exv10w6






Exhibit 10.6




EXECUTION VERSION




 





GUARANTY




dated as of



January 28, 2011



among



SCORPIO ACQUISITION CORPORATION,

as Holdings,



CERTAIN SUBSIDIARIES OF SCORPIO ACQUISITION CORPORATION IDENTIFIED HEREIN



and



CITIBANK, N.A.,

as Administrative Agent and Collateral Agent



 






 









 








Table of Contents




	 	 	 	 	 
	 	 	Page	 
	Article I.
	 	 	 	 
	 
	 	 	 	 
	Definitions
	 	 	 	 
	 
	 	 	 	 
	Section 1.1. Credit Agreement
	 	 	1	 
	Section 1.2. Other Defined Terms
	 	 	1	 
	 
	 	 	 	 
	Article II.
	 	 	 	 
	 
	 	 	 	 
	Guaranty
	 	 	 	 
	 
	 	 	 	 
	Section 2.1. Guaranty
	 	 	2	 
	Section 2.2. Guaranty of Payment
	 	 	2	 
	Section 2.3. No Limitations
	 	 	2	 
	Section 2.4. Reinstatement
	 	 	3	 
	Section 2.5. Agreement To Pay; Subrogation
	 	 	3	 
	Section 2.6. Information
	 	 	4	 
	 
	 	 	 	 
	Article III.
	 	 	 	 
	 
	 	 	 	 
	Indemnity, Subrogation and Subordination
	 	 	 	 
	 
	 	 	 	 
	Section 3.1. Waiver of Contribution and Subrogation
	 	 	4	 
	Section 3.2. Subordination
	 	 	4	 
	 
	 	 	 	 
	Article IV.
	 	 	 	 
	 
	 	 	 	 
	Miscellaneous
	 	 	 	 
	 
	 	 	 	 
	Section 4.1. Notices
	 	 	5	 
	Section 4.2. Waivers; Amendment
	 	 	5	 
	Section 4.3. Administrative Agent’s Fees and Expenses; Indemnification
	 	 	5	 
	Section 4.4. Successors and Assigns
	 	 	6	 
	Section 4.5. Survival of Agreement
	 	 	6	 
	Section 4.6. Counterparts; Effectiveness; Several Agreement
	 	 	7	 
	Section 4.7. Severability
	 	 	7	 
	Section 4.8. Right of Setoff
	 	 	7	 
	Section 4.9. Governing Law; Jurisdiction; Consent to Service of Process
	 	 	8	 
	Section 4.10. WAIVER OF JURY TRIAL
	 	 	8	 
	Section 4.11. Headings
	 	 	8	 
	Section 4.12. Security Interest Absolute
	 	 	8	 
	Section 4.13. Termination or Release
	 	 	8	 
	Section 4.14. Additional Guarantors
	 	 	9	 
	Section 4.15. Intercreditor Agreement
	 	 	9	 






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	Exhibits	 	 
	Exhibit A

	 	Form of Guaranty Supplement






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     GUARANTY, dated as of January 28, 2011, among SCORPIO ACQUISITION CORPORATION, a Delaware
corporation (“Holdings”), certain subsidiaries of Holdings from time to time party hereto and
CITIBANK, N.A., as Administrative Agent and Collateral Agent.



     Reference is made to the Credit Agreement dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among Holdings,
SCORPIO MERGER SUB CORPORATION (“Merger Sub” and, prior to the Merger (as defined below), the “Lead
Borrower”), a Delaware corporation to be merged with and into POLYMER GROUP, INC., a Delaware
corporation (the “Company” and, after the Merger, the “Lead Borrower”), the other Borrowers from
time to time party thereto (together with the Lead Borrower and the other Borrowers, the
“Borrowers”), CITIBANK, N.A., as Administrative Agent and Collateral Agent, the other agents party
thereto and each lender from time to time party thereto (collectively, the “Lenders” and
individually, a “Lender”). The Lenders have agreed to extend credit to the Borrowers subject to
the terms and conditions set forth in the Credit Agreement. The obligations of the Lenders to
extend such credit are conditioned upon, among other things, the execution and delivery of this
Agreement. Each Guarantor (as defined below) is an affiliate of the Borrowers, will derive
substantial benefits from the extension of credit to the Borrowers pursuant to the Credit Agreement
and is willing to execute and deliver this Agreement in order to induce the Lenders to extend such
credit. Accordingly, the parties hereto agree as follows:



Article I.




