011 (as amended, restated, supplemented or modified from time to time, the
“Collateral Agency Agreement”), among the Company, the Guarantors, Parent, the Collateral
Agent, the Tranche 2 Representative and the Trustee, which sets forth the terms on which the
Collateral Agent has undertaken to accept, hold and enforce the security interests described above
and all related rights, interests and powers as agent for, and for the benefit exclusively of, the
present and future holders of the Senior Secured Notes and Additional Senior Secured Debt Holders
and describes the relative rights and obligations of the Trustee on behalf of the Noteholders and
the Additional Senior Secured Debt Representative on behalf of the Additional Senior Secured Debt
Holders with respect to the Collateral.



     Section 7.02 of the Collateral Agency Agreement requires that, upon the Note Parties’
entering into any additional indenture or agreement constituting the “Indenture” or an “Additional
Senior Secured Debt Agreement” pursuant to the definitions thereof (such additional indenture or
agreement, the “New Debt Agreement”), as the case may be, a trustee or an agent under such
indenture or agreement shall become a party to the Collateral Agency Agreement.



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     Accordingly, in consideration of the mutual agreements set forth herein, the New Collateral
Agency Party and the Company hereby agree as follows:



     Section 1. Designation. The Company hereby designates the New Debt Agreement as the
“Additional Senior Secured Debt Agreement,” indebtedness incurred under the New Debt Agreement as
the “Additional Senior Secured Debt” and [describe the agent or trustee under the New Debt
Agreement] as the “Additional Senior Secured Debt Representative.”



     Section 2. Joinder. In accordance with Section 7.02(d) of the Collateral
Agency Agreement, the New Collateral Agency Party agrees, for the enforceable benefit of the
Collateral Agent, each Additional Senior Secured Debt Representative, the Trustee and the other
parties to the Collateral Agency Agreement from time to time, that: (i) all Additional Senior
Secured Debt shall be and are secured equally and ratably by all Liens and all Collateral at any
time granted by the Note Parties to secure any Finance Obligations; (ii) all such Liens shall be
enforceable by the Collateral Agent for all holders of Finance Obligations and Additional Senior
Secured Debt equally and ratably (subject to Section 4.05 of the Collateral Agency
Agreement); (iii) such New Collateral Agency Party on behalf of the applicable debtholders under
the New Debt Agreement consents to and will be bound by the provisions of the Collateral Agency
Agreement including those relating to the order of application of proceeds from enforcement of the
Collateral Agent’s Liens upon the Collateral; (iv) such New Collateral Agency Party consents to and
directs the Collateral Agent to perform its obligations under the Collateral Agency Agreement and
(v) such New Collateral Agency Party is authorized by the requisite debtholders under the New Debt
Agreement (which authorization may be set forth in the relevant New Debt Agreement) to execute this
Agreement.



     Section 3. Representations and Warranties.



     (a) The New Collateral Agency Party hereby represents and warrants that this Agreement has
been duly authorized, executed and delivered by the New Collateral Agency Party, and each of this
Agreement and the Collateral Agency Agreement, as acceded to hereby by the New Collateral Agency
Party, constitutes a valid and binding agreement of the New Collateral Agency Party, enforceable
against the New Collateral Agency Party in accordance with its terms, except in each case as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforceability of creditors’ rights generally and by equitable principles of general
applicability (regardless of whether such enforceability is considered in a proceeding in equity or
at law).



     (b) The Company hereby represents and warrants that the indebtedness incurred under the New
Debt Agreement complies with the definition of “Additional Senior Secured Debt” set forth in the
Collateral Agency Agreement.



     Section 2. Effectiveness. This Agreement and the accession of the New Collateral
Agency Party to the Collateral Agency Agreement as provided herein shall become effective with
respect to the New Collateral Agency Party when the Company, the Collateral Agent and the Trustee
shall have received a counterpart of this Agreement duly executed by the New Collateral Agency
Party (with a copy to any Additional Senior Secured Debt Representative).



     Section 3. Integration; Confirmation. On and after the date hereof, the Collateral
Agency Agreement shall be supplemented as expressly set forth herein; all other terms and
provisions of the Collateral Agency Agreement, the other Finance Documents and the respective
Schedules thereto shall continue in full force and effect and unchanged and are hereby confirmed in
all respects.



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     Section 4. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.



     Section 5. Address for Notices. Any communications, including notices and
instructions or notices provided in the Collateral Agency Agreement to be given to the Additional
Senior Secured Debt Holders or Additional Senior Secured Debt Representative under the New Debt
Agreement, may be given to the following address:



     [INSERT NOTICE INSTRUCTIONS]



     Section 6. Counterparts. The parties may sign any number of copies of this
Agreement. Each signed copy shall be an original, but all of them together represent the same
agreement. This Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto and receipt by each party of written or telephonic notification of such
execution and authorization of delivery thereof.



[Signature Pages Follow]






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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.



	 	 	 	 	 
	 	[NEW COLLATERAL AGENCY PARTY NAME]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	COMPANY:	 POLYMER GROUP, INC.



 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




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