Definitions



     Section 1.1. Credit Agreement.



     (a) Capitalized terms used in this Agreement and not otherwise defined herein have the
meanings specified in the Credit Agreement.



     (b) The rules of construction specified in Article I of the Credit Agreement also apply to
this Agreement.


     Section 1.2. Other Defined Terms. As used in this Agreement, the following terms have the meanings
specified below:




     “Agreement” means this Guaranty.



     “Credit Agreement” has the meaning assigned to such term in the preliminary statement of this
Agreement.



     “Guarantor” means Holdings, any Intermediate Holding Company, each Borrower (other than in
respect of its own Finance Obligations) and each Restricted Subsidiary of the Borrowers that is a
wholly owned Material Domestic Subsidiary (other than any Excluded Subsidiary) and each Person that
becomes a party to this Agreement after the Closing Date.



     “Guaranty Parties” means, collectively, each Borrower (other than in respect of its own
Finance Obligations) and each Guarantor.



 









 





     “Guaranty Supplement” means an instrument in the form of Exhibit A hereto.



     “Holdings” has the meaning assigned to such term in the preliminary statement of this
Agreement.



Article II.




Guaranty



     Section 2.1. Guaranty. Each Guarantor absolutely, irrevocably and unconditionally guarantees, jointly with the
other Guarantors and severally, as a primary obligor and not merely as a surety, the due and
punctual payment and performance of the Finance Obligations. Each of the Guarantors further agrees
that the Finance Obligations may be extended or renewed, in whole or in part, without notice to or
further assent from it, and that it will remain bound upon its guarantee notwithstanding any
extension or renewal of any Finance Obligation. Each of the Guarantors waives presentment to,
demand of payment from and protest to the Borrowers or any other Guaranty Party of any of the
Finance Obligations, and also waives notice of acceptance of its guarantee and notice of protest
for nonpayment.



     Section 2.2. Guaranty of Payment. Each of the Guarantors further agrees that its guarantee hereunder
constitutes a guarantee of payment when due and not of collection, and waives any right to require
that any resort be had by the Administrative Agent, Collateral Agent or any other Secured Party to
any security held for the payment of the Finance Obligations, or to any balance of any deposit
account or credit on the books of the Administrative Agent or any other Secured Party in favor of
the Borrowers or any other Person.



     Section 2.3. No Limitations.



     (a) Except for termination of a Guarantor’s obligations hereunder as expressly provided in
Section 4.13, the obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Finance Obligations, or otherwise. Without limiting the generality of the
foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or
otherwise affected by (i) the failure of the Administrative Agent or any other Secured Party to
assert any claim or demand or to enforce any right or remedy under the provisions of any Finance
Document or otherwise; (ii) any rescission, waiver, amendment or modification of, or any release
from any of the terms or provisions of, any Finance Document or any other agreement, including with
respect to any other Guarantor under this Agreement; (iii) the release of any security held by the
Collateral Agent or any other Secured Party for the Finance Obligations; (iv) any default, failure
or delay, willful or otherwise, in the performance of the Finance Obligations; or (v) any other act
or omission that may or might in any manner or to any extent vary the risk of any Guarantor or
otherwise operate as a discharge of any Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Finance Obligations). Each Guarantor expressly
authorizes the Secured Parties to take and hold security for the payment and performance of the
Finance Obligations, to exchange, waive or release any or all such security



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(with or without consideration), to enforce or apply such security and direct the order and manner
of any sale thereof in their sole discretion or to release or substitute any one or more other
guarantors or obligors upon or in respect of the Finance Obligations, all without affecting the
obligations of any Guarantor hereunder.




     (b) To the fullest extent permitted by applicable Law, each Guarantor waives any defense based
on or arising out of any defense of the Borrowers or any other Guaranty Party or the
unenforceability of the Finance Obligations, or any part thereof from any cause, or the cessation
from any cause of the liability of the Borrowers or any other Guaranty Party, other than the
indefeasible payment in full in cash of all the Finance Obligations. The Administrative Agent,
Collateral Agent and the other Secured Parties may in accordance with the terms of the Collateral
Documents, at their election, foreclose on any security held by one or more of them by one or more
judicial or nonjudicial sales, accept an assignment of any such security in lieu of foreclosure,
compromise or adjust any part of the Finance Obligations, make any other accommodation with the
Borrowers or any other Guaranty Party or exercise any other right or remedy available to them
against the Borrowers or any other Guaranty Party, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Finance Obligations have been fully
and indefeasibly paid in full in cash. To the fullest extent permitted by applicable Law, each
Guarantor waives any defense arising out of any such election even though such election operates,
pursuant to applicable Law, to impair or to extinguish any right of reimbursement or subrogation or
other right or remedy of such Guarantor against the Borrowers or any other Guaranty Party, as the
case may be, or any security.



     (c) Each Subsidiary Guarantor, and by its acceptance of this Agreement, the Administrative
Agent and each other Secured Party, hereby confirms that it is the intention of all such Persons
that this Agreement and the Finance Obligations of each Subsidiary Guarantor hereunder not
constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code of the United
States, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
foreign, federal or state Law to the extent applicable to this Guaranty and the Finance Obligations
of each Subsidiary Guarantor hereunder. To effectuate the foregoing intention, the Administrative
Agent, the other Secured Parties and the Guarantors hereby irrevocably agree that the Finance
Obligations of each Subsidiary Guarantor under this Guaranty at any time shall be limited to the
maximum amount as will result in the Finance Obligations of such Subsidiary Guarantor under this
Guaranty not constituting a fraudulent transfer or conveyance.



     (d) Each Guarantor acknowledges that it will receive indirect benefits from the financing
arrangements contemplated by the Finance Documents and that the waivers set forth in this Agreement
are knowingly made in contemplation of such benefits.



     Section 2.4. Reinstatement. Each of the Guarantors agrees that its guarantee hereunder shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any
Finance Obligation, is rescinded or must otherwise be restored by the Administrative Agent or any
other Secured Party upon the bankruptcy, insolvency or reorganization of any of the Borrowers, any
other Guaranty Party or otherwise.



     Section 2.5. Agreement To Pay; Subrogation. In furtherance of the foregoing and not in limitation of
any other right that the Administrative Agent or any other Secured Party has at



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law or in equity against any Guarantor by virtue hereof, upon the failure of any of the Borrowers
or any other Guaranty Party to pay any Finance Obligation when and as the same shall become due,
whether at maturity, by acceleration, after notice of prepayment or otherwise, each Guarantor
hereby promises to and will forthwith pay, or cause to be paid, to the Administrative Agent for
distribution to the Secured Parties in cash the amount of such unpaid Finance Obligation. Upon
payment by any Guarantor of any sums to the Administrative Agent as provided above, all rights of
such Guarantor against any of the Borrowers or any other Guaranty Party arising as a result thereof
by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all
respects be subject to Article III.




     Section 2.6. Information. Each Guarantor assumes all responsibility for being and keeping itself informed of
the Borrowers’ and each other Guaranty Party’s financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the Finance Obligations, and the nature, scope
and extent of the risks that such Guarantor assumes and incurs hereunder, and agrees that none of
the Administrative Agent or the other Secured Parties will have any duty to advise such Guarantor
of information known to it or any of them regarding such circumstances or risks.



Article III.




Indemnity, Subrogation and Subordination


Section 3.1. Waiver of Contribution and Subrogation. Each Guarantor Party hereby unconditionally and
irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against any
other Guaranty Party that arise from the existence, payment, performance or enforcement of such
Guarantor’s Finance Obligations under or in respect of this Guaranty or any other Finance Document,
including, without limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of any Secured Party against
the Borrowers, any other Guaranty Party or any Collateral, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including, without limitation, the
right to take or receive from the Borrowers or any other Guaranty Party, directly or indirectly, in
cash or other property or by set-off or in any other manner, payment or security on account of such
claim, remedy or right, unless and until all of the Finance Obligations (other than contingent
indemnity obligations for then unasserted claims) and all other amounts payable under this
Agreement shall have been paid in full, all Letters of Credit, all Secured Hedge Agreements and all
Secured Cash Management Agreements shall have expired or been terminated and the Revolving Credit
Commitments shall have expired or been terminated.



Section 3.2. Subordination. Each Guarantor Party hereby agrees that upon the occurrence and during the
continuance of an Event of Default and after notice from the Collateral Agent all Indebtedness owed
by it to any Subsidiary shall be fully subordinated to the indefeasible payment in full in cash of
the Finance Obligations.







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Article IV.




Miscellaneous



     Section 4.1. Notices. All communications and notices hereunder shall (except as otherwise expressly permitted
herein) be in writing and given as provided in Section 10.02 of the Credit Agreement. All
communications and notices hereunder to any Guarantor shall be given to it in care of the Borrowers
as provided in Section 10.02 of the Credit Agreement.


Section 4.2. Waivers; Amendment.




     (a) No failure or delay by the Administrative Agent, any other Agent, or any Lender in
exercising any right or power hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of the Administrative
Agent, any other Agent, and the Lenders hereunder and under the other Loan Documents and the rights
and remedies of the other Secured Parties under the other Finance Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision
of this Agreement or consent to any departure by any Guaranty Party therefrom shall in any event be
effective unless the same shall be permitted by clause (b) of this Section 4.2, and then
such waiver or consent shall be effective only in the specific instance and for the purpose for
which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of
a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any other Agent, or any Lender may have had notice or knowledge of such
Default at the time. No notice or demand on any Guaranty Party in any case shall entitle any
Guaranty Party to any other or further notice or demand in similar or other circumstances.



     (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the
Guaranty Party or Guaranty Parties with respect to which such waiver, amendment or modification is
to apply, subject to any consent required in accordance with Section 10.01 of the Credit
Agreement.



     Section 4.3. Administrative Agent’s Fees and Expenses; Indemnification.



     (a) The parties hereto agree that the Administrative Agent shall be entitled to reimbursement
of its expenses incurred hereunder as provided in Section 10.04 of the Credit Agreement.



     (b) Without limitation of its indemnification obligations under the other Loan Documents, each
Guarantor jointly and severally agrees to indemnify the Administrative Agent and the other
Indemnitees against, and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and reasonably related expenses (including the reasonable fees, charges and
disbursements of any counsel for any Indemnitee) incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by any Guarantor arising out of, in connec



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tion with, or as a result of, (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby or, in the case of the Administrative Agent (and any
sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other
Loan Documents or (ii) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing brought by a third party or by any Guarantor or any of its
directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence, fraud, bad faith or willful misconduct of such Indemnitee, (y) result from a material
breach of this Agreement by such Indemnified Party or any Affiliate, director, officer, employee or
agent of such Indemnified Party or (z) in respect of any dispute among Indemnified Parties other
than claims against any Indemnified Party in its capacity or in fulfilling its role as an agent or
arranger of any other similar role hereunder and other than any claims arising out of any act or
omission of the Company or its Affiliates.




     (c) Any such amounts payable as provided hereunder shall be additional Finance Obligations
secured hereby and by the other Collateral Documents. The provisions of this Section 4.3
shall remain operative and in full force and effect regardless of the termination of this Agreement
or any other Finance Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Finance Obligations, the invalidity or unenforceability of any term or
provision of this Agreement or any other Finance Document, or any investigation made by or on
behalf of the Administrative Agent or any other Secured Party. All amounts due under this
Section 4.3 shall be payable within 10 days of written demand therefor.



     Section 4.4. Successors and Assigns. Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the permitted successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of any Guarantor or the Administrative
Agent that are contained in this Agreement shall bind and inure to the benefit of their respective
successors and assigns, except that neither the Lead Borrower nor any other Guaranty Party may
assign or otherwise transfer any of its rights or obligations hereunder except as otherwise
permitted by this Agreement or the Credit Agreement without the prior written consent of the
Administrative Agent.



     Section 4.5. Survival of Agreement. All covenants, agreements, representations and warranties made by
the Guaranty Parties in the Loan Documents and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and shall survive the execution and delivery of
the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of
any investigation made by any Lender or on its behalf and notwithstanding that any Senior Credit
Party may have had notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended under the Credit Agreement, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any fee or any other
amount payable under any Loan Document is out



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standing and unpaid or any Letter of Credit is outstanding and so long as the Revolving Credit
Commitments have not expired or terminated.




     Section 4.6. Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in
counterparts, each of which shall constitute an original but all of which when taken together shall
constitute a single contract. Delivery of an executed signature page to this Agreement by
facsimile transmission or other electronic communication shall be as effective as delivery of a
manually signed counterpart of this Agreement. This Agreement shall become effective as to any
Guaranty Party when a counterpart hereof executed on behalf of such Guaranty Party shall have been
delivered to the Administrative Agent and a counterpart hereof shall have been executed on behalf
of the Administrative Agent, and thereafter shall be binding upon such Guaranty Party and the
Administrative Agent and their respective permitted successors and assigns, and shall inure to the
benefit of such Guaranty Party, the Administrative Agent and the other Secured Parties and their
respective successors and assigns, except that no Guaranty Party shall have the right to assign or
transfer its rights or obligations hereunder or any interest herein (and any such assignment or
transfer shall be void) except as otherwise permitted by this Agreement or the Credit Agreement.
This Agreement shall be construed as a separate agreement with respect to each Guaranty Party and
may be amended, modified, supplemented, waived or released with respect to any Guaranty Party
without the approval of any other Guaranty Party and without affecting the obligations of any other
Guaranty Party hereunder.



     Section 4.7. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and enforceability of the
remaining provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.



     Section 4.8. Right of Setoff. In addition to any rights and remedies of the Lenders provided by Law,
upon the occurrence and during the continuance of any Event of Default, each Lender and its
Affiliates is authorized at any time and from time to time, without prior notice to the Borrowers
or any other Guaranty Party, any such notice being waived by the Borrowers and each Guaranty Party
to the fullest extent permitted by applicable Law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by, and other
Indebtedness at any time owing by, such Lender and its Affiliates to or for the credit or the
account of the respective Guaranty Parties against any and all obligations owing to such Lender and
its Affiliates hereunder, now or hereafter existing, irrespective of whether or not such Lender or
Affiliate shall have made demand under this Agreement and although such obligations may be
contingent or unmatured or denominated in a currency different from that of the applicable deposit
or Indebtedness. Each Lender agrees promptly to notify the Borrowers and the Administrative Agent
after any such setoff and application made by such Lender; provided, that the failure to give such
notice shall not affect the validity of such setoff and application. The rights of each Lender
under this Section 4.8 are in addition to other rights and remedies (including other rights
of setoff) that the Administrative Agent and such Lender may have.



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     Section 4.9. Governing Law; Jurisdiction; Consent to Service of Process.



     (a) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK; PROVIDED, HOWEVER, THAT IF THE LAWS OF ANY JURISDICTION OTHER THAN NEW
YORK SHALL GOVERN IN REGARD TO THE VALIDITY, PERFECTION OR EFFECT OF PERFECTION OF ANY LIEN OR IN
REGARD TO PROCEDURAL MATTERS AFFECTING ENFORCEMENT OF ANY LIENS IN COLLATERAL, SUCH LAWS OF SUCH
OTHER JURISDICTIONS SHALL CONTINUE TO APPLY TO THAT EXTENT.



     Section 4.10. WAIVER OF JURY TRIAL. EACH OF THE GRANTORS, THE COLLATERAL AGENT AND THE SECURED PARTIES
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 OR THE
TRANSACTIONS CONTEMPLATED HEREBY.



     Section 4.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement.



     Section 4.12. Security Interest Absolute. All rights of the Administrative Agent hereunder and all
obligations of each Guarantor hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Finance Document, any
agreement with respect to any of the Finance Obligations or any other agreement or instrument
relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Finance Obligations, or any other amendment or waiver of or
any consent to any departure from the Credit Agreement, any other Finance Document, any other
agreement or instrument, (c) any release or amendment or waiver of or consent under or departure
from any guarantee guaranteeing all or any of the Finance Obligations or (d) any other circumstance
that might otherwise constitute a defense available to, or a discharge of, any Guarantor in respect
of the Finance Obligations or this Agreement.



     Section 4.13. Termination or Release.



     (a) This Agreement and the Guaranties made herein shall terminate with respect to all Finance
Obligations (other than contingent indemnification obligations not yet accrued and payable) when
(i) the Tranche 1 Revolving Credit Commitments and Tranche 2 Revolving Credit Commitments have
expired or been terminated, (ii) the principal of and interest on each Loan (including Swing Line
Loans) and all fees and other Finance Obligations (other than contingent indemnity obligations and
the Other Liabilities) shall have been paid in full, (iii) all Letters of Credit shall have expired
or terminated (or been Cash Collateralized or backstopped in an amount equal to 101.5% of the
outstanding Letters of Credit or in respect of which other arrangements reasonably satisfactory to
the Administrative Agent and L/C Issuers have been made) and (iv) all outstanding Letters of Credit
have been reduced to zero (or Cash Collateralized or backstopped in an amount equal to 101.5% of
the outstanding Letters of Credit or in



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respect of which other arrangements reasonably satisfactory to the Administrative Agent and L/C
Issuers have been made).




     (b) A Guarantor shall automatically be released from its obligations hereunder upon the
consummation of any transaction or designation permitted by the Credit Agreement as a result of
which such Guarantor (i) ceases to be a Restricted Subsidiary of a Borrower or is designated as an
Unrestricted Subsidiary or (ii) becomes an Excluded Subsidiary; provided that the Required Lenders
shall have consented to such transaction (to the extent required by the Credit Agreement) and the
terms of such consent did not provide otherwise.



     (c) In connection with any termination or release pursuant to paragraphs (a) or (b), the
Administrative Agent shall execute and deliver to any Guarantor, at such Guarantor’s expense, all
documents that such Guarantor shall reasonably request to evidence such termination or release.
Any execution and delivery of documents pursuant to this Section 4.13 shall be without
recourse to or warranty by the Administrative Agent.



     (d) A Guarantor (other than Holdings and any Intermediate Holding Company) shall automatically
be released from its obligations hereunder if such Guarantor ceases to be a Material Domestic
Subsidiary pursuant to the terms of the Credit Agreement.



     Section 4.14. Additional Guarantors. Pursuant to Section 6.11 of the Credit Agreement, any Intermediate
Holding Company and certain Restricted Subsidiaries of a Borrower that were not in existence or not
Restricted Subsidiaries on the date of the Credit Agreement or cease being Excluded Subsidiaries
are required to enter in this Agreement as Guarantors upon becoming an Intermediate Holding Company
or Restricted Subsidiary, as the case may be. Upon execution and delivery by the Administrative
Agent and an Intermediate Holding Company or a Restricted Subsidiary, as the case may be, of a
Guaranty Supplement, such Intermediate Holding Company or Restricted Subsidiary shall become a
Guarantor hereunder with the same force and effect as if originally named as a Guarantor herein.
The execution and delivery of any such instrument shall not require the consent of any other
Guaranty Party hereunder. The rights and obligations of each Guaranty Party hereunder shall remain
in full force and effect notwithstanding the addition of any new Guaranty Party as a party to this
Agreement.



     Section 4.15.Intercreditor Agreement. Reference is made to the Intercreditor Agreement.
Notwithstanding any other provision contained herein, this Agreement, the Liens created hereby and
the rights, remedies, duties and obligations provided for herein are subject in all respects to the
provisions of the Intercreditor Agreement and, to the extent provided therein, the applicable
Indenture Noteholder Security Documents (as defined therein). In the event of any conflict or
inconsistency between the provisions of this Agreement and the Intercreditor Agreement, the
provisions of the Intercreditor Agreement shall control.



[Signature Pages to Follow]








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



	 	 	 	 	 
	 	SCORPIO ACQUISITION CORPORATION

 	 
	 	By:  	/s/ Jason Giordano	 
	 	 	Name:  	Jason Giordano	 
	 	 	Title:  	Vice President and Treasurer 	 
	 
	 	SCORPIO MERGER SUB CORPORATION

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



[Signature Pages to the ABL Guaranty]







S-1









 









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



	 	 	 	 	 
	 	POLYMER GROUP INC.

 	 
	 	By:  	/s/ Dennis E. Norman	 
	 	 	Name:  	Dennis E. Norman	 
	 	 	Title:  	Chief Financial officer	 
	 



[Signature Pages to the ABL Guaranty]




S-2









 









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



	 	 	 	 	 
	 	[ CHICOPEE, INC.

DOMINION TEXTILE (USA), L.L.C.

FABRENE, L.L.C.

PGI EUROPE, INC.

PGI POLYMER, INC.
]

 	 
	 	By:  	/s/ Dennis E. Norman	 
	 	 	Name:  	Dennis E. Norman	 
	 	 	Title:  	Chief Financial officer	 
	 



[Signature Pages to the ABL Guaranty]




S-3









 









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



	 	 	 	 	 
	 	CITIBANK, N.A.

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



[Signature Pages to the ABL Guaranty]





S-4









 








Exhibit A to the

Guaranty Agreement





     SUPPLEMENT NO. __ (the “Guaranty Supplement”) dated as of [___________], to the Guaranty dated
as of January 28, 2011, among SCORPIO ACQUISITION CORPORATION, a Delaware corporation (“Holdings”),
certain subsidiaries of Holdings from time to time party thereto and CITIBANK, N.A., as
Administrative Agent and Collateral Agent.



     A. Reference is made to the Credit Agreement dated as of January 28, 2011 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among SCORPIO MERGER
SUB CORPORATION (“Merger Sub” and, prior to the Merger (as defined below), the “Lead Borrower”), a
Delaware corporation to be merged with and into POLYMER GROUP, INC., a Delaware corporation (the
“Company” and, after the Merger, the “Lead Borrower”), the other Borrowers from time to time party
thereto, Holdings, CITIBANK, N.A., as Administrative Agent and Collateral Agent, the other agents
party thereto and each lender from time to time party thereto (collectively, the “Lenders” and
individually, a “Lender”).



     B. Capitalized terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement and the Guaranty referred to therein.



     C. The Guarantors have entered into the Guaranty in order to induce the Lenders to make Loans.
Section 4.14 of the Guaranty provides that any Intermediate Holding Company and certain Restricted
Subsidiaries of a Borrower that were not in existence or not Restricted Subsidiaries on the date of
the Credit Agreement are required (pursuant to the terms of the Credit Agreement), to become
Guarantors under the Guaranty by execution and delivery of an instrument in the form of this
Guaranty Supplement. The undersigned Intermediate Holding Company or Subsidiary of a Borrower (the
“New Guarantor”) is executing this Guaranty Supplement in accordance with the requirements of the
Credit Agreement to become a Guarantor under the Guaranty in order to induce the Lenders to make
additional Loans and as consideration for Loans previously made.



     Accordingly, the Administrative Agent and the New Guarantor agree as follows:



     SECTION 1. Obligations under the Guaranty. In accordance with Section 4.14 of the
Guaranty, the New Guarantor by its signature below becomes a Guarantor under the Guaranty with the
same force and effect as if originally named therein as a Guarantor and the New Guarantor hereby
(a) agrees to all the terms and provisions of the Guaranty applicable to it as a Guarantor
thereunder and (b) represents and warrants that the representations and warranties made by it as a
Guarantor thereunder are true and correct on and as of the date hereof. Each reference to a
“Guarantor” in the Guaranty shall be deemed to include the New Guarantor and each reference in the
Credit Agreement and any other Finance Document to a “Guarantor”, “Subsidiary Guarantor” or a “Loan
Party” shall also be deemed to include the New Guarantor. The Guaranty is hereby incorporated
herein by reference.



     SECTION 2. Representations and Warranties. The New Guarantor represents and warrants
to the Administrative Agent and the other Secured Parties that this Guaranty Supplement



 









 




has been duly authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms.




     SECTION 3. Execution and Delivery. This Guaranty Supplement may be executed in
counterparts (and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Guaranty Supplement shall become effective when the Administrative Agent shall have received a
counterpart of this Guaranty Supplement that bears the signature of the New Guarantor and the
Administrative Agent has executed a counterpart hereof. Delivery of an executed signature page to
this Guaranty Supplement by facsimile transmission or other electronic communication shall be as
effective as delivery of a manually signed counterpart of this Guaranty Supplement.



     SECTION 4. Affirmation. Except as expressly supplemented hereby, the Guaranty shall remain
in full force and effect.



     SECTION 5. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.



     (a) THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK; PROVIDED, HOWEVER, THAT IF THE LAWS OF ANY JURISDICTION OTHER THAN NEW
YORK SHALL GOVERN IN REGARD TO THE VALIDITY, PERFECTION OR EFFECT OF PERFECTION OF ANY LIEN OR IN
REGARD TO PROCEDURAL MATTERS AFFECTING ENFORCEMENT OF ANY LIENS IN COLLATERAL, SUCH LAWS OF SUCH
OTHER JURISDICTIONS SHALL CONTINUE TO APPLY TO THAT EXTENT.



     (b) EACH OF THE GRANTORS, THE COLLATERAL AGENT AND THE SECURED PARTIES 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 OR THE TRANSACTIONS CONTEMPLATED
HEREBY.



     SECTION 6. Severability. In case any one or more of the provisions contained in this
Guaranty Supplement should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and in the Guaranty shall
not in any way be affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself affect the validity of
such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.



     SECTION 7. Notice. All communications and notices hereunder shall be in writing and given as
provided in Section 4.1 of the Guaranty.



     SECTION 8. Reimbursement. The New Guarantor agrees to reimburse the Administrative Agent for
its reasonable out-of-pocket expenses in connection with this Guaranty Supplement, including the
reasonable fees, other charges and disbursements of counsel for the Administrative Agent.



-2-









 





     IN WITNESS WHEREOF, the New Guarantor and the Administrative Agent have duly executed this
Guaranty Supplement as of the date first above written.



	 	 	 	 	 
	 	[NEW GUARANTOR]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	CITIBANK, N.A.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title: