Exhibit 10.1


EXECUTION
COPY




 





CREDIT AGREEMENT


 


among


PP HOLDING
CORPORATION,


POLYPORE, INC. and
DARAMIC HOLDING SAS,


as Borrowers,


The Several
Lenders from Time to Time Parties Hereto,


GENERAL ELECTRIC CAPITAL
CORPORATION and BEAR, STEARNS & CO. INC.,


as
Co-Documentation Agents,


CREDIT SUISSE SECURITIES
(USA) LLC,


as Syndication
Agent,


and


JPMORGAN CHASE BANK, N.A.


as Administrative
Agent


Dated as of May 13, 2004,


as Amended and
Restated as of July 3, 2007




 





 


 


J.P. MORGAN SECURITIES
INC.,


as Sole Lead Arranger and Sole Bookrunner


















TABLE OF CONTENTS


	
  ARTICLE I DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
   

  	
  Defined Terms

  	
   

  	
  1

  
	
  SECTION 1.2.

  	
   

  	
  Terms Generally

  	
   

  	
  34

  
	
  SECTION 1.3.

  	
   

  	
  Pro Forma Calculations

  	
   

  	
  35

  
	
  SECTION 1.4.

  	
   

  	
  Classification of Loans and Borrowings

  	
   

  	
  35

  
	
  SECTION 1.5.

  	
   

  	
  Currency Equivalents Generally

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II THE CREDITS

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
   

  	
  Commitments

  	
   

  	
  36

  
	
  SECTION 2.2.

  	
   

  	
  Loans

  	
   

  	
  36

  
	
  SECTION 2.3.

  	
   

  	
  Borrowing Procedure

  	
   

  	
  38

  
	
  SECTION 2.4.

  	
   

  	
  Evidence of Debt; Repayment of Loans

  	
   

  	
  38

  
	
  SECTION 2.5.

  	
   

  	
  Fees

  	
   

  	
  39

  
	
  SECTION 2.6.

  	
   

  	
  Interest on Loans

  	
   

  	
  39

  
	
  SECTION 2.7.

  	
   

  	
  Default Interest

  	
   

  	
  40

  
	
  SECTION 2.8.

  	
   

  	
  Alternate Rate of Interest

  	
   

  	
  40

  
	
  SECTION 2.9.

  	
   

  	
  Termination and Reduction of Commitments

  	
   

  	
  40

  
	
  SECTION 2.10.

  	
   

  	
  Conversion and Continuation of Borrowings

  	
   

  	
  41

  
	
  SECTION 2.11.

  	
   

  	
  Repayment of Term Loan Borrowings

  	
   

  	
  42

  
	
  SECTION 2.12.

  	
   

  	
  Optional Prepayments

  	
   

  	
  43

  
	
  SECTION 2.13.

  	
   

  	
  Mandatory Prepayments

  	
   

  	
  43

  
	
  SECTION 2.14.

  	
   

  	
  Reserve Requirements; Change in Circumstances

  	
   

  	
  44

  
	
  SECTION 2.15.

  	
   

  	
  Indemnity

  	
   

  	
  45

  
	
  SECTION 2.16.

  	
   

  	
  Pro Rata Treatment

  	
   

  	
  46

  
	
  SECTION 2.17.

  	
   

  	
  Sharing of Setoffs

  	
   

  	
  46

  
	
  SECTION 2.18.

  	
   

  	
  Payments

  	
   

  	
  46

  
	
  SECTION 2.19.

  	
   

  	
  Taxes

  	
   

  	
  47

  
	
  SECTION 2.20.

  	
   

  	
  Assignment of Commitments Under Certain
  Circumstances; Duty to Mitigate

  	
   

  	
  48

  
	
  SECTION 2.21.

  	
   

  	
  Swingline Loans

  	
   

  	
  48

  
	
  SECTION 2.22.

  	
   

  	
  Letters of Credit

  	
   

  	
  50

  
	
  SECTION 2.23.

  	
   

  	
  Increase in Term Loan Commitments

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
   

  	
  Organization; Powers

  	
   

  	
  54

  
	
  SECTION 3.2.

  	
   

  	
  Authorization

  	
   

  	
  54

  
	
  SECTION 3.3.

  	
   

  	
  Enforceability

  	
   

  	
  55

  
	
  SECTION 3.4.

  	
   

  	
  Governmental Approvals

  	
   

  	
  55

  
	
  SECTION 3.5.

  	
   

  	
  Financial Statements

  	
   

  	
  55

  
	
  SECTION 3.6.

  	
   

  	
  No Material Adverse Change

  	
   

  	
  55

  
	
  SECTION 3.7.

  	
   

  	
  Title to Properties; Possession Under Leases

  	
   

  	
  56

  
	
  SECTION 3.8.

  	
   

  	
  Subsidiaries

  	
   

  	
  56

  



 













 


	
  SECTION 3.9.

  	
   

  	
  Litigation; Compliance with Laws

  	
   

  	
  56

  
	
  SECTION 3.10.

  	
   

  	
  Agreements

  	
   

  	
  56

  
	
  SECTION 3.11.

  	
   

  	
  Federal Reserve Regulations

  	
   

  	
  56

  
	
  SECTION 3.12.

  	
   

  	
  Investment Company Act

  	
   

  	
  57

  
	
  SECTION 3.13.

  	
   

  	
  Use of Proceeds

  	
   

  	
  57

  
	
  SECTION 3.14.

  	
   

  	
  Tax Returns

  	
   

  	
  57

  
	
  SECTION 3.15.

  	
   

  	
  No Material Misstatements

  	
   

  	
  57

  
	
  SECTION 3.16.

  	
   

  	
  Employee Benefit Plans

  	
   

  	
  57

  
	
  SECTION 3.17.

  	
   

  	
  Environmental Matters

  	
   

  	
  57

  
	
  SECTION 3.18.

  	
   

  	
  Insurance

  	
   

  	
  58

  
	
  SECTION 3.19.

  	
   

  	
  Security Documents

  	
   

  	
  58

  
	
  SECTION 3.20.

  	
   

  	
  Location of Real Property and Leased Premises

  	
   

  	
  58

  
	
  SECTION 3.21.

  	
   

  	
  Labor Matters

  	
   

  	
  58

  
	
  SECTION 3.22.

  	
   

  	
  Solvency

  	
   

  	
  59

  
	
  SECTION 3.23.

  	
   

  	
  Senior Indebtedness

  	
   

  	
  59

  
	
  SECTION 3.24.

  	
   

  	
  Certain Treasury Regulation Matters

  	
   

  	
  59

  
	
  SECTION 3.25.

  	
   

  	
  Foreign Assets Control Regulations, Etc.

  	
   

  	
  59

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV CONDITIONS OF LENDING

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.1.

  	
   

  	
  All Credit Events

  	
   

  	
  60

  
	
  SECTION 4.2.

  	
   

  	
  First Credit Event

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V AFFIRMATIVE COVENANTS

  	
   

  	
  62

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.1.

  	
   

  	
  Existence; Businesses and Properties

  	
   

  	
  62

  
	
  SECTION 5.2.

  	
   

  	
  Insurance

  	
   

  	
  63

  
	
  SECTION 5.3.

  	
   

  	
  Taxes

  	
   

  	
  64

  
	
  SECTION 5.4.

  	
   

  	
  Financial Statements, Reports, etc

  	
   

  	
  64

  
	
  SECTION 5.5.

  	
   

  	
  Litigation and Other Notices

  	
   

  	
  65

  
	
  SECTION 5.6.

  	
   

  	
  Information Regarding Collateral

  	
   

  	
  66

  
	
  SECTION 5.7.

  	
   

  	
  Maintaining Records; Access to Properties and
  Inspections

  	
   

  	
  66

  
	
  SECTION 5.8.

  	
   

  	
  Use of Proceeds

  	
   

  	
  66

  
	
  SECTION 5.9.

  	
   

  	
  Further Assurances

  	
   

  	
  66

  
	
  SECTION 5.10.

  	
   

  	
  Certain Treasury Regulation Matters

  	
   

  	
  67

  
	
  SECTION 5.11.

  	
   

  	
  Hedging Agreements

  	
   

  	
  67

  
	
  SECTION 5.12.

  	
   

  	
  Environmental Laws

  	
   

  	
  67

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI NEGATIVE COVENANTS

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.1.

  	
   

  	
  Indebtedness

  	
   

  	
  68

  
	
  SECTION 6.2.

  	
   

  	
  Liens

  	
   

  	
  69

  
	
  SECTION 6.3.

  	
   

  	
  Sale and Lease-Back Transactions

  	
   

  	
  71

  
	
  SECTION 6.4.

  	
   

  	
  Investments, Loans and Advances

  	
   

  	
  71

  
	
  SECTION 6.5.

  	
   

  	
  Mergers, Consolidations and Sales of Assets

  	
   

  	
  73

  
	
  SECTION 6.6.

  	
   

  	
  Restricted Payments

  	
   

  	
  75

  
	
  SECTION 6.7.

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  77

  
	
  SECTION 6.8.

  	
   

  	
  Business of Holdings, Polypore and Subsidiaries

  	
   

  	
  78

  



 



 ii
 









 


	
  SECTION 6.9.

  	
   

  	
  Amendments to Senior Subordinated Note Indenture;
  Certain Payments of Subordinated Debt

  	
   

  	
  79

  
	
  SECTION 6.10.

  	
   

  	
  Capital Expenditures

  	
   

  	
  79

  
	
  SECTION 6.11.

  	
   

  	
  Financial Condition Covenant

  	
   

  	
  79

  
	
  SECTION 6.12.

  	
   

  	
  Fiscal Year

  	
   

  	
  80

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII EVENTS OF DEFAULT

  	
   

  	
  80

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII THE AGENTS

  	
   

  	
  83

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.1.

  	
   

  	
  Appointment

  	
   

  	
  83

  
	
  SECTION 8.2.

  	
   

  	
  Delegation of Duties

  	
   

  	
  83

  
	
  SECTION 8.3.

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  83

  
	
  SECTION 8.4.

  	
   

  	
  Reliance by Administrative Agent

  	
   

  	
  84

  
	
  SECTION 8.5.

  	
   

  	
  Notice of Default

  	
   

  	
  84

  
	
  SECTION 8.6.

  	
   

  	
  Non-Reliance on Agents and Other Lenders

  	
   

  	
  84

  
	
  SECTION 8.7.

  	
   

  	
  Indemnification

  	
   

  	
  85

  
	
  SECTION 8.8.

  	
   

  	
  Agent in Its Individual Capacity

  	
   

  	
  85

  
	
  SECTION 8.9.

  	
   

  	
  Successor Administrative Agent

  	
   

  	
  85

  
	
  SECTION 8.10.

  	
   

  	
  Co-Documentation Agents and Syndication Agent

  	
   

  	
  85

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX MISCELLANEOUS

  	
   

  	
  86

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.1.

  	
   

  	
  Notices

  	
   

  	
  86

  
	
  SECTION 9.2.

  	
   

  	
  Survival of Agreement

  	
   

  	
  86

  
	
  SECTION 9.3.

  	
   

  	
  Binding Effect

  	
   

  	
  87

  
	
  SECTION 9.4.

  	
   

  	
  Successors and Assigns

  	
   

  	
  87

  
	
  SECTION 9.5.

  	
   

  	
  Expenses; Indemnity

  	
   

  	
  89

  
	
  SECTION 9.6.

  	
   

  	
  Right of Setoff

  	
   

  	
  90

  
	
  SECTION 9.7.

  	
   

  	
  Applicable Law

  	
   

  	
  91

  
	
  SECTION 9.8.

  	
   

  	
  Waivers; Amendment

  	
   

  	
  91

  
	
  SECTION 9.9.

  	
   

  	
  Interest Rate Limitation

  	
   

  	
  92

  
	
  SECTION 9.10.

  	
   

  	
  Entire Agreement

  	
   

  	
  92

  
	
  SECTION 9.11.

  	
   

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  92

  
	
  SECTION 9.12.

  	
   

  	
  Severability

  	
   

  	
  93

  
	
  SECTION 9.13.

  	
   

  	
  Counterparts

  	
   

  	
  93

  
	
  SECTION 9.14.

  	
   

  	
  Headings

  	
   

  	
  93

  
	
  SECTION 9.15.

  	
   

  	
  Jurisdiction; Consent to Service of Process

  	
   

  	
  93

  
	
  SECTION 9.16.

  	
   

  	
  Confidentiality

  	
   

  	
  94

  
	
  SECTION 9.17.

  	
   

  	
  USA Patriot Act

  	
   

  	
  94

  
	
  SECTION 9.18.

  	
   

  	
  Releases of Guarantees and Liens

  	
   

  	
  94

  
	
  SECTION 9.19.

  	
   

  	
  Judgment Currency

  	
   

  	
  95

  
	
  SECTION 9.20.

  	
   

  	
  Taux Effectif Global

  	
   

  	
  95

  



 



 iii
 









 


	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1.1(a)

  	
   

  	
  Subsidiary Guarantors

  
	
  Schedule 1.1(b)

  	
   

  	
  Mortgaged Properties

  
	
  Schedule 2.1

  	
   

  	
  Lenders and Commitments

  
	
  Schedule 3.2

  	
   

  	
  Authorizations

  
	
  Schedule 3.8

  	
   

  	
  Subsidiaries

  
	
  Schedule 3.17

  	
   

  	
  Environmental Matters

  
	
  Schedule 3.18

  	
   

  	
  Insurance

  
	
  Schedule 3.19(a)

  	
   

  	
  Filing Offices

  
	
  Schedule 3.19(d)

  	
   

  	
  Mortgage Filing Offices

  
	
  Schedule 3.20(a)

  	
   

  	
  Owned Property

  
	
  Schedule 3.20(b)

  	
   

  	
  Leased Property

  
	
  Schedule 6.1

  	
   

  	
  Outstanding Indebtedness on Restatement Effective
  Date

  
	
  Schedule 6.2

  	
   

  	
  Liens Existing on Restatement Effective Date

  
	
  Schedule 6.4

  	
   

  	
  Existing Investments

  
	
  Schedule 6.7

  	
   

  	
  Transactions with Affiliates

  



 


	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
   

  	
  Form of Assignment and Assumption

  
	
  EXHIBIT B

  	
   

  	
  Form of Borrowing Request

  
	
  EXHIBIT C

  	
   

  	
  Guarantee and Collateral Agreement

  
	
  EXHIBIT D

  	
   

  	
  Form of Perfection Certificate

  
	
  EXHIBIT E-1

  	
   

  	
  Form of Opinion of Willkie Farr & Gallagher LLP

  
	
  EXHIBIT E-2

  	
   

  	
  Form of Opinion of Willkie Farr & Gallagher LLP,
  Paris office

  
	
  EXHIBIT F

  	
   

  	
  Form of Mortgage

  
	
  EXHIBIT G

  	
   

  	
  Form of First Amendment and Reaffirmation

  
	
  EXHIBIT H

  	
   

  	
  Form of Letter Concerning Taux
  Effectif Global

  



 



 iv















CREDIT
AGREEMENT (this “Agreement”), dated as of May 13, 2004, as amended and
restated as of July 3, 2007, among PP HOLDING CORPORATION, a Delaware
corporation (“Holdings”), POLYPORE, INC., a Delaware corporation (“Polypore”),
DARAMIC HOLDING SAS, a
French société par actions
simplifiée (“Daramic Holding”), the several banks and other
financial institutions or entities from time to time parties to this Agreement
(the “Lenders”), GENERAL ELECTRIC CAPITAL CORPORATION and BEAR, STEARNS
& CO. INC., as co-documentation agents (in such capacity, the “Co-Documentation
Agents”), CREDIT SUISSE SECURITIES (USA) LLC, as syndication agent (in such
capacity, the “Syndication Agent”), and JPMORGAN CHASE BANK, N.A., as
administrative agent.


W  I  T  N  E  S  S
E  T  H:


WHEREAS, Polypore entered into the Credit Agreement,
dated as of May 13, 2004, as amended prior to the Restatement Effective Date
(as defined below) (the “Existing Credit Agreement”), among Polypore,
Holdings, the several banks and other financial institutions or entities party
thereto and the agents named therein; and


WHEREAS, the parties hereto have agreed to amend and
restate the Existing Credit Agreement as provided in this Agreement, which
Agreement shall become effective upon the satisfaction of the conditions precedent
set forth in Section 4.2 hereof; and


WHEREAS, it is the intent of the parties hereto that
this Agreement not constitute a novation of the obligations and liabilities
existing under the Existing Credit Agreement or evidence repayment of any of
such obligations and liabilities and that this Agreement amend and restate in
its entirety the Existing Credit Agreement and re-evidence the obligations of
Polypore outstanding thereunder;


NOW, THEREFORE, in consideration of the above
premises, the parties hereto hereby agree that, on the Restatement Effective
Date, the Existing Credit Agreement shall be amended and restated in its
entirety as follows:


ARTICLE
I


Definitions


SECTION
1.1.  Defined Terms.  As used in this Agreement, the following
terms shall have the meanings specified below:


“ABR”, when used in reference to
any Loan or Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are bearing interest at a rate determined by reference to the
Alternate Base Rate.


“Acquired CapEx Amount” shall have the meaning assigned to such
term in Section 6.10(a).


“Acquired Entity” shall mean any Person acquired by any Group
Member in a transaction not prohibited by this Agreement.


“Acquired Indebtedness”
shall mean Indebtedness (a) of a Person or any of its Subsidiaries existing at
the time such Person becomes a Subsidiary of Polypore or at the time it merges
or consolidates with or into Polypore or any of its Subsidiaries or (b) that is
assumed in connection with the acquisition of assets from such Person and in
each case not incurred by such Person in connection with, or in



















anticipation
or contemplation of, such Person becoming a Subsidiary of Polypore or such
acquisition, merger or consolidation. 
Acquired Indebtedness shall be deemed to have been incurred, with
respect to clause (a) of the preceding sentence, on the date such Person
becomes a Subsidiary and, with respect to clause (b) of the preceding sentence,
on the date of consummation of such acquisition of assets.


“Administrative
Agent” shall mean JPMorgan Chase Bank, N.A., together with its affiliates,
as the arranger of the Commitments and as the administrative agent for the
Lenders under this Agreement and the other Loan Documents, together with any of
its successors.


“Administrative Agent Fees” shall
have the meaning assigned to such term in Section 2.5(b).


“Affiliate” shall mean, when used
with respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.


“Agents”
shall mean the collective reference to the Syndication Agent, the
Co-Documentation Agents and the Administrative Agent.


“Aggregate Revolving Credit Exposure”
shall mean the aggregate amount of the Lenders’ Revolving Credit Exposures.


“Alnery” shall mean Alnery No. 104 Limited, a private company
limited by shares organized in Hong Kong.


“Alnery Acquisition” shall mean the acquisition by Polypore BV
of Alnery pursuant to the Alnery Purchase Agreement.


“Alnery Purchase Agreement” shall mean that certain Joint
Venture Agreement entered into as of January 1, 2007 by and among Nippon Sheet
Glass Company, Limited, a corporation organized and existing under the laws of
Japan, Alnery, Polypore BV and Tianjin PE Separator Co. Ltd., a wholly foreign
owned enterprise organized and existing under the laws of the People’s Republic
of China.


“Alternate Base Rate” shall mean,
for any day, a rate per annum (rounded upwards, if necessary, to the next 1/100
of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b)
the Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1%.  For purposes hereof:  “Prime Rate” shall mean the rate of
interest per annum publicly announced from time to time by JPMorgan Chase Bank,
N.A. as its prime rate in effect at its principal office in New York City (the
Prime Rate not being intended to be the lowest rate of interest charged by
JPMorgan Chase Bank, N.A. in connection with extensions of credit to debtors).  Any change in the ABR due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective as of the
opening of business on the effective day of such change in the Prime Rate or
the Federal Funds Effective Rate, respectively.


“Applicable Percentage” shall
mean, for any day, with respect to any Eurocurrency Loan or ABR Loan, as the
case may be, the applicable percentage set forth below under the caption “Eurocurrency
Spread-Term Loans”, “ABR Spread-Term Loans”, “Eurocurrency Spread-Revolving
Loans and Swingline Loans” or “ABR Spread-Revolving Loans and Swingline Loans”,
as the case may be:



 2
 









 


	
  Eurocurrency

  Spread-

  Term Loans

  	
   

  	
  ABR Spread-

  Term Loans

  	
   

  	
  Eurocurrency

  Spread-

  Revolving Loans and

  Swingline Loans

  	
   

  	
  ABR Spread-

  Revolving Loans and

  Swingline Loans

  	
   

  
	
  2.25%

  	
   

  	
  1.25%

  	
   

  	
  2.25%

  	
   

  	
  1.25%

  	
   

  



 


; provided,
that on and after the first Adjustment Date (as defined in the definition of “Pricing
Grid”) occurring after the Restatement Effective Date, the Applicable
Percentage will be determined pursuant to the Pricing Grid.


“Approved Fund” shall have the meaning assigned
to such term in Section 9.4.


“Asset Sale” shall mean the sale, transfer or other
disposition (by way of merger, casualty, condemnation or otherwise but
excluding investments permitted by Section 6.4) by any Group Member to any
Person other than Polypore or any Subsidiary Guarantor of (a) any Capital Stock
of any of the Subsidiaries or Unrestricted Subsidiaries (other than directors’
qualifying shares or the sale by any Person of Capital Stock of such Person) or
(b) any other assets of any Group Member (other than (i) inventory, materials
and equipment, damaged, obsolete or worn out assets, scrap and Permitted
Investments, in each case disposed of in the ordinary course of business, (ii)
licenses of intellectual property in the ordinary course of business, (iii)
dispositions between or among Polypore and Domestic Subsidiaries,
(iv) dispositions between or among Foreign Subsidiaries and (v)
dispositions of assets from Polypore or a Domestic Subsidiary to a Foreign
Subsidiary if the disposition were treated as an investment in the Foreign
Subsidiary and would be permitted by Section 6.4), provided, that any Specified Disposition shall be deemed not
to be an “Asset Sale” for purposes of this Agreement.


“Assignee”
shall have the meaning assigned to such term in Section 9.4(b).


“Assignment and
Assumption” shall mean an Assignment and Assumption, substantially in the
form of Exhibit A or such other form as may be approved by the Administrative
Agent.


“Available
Amount” shall mean an amount (which may be a negative number) equal to (a)
the sum of (i) $30,000,000 and (ii) the Restricted Available Amount minus
(b) any Specified Payment made prior to the relevant transaction, provided,
that, in connection with a particular transaction (other than the making of any
Capital Expenditures pursuant to Section 6.10(c)(ii)), the Restricted Available
Amount shall not be available if, at the time of such transaction or immediately after giving effect
thereto, (x) a Default or an Event of Default shall have occurred and be
continuing (or would result therefrom) or (y) Polypore is not able to incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 6.1.


“Board” shall mean the Board of
Governors of the Federal Reserve System of the United States of America.


“Borrower”
shall mean (a) in the case of the Euro Term Facility, Daramic Holding and (b)
otherwise, Polypore.  All references
herein to “the Borrower” shall be deemed to be references to the relevant
Borrower under the relevant Facility.


“Borrowing” shall mean (a) Loans
of the same Class and Type made, converted or continued on the same date and,
in the case of Eurocurrency Loans, as to which a single Interest Period is in
effect, or (b) a Swingline Loan.



 3
 









“Borrowing Request” shall mean a
request by the Borrower in accordance with the terms of Section 2.3 and
substantially in the form of Exhibit B, or such other form as shall be approved
by the Administrative Agent.


“Breakage Event”
shall have the meaning assigned to such term in Section 2.15.


“Business Day” shall mean any day
other than a Saturday, Sunday or day on which banks in New York City are
authorized or required by law to close; provided, however,
that when used in connection with a Eurocurrency Loan, the term “Business Day” shall also exclude
any day on which banks are not open for dealings in dollar deposits or euro
deposits, as the case may be, in the London interbank market.


“CapEx Covenant”
shall mean the covenant set forth in Section 6.10.


“Capital Expenditures” shall mean,
for any period, (a) the additions to property, plant and equipment and other
capital expenditures of Polypore and its consolidated Subsidiaries that are (or
should be) set forth in a consolidated statement of cash flows of Polypore for
such period prepared in accordance with GAAP and (b) Capital Lease Obligations
or Synthetic Lease Obligations incurred by Polypore and its consolidated
Subsidiaries during such period, but excluding in each case (i) any such
expenditure made to restore, replace or rebuild property to the condition of
such property immediately prior to any damage, loss, destruction or
condemnation of such property, to the extent such expenditure is made with
insurance proceeds, condemnation awards or damage recovery proceeds relating to
any such damage, loss, destruction or condemnation, (ii) any such expenditure
made as the purchase price of any Permitted Acquisition, (iii) capital
expenditures relating to the construction or acquisition of any property that
has been transferred to a Person (other than any Group Member) pursuant to a
sale-leaseback transaction permitted under Section 6.3, (iv) interest
capitalized during such period, (v) the purchase price of equipment that is
purchased during such period to the extent the consideration therefor consists
of any combination of (x) used or surplus equipment traded in at the time of
such purchase and (y) the proceeds of a concurrent sale of used or surplus equipment,
in each case, in the ordinary course of business, (vi) the purchase price of
equipment that is purchased substantially contemporaneously with the trade-in
of existing equipment to the extent that the gross amount of the such price is
reduced by the credit granted by the seller of such equipment for the equipment
being traded at such time or (vii) any capital expenditures made with Net Cash
Proceeds received from an Asset Sale.


“Capital Lease Obligations” of any
Person shall mean the obligations of such Person to pay rent or other amounts
under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to
be classified and accounted for as capital leases on a balance sheet of such
Person under GAAP, and the amount of such obligations shall be the capitalized
amount thereof determined in accordance with GAAP.


“Capital Stock” shall mean shares
of capital stock, partnership interests, membership interests in a limited
liability company, beneficial interests in a trust or other Capital Stock in
any Person.


“Cash Management Agreement” shall
mean any agreement entered into by any Group Member in respect of treasury,
depository and cash management services, purchasing card services, T&E card
services, automated clearing house transfers of funds or similar arrangements.


“Change in Control” shall mean any
of the following events:


(a)  any “person” or “group” (within the meaning
of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as
in effect on the Restatement Effective Date) other than the Permitted Investors
becomes, directly or indirectly, the beneficial owner of Capital Stock in
Holdings (or, after



 4
 









consummation
of the Merger, Polypore) representing more than 40% of the aggregate ordinary
voting power represented by the issued and outstanding Capital Stock of
Holdings (or, after consummation of the Merger, Polypore) and the percentage of
aggregate voting power owned by such “person” or “group” exceeds the percentage
of ordinary voting power owned by the Permitted Investors;


(b)  at any time, occupation of a majority of the
seats (other than vacant seats) on the board of directors of Holdings or
Polypore by persons who were neither (i) nominated by the board of directors of
Holdings or Polypore, as the case may be, nor (ii) appointed by directors so
nominated;


(c)  the occurrence of any change in control or
similar event (however denominated) with respect to Holdings or Polypore under
and as defined in any indenture or agreement in respect of Material
Indebtedness to which any Group Member is a party;


(d)  while any Euro Term Loans are outstanding,
Daramic Holding shall cease to be a Subsidiary of Polypore; or


(e)  prior to consummation of the Merger, Holdings
shall cease to directly own, beneficially and of record, 100% of the issued and
outstanding Capital Stock of Polypore.


“Change in Law” shall mean
(a) the adoption of any law, rule or regulation after the Restatement
Effective Date, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
Restatement Effective Date or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.14, by any lending office of such
Lender or by such Lender’s or Issuing Bank’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the Restatement Effective Date.


“Charges”
shall have the meaning assigned to such term in Section 9.9.


“Class”, when used in reference to
any Loan or Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are Revolving Loans, Term Loans, Other Term Loans or Swingline
Loans and, when used in reference to any Commitment, refers to whether such
Commitment is a Revolving Credit Commitment, a Term Loan Commitment, an
Incremental Term Loan Commitment or a Swingline Commitment.


“Code” shall mean the Internal
Revenue Code of 1986, as amended from time to time.


“Co-Documentation
Agents” shall have the meaning assigned to such term in the preamble
hereto.


“Collateral” shall mean all the “Collateral”
as defined in any Security Document, and shall include the Mortgaged
Properties.


“Commitment” shall mean, with
respect to any Lender, such Lender’s Revolving Credit Commitment and Term Loan
Commitment.


“Commitment Fee” shall have the
meaning assigned to such term in Section 2.5(a).


“Conduit Lender”
shall mean  any special purpose
corporation organized and administered by any Lender for the purpose of making
Loans otherwise required to be made by such Lender and designated by such
Lender in a written instrument; provided, that the designation by any
Lender of a Conduit Lender



 5
 









shall
not relieve the designating Lender of any of its obligations to fund a Loan
under this Agreement if, for any reason, its Conduit Lender fails to fund any
such Loan, and the designating Lender (and not the Conduit Lender) shall have
the sole right and responsibility to deliver all consents and waivers required
or requested under this Agreement with respect to its Conduit Lender, and provided,
further, that no Conduit Lender shall (a) be entitled to receive any
greater amount pursuant to Section 2.14, 2.15, 2.19 or 9.5 than the designating
Lender would have been entitled to receive in respect of the extensions of
credit made by such Conduit Lender or (b) be deemed to have any Commitment.


“Confidential Information Memorandum”
shall mean the Confidential Information Memorandum of Polypore dated May 2007.


“Consolidated
EBITDA” shall mean, for any period, Consolidated Net Income for such
period plus (a) without duplication and to the extent deducted in determining
such Consolidated Net Income, the sum of (i) Consolidated Interest Expense
for such period, (ii) all income tax expense (including, without
limitation, income tax expense of consolidated Foreign Subsidiaries) and
foreign withholding tax expense for such period, (iii) all amounts
attributable to depreciation and amortization for such period, (iv) any
non-recurring fees, cash charges and other cash expenses made or incurred in
connection with (A) the Transactions (to the extent paid or otherwise accounted
for within 180 days of the consummation of the Transactions), (B) current and
future permitted financing transactions and (C) permitted retirements,
purchases and redemptions of the Senior Subordinated Notes (including, without
limitation, premiums paid and costs incurred in connection therewith),
(v) (A) facilities relocation or closing costs, (B) non-recurring
restructuring costs and (C) integration costs and fees, including cash
severance costs, in connection with Permitted Acquisitions, in each case
incurred during such period and payable in cash, in an aggregate amount under
this clause (v) not to exceed $10,000,000 for such period and (vi) any
other non-cash charges (other than the write-down of current assets),
impairments and expenses for such period (including amortization of loan
acquisition costs and unrealized gains and losses on Hedging Agreements and
gains and losses on foreign exchange (including in respect of intercompany
notes)) minus (b) without duplication (i) all cash payments
made during such period on account of non-cash charges added to Consolidated
Net Income pursuant to clause (a)(vi) above in such period or in a previous
period and (ii) to the extent included in determining such Consolidated
Net Income, any non-cash items of income (other than normal accruals in the
ordinary course of business) for such period, all determined on a consolidated
basis in accordance with GAAP.


“Consolidated Fixed Charge Coverage Ratio”
shall mean the “Consolidated Fixed Charge Coverage Ratio” as defined in the
Senior Subordinated Note Indenture as in effect on the Restatement Effective
Date (provided that clause (ii) of the term “Consolidated Fixed Charges”
as used in such definition shall be deemed to include Designated Preferred
Stock (as defined in this Agreement) in addition to Disqualified Capital
Stock), determined with respect to Holdings and its Subsidiaries.


“Consolidated Interest Expense”
shall mean, for any period, the sum of (a) the interest expense (including
imputed interest expense in respect of Capital Lease Obligations and Synthetic
Lease Obligations), net of cash interest income of Polypore and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP, plus (b) any interest accrued during such period in respect
of Indebtedness of Polypore or any Subsidiary that is required to be
capitalized rather than included in consolidated interest expense for such
period in accordance with GAAP. For purposes of the foregoing, interest expense
shall be determined (a) by excluding non-cash interest expense and
amortization of deferred financing costs and original issue discount and
(b) after giving effect to any net payments made or received by Polypore
or any Subsidiary with respect to interest rate Hedging Agreements.


“Consolidated Net Income” shall mean, for any period, the aggregate
net income (or loss) of Polypore and its Subsidiaries for such period on a
consolidated basis, in accordance with GAAP and



 6
 









without any deduction in respect of preferred stock
dividends; provided that there shall be excluded therefrom to the extent
otherwise included, without duplication: (a) gains and losses from Asset Sales
(without regard to the $2,500,000 limitation set forth in the definition
thereof) and the related tax effects according to GAAP; (b) gains and losses
due solely to fluctuations in currency values and the related tax effects
according to GAAP; (c) all extraordinary, unusual or non-recurring charges,
gains and losses (including, without limitation, all restructuring costs,
acquisition integration costs and fees, including cash severance payments made
in connection with acquisitions, and any expense or charge related to the
repurchase of Capital Stock or warrants or options to purchase Capital Stock),
and the related tax effects according to GAAP; (d) the net income (but not
loss) of any Subsidiary to the extent that the declaration of dividends or
similar distributions by that Subsidiary of that income is prohibited by
contract, operation of law or otherwise provided, however, that a
Foreign Subsidiary may agree to restrict its ability to declare dividends or
similar distributions without excluding the net income of such Foreign
Subsidiary from Consolidated Net Income if (i) the agreement that restricts
such ability relates to Indebtedness of such Foreign Subsidiary described in
clause (xiv) of the definition of “Permitted Indebtedness,” (ii) the proceeds
thereof are used, directly or indirectly through intercompany transfers, to
permanently repay the Loans, and (iii) the net income of such Foreign
Subsidiary, together with the net income of each other Foreign Subsidiary
subject to a similar restriction, does not exceed 10% of Consolidated Net
Income; (e) the net loss of any Person, other than a Subsidiary; (f) the net
income of any Person, other than a Subsidiary Guarantor, a Wholly Owned Subsidiary
or Alnery (so long as Alnery is a Subsidiary), except to the extent of cash
dividends or distributions paid to Polypore, a Subsidiary Guarantor or a Wholly
Owned Subsidiary (provided that if either (i) Polypore ceases to have
the right to cause Alnery to become a Wholly Owned Subsidiary substantially on
the terms in effect on the Restatement Effective Date or (ii) Alnery is not a
Wholly Owned Subsidiary on June 30, 2009, then automatically the reference in
this clause (f) to Alnery shall be deemed to be deleted for purposes of any
subsequent calculation of Consolidated Net Income); (g) in the case of a
successor to the referent Person by consolidation or merger or as a transferee
of the referent Person’s assets, any earnings of the successor corporation
prior to such consolidation, merger or transfer of assets; (h) any non-cash
compensation charges and deferred compensation charges, including any arising
from existing stock options resulting from any merger or recapitalization
transaction; provided, however, that Consolidated Net Income for
any period shall be reduced by any cash payments made during such period by
such Person in connection with any such deferred compensation, whether or not
such reduction is in accordance with GAAP; (i) inventory purchase accounting
adjustments and amortization and impairment charges resulting from other
purchase accounting adjustments with respect to acquisition transactions; and
(j) unrealized gains and losses due solely to fluctuations in currency values
and related tax effects according to GAAP.


“Consolidated
Total Indebtedness” shall mean, on any date, the total Indebtedness of
Polypore and the Subsidiaries on a consolidated basis on such date.


“Control” shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings
correlative thereto.


“Credit Event” shall have the
meaning assigned to such term in Section 4.1.


“Cure Amount”
shall have the meaning assigned to such term in Article VII.


“Cure Right”
shall have the meaning assigned to such term in Article VII.


“Current Assets” shall mean, at
any time, the consolidated current assets (other than cash and Permitted
Investments) of Polypore and the Subsidiaries.



 7
 









“Current Liabilities” shall mean,
at any time, the consolidated current liabilities of Polypore and the
Subsidiaries at such time, but excluding, without duplication, (a) the current
portion of any long-term Indebtedness and (b) outstanding Revolving Loans and
Swingline Loans.


“Daramic Holding” shall have the meaning assigned to such term
in the preamble hereto.


“Default” shall mean any event or
condition which upon notice, lapse of time or both would constitute an Event of
Default.


“Defaulting Lender” shall mean any
Lender that (a) has failed to fund any portion of the Term Loans, Revolving
Loans, participations in L/C Exposure or participations in Swing Line Loans
required to be funded by it hereunder within one (1) Business Day of the date
required to be funded by it hereunder, unless the subject of a good faith
dispute, (b) has otherwise failed to pay over to the Administrative Agent or
any other Lender any other amount required to be paid by it hereunder within
one (1) Business Day of the date when due, unless the subject of a good faith
dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy
or insolvency proceeding.


“De Minimis Holders”
shall mean, with respect to any Wholly Owned Subsidiary holders of directors’
qualifying shares and other de minimis ownership interests required to be owned
under foreign law by local residents.


“Designated
Preferred Stock” shall mean preferred stock that is so designated as
Designated Preferred Stock, pursuant to an Officers’ Certificate executed by
the principal executive officer and the principal financial officer of
Polypore, on the issuance date thereof, the cash proceeds of which are excluded
from the Available Amount.


“Disqualified Capital
Stock” shall mean, with respect to any Person, any Capital Stock which by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder) or upon the happening of
any event: (i) matures or is mandatorily redeemable (other than redeemable only
for Capital Stock of such Person which is not itself Disqualified Capital
Stock) pursuant to a sinking fund obligation or otherwise; (ii) is convertible
or exchangeable at the option of the holder for Indebtedness or Disqualified
Capital Stock (excluding Capital Stock which is convertible or exchangeable
solely at the option of Holdings, Polypore or a Subsidiary); or (iii) is
mandatorily redeemable or must be purchased upon the occurrence of certain
events or otherwise, in whole or in part; in each case (x) in the case of
Holdings or Polypore, on or prior to (a) the final maturity date of the Term
Loans or (b) the date on which there are no Loans or Commitments outstanding or
(y) in the case of a Subsidiary, at any time; provided, however,
that any Capital Stock that would not constitute Disqualified Capital Stock but
for provisions thereof giving holders thereof the right to require such Person
to purchase or redeem such Capital Stock upon the occurrence of an “asset sale”
or “change of control” occurring prior to the final maturity date of the Term
Loans shall not constitute Disqualified Capital Stock if:  (A) the “asset sale” or “change of control” provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the terms described in Sections 4.10 and 4.15, respectively,
of the Senior Subordinated Note Indenture as in effect on the Restatement
Effective Date; and (B) any such requirement only becomes operative after (1)
compliance with such terms applicable to the Senior Subordinated Notes,
including the purchase of any Senior Subordinated Notes tendered pursuant
thereto and (2) payment in full of all amounts owing under this Agreement and
the termination of the Commitments. The amount of any Disqualified Capital
Stock that does not have a fixed redemption, repayment or repurchase price will
be calculated in accordance with the terms of such Disqualified Capital Stock
as if such Disqualified Capital Stock were redeemed, repaid or repurchased on
any date on which the amount of such Disqualified Stock is to be determined
pursuant to this Agreement; provided, however, that if such
Disqualified Capital Stock could not be required to be redeemed, repaid or



 8
 









repurchased
at the time of such determination, the redemption, repayment or repurchase
price will be the book value of such Disqualified Capital Stock as reflected in
the most recent internal financial statements of such Person.


“Dollars” and “$”
shall mean dollars in lawful currency of the United States.


“Domestic Subsidiaries” shall mean
all Subsidiaries incorporated or organized under the laws of the United States
of America, any State thereof or the District of Columbia.  If a Foreign Subsidiary becomes a Guarantor
and complies with the provisions of Section 5.9 as to collateral, Polypore may
elect by written notice to the Administrative Agent to treat such Subsidiary as
a Domestic Subsidiary for purposes of the Loan Documents; provided, that
the Administrative Agent concludes, in its reasonable discretion, that the
Lenders would have substantially the same rights against such Subsidiary
pursuant to the Security Documents under the law of the relevant foreign jurisdiction
as the Lenders would have if such Subsidiary were organized in the United
States of America.


“Environmental Laws” shall mean
all former, current and future Federal, state, local and foreign laws
(including common law), treaties, regulations, rules, ordinances, codes,
decrees, judgments, directives having the force of law and orders (including
consent orders), in each case, relating to protection of the environment,
natural resources, human health and safety or the presence, Release of, or exposure
to, Hazardous Materials, or the generation, manufacture, processing,
distribution, use, treatment, storage, transport, recycling or handling of, or
the arrangement for such activities with respect to, Hazardous Materials.


“Environmental Liability” shall
mean all liabilities, obligations, damages, losses, claims, actions, suits,
judgments, orders, fines, penalties, fees, expenses and costs (including
administrative oversight costs, natural resource damages and remediation
costs), whether contingent or otherwise, arising out of or relating to (a)
compliance or non-compliance with any Environmental Law, (b) the generation,
use, handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the Release of any
Hazardous Materials or (e) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.


“Environmental
Permits” shall mean any and all permits, licenses, approvals,
registrations, notifications, exemptions and any other authorization pursuant
to any Environmental Law.


“ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as the same may be amended from time to
time.


“ERISA Affiliate” shall mean any
trade or business (whether or not incorporated) that, together with Polypore,
is treated as a single employer under Section 414(b) or (c) of the Code,
or solely for purposes of Section 302 of ERISA and Section 412 of the
Code, is treated as a single employer under Section 414 of the Code.


“ERISA Event” shall mean (a) any “reportable
event”, as defined in Section 4043 of ERISA or the regulations issued
thereunder, with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an “accumulated
funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by Polypore or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan
or the withdrawal or partial withdrawal of Polypore or any of its ERISA
Affiliates from any Plan or



 9
 









Multiemployer
Plan; (e) the receipt by Polypore or any of its ERISA Affiliates from the PBGC
or a plan administrator of any notice relating to the intention to terminate
any Plan or Plans or to appoint a trustee to administer any Plan; (f) the
adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of
ERISA; (g) the receipt by Polypore or any of its ERISA Affiliates of any
notice, or the receipt by any Multiemployer Plan from Polypore or any of its
ERISA Affiliates of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA; (h)
the occurrence of a “prohibited transaction” with respect to which any Group
Member or any ERISA Affiliate is a “disqualified person” (within the meaning of
Section 4975 of the Code) or with respect to which any Group Member or
ERISA Affiliate could otherwise be liable; or (i) any other event or condition
with respect to a Plan or Multiemployer Plan that could result in liability of
Polypore or any ERISA Affiliate.


“Euro” and “€” shall mean the single currency of
participating member states of the European Union.


“Euro Term Loan” shall have the meaning assigned to such term in
Section 2.1.


“Euro Term Loan Borrowing” shall mean a Borrowing comprised of Euro Term Loans.


“Euro Term Loan Commitment” shall mean, with respect
to each Lender, the commitment of such Lender to make Euro Term Loans hereunder
as set forth on Schedule 2.1, or in the Assignment and Assumption pursuant
to which such Lender assumed its Euro Term Loan Commitment, as applicable, as
the same may be (i) reduced from time to time pursuant to Section 2.9
and (ii) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 9.4. 
The aggregate amount of the Euro Term Loan Commitments as of the
Restatement Effective Date is €35,000,000.


“Euro Term
Percentage” shall mean, as to any Lender at any time, the percentage which
such Lender’s Euro Term Loan Commitment then constitutes of the aggregate Euro
Term Loan Commitments (or, at any time after the Restatement Effective Date,
the percentage which the principal amount of such Lender’s Euro Term Loan then
outstanding constitutes of the aggregate principal amount of the Euro Term
Loans then outstanding).


“Eurocurrency Base
Rate” shall mean with respect to each day during each Interest Period
pertaining to a Eurocurrency Loan, the rate per annum determined on the basis
of the rate for deposits in the relevant currency for a period equal to such
Interest Period commencing on the first day of such Interest Period appearing
on the relevant page of the Reuters screen as of 11:00 A.M., Local Time, two
Business Days prior to the beginning of such Interest Period.  In the event that such rate does not appear
on the Reuters screen, the “Eurocurrency Base Rate” shall be determined
by reference to such other comparable publicly available service for displaying
Eurocurrency rates as may be selected by the Administrative Agent or, in the
absence of such availability, by reference to the rate at which the
Administrative Agent is offered deposits in the relevant currency at or about
11:00 A.M., Local Time, two Business Days prior to the beginning of such
Interest Period in the interbank eurocurrency market where its relevant
eurocurrency and foreign currency and exchange operations are then being
conducted for delivery on the first day of such Interest Period for the number
of days comprised therein.


“Eurocurrency Rate”
shall mean, with respect to each day during each Interest Period pertaining to
a Eurocurrency Loan, a rate per annum determined for such day in accordance
with the following formula (rounded upward to the nearest 1/100th of 1%):



 10
 









 




	
  Eurocurrency Base Rate

  
	
  1.00 -
  Eurocurrency Reserve Requirements

  






 


“Eurocurrency
Reserve Requirements” shall mean, for any day as applied to a Eurocurrency
Loan, the aggregate (without duplication) of the maximum rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves) under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System. “Eurocurrency”, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are bearing interest at a rate determined by reference
to the Eurocurrency Rate.


“Event of Default” shall have the
meaning assigned to such term in Article VII.


“Excess Cash Flow” shall mean, for
any fiscal year of Polypore, the excess of (a) the sum, without duplication, of
(i) Consolidated EBITDA for such fiscal year and (ii) reductions to noncash
working capital of Polypore and the Subsidiaries for such fiscal year (i.e., the decrease, if any, in Current Assets minus Current
Liabilities from the beginning to the end of such fiscal year) over (b) the
sum, without duplication, of (i) the amount of any Tax Payments in cash by
Polypore and the Subsidiaries with respect to such fiscal year, (ii)
Consolidated Interest Expense for such fiscal year payable in cash, (iii)
Capital Expenditures made in cash in accordance with Section 6.10 and cash
expenditures in connection with Permitted Acquisitions (other than the Alnery Acquisition) during
such fiscal year, in each case except to the extent financed with the proceeds
of Indebtedness, equity issuances or other proceeds that would not be included
in Consolidated EBITDA for such fiscal year, (iv) permanent repayments of
Indebtedness (other than mandatory prepayments of Loans under
Section 2.13), including the principal component of Capitalized Lease
Obligations and Synthetic Lease Obligations, made by Polypore and the
Subsidiaries during such fiscal year, but only to the extent that such
prepayments by their terms cannot be reborrowed or redrawn and do not occur in
connection with a refinancing of all or any portion of such Indebtedness, (v)
additions to noncash working capital for such fiscal year (i.e.,
the increase, if any, in Current Assets minus Current Liabilities from the
beginning to the end of such fiscal year), (vi) to the extent added to
Consolidated Net Income in determining Consolidated EBITDA, proceeds received
by the Loan Parties during such fiscal year from insurance claims with respect
to casualty events, business interruption or product recalls which reimburse
prior business expenses, (vii) to the extent added to Consolidated Net Income
in determining Consolidated EBITDA, cash indemnity payments received during
such fiscal year pursuant to indemnification provisions in any agreement in
connection with any Permitted Acquisition or any other investment permitted
hereunder, (viii) Restricted Payments made in such fiscal year to the extent
such Restricted Payments are permitted under Section 6.6(b) or 6.6(c), (ix) to
the extent not deducted from Consolidated Net Income in determining
Consolidated EBITDA, letter of credit fees paid in such fiscal year, (x) all
extraordinary cash charges for such fiscal year, (xi) to the extent included in
determining Consolidated EBITDA or
added to Consolidated Net Income in determining Consolidated EBITDA,
non-recurring cash charges for such fiscal year, (xii) to the extent added to
Consolidated Net Income in determining Consolidated EBITDA, losses from
discontinued operations for such fiscal year, (xiii) cash expenditures made in
respect of Hedging Agreements during such fiscal year to the extent not
reflected in the computation of Consolidated EBITDA, (xiv) to the extent not
deducted from Consolidated Net Income in determining Consolidated EBITDA, cash
payments for employment benefits made during such fiscal year; (xv) to the
extent not deducted from Consolidated Net Income in determining Consolidated
EBITDA, cash payments for reserves deemed appropriate by Polypore for
environmental liabilities during such fiscal year (unless such cash payments
relate to reserves previously



 11
 









excluded
from Consolidated EBITDA pursuant to clause (B) of the next sentence); and (xvi) in the case of the 2008 and 2009 fiscal
years, additional cash payments actually made in any such fiscal year of up to
$5,100,000 in the aggregate to fulfill the commitments of Polypore BV under the
Alnery Purchase Agreement to acquire the remaining unowned Capital Stock of
Alnery.  For purposes of
computation of Excess Cash Flow, Consolidated EBITDA shall be computed by
excluding (A) items (iv) and (v) of clause (a) of the definition of
Consolidated EBITDA to the extent such items are paid in cash during such
fiscal year, (B) without duplication of clause (b)(xv) above and to the extent
added to Consolidated Net Income in determining Consolidated EBITDA, reserves
deemed appropriate by Polypore for environmental liabilities for such fiscal
year, (C) without duplication of clause (b)(xiv) above and to the extent added
to Consolidated Net Income in determining Consolidated EBITDA, employment
benefits for such fiscal year, (D) to the extent added to Consolidated Net
Income in determining Consolidated EBITDA, working capital changes resulting
from purchase accounting for such fiscal year and (E) to the extent added to Consolidated Net Income in determining
Consolidated EBITDA and constituting noncash amounts, items (c), (e), (g), (h)
and (i) of the definition of Consolidated Net Income.


“Excluded Contributions”
shall mean net cash proceeds, or property other than cash that would constitute
Permitted Investments or a Permitted Business, in each case received by
Polypore from:


(i)            contributions to
its common equity capital (except to the extent financed with Indebtedness of
Holdings); and


(ii)           the sale (other
than to a Subsidiary or to any management equity plan or stock option plan or
any other management or employee benefit plan or agreement of Polypore or any
Subsidiary) of Capital Stock (other than Disqualified Capital Stock) of
Polypore,


in each case designated as
Excluded Contributions pursuant to an Officers’ Certificate on the date such
capital contributions are made or the date such Capital Stock are sold, as the
case may be, which are excluded from the calculation of the Restricted
Available Amount.


“Excluded Taxes” shall mean, with
respect to the Administrative Agent, any Lender, the Issuing Bank or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income by the United States of America, or by the jurisdiction under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending
office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction described in
clause (a) above and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the relevant Borrower under
Section 2.20(a)), any withholding tax that is imposed on amounts payable
to such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender’s failure to comply with Section 2.19(e), except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.19(a).


“Executive Order”
shall mean have the meaning assigned to such term in Section 3.25.


“Existing
Credit Agreement” shall have the meaning set forth in the recitals hereto.


“Facility”
shall mean each of (a) the US$ Term Commitments and the US$ Term Loans made
thereunder (the “US$ Term Facility”), (b) the Euro Term Commitments and
the Euro Term Loans made thereunder (the “Euro Term Facility”), (c) the
Incremental Term Commitments and the Incremental Term



 12
 









Loans
made thereunder (the “Incremental Term Facility”) and (d) the Revolving
Credit Commitments and the extensions of credit made thereunder (the “Revolving
Facility”).


“Federal Funds Effective Rate”
shall mean, for any day, the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average of the quotations for the day of
such transactions received by JPMorgan Chase Bank, N.A. from three federal
funds brokers of recognized standing selected by it.


“Fee Letter” shall mean the
Administrative Agent Fee Letter dated May 11, 2007, between Polypore and the
Administrative Agent.


“Fee Payment
Date” shall mean (a) the third Business Day following the last day of each
March, June, September and December and (b) the Revolving Credit Maturity Date.


“Fees” shall mean the Commitment
Fees, the Administrative Agent Fees, the L/C Participation Fees, the Issuing
Bank Fees and any other fees payable by a Loan Party pursuant to a fee
agreement entered into with the Administrative Agent or any other Lender.


“Financial Officer” of any Person
shall mean the chief financial officer, principal accounting officer, Treasurer
or Controller of such Person.


“Financial
Performance Covenant” shall have the meaning assigned to such term in
Article VII.


“Foreign Asset
Control Regulations” shall mean have the meaning assigned to such term in
Section 3.25.


“Foreign Lender” shall mean, under
the relevant Facility, any Lender that is organized under the laws of, or if
different, of which the lending office is located in, a jurisdiction other than
that in which the relevant Borrower is located. For purposes of this
definition, the United States of America, each State thereof and the District
of Columbia shall be deemed to constitute a single jurisdiction.


“Foreign Subsidiary” shall mean
any Subsidiary that is not a Domestic Subsidiary.


“Funded Debt”
shall mean, as to any Person, all Indebtedness of such Person that matures more
than one year from the date of its creation or matures within one year from
such date but is renewable or extendible, at the option of such Person, to a
date more than one year from such date or arises under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit during
a period of more than one year from such date, including all current maturities
and current sinking fund payments in respect of such Indebtedness whether or
not required to be paid within one year from the date of its creation and, in
the case of Polypore and Daramic Holding, Indebtedness in respect of the Loans.


“Funding Office”
shall mean the relevant office of the Administrative Agent specified in Section
9.1 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower
and the Lenders.


“GAAP” shall mean United States of
America generally accepted accounting principles.


“Governmental Authority” shall
mean any Federal, state, local or foreign court or governmental agency,
authority, instrumentality or regulatory body.



 13
 









“Group Members”
shall mean the collective reference to Holdings, Polypore and the Subsidiaries.


“Guarantee” of or by any Person
shall mean any obligation, contingent or otherwise, of such Person guaranteeing
or having the economic effect of guaranteeing any Indebtedness or other
obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and
including any obligation of such Person, direct or indirect, (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment of such Indebtedness or other
obligation, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness or other obligation of the
payment of such Indebtedness or other obligation or (c) to maintain working
capital, equity capital or any other financial statement condition or liquidity
of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation; provided,
however, that the term “Guarantee”
shall not include endorsements for collection or deposit in the ordinary course
of business.


“Guarantee and
Collateral Agreement” shall mean the Guarantee and Collateral Agreement
executed and delivered by Holdings, Polypore and each Subsidiary Guarantor, in
the form of Exhibit C.


“Guarantors” shall mean Holdings
and the Subsidiary Guarantors.


“Hazardous Materials” shall mean
(a) any petroleum products or byproducts and all other hydrocarbons, coal ash,
radon gas, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, chlorofluorocarbons and all other ozone-depleting substances and
(b) any chemical, material, substance or waste that is prohibited, limited
or regulated by or pursuant to any Environmental Law.


“Hedging Agreement” shall mean any
interest rate protection agreement, foreign currency exchange agreement,
commodity price protection agreement or other interest or currency exchange
rate or commodity price hedging arrangement.


“Holdings”
shall have the meaning assigned to such term in the preamble hereto; provided,
that after the consummation of the Merger, all references herein to “Holdings”
shall be deemed to be references to the Parent, as the surviving corporation of
the Merger.


“Inactive Subsidiary” shall mean
any Subsidiary of Polypore that (a) does not conduct any business operations,
(b) has assets with a total book value not in excess of $10,000 and (c) does
not have any Indebtedness outstanding.


“Incremental Term Lender”  shall mean a
Lender with an Incremental Term Loan Commitment or an outstanding Incremental
Term Loan.


“Incremental Term Loan Amount”
shall mean, at any time, the excess, if any, of (a) $200,000,000 over
(b) the aggregate amount of all Incremental Term Loan Commitments established
prior to such time pursuant to Section 2.23.


“Incremental Term Loan Assumption Agreement”
shall mean an Incremental Term Loan Assumption Agreement in form and substance
reasonably satisfactory to the Administrative Agent, among Polypore, the
Administrative Agent and one or more Incremental Term Lenders.


“Incremental Term Loan Borrowing” shall mean a Borrowing comprised of
Incremental Term Loans.



 14
 









“Incremental Term Loan Commitment”
shall mean the commitment of any Lender, established pursuant to Section 2.23,
to make Incremental Term Loans to Polypore.


“Incremental Term Loan Maturity Date”
shall mean the final maturity date of any Incremental Term Loan, as set forth
in the applicable Incremental Term Loan Assumption Agreement.


“Incremental Term Loan Repayment Dates”
shall mean the dates scheduled for the repayment of principal of any
Incremental Term Loan, as set forth in the applicable Incremental Term Loan
Assumption Agreement.


“Incremental Term Loans” shall
mean Term Loans made by one or more Lenders to Polypore pursuant to
Section 2.1(b).  Incremental Term
Loans may be made in the form of additional Term Loans or, to the extent
permitted by Section 2.23 and provided for in the relevant Incremental
Term Loan Assumption Agreement, Other Term Loans.


“Indebtedness” of any Person shall
mean, without duplication, (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations of such Person issued or assumed
as the deferred purchase price of property or services (excluding trade
accounts payable and accrued obligations incurred in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed (it being understood
that, unless such Person shall have assumed such obligations, the amount of
such Indebtedness shall be the lesser of (x) the fair market value of the property
securing such Indebtedness and (y) the stated principal amount of such
Indebtedness), (f) all Guarantees by such Person of Indebtedness of others, (g)
all Capital Lease Obligations and Synthetic Lease Obligations of such Person,
(h) all outstanding reimbursement obligations of such Person as an account
party in respect of letters of credit, (i) all obligations of such Person
in respect of bankers’ acceptances, (j) all obligations of such Person
under or in respect of Hedging Agreements, (k) all obligations of such Person
under a Qualified Securitization Transaction or any transaction of the type
described in the definition thereof that does not meet the criteria of a
Qualified Securitization Transaction and (l) for the purposes of Section 6.1
and the definition of “Total Leverage Ratio” only, all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price or, with respect to any
Subsidiary, any Preferred Stock (but excluding, in each case, accrued
dividends, if any).  For purposes
of determining the amount of Indebtedness of any Person under clause (j) of the
preceding sentence, (i) in the case of Section 6.1 and in determining the Total
Leverage Ratio pursuant to clause (i) of the definition of “Restricted
Available Amount”, the amount of the
obligations of such Person in respect of any Hedging Agreement shall be equal
at any time to the termination value, as determined in good faith by Polypore’s
Board of Directors, which determination will be conclusive, of such agreement
or arrangement giving rise to such obligation that would be payable by such
Person at such time and (ii) in all other cases, the amount of the
obligations of such Person in respect of any Hedging Agreement at any time
shall be zero prior to the time any counterparty to such Hedging Agreement
shall be entitled to terminate such Hedging Agreement and, thereafter, shall be
the maximum aggregate amount (giving effect to any netting agreements) that
such Person would be required to pay if such Hedging Agreement were terminated
at such time.  The Indebtedness of any
Person shall include the Indebtedness of any partnership in which such Person
is a general partner only to the extent such Person is liable therefor by
contract, as a matter of law or otherwise, and shall not include any
Indebtedness of such partnership that is expressly non-recourse to such Person.
 For clarification purposes, the
liability of Polypore or any Subsidiary Guarantor to make



 15
 









any
periodic payments to licensors in consideration for the license of patents and
technical information under license agreements in existence on the Restatement
Effective Date and any amount payable in respect of a settlement of disputes
with respect to such payments thereunder, shall not constitute
Indebtedness.  Indebtedness incurred by
Holdings pursuant to Section 6.1 shall not be included in the computations under
Section 6.11 unless such Indebtedness is assumed by Polypore pursuant to the
Merger.  Notwithstanding any other
provision of this Agreement to the contrary, (i) the term “Indebtedness” shall
not be deemed to include (x) any earn-out obligation until such obligation
becomes a liability on the balance sheet of the applicable Person, (y) any
deferred compensation arrangements or (z) any non compete or consulting
obligations incurred in connection with Permitted Acquisitions and (ii) the
amount of Indebtedness for which recourse is limited either to a specified
amount or to an identified asset of such Person shall be deemed to be equal to
such specified amount or the fair market value of such identified asset, as the
case may be.


Notwithstanding the
foregoing, in connection with the purchase by Polypore or any Subsidiary of any
business, the term “Indebtedness” will exclude post-closing payment adjustments
to which the seller may become entitled to the extent such payment is
determined by a final closing balance sheet or such payment depends on the
performance of such business after the closing; provided, however, that, at the time of closing, the
amount of any such payment is not determinable and, to the extent such payment
thereafter becomes fixed and determined, the amount is paid within 60 days
thereafter.


For purposes hereof, the “maximum
fixed repurchase price” of any Disqualified Capital Stock which does not have a
fixed repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant
to this Agreement, and if such price is based upon, or measured by, the fair
market value of such Disqualified Capital Stock, such fair market value shall
be determined reasonably and in good faith by the Board of Directors of the
issuer of such Disqualified Capital Stock. For the purposes of calculating the
amount of Indebtedness of a Securitization Entity outstanding as of any date,
the face or notional amount of any interest in receivables or equipment that is
outstanding as of such date shall be deemed to be Indebtedness but any such
interests held by Affiliates of such Securitization Entity shall be excluded for
purposes of such calculation.


“Indemnified Taxes” shall mean
Taxes other than Excluded Taxes and VAT.


“Interest Payment Date” shall mean
(a) as to any ABR Loan (other than any Swingline Loan), the last day of each
March, June, September and December to occur while such Loan is outstanding and
the final maturity date of such Loan, (b) as to any Eurocurrency Loan having an
Interest Period of three months or less, the last day of such Interest Period,
(c) as to any Eurocurrency Loan having an Interest Period longer than three
months, each day that is three months, or a whole multiple thereof, after the
first day of such Interest Period and the last day of such Interest Period, (d)
as to any Loan (other than any Revolving Loan that is an ABR Loan and any Swingline
Loan), the date of any repayment or prepayment made in respect thereof and (e)
as to any Swingline Loan, the day that such Loan is required to be repaid.


“Interest Period” shall mean, as
to any Eurocurrency Loan, (a) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such Eurocurrency Loan
and ending one, two, three or six or (if agreed to by all Lenders under the
relevant Facility) nine or twelve months thereafter, as selected by the
Borrower in its notice of borrowing or notice of conversion, as the case may
be, given with respect thereto; and (b) thereafter, each period commencing on
the last day of the next preceding Interest Period applicable to such
Eurocurrency Loan and ending one, two, three or six or (if agreed to by all
Lenders under the relevant Facility) nine or twelve months thereafter, as
selected by the Borrower by irrevocable notice to the Administrative Agent not
later than 11:00 A.M., Local Time, on the date that is three Business Days
prior to the last day of the then current Interest Period with respect



 16
 









thereto; provided that, all of the foregoing
provisions relating to Interest Periods are subject to the following:


(i)            if any Interest Period would
otherwise end on a day that is not a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless the result of such
extension would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately preceding
Business Day;


(ii)           the Borrower may not select an
Interest Period under a particular Facility that would extend beyond the
Revolving Credit Maturity Date or beyond the date final payment is due on the
Term Loans, as the case may be; and


(iii)          any Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.


“Investment”
or “investment” shall have the meaning assigned to such term in Section
6.4.


“Issuing Bank” shall mean, as the
context may require, (a) JPMorgan Chase Bank, N.A., in its capacity as the
issuer of Letters of Credit hereunder, and (b) any other Lender that may become
an Issuing Bank pursuant to Section 2.22(i) or 2.22(k), with respect to
Letters of Credit issued by such Lender. 
The Issuing Bank may, in its discretion, arrange for one or more Letters
of Credit to be issued by Affiliates of the Issuing Bank, in which case the
term “Issuing Bank” shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate.


“Issuing Bank Fees” shall have the
meaning assigned to such term in Section 2.5(c).


“Judgment
Currency” shall have the meaning assigned to such term in Section 9.19.


“Judgment
Currency Conversion Date” shall have the meaning assigned to such term in
Section 9.19.


“L/C Commitment” shall mean the
commitment of the Issuing Bank to issue Letters of Credit pursuant to
Section 2.22.


“L/C Disbursement” shall mean a
payment or disbursement made by the Issuing Bank pursuant to a Letter of
Credit.


“L/C Exposure” shall mean at any
time the Dollar Equivalent of the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time and (b) the aggregate principal
amount of all L/C Disbursements that have not yet been reimbursed at such
time.  The L/C Exposure of any Revolving
Credit Lender at any time shall equal its Pro Rata Percentage of the aggregate L/C
Exposure at such time.


“L/C Participation Fee” shall have
the meaning assigned to such term in Section 2.5(c).


“Lenders” shall mean (a) the
Persons listed on Schedule 2.1 (other than any such Person that has ceased to
be a party hereto pursuant to an Assignment and Assumption) and (b) any Person
that has become a party hereto pursuant to an Assignment and Assumption.  Unless the context clearly indicates
otherwise, the term “Lenders” shall include the Swingline Lender.



 17
 









“Letter of Credit” shall mean any
letter of credit issued pursuant to Section 2.22.


“Lien” shall mean, with respect to
any asset, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge
or security interest in or on such asset, (b) the interest of a vendor or a
lessor under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities.


“Loan Documents” shall mean this
Agreement, the Letters of Credit, the Security Documents, any fee letters
entered into between any Loan Party and the Administrative Agent or any Lender
and each Incremental Term Loan Assumption Agreement.


“Loan Parties” shall mean
Polypore, Daramic Holding and the Guarantors.


“Loans” shall mean the Revolving
Loans, the Term Loans and the Swingline Loans.


“Local Time”
shall mean (a) in the case of the definition of “Eurocurrency Base Rate” with
respect to Loans denominated in Euros, London time, and (b) in all other cases,
New York City time.


“Margin Stock” shall have the
meaning assigned to such term in Regulation U.


“Material Adverse Effect” shall
mean (a) a materially adverse effect on the business, operations, assets,
liabilities, financial condition or results of operations of the Group Members,
taken as a whole, (b) a material impairment of the ability of Polypore or any
other Loan Party to perform any of its obligations under any Loan Document to
which it is or will be a party or (c) a material impairment of the rights of or
benefits available to the Lenders under any Loan Document.


“Material Indebtedness” shall mean
Indebtedness (other than the Loans and Letters of Credit) of any one or more
Group Members in an aggregate principal amount exceeding $20,000,000.


“Material
Subsidiary” shall mean, at any time, any Subsidiary which at such time
shall be a “significant subsidiary” of Polypore within the meaning of Regulation
S-X of the SEC as in effect on the Restatement Effective Date; provided,
that Polypore and its Material Subsidiaries shall at all times have assets
during the term of this Agreement constituting at least 90% of Polypore’s
consolidated total assets; provided, further, that each
Subsidiary which owns any Intellectual Property (other than Intellectual
Property with an aggregate fair market value of less than $1,500,000) shall be
deemed to be a Material Subsidiary hereunder.


“Materials of
Environmental Concern” shall mean any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation, molds, pollutants,
contaminants, radioactivity, radiofrequency radiation or any other radiation
associated with or allegedly associated with the telecommunications business,
and any other substance of any kind that is regulated pursuant to or gives rise
to liability under any applicable Environmental Law.


“Maximum Rate”
shall have the meaning assigned to such term in Section 9.9.


“Merger”
shall mean a merger of Polypore and Holdings with and into the Parent, with the
Parent being the surviving corporation. 
For the purposes of any calculation made pursuant to this Agreement,
each transaction, circumstance or event relating to the Parent or Holdings that
would affect such



 18
 









calculation
if it occurred with respect to Polypore shall, from and after the date of the
Merger, be deemed to have occurred with respect to Polypore.


“Mortgaged Properties” shall mean,
initially, the real properties owned or leased by the Loan Parties specified on
Schedule 1.1(b), and shall include each parcel of real property and
improvements thereto with respect to which a Mortgage is granted pursuant to Section 5.9.


“Mortgages” shall mean the
mortgages, deeds of trust, leasehold mortgages, assignments of leases and
rents, modifications and other security documents delivered by any Loan Party
in connection with the Existing Credit Agreement or pursuant to Section 5.9,
each substantially in the form of Exhibit F.


“Multiemployer Plan” shall mean a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.


“Net Cash Proceeds” shall mean (a)
with respect to any Asset Sale or Recovery Event, the cash proceeds (including
cash proceeds subsequently received (as and when received) in respect of
noncash consideration initially received), net of (i) selling expenses
(including reasonable broker’s and investment banking fees or commissions,
legal, environmental assessment, appraisal and consultant’s fees, transfer and
similar taxes and Polypore’s good faith estimate of income taxes paid or
payable in connection with such sale), (ii) amounts provided as a reserve, in
accordance with GAAP, against (A) any liabilities under any indemnification
obligations or purchase price adjustment associated with such Asset Sale and
(B) any liabilities associated with such asset or assets and retained by
Polypore or any of its Subsidiaries after such sale or other disposition
thereof, including, without limitation, pension and other post-employment
benefit liabilities and liabilities related to environmental matters or against
any indemnification obligations associated with such transaction (provided, that, to the extent and
at the time any such amounts are released from such reserve, such amounts shall
constitute Net Cash Proceeds) and (iii) the principal amount, premium or
penalty, if any, interest and other amounts on any Indebtedness for borrowed
money which is secured by the asset sold in such Asset Sale or the asset
relating to such Recovery Event, as applicable, and which is required to be
repaid with such proceeds (other than any such Indebtedness assumed by the
purchaser of such asset); provided,
however, that, if (x)
Polypore shall deliver a certificate of a Financial Officer to the
Administrative Agent at the time of receipt thereof setting forth Polypore’s
intent to reinvest such proceeds in productive assets of a kind used or useful
in the business of Polypore and its Subsidiaries within 365 days of receipt of
such proceeds and (y) no Default or Event of Default shall have occurred and
shall be continuing at the time of such certificate or at the proposed time of
the application of such proceeds, such proceeds shall not constitute Net Cash
Proceeds except to the extent not so used or contractually committed to be used
at the end of such 365-day period, at which time such proceeds shall be
deemed to be Net Cash Proceeds (provided, that any such proceeds that are
excluded from Net Cash Proceeds because they have been contractually committed
to be used, but not actually used, by the end of such 365-day period shall be
deemed to be Net Cash Proceeds on the date that is 120 days after the end of
such 365-day period, unless they have been actually used prior thereto); and
(b) with respect to any issuance or disposition of Indebtedness, the cash
proceeds thereof, net of all taxes and fees (including investment banking fees,
underwriting discounts, commissions, costs and other out-of-pocket expenses and
other customary expenses) incurred in connection therewith.


“Obligation
Currency” shall have the meaning assigned to such term in Section 9.19.


“Obligations” the unpaid principal
of and interest on (including interest accruing after the maturity of the Loans
(including the Incremental Term Loans) and Reimbursement Obligations and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
Polypore or Daramic Holding, whether or not a claim for



 19
 









post-filing
or post-petition interest is allowed in such proceeding) the Loans and all
other obligations and liabilities of Polypore or Daramic Holding to the
Administrative Agent or to any Lender (or, in the case of Specified Hedging
Agreements or Specified Cash Management Agreements, any affiliate of any
Lender), whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any other Loan Document, the Letters of
Credit, any Specified Hedging Agreement, any Specified Cash Management
Agreement or any other document made, delivered or given in connection herewith
or therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including all fees, charges
and disbursements of counsel to the Administrative Agent or to any Lender that
are required to be paid by Polypore pursuant hereto) or otherwise.


“Officers’ Certificate” shall mean a certificate signed on
behalf of Polypore by two officers of Polypore, one of whom must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of Polypore.


“Other Taxes” shall mean any and
all present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies arising from any payment made under
any Loan Document or from the execution, delivery or enforcement of, or
otherwise with respect to, any Loan Document.


“Other Term Loans” shall have the
meaning assigned to such term in Section 2.23(a).


“Parent”
shall mean Polypore International, Inc., a Delaware corporation.


“Parent Notes”
shall mean the Parent’s
10-1/2% Senior Discount Notes due 2012.


“Participant”
shall have the meaning assigned to such term in Section 9.4(c).


“Patriot Act
shall have the meaning assigned to such term in Section 9.17.


“PBGC” shall mean the Pension
Benefit Guaranty Corporation referred to and defined in ERISA.


“Perfection Certificate” shall
mean the Perfection Certificate substantially in the form of Exhibit D,
prepared by Polypore.


“Permitted Acquisition” shall mean
any acquisition not prohibited by this Agreement.


“Permitted Business”
shall mean any business (including stock or assets) that derives a majority of
its revenues from the business engaged in by Polypore and its Subsidiaries on
the Restatement Effective Date and/or activities that are reasonably similar,
ancillary or related to, or a reasonable extension, development or expansion
of, the businesses in which Polypore and its Subsidiaries are engaged on the
Restatement Effective Date.


“Permitted Cure
Securities” shall have the meaning assigned to such term in Article VII.


“Permitted Indebtedness”
shall mean, without duplication, each of the following:


(i)  Indebtedness under the Senior Subordinated
Notes outstanding on the Restatement Effective Date and the Guarantees thereof
outstanding on the Restatement Effective Date;


(ii)  Indebtedness of the Loan Parties under the
Loan Documents;



 20















(iii)  other Indebtedness of Polypore and its
Subsidiaries outstanding on the Restatement Effective Date described on
Schedule 6.1;


(iv)  Hedging Agreements of Polypore or any of its
Subsidiaries covering Indebtedness of Polypore or any of its Subsidiaries; provided, however, that, if applicable, any Indebtedness to which
any such Hedging Agreements correspond is otherwise permitted to be incurred
under this Agreement; and provided, further, that such Hedging
Agreements are not entered into, in the judgment of Polypore, for speculative
purposes;


(v)  unsecured intercompany Indebtedness between
or among Polypore and any such Subsidiaries (other than a Securitization
Entity); provided, however, that: (a) if any Loan Party is the obligor on such
Indebtedness and the payee is a Subsidiary that is not a Guarantor, such
Indebtedness is expressly subordinated to the prior payment in full in cash of
all obligations of such Loan Party under the Loan Documents to which it is a
party; and (b)(1) any subsequent issuance or transfer of Capital Stock or any
other event which results in any such Indebtedness being beneficially held by a
Person other than Polypore or a Subsidiary (other than a Securitization Entity)
thereof; and (2) any sale or other transfer of any such Indebtedness to a
Person that is not either Polypore or a Subsidiary (other than a Securitization
Entity) thereof (other than by way of granting a Lien permitted under this
Agreement or in connection with the exercise of remedies by a secured creditor)
shall be deemed, in each case, to constitute an incurrence of such Indebtedness
by Polypore or such Subsidiary, as the case may be, that was not permitted by
this clause (v);


(vi)  Indebtedness (including Capital Lease
Obligations) incurred to finance the purchase, lease or improvement of property
(real or personal) or equipment (whether through the direct purchase of assets
or the Capital Stock of any Person owning such assets and no other material
assets) in an aggregate principal amount outstanding not to exceed the greater
of (a) $20,000,000 and (b) 1.5% of Total Assets, provided, that such
Indebtedness is incurred prior to or within 180 days after such purchase, lease
or improvement;


(vii)  Refinancing Indebtedness;


(viii)  guarantees by Polypore and its Subsidiaries
of each other’s Indebtedness; provided, however, that such Indebtedness is permitted to be incurred
under this Agreement; provided, further, that in the event
such Indebtedness (other than Acquired Indebtedness) is incurred pursuant to
the Consolidated Fixed Charge Coverage Ratio, such guarantees are by Polypore
or a Guarantor only; and provided, further, that the Indebtedness
of any Subsidiary that is not a Guarantor may only be so guaranteed by another
Subsidiary that is not a Guarantor;


(ix)  Indebtedness arising from agreements of
Polypore or a Subsidiary of Polypore providing for indemnification, adjustment
of purchase price, earn-out or other similar obligations, in each case,
incurred or assumed in connection with the disposition of any business, assets
or Capital Stock of a Subsidiary of Polypore, other than guarantees of
Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such acquisition; provided, however, that
the maximum assumable liability in respect of all such Indebtedness shall at no
time exceed the gross proceeds actually received by Polypore and its
Subsidiaries in connection with such disposition;


(x)  obligations in respect of performance and
surety bonds and completion guarantees provided by Polypore or any Subsidiary
of Polypore in the ordinary course of business;


(xi)  Indebtedness of a Securitization Entity
incurred in a Qualified Securitization Transaction that is non-recourse to
Polypore or any Subsidiary of Polypore (except for Standard Securitization
Undertakings);



 21
 









(xii)  Indebtedness assumed by Polypore or any of
the Guarantors in connection with the acquisition of a Permitted Business; provided  that on the date of the incurrence of
such Indebtedness, after giving effect to the incurrence thereof and the use of
proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio is greater
than the Consolidated Fixed Charge Coverage Ratio immediately prior to the
incurrence of such Indebtedness; and provided, further, that such
Indebtedness is not incurred in anticipation or contemplation of such
acquisition;


(xiii)  additional Indebtedness of Polypore and the
Domestic Subsidiaries in an aggregate principal amount which does not exceed
$50,000,000 at any one time outstanding which amount may, but need not, be
incurred in whole or in part under a credit facility (it being understood that
any Indebtedness or Preferred Stock incurred pursuant to this clause (xiii)
shall cease to be deemed incurred or outstanding for purposes of this clause
(xiii) but shall be deemed incurred under Section 6.1 hereof from and after the
first date on which Polypore or such Domestic Subsidiary could have incurred
such Indebtedness or Preferred Stock thereunder without reliance on this clause
(xiii));


(xiv)  additional Indebtedness of the Foreign
Subsidiaries in an aggregate outstanding principal amount which does not exceed
an amount equal to (a) the greater of (1) $50,000,000 and (2) 3.6% of the
portion of Total Assets comprising assets of the Foreign Subsidiaries minus (b)
the aggregate outstanding principal amount of the Euro Term Loans (which amount
may, but need not, be incurred in whole or in part under a credit facility);


(xv)  Indebtedness arising from the honoring by a
bank or other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided, however,
that such Indebtedness is extinguished within five Business Days of incurrence;


(xvi)  Indebtedness of Polypore or any of its
Subsidiaries represented by letters of credit for the account of Polypore or
such Subsidiary, as the case may be, issued in the ordinary course of business
of Polypore or such Subsidiary, including, without limitation, in order to
provide security for workers’ compensation claims or payment obligations in
connection with self-insurance or similar requirements in the ordinary course
of business and other Indebtedness with respect to workers’ compensation
claims, self-insurance obligations, performance, surety and similar bonds and
completion guarantees provided by Polypore or any Subsidiary of Polypore in the
ordinary course of business; and


(xvii) Indebtedness consisting
of promissory notes issued by Polypore or any Guarantor to current or former
officers, directors and employees, their respective estates, spouses or former
spouses to finance the purchase or redemption of Capital Stock of Holdings (or,
after consummation of the Merger, Polypore) permitted by Section 6.6.


No Foreign Subsidiary may
incur any Indebtedness (other than pursuant to clause (v) of the definition of
Permitted Indebtedness) if the proceeds are used to refinance Indebtedness of
Polypore; provided, however, that proceeds of
Indebtedness incurred pursuant to clause (xiv) of the definition of “Permitted
Indebtedness” may be used to prepay the Term Loans or, if there is a
corresponding permanent reduction in the Revolving Credit Commitments, the Revolving
Loans.


For purposes of determining
compliance with Section 6.1, in the event that an item of Indebtedness meets
the criteria of more than one of the categories of Permitted Indebtedness
described in clauses (i) through (xvii) above or is entitled to be incurred
pursuant to the Consolidated Fixed Charge Coverage Ratio provisions of Section
6.1, Polypore shall, in its sole discretion, divide and classify (or later
redivide and reclassify) such item of Indebtedness in any manner that complies
with Section 6.1 hereof.  Accrual of
interest, accretion or amortization of original issue discount, the payment of
interest



 22
 









on
any Indebtedness in the form of additional Indebtedness with the same terms,
and the payment of dividends on Disqualified Capital Stock in the form of
additional shares of the same class of Disqualified Capital Stock will not be
deemed to be an incurrence of Indebtedness or an issuance of Disqualified
Capital Stock for purposes of Section 6.1.


“Permitted Investments” shall
mean:


(a) direct obligations
of, or obligations the principal of and interest on which are unconditionally
guaranteed by, the United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the United
States of America) or, in the case of a Foreign Subsidiary, marketable direct
obligations issued by or unconditionally guaranteed by the government of the
country of such Foreign Subsidiary or backed by the full faith and credit of
the government of the country of such Foreign Subsidiary, in each case maturing
within one year from the date of acquisition thereof;


(b) investments in
commercial paper maturing within one year from the date of acquisition thereof
and having, at such date of acquisition, one of the two highest credit ratings
obtainable from Standard & Poor’s Ratings Service (“S&P”) or from Moody’s
Investors Service, Inc. (“Moody’s”) or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of investments;


(c) investments in
certificates of deposit, Eurocurrency deposits, overnight bank deposits or
banker’s acceptances, demand deposits and time deposits maturing within one
year from the date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by, the
Administrative Agent or any domestic office of any Lender or any other
commercial bank organized under the laws of the United States of America or any
State thereof that has a combined capital and surplus and undivided profits of
not less than $500,000,000 or issued by or offered by a bank organized under
the laws of any foreign country recognized by the United States the long-term
debt of which is rated at least “A” or the equivalent by S&P or “A” or the
equivalent thereof by Moody’s having at the date of acquisition thereof
combined capital and surplus of not less than $500,000,000 or the foreign
currency equivalent thereof;


(d) fully
collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial
institution satisfying the criteria of clause (c) above;


(e) investments in
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and having, at such date of acquisition, one of the two highest credit
ratings obtainable from Standard & Poor’s Ratings Service or from Moody’s
Investors Service, Inc.;


(f) investments in “money
market funds” within the meaning of Rule 2a-7 of the Investment Company Act of
1940, as amended, substantially all of whose assets are invested in investments
of the type described in clauses (a) through (e) above;


(g) other short-term
investments utilized by Foreign Subsidiaries in accordance with normal
investment practices for cash management in investments of a type analogous to
the foregoing; and



 23
 









(h) solely with
respect to any Foreign Subsidiary, non-Dollar denominated (i) certificates
of deposit of, bankers acceptances of, or time deposits with, any commercial
bank which is organized and existing under the laws of the country in which such
Foreign Subsidiary maintains its chief executive office and principal place of
business provided such country is a member of the Organization for Economic
Cooperation and Development, and whose short-term commercial paper rating from
S&P is at least A-1 or the equivalent thereof or from Moody’s is at least
P-1 or the equivalent thereof (any such bank being an “Approved Foreign Bank”) and
maturing within twelve (12) months of the date of acquisition and (ii)
equivalents of demand deposit accounts which are maintained with an Approved
Foreign Bank.


“Permitted
Investors” shall mean (a) the Sponsor and (b) the directors, executive
officers and other management employees of Holdings or Polypore on the
Restatement Effective Date.


“Person”
shall mean any natural person, corporation, business trust, joint venture,
association, company, limited liability company, partnership, Governmental
Authority or other entity.


“Plan”
shall mean any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the
Code or Section 302 of ERISA, and in respect of which Polypore or any
ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.


“Polypore”
shall have the meaning assigned to such term in the preamble hereto; provided,
that after the consummation of the Merger, all references herein to “Polypore”
shall be deemed to be references to the Parent, as the surviving corporation of
the Merger.


“Polypore
BV” shall mean Polypore B.V., a limited liability company organized and
existing under the laws of the Netherlands.


“Preferred
Stock” of any Person shall mean any Capital Stock of such Person that has
preferential rights to any other Capital Stock of such Person with respect to
dividends or redemptions or upon liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.



 24
 









“Pricing Grid”
shall mean the table set forth below.


	
  Total Leverage

  Ratio

  	
   

  	
  Eurocurrency

  Spread-

  Term Loans

  	
   

  	
  ABR

  Spread-

  Term Loans

  	
   

  	
  Eurocurrency

  Spread-

  Revolving Loans

  and Swingline

  Loans

  	
   

  	
  ABR Spread-

  Revolving Loans

  and Swingline

  Loans

  	
   

  
	
  Category 1

  

  Greater than 4.50 to

  1.00

  	
   

  	
  2.25

  	
  %

  	
  1.25

  	
  %

  	
  2.25

  	
  %

  	
  1.25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Category 2

  

  Greater than 3.50 to

  1.00, but less than or

  equal to 4.50 to 1.00

  	
   

  	
  2.00

  	
  %

  	
  1.00

  	
  %

  	
  2.00

  	
  %

  	
  1.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Category 3

  

  Less than or equal to

  3.50 to 1.00

  	
   

  	
  2.00

  	
  %

  	
  1.00

  	
  %

  	
  1.75

  	
  %

  	
  0.75

  	
  %

  



Each change in the Applicable Percentage resulting from a change in the
Total Leverage Ratio shall be effective with respect to all Loans and Letters
of Credit outstanding on and after the date (the “Adjustment Date”) of
delivery to the Administrative Agent of the financial statements and
certificates required by Section 5.4(a) or (b) and Section 5.4(c),
respectively, indicating such change, and until the date immediately preceding
the next date of delivery of such financial statements and certificates
indicating another such change. 
Notwithstanding the foregoing, until Polypore shall have delivered the
financial statements and certificates required by Section 5.4(b) and
Section 5.4(c), respectively, for the fiscal period ended on June 30,
2007, the Total Leverage Ratio shall be deemed to be in Category 1 for purposes
of determining the Applicable Percentage.


“Pro Forma Basis” shall mean, with respect to
compliance with any test or covenant hereunder (excluding any calculation of
the Restricted Available Amount), compliance with such test or covenant after
giving effect to any proposed Permitted Acquisition or Asset Sale (including
pro forma adjustments arising out of events which are directly attributable to
the proposed Permitted Acquisition or Asset Sale, are factually supportable and
are expected to have a continuing impact, in each case as reasonably determined
by Polypore and as certified by a Financial Officer of Polypore and approved by
the Administrative Agent) using, for purposes of determining such compliance,
the historical financial statements of all entities or assets so acquired or
sold or to be acquired or sold and the consolidated financial statements of
Polypore and its Subsidiaries which shall be reformulated as if such Permitted
Acquisitions or Asset Sale, and all other Permitted Acquisitions or Asset Sales
that have been consummated during the period, and any Indebtedness or other
liabilities incurred or repaid in connection with any such Permitted
Acquisitions or Asset Sale had been consummated and incurred or repaid at the
beginning of such period (and if such Indebtedness has a floating or formula
rate, shall have an implied rate of interest for the applicable period for
purposes of this definition determined by utilizing the rate which is or would
be in effect with respect to such Indebtedness as at the relevant date of
determination).  For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of assets and the amount of
income or earnings relating thereto, the pro forma calculations shall be
determined in good faith by a responsible financial or accounting officer of
Polypore (including pro forma expense and cost



 25
 









reductions).  In addition, any such pro forma calculation,
to reflect operating expense reductions reasonably expected to result from any
acquisition or merger, may include adjustments as appropriate, in the
reasonable determination of Polypore as set forth in an certificate of its
chief financial officer, that either (a) would be permitted pursuant to Rule
11-02 of Regulation S-X of the Securities Act of 1933, as amended, or (b)
have been realized or for which substantially all the steps necessary for
realization have been taken or at the time of determination are reasonably
expected to be taken within 12 months following any such acquisition,
including, but not limited to, the execution or termination of any contracts,
the termination of any personnel or the closing of any facility, as applicable
(but determined without duplication of any amounts included in clause (a)(v)(C)
of the definition of “Consolidated EBITDA”), provided that such adjustments shall be calculated on an
annualized basis and will be set forth in a certificate signed by Polypore’s
chief financial officer and another officer which states in detail (i) the
amount of such adjustment or adjustments, and (ii) that such adjustment or
adjustments are based on the reasonable good faith beliefs of the officers
executing such certificate at the time of such execution.


“Pro Rata
Percentage” shall mean, of
any Revolving Credit Lender at any time shall mean the percentage of the Total
Revolving Credit Commitment represented by such Lender’s Revolving Credit
Commitment.  In the event the Revolving
Credit Commitments shall have expired or been terminated, the Pro Rata
Percentages shall be determined on the basis of the Revolving Credit
Commitments most recently in effect.


“Public Equity
Offering” shall mean an underwritten primary public offering of common
stock of, and by, the Parent pursuant to a registration statement filed with
the SEC in accordance with the Securities Act of 1933, as amended, which yields
not less than $225,000,000 in gross cash proceeds to the Parent.


“Purchase Money Note”
shall mean a promissory note of a Securitization Entity evidencing the deferred
purchase price of receivables (and related assets) and/or a line of credit,
which may be irrevocable, from Polypore or any Subsidiary in connection with a
Qualified Securitization Transaction to a Securitization Entity, which note
shall be repaid from cash available to the Securitization Entity other than
amounts required to be established as reserves pursuant to agreements, amounts
paid to investors in respect of interest and principal and amounts paid in
connection with the purchase of newly generated receivables or newly acquired
equipment.


“Qualified Capital Stock”
shall mean any Capital Stock that is not Disqualified Capital Stock.


“Qualified Securitization
Transaction” shall mean any transaction or series of transactions that may
be entered into by Polypore or any of its Subsidiaries pursuant to which
Polypore or any of its Subsidiaries may sell, convey or otherwise transfer to:
(i) a Securitization Entity (in the case of a transfer by Polypore or any of
its Subsidiaries); and (ii) any other Person (in the case of a transfer by a
Securitization Entity), or may grant a security interest in any accounts
receivable or equipment (whether now existing or arising or acquired in the
future) of Polypore or any of its Subsidiaries, and any assets related thereto
including, without limitation, all collateral securing such accounts receivable
and all contracts and contract rights and all guarantees or other obligations
in respect of such accounts receivable, proceeds of such accounts receivable
and other assets (including contract rights) which are customarily transferred
or in respect of which security interests are customarily granted in connection
with assets securitization transactions involving accounts receivable.


“Recovery Event”
shall mean any settlement of or payment in respect of any property or casualty
insurance claim or any condemnation proceeding relating to any asset of any
Loan Party.



 26
 









“Refinance” shall
mean, in respect of any security or Indebtedness, to refinance, extend, renew,
refund, repay, prepay, redeem, defease or retire, or to issue a security or
Indebtedness in exchange or replacement for, such security or Indebtedness in
whole or in part. “Refinanced” and “Refinancing” shall have correlative
meanings.


“Refinancing Indebtedness”
shall mean any Refinancing, modification, replacement, restatement, refunding,
deferral, extension, substitution, supplement, reissuance or resale of existing
or future Indebtedness (other than intercompany Indebtedness), including any
additional Indebtedness incurred to pay interest or premiums required by the
instruments governing such existing or future Indebtedness as in effect at the
time of issuance thereof (“Required Premiums”) and fees in connection
therewith; provided that
any such event shall not: (i) directly or indirectly result in an increase in
the aggregate principal amount of Permitted Indebtedness, except to the extent
such increase is a result of a simultaneous incurrence of additional
Indebtedness: (A) to pay Required Premiums and related fees; or (B) otherwise
permitted to be incurred under this Agreement; and (ii) create Indebtedness
with a Weighted Average Life to Maturity at the time such Indebtedness is
incurred that is less than the Weighted Average Life to Maturity at such time
of the Indebtedness being refinanced, modified, replaced, renewed, restated,
refunded, deferred, extended, substituted, supplemented, reissued or resold;
and (iii) if the Indebtedness being refinanced is subordinated in right of
payment to the Obligations or the Guarantees thereof, such Refinancing Indebtedness
is subordinated in right of payment to the Obligations or the Guarantees
thereof on terms at least as favorable to the Lenders as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.


“Register”
shall have the meaning assigned to such term in Section 9.4(b).


“Regulation T”
shall mean Regulation T of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.


“Regulation U”
shall mean Regulation U of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.


“Regulation X”
shall mean Regulation X of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.


“Reimbursement
Obligation” shall mean the obligation of Polypore to reimburse the Issuing
Bank pursuant to Section 2.22(e) for amounts drawn under Letters of Credit.


“Related
Parties” shall mean, with
respect to any specified Person, such Person’s Affiliates and the respective
directors, officers, employees, agents and advisors of such Person and such
Person’s Affiliates.


“Release”
shall mean any release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into or through
the environment or within or upon any building, structure, facility or fixture.


“Repayment Date”
shall have the meaning assigned to such term in Section 2.11.


“Required Lenders”
shall mean, at any time, the holders of more than 50% of (a) until the
Restatement Effective Date, the Commitments then in effect and (b) thereafter,
the sum of (i) the aggregate unpaid principal amount of the Term Loans then
outstanding and (ii) the Total Revolving Credit Commitments then in effect or,
if the Revolving Credit Commitments have been terminated, the total Revolving
Credit Exposure of all Lenders at such time; provided,
that the unused Term



 27
 









Commitment,
unused Revolving Credit Commitment of, and the portion of the Term Loans and
Revolving Credit Exposure held or deemed held by, any Defaulting Lender shall
be excluded for purposes of making a determination of Required Lenders.


“Required Revolving Lenders” shall mean, at any time, the holders of more than 50% of the
Total Revolving Credit Commitments then in effect or, if the Revolving Credit
Commitments have been terminated, the total Revolving Credit Exposure of all
Lenders at such time; provided, that the unused Revolving Credit
Commitment of, and the portion of the Revolving Credit Exposure held or deemed
held by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Revolving Lenders.


“Responsible Officer” of any Person shall mean any executive officer or Financial
Officer of such Person and any other officer or similar official thereof
responsible for the administration of the obligations of such Person in respect
of this Agreement.


“Restatement
Effective Date” shall mean the date on which the conditions precedent set
forth in Section 4.2 hereof shall have been satisfied.


“Restricted Available Amount” shall
mean the sum of, without duplication:


(i)  50% of the cumulative Consolidated Net Income
(or if cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss) of Polypore earned subsequent to July 1, 2007 and on or prior to the date
the relevant Specified Payment occurs (the “Reference Date”) (treating such
period as a single accounting period); provided, however, that if, at the time of a
proposed Specified Payment, the Total Leverage Ratio is less than 4.50 to 1.00,
for purposes of calculating the availability of amounts hereunder for such
Specified Payment only, the reference to 50% in this clause (i) shall be deemed
to be 75%; plus


(ii)
100% of the aggregate net cash proceeds (including the fair market value of
property other than cash that would constitute Permitted Investments or a
Permitted Business) received by Polypore from any Person (other than (1) a
Subsidiary of Polypore, (2) Excluded Contributions and (3) proceeds of
Indebtedness of Holdings) from the issuance and sale subsequent to the
Restatement Effective Date and on or prior to the Reference Date of Qualified
Capital Stock of Polypore; plus


(iii) without duplication of any amounts included in clause (ii) above,
100% of the aggregate net cash proceeds of any equity contribution received
subsequent to the Restatement Effective Date by Polypore from a holder of
Polypore’s Capital Stock (other than Excluded Contributions, proceeds from the
Public Equity Offering (unless contributed to Polypore in the form of common
equity) and proceeds of Indebtedness of Holdings); plus


(iv) the amount by which Indebtedness of Polypore is reduced on
Polypore’s balance sheet upon the conversion or exchange subsequent to the
Restatement Effective Date of any Indebtedness of Polypore for Qualified
Capital Stock of Polypore (less the amount of any cash, or the fair value of
any other property, distributed by Polypore upon such conversion or exchange); provided, however,
that the foregoing amount shall not exceed the net cash proceeds received by
Polypore or any Subsidiary from the sale of such Indebtedness (excluding net
cash proceeds from sales to a Subsidiary of Polypore or to an employee stock
ownership plan or a trust established by Polypore or any of its Subsidiaries
for the benefit of their employees); plus


(v) an amount equal to the sum of (I) 100% of the aggregate net
proceeds (including the fair market value of property other than cash that
would constitute Permitted Investments or a Permitted



 28
 









Business) received by Polypore or any Subsidiary (A) from any sale or
other disposition of any Investment in any Person (including an Unrestricted
Subsidiary) made by Polypore and its Subsidiaries pursuant to Section 6.4(l)
and (B) representing the return of capital or principal (excluding dividends
and distributions otherwise included in Consolidated Net Income) with respect
to such Investment, and (II) the portion (proportionate to Polypore’s Capital
Stock in an Unrestricted Subsidiary) of the fair market value of the net assets
of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Subsidiary; provided, however, that, in the case of item (II), the foregoing sum
shall not exceed, in the case of any Unrestricted Subsidiary, the amount of
Investments previously made (and treated as a Specified Payment) by Polypore or
any Subsidiary in such Unrestricted Subsidiary pursuant to Section 6.4(l) and; provided  further,
that no amount will be included under this clause (v) to the extent it is
already included in Consolidated Net Income; plus


(vi) $25,000,000.


“Restricted Indebtedness” shall mean Indebtedness of any Group Member, the payment,
prepayment, repurchase or defeasance of which is restricted under Section 6.9(b).


“Restricted Payment”
shall mean any dividend or other distribution (whether in cash, securities or
other property) with respect to any Capital Stock in any Group Member, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any Capital Stock in any Group
Member or any option, warrant or other right to acquire any such Capital Stock
in any Group Member.


“Restricted
Subsidiary” shall mean any subsidiary of Polypore that is not an
Unrestricted Subsidiary.


“Revolving Credit Borrowing” shall mean a Borrowing comprised of Revolving Loans.


“Revolving Credit Commitment” shall mean, as to any Lender, the obligation of such Lender,
if any, to make Revolving Credit Loans and participate in Swingline Loans and
Letters of Credit in an aggregate principal and/or face amount not to exceed
the amount set forth under the heading “Revolving Credit Commitment” opposite
such Lender’s name on Schedule 2.1 or in the Assignment and Assumption pursuant
to which such Lender became a party hereto, as the same may be changed from
time to time pursuant to the terms hereof.


“Revolving Credit Exposure” shall mean, with respect to any Lender at any time, the
aggregate principal amount at such time of all outstanding Revolving Loans of
such Lender, plus the aggregate amount at such time of such Lender’s L/C
Exposure, plus the aggregate amount at such time of such Lender’s Swingline
Exposure.


“Revolving Credit Lender” shall mean a Lender with a Revolving Credit Commitment or an
outstanding Revolving Loan.


“Revolving Credit Maturity Date” shall mean July 3, 2013. 
Notwithstanding the
foregoing, if any Senior Subordinated Notes are outstanding on February 1,
2012, then the Revolving Credit Maturity Date shall automatically be changed to
February 1, 2012.  Any Senior Subordinated Notes that have been
defeased in accordance with the Senior Subordinated Note Indenture shall be
deemed to be no longer outstanding for the purposes of this definition.


“Revolving Loans”
shall mean the revolving loans made by the Lenders to Polypore pursuant to
clause (iii) of Section 2.1(a).



 29
 









“SEC” shall
mean the Securities and Exchange Commission, any successor thereto and any
analogous Governmental Authority.


“Secured Parties”
shall have the meaning assigned to such term in the Guarantee and Collateral
Agreement.


“Securitization Entity”
shall mean a wholly-owned Subsidiary of Polypore (or another Person in which
Polypore or any Subsidiary of Polypore makes an Investment and to which
Polypore or any Subsidiary of Polypore transfers accounts receivable or
equipment and related assets) which engages in no activities other than in
connection with the financing of accounts receivable or equipment and which is
designated by the Board of Directors of Polypore (as provided below) as a
Securitization Entity:  (i) no portion of
the Indebtedness or any other obligations (contingent or otherwise) of which:
(A) is guaranteed by Polypore or any Subsidiary of Polypore (excluding
guarantees of obligations (other than the principal of, and interest on,
Indebtedness) pursuant to Standard Securitization Undertakings); (B) is
recourse to or obligates Polypore or any Subsidiary of Polypore in any way
other than pursuant to Standard Securitization Undertakings; or (C) subjects
any property or asset of Polypore or any Subsidiary of Polypore, directly or
indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant
to Standard Securitization Undertakings; (ii) with which neither Polypore nor
any Subsidiary of Polypore has any material contract, agreement, arrangement or
understanding (except in connection with a Purchase Money Note or Qualified
Securitization Transaction) other than on terms no less favorable to Polypore
or such Subsidiary than those that might be obtained at the time from Persons
that are not Affiliates of Polypore, other than fees payable in the ordinary
course of business in connection with servicing receivables of such entity; and
(iii) to which neither Polypore nor any Subsidiary of Polypore has any
obligations to maintain or preserve such entity’s financial condition or cause
such entity to achieve certain levels of operating results.


Any such designation by the
Board of Directors of Polypore shall be evidenced to the Administrative Agent
by filing with the Administrative Agent a certified copy of the resolution of
the Board of Directors of Polypore giving effect to such designation and an Officers’
Certificate certifying that such designation complied with the foregoing
conditions.


“Security Documents”
shall mean the Mortgages, the Guarantee and Collateral Agreement and each of
the security agreements, mortgages and other instruments and documents executed
and delivered pursuant to any of the foregoing or pursuant to Section 5.9.


“Senior
Leverage Ratio” shall mean, on any date, the ratio of (a) the excess of (i)
Consolidated Total Indebtedness that is secured by a Lien on such date over
(ii) an amount equal to the lesser of (x) the amount of cash and Permitted
Investments held by Polypore and its Subsidiaries on such date that are free
and clear of any Lien (other than non-consensual Liens permitted by Section 6.2
and Liens permitted by Section 6.2(b)) and (y) $50,000,000 to (b) Consolidated
EBITDA for the period of four consecutive fiscal quarters most recently ended
on or prior to such date


“Senior Subordinated
Note Indenture” shall mean the Indenture entered into by Polypore and
certain of the Subsidiary Guarantors in connection with the issuance of the
Senior Subordinated Notes, together with all instruments and other agreements
entered into by Polypore or such Subsidiary Guarantor in connection therewith.


“Senior
Subordinated Notes” shall mean (a) the 8 3⁄4% subordinated notes of Polypore
issued on May 13, 2004 pursuant to the Senior Subordinated Note Indenture,
together with any exchange notes or any replacement notes issued under the
Senior Subordinated Note Indenture and (b) additional



 30
 









subordinated
notes of Polypore issued after the Restatement Effective Date pursuant to the
Senior Subordinated Note Indenture to the extent permitted under Section 6.1.


“Specified Cash Management Agreement” shall mean any Cash
Management Agreement entered into by any Group Member with any Lender or
affiliate thereof which either (a) is in effect on the Restatement Effective
Date or (b) has been designated by such Lender and Polypore, by notice to the
Administrative Agent not later than 90 days after execution and delivery
thereof, as a “Specified Cash Management Agreement”.


“Specified Disposition” shall mean any asset sale or series of
related asset sales described in clause (b) of the definition of “Asset Sale”
having a value not in excess of $2,500,000.


“Specified
Hedging Agreement” shall mean any Hedging Agreement in respect of interest
rates entered into by Polypore and any Lender or affiliate thereof or, in the case of any agreement in effect on
the Restatement Effective Date, any former Lender that was a Lender on the
Restatement Effective Date, or any of their respective affiliates, which either
(a) is in effect on the Restatement Effective Date or (b) has been designated
by such Lender and Polypore, by notice to the Administrative Agent not later
than 90 days after execution and delivery thereof, as a “Specified Hedging
Agreement”.


“Specified
Payment” shall mean any payment or expenditure made pursuant to Section
6.4(l), 6.6(j), 6.6(k), 6.9(b)(iii) or 6.10(c)(ii).


“Sponsor”
shall mean Warburg Pincus Private Equity VIII, L.P., Warburg Pincus
International Partners, L.P. and their respective Affiliates.


“Standard Securitization
Undertakings” shall mean representations, warranties, covenants and
indemnities entered into by Polypore or any Subsidiary of Polypore which are
reasonably customary, as determined in good faith by the Board of Directors of
Polypore, in an accounts receivable or equipment transaction.


“subsidiary”
shall mean, with respect to any Person (herein referred to as the “parent”),
any corporation, partnership, association or other business entity of which
securities or other ownership interests representing more than 50% of the
equity or more than 50% of the ordinary voting power or more than 50% of the
general partnership interests are, at the time any determination is being made,
owned, controlled or held by the parent or one or more subsidiaries of the
parent or a combination thereof.


“Subsidiary”
shall mean any subsidiary of Polypore; provided, that Unrestricted
Subsidiaries shall be deemed not to constitute “Subsidiaries” for the purposes
of this Agreement (other than the definition of “Unrestricted Subsidiary”).


“Subsidiary Guarantor” shall mean each Subsidiary listed on Schedule 1.1(a), and
each other Subsidiary that is or becomes a party to the Guarantee and
Collateral Agreement.


“Swingline Commitment” shall mean the commitment of the Swingline Lender to make
loans pursuant to Section 2.21, as the same may be reduced from time to
time pursuant to Section 2.9 or Section 2.21.


“Swingline Exposure”
shall mean at any time the aggregate principal amount at such time of all
outstanding Swingline Loans.  The
Swingline Exposure of any Revolving Credit Lender at any time shall equal its
Pro Rata Percentage of the aggregate Swingline Exposure at such time.



 31
 









“Swingline Lender”
shall mean JPMorgan Chase Bank, N.A., in its capacity as lender of Swingline
Loans hereunder.


“Swingline Loan”
shall mean any loan made by the Swingline Lender pursuant to Section 2.21.


“Syndication
Agent” shall have the meaning assigned to such term in the preamble hereto.


“Synthetic
Lease” shall mean, as to any Person, any lease (including leases that may
be terminated by the lessee at any time) of any property (whether real,
personal or mixed) (a) that is accounted for as an operating lease under GAAP
and (b) in respect of which the lessee retains or obtains ownership of the
property so leased for U.S. federal income tax purposes, other than any such
lease under which such Person is the lessor.


“Synthetic
Lease Obligations” shall mean, as to any Person, an amount equal to the sum
of (a) the obligations of such Person to pay rent or other amounts under any
Synthetic Lease which are attributable to principal and, without duplication,
(b) the amount of any purchase price payment under any Synthetic Lease assuming
the lessee exercises the option to purchase the leased property at the end of
the lease term.


“Synthetic Purchase Agreement” shall mean any swap, derivative or other agreement or
combination of agreements pursuant to which any Group Member is or may become
obligated to make (a) any payment in connection with a purchase by any third
party from a Person other than any Group Member of any Capital Stock or
Restricted Indebtedness of any Group Member or (b) any payment (other than on
account of a permitted purchase by it of any Capital Stock or Restricted
Indebtedness) the amount of which is determined by reference to the price or
value at any time of any Capital Stock or Restricted Indebtedness of any Group
Member; provided, that no phantom stock or similar plan providing for
payments only to current or former directors, officers or employees of any
Group Member (or to their heirs or estates) shall be deemed to be a Synthetic
Purchase Agreement.


“Taxes”
shall mean any and all present or future taxes, levies, imposts, duties,
deductions, charges, liabilities or withholdings imposed by any Governmental
Authority.


“Tax Payments” shall mean net
payments in cash by Polypore (or by Holdings or the Parent on behalf of
Polypore) to Holdings in respect of Taxes pursuant to the Tax Sharing
Agreement.


“Tax Sharing Agreement” shall mean
the Tax Sharing Agreement dated as of May 13, 2004 among Holdings, the Parent,
Polypore and certain Subsidiaries.


“Term Loan Commitment” shall mean, with respect to any Lender, such Lender’s
(a) US$ Term Loan Commitment, (b) Euro Term Loan Commitment and (c)
Incremental Term Loan Commitment.


“Term Loan Maturity Date” shall mean July 3, 2014. 
Notwithstanding the
foregoing, if any Senior Subordinated Notes are outstanding on February 1,
2012, then the Term Loan Maturity Date shall automatically be changed to
February 1, 2012.  Any Senior Subordinated Notes that have been
defeased in accordance with the Senior Subordinated Note Indenture shall be
deemed to be no longer outstanding for the purposes of this definition.


“Term Loans”
shall mean the term loans made by the Lenders to the Borrower pursuant to
clauses (i) and (ii) of Section 2.1(a). 
Unless the context shall otherwise require, the term “Term Loans” shall
include Incremental Term Loans.



 32
 









“Total Assets” shall mean, as of any date, the total
consolidated assets of Polypore and the Subsidiaries, as set forth on Polypore’s
most recently delivered quarterly balance sheet.


“Total Leverage
Ratio” shall mean, on any date, the ratio of (a) the excess of (i)
Consolidated Total Indebtedness on such date over (ii) an amount equal
to the lesser of (x) the amount of cash and Permitted Investments held by
Polypore and its Subsidiaries on such date that are free and clear of any Lien
(other than non-consensual Liens permitted by Section 6.2) and (y) $50,000,000
to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters
most recently ended on or prior to such date.


“Total Revolving Credit Commitment” shall mean, at any time, the aggregate amount of the Revolving
Credit Commitments, as in effect at such time. The Total Revolving Credit
Commitment as of the Restatement Effective Date is $90,000,000.


“Trading With
the Enemy Act” shall have the meaning assigned to such term in Section
3.25.


“Transactions”
shall mean, collectively, (a) the execution, delivery and performance by the
Loan Parties of the Loan Documents to which they are a party and, in the case
of the Borrower, the making of the initial Borrowings hereunder, (b) the
repayment of all amounts outstanding or due under, and the termination of, the
Existing Credit Agreement and (c) the payment of related fees and expenses.


“Type”,
when used in respect of any Loan or Borrowing, shall refer to the Rate by
reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined.  For purposes
hereof, the term “Rate”
shall include the Eurocurrency Rate and the Alternate Base Rate.


“Uniform
Customs” shall have the meaning assigned to such term in Section 9.7.


“Unrestricted Subsidiary”
of any Person means: (i) any Subsidiary of such Person that at the time of
determination shall be or continue to be designated an Unrestricted Subsidiary
by the Board of Directors of such Person in the manner provided below; and (ii)
any Subsidiary of an Unrestricted Subsidiary.


The Board of Directors of
Polypore may designate any Subsidiary (including any newly acquired or newly
formed Subsidiary or a Person becoming a Subsidiary through merger or
consolidation or Investment therein) to be an Unrestricted Subsidiary unless
such Subsidiary owns any Capital Stock of or Indebtedness of or has any
Investment in, or owns or holds any Lien on any property of, Polypore or any
other Subsidiary of Polypore that is not a Subsidiary of the Subsidiary to be
so designated or another Unrestricted Subsidiary; provided that: (i) Polypore certifies to the Administrative
Agent that such designation is being made as an Investment using the Available
Amount pursuant to Section 6.4(l) or the basket referred to in Section 6.4(r)
(with the amount of such Investment being deemed to be the fair market value of
the net assets of such Subsidiary at the time such Subsidiary is designated an
Unrestricted Subsidiary); and (ii) each Subsidiary to be so designated and each
of its Subsidiaries: (A) has not at the time of designation, any Indebtedness
pursuant to which the lender has recourse to any of the assets of Polypore or
any of its Restricted Subsidiaries, unless such recourse is Indebtedness or a
Lien that is permitted under this Agreement after giving effect to such
designation; and (B) either alone or in the aggregate with all other
Unrestricted Subsidiaries does not operate, directly or indirectly, all or
substantially all of the business of Polypore and its Subsidiaries.


The Board of Directors of
Polypore may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if (x) immediately after giving effect to such designation,
Polypore is able to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with Section 6.1 and (y) immediately
before and immediately after giving effect to such designation, no Default or
Event of



 33
 









Default
shall have occurred and be continuing or would occur as a consequence thereof.
Any such designation by the Board of Directors of Polypore shall be evidenced
to the Administrative Agent by promptly filing with the Administrative Agent a
copy of the Board Resolution giving effect to such designation and an Officers’
Certificate certifying that such designation complied with the foregoing
provisions.  Any Unrestricted Subsidiary
designated as a Restricted Subsidiary may not subsequently be re-designated as
an Unrestricted Subsidiary.


If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Agreement and any Indebtedness of such
Subsidiary shall be deemed to be incurred as of such date.


Actions taken by an
Unrestricted Subsidiary shall not be deemed to have been taken, directly or
indirectly, by Polypore or any Restricted Subsidiary.


“US$ Term Loan” shall have the meaning assigned to such term in
Section 2.1.


“US$ Term Loan Borrowing” shall mean a Borrowing comprised of US$ Term Loans.


“US$ Term Loan Commitment” shall mean, with respect
to each Lender, the commitment of such Lender to make US$ Term Loans hereunder
as set forth on Schedule 2.1, or in the Assignment and Assumption pursuant
to which such Lender assumed its US$ Term Loan Commitment, as applicable, as
the same may be (i) reduced from time to time pursuant to Section 2.9
and (ii) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 9.4. 
The aggregate amount of the US$ Term Loan Commitments as of the
Restatement Effective Date is $322,893,500.


“US$ Term
Percentage”:  as to any Lender at any
time, the percentage which such Lender’s US$ Term Loan Commitment then constitutes
of the aggregate US$ Term Loan Commitments (or, at any time after the
Restatement Effective Date, the percentage which the principal amount of such
Lender’s US$ Term Loan then outstanding constitutes of the aggregate principal
amount of the US$ Term Loans then outstanding).


“Weighted Average Life to Maturity” shall mean, when applied to
any Indebtedness at any date, the number of years obtained by dividing:  (a) the then outstanding aggregate principal
amount of such Indebtedness into (b) the sum of the total of the products
obtained by multiplying:  (i) the amount
of each then remaining installment, sinking fund, serial maturity or other
required payment of principal, including payment at final maturity, in respect
thereof; by (ii) the number of years (calculated to the nearest one-twelfth)
which will elapse between such date and the making of such payment.


“Wholly Owned Subsidiary” of any Person shall mean a subsidiary of such Person of which
securities (except for directors’ qualifying shares and other de minimis
ownership interests required to be owned under foreign law by local residents)
or other ownership interests representing 100% of the Capital Stock are, at the
time any determination is being made, owned, controlled or held by such Person
or one or more Wholly Owned Subsidiaries of such Person or by such Person and
one or more Wholly Owned Subsidiaries of such Person.


“Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.


SECTION
1.2.  Terms Generally.  The definitions in Section 1.1 shall
apply equally to both the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the



 34
 









corresponding masculine, feminine and neuter
forms.  The words “include”, “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation”.  The word “will” shall be
construed to have the same meaning and effect as the word “shall”; and the
words “asset” and “property” shall be construed as having the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.  All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections of,
and Exhibits and Schedules to, this Agreement unless the context shall otherwise
require.  Except as otherwise expressly
provided herein, (a) any reference in this Agreement to any Loan Document
shall mean such document as amended, restated, supplemented or otherwise
modified from time to time and (b) all terms of an accounting or financial
nature shall be construed in accordance with GAAP, as in effect from time to
time; provided, however, that if, before or after any change in GAAP occurs,
Polypore notifies the Administrative Agent that Polypore wishes to amend any
covenant in Article VI or any related definition to eliminate the effect of any
such change in GAAP occurring after the Restatement Effective Date on the
operation of such covenant (or if the Administrative Agent notifies Polypore
that the Required Lenders (or, in the case of Sections 6.10 and 6.11, the Required
Revolving Lenders) wish to amend Article VI or any related definition for such
purpose), then Polypore’s compliance with such covenant (and the computations
made for purposes of determining the Applicable Percentage) shall be determined
on the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to Polypore and the Required Lenders (or, in
the case of Sections 6.10 and 6.11, Polypore and the Required Revolving
Lenders).


SECTION
1.3.  Pro Forma Calculations.  With respect to any period during which any
Permitted Acquisition or Asset Sale occurs as permitted pursuant to the terms
hereof, the Total Leverage Ratio and the Senior Leverage Ratio shall be
calculated with respect to such period and such Permitted Acquisition or Asset
Sale on a Pro Forma Basis.  For purposes
of determining whether a Default or Event of Default is in existence after
giving effect to a particular transaction, if the Revolving Facility is then
being utilized (after giving effect to such transaction), pro forma compliance
with Section 6.11 shall be required unless otherwise agreed by the Required
Revolving Lenders.


SECTION
1.4.  Classification of Loans
and Borrowings. 
For purposes of this Agreement, Loans may be classified and referred to
by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurocurrency
Loan”) or by Class and Type (e.g., a “Eurocurrency Revolving Loan”).  Borrowings also may be classified and
referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a
“Eurocurrency Borrowing”) or by Class and Type (e.g., a “Eurocurrency
Revolving Borrowing”).


SECTION
1.5.  Currency Equivalents
Generally.  Any
amount specified in this Agreement or any of the other Loan Documents to be in
Dollars shall also include the equivalent of such amount in any currency other
than Dollars, such equivalent amount to be determined at the rate of exchange
quoted by JPMorgan Chase Bank, N.A. in New York, New York at the close of
business on the Business Day immediately preceding any date of determination
thereof, to prime banks in New York, New York for the spot purchase in the New
York foreign exchange market of such amount in Dollars with such other currency.  The maximum amount of Indebtedness,
investments and other threshold amounts that any Group Member may incur under
Article VI shall not be deemed to be exceeded, with respect to any outstanding
Indebtedness, investments and other threshold amounts solely as a result of
fluctuations in the exchange rate of currencies.  When calculating capacity for the incurrence
of additional Indebtedness, investments and other threshold amounts by any
Group Member, the exchange rate of currencies shall be measured as of the date
of such calculation.



 35
 









ARTICLE
II


The Credits


SECTION
2.1.  Commitments.  (a) 
Subject to the terms and conditions and relying upon the representations
and warranties herein set forth, each Lender agrees, severally and not jointly,
(i) to make a term loan to Polypore in Dollars (a “US$ Term Loan”) on
the Restatement Effective Date in a principal amount not to exceed its US$ Term
Loan Commitment, (ii) to make a term loan to Daramic Holding in Euros (a “Euro
Term Loan”) on the Restatement Effective Date in a principal amount not to
exceed its Euro Term Loan Commitment and (iii) to make Revolving Loans to
Polypore in Dollars, at any time and from time to time on or after the
Restatement Effective Date, and until the earlier of the Revolving Credit Maturity
Date and the termination of the Revolving Credit Commitment of such Lender in
accordance with the terms hereof, in an aggregate principal amount at any time
outstanding that will not result in such Lender’s Revolving Credit Exposure
exceeding such Lender’s Revolving Credit Commitment.  Within the limits set forth in clause (iii)
of the preceding sentence and subject to the terms, conditions and limitations
set forth herein, Polypore may borrow, pay or prepay and reborrow Revolving
Loans.  Amounts paid or prepaid in
respect of Term Loans may not be reborrowed.


(b)                                 Incremental Term Loans.  Each Lender having
an Incremental Term Loan Commitment hereby agrees, severally and not jointly,
on the terms and subject to the conditions set forth herein and in the applicable
Incremental Term Loan Assumption Agreement and in reliance on the
representations and warranties set forth herein and in the other Loan
documents, to make Incremental Term Loans to Polypore, in an aggregate
principal amount not to exceed its Incremental Term Loan Commitment.  Amounts paid or prepaid in respect of
Incremental Term Loans may not be reborrowed.


SECTION
2.2.  Loans.  (a) 
Each Loan (other than Swingline Loans) shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their applicable Commitments; provided, however, that the failure
of any Lender to make any Loan shall not in itself relieve any other Lender of
its obligation to lend hereunder (it being understood, however, that no Lender
shall be responsible for the failure of any other Lender to make any Loan
required to be made by such other Lender). 
Except for Swingline Loans and Loans deemed made pursuant to
Section 2.2(f), the Loans comprising any Borrowing shall be in an
aggregate principal amount that is (i) (A) in the case of a Revolving
Borrowing, an integral multiple of $1,000,000 and not less than $1,000,000,
(B) in the case of a US$ Term Loan Borrowing or an Incremental Term Loan
Borrowing, an integral multiple of $1,000,000 and not less than $5,000,000
(except with respect to any Incremental Term Loan Borrowing, to the extent
otherwise provided in the related Incremental Term Loan Assumption Agreement)
and (C) in the case of a Euro Term Loan Borrowing, an integral multiple of €1,000,000
and not less than €5,000,000 or (ii) in the case of any Borrowing, equal
to the remaining available balance of the applicable Commitments.


(b)                                 Subject
to Section 2.8, each Borrowing shall be comprised entirely of Eurocurrency
Loans or, with respect to Loans denominated in Dollars, ABR Loans, as the
Borrower may request pursuant to Section 2.3.  Each Lender may at its option make any
Eurocurrency Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; provided,
that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this
Agreement.  Borrowings of more than one
Type may be outstanding at the same time; provided, however,
that the Borrower shall not be entitled to request any Borrowing that, if made,
would result in more than ten (10) Eurocurrency Borrowings outstanding
hereunder at any time.  For purposes of
the foregoing, Borrowings having different Interest Periods, regardless of
whether they commence on the same date, shall be considered separate
Borrowings.



 36
 









(c)                                  Except
with respect to Swingline Loans and Loans made pursuant to Section 2.2(f),
each Lender shall make each Loan to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds to the Funding
Office not later than 12:00 (noon), Local Time, and the Administrative Agent
shall promptly transfer the amounts so received to the account designated by
the Borrower in the applicable Borrowing Request or, if a Borrowing shall not
occur on such date because any condition precedent herein specified shall not
have been met, return the amounts so received to the respective Lenders.


(d)                                 Unless
the Administrative Agent shall have received notice from a Lender prior to the
date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount.  If the
Administrative Agent shall have so made funds available then, to the extent
that such Lender shall not have made such portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay to
the Administrative Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to the Borrower until the date such amount is repaid to the Administrative
Agent at (i) in the case of the Borrower, the interest rate applicable at the
time to the Loans comprising such Borrowing and (ii) in the case of such
Lender, a rate determined by the Administrative Agent to represent its cost of
overnight or short-term funds (which determination shall be conclusive absent
manifest error).  If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount shall
constitute such Lender’s Loan as part of such Borrowing for purposes of this
Agreement.


(e)                                  Notwithstanding
any other provision of this Agreement, Polypore shall not be entitled to
request any Revolving Credit Borrowing if the Interest Period requested with
respect thereto would end after the Revolving Credit Maturity Date.


(f)                                    If
the Issuing Bank shall not have received from Polypore the payment required to
be made by Section 2.22(e) within the time specified in such Section, the
Issuing Bank will promptly notify the Administrative Agent of the L/C
Disbursement and the Administrative Agent will promptly notify each Revolving
Credit Lender of such L/C Disbursement and its Pro Rata Percentage
thereof.  Each Revolving Credit Lender
shall pay by wire transfer of immediately available funds to the Administrative
Agent not later than 2:00 p.m., New York City time, on such date (or, if such
Revolving Credit Lender shall have received such notice later than 12:00
(noon), New York City time, on any day, not later than 10:00 a.m., New York
City time, on the immediately following Business Day), an amount equal to such
Lender’s Pro Rata Percentage of such L/C Disbursement (it being understood that
such amount shall be deemed to constitute an ABR Revolving Loan of such Lender
and such payment shall be deemed to have reduced the L/C Exposure), and the
Administrative Agent will promptly pay to the Issuing Bank amounts so received
by it from the Revolving Credit Lenders. 
The Administrative Agent will promptly pay to the Issuing Bank any
amounts received by it from Polypore pursuant to Section 2.22(e) prior to
the time that any Revolving Credit Lender makes any payment pursuant to this
paragraph (f); any such amounts received by the Administrative Agent thereafter
will be promptly remitted by the Administrative Agent to the Revolving Credit
Lenders that shall have made such payments and to the Issuing Bank, as their
interests may appear.  If any Revolving
Credit Lender shall not have made its Pro Rata Percentage of such L/C
Disbursement available to the Administrative Agent as provided above, such
Lender and Polypore severally agree to pay interest on such amount, for each
day from and including the date such amount is required to be paid in
accordance with this paragraph to but excluding the date such amount is paid,
to the Administrative Agent for the account of the Issuing Bank at (i) in the
case of Polypore, a rate per annum equal to the interest rate applicable to
Revolving Loans pursuant to Section 2.6(a), and (ii) in the case of



 37
 









such Lender,
for the first such day, the Federal Funds Effective Rate, and for each day
thereafter, the Alternate Base Rate.


SECTION
2.3.  Borrowing Procedure.  In order to request a Borrowing (other than a
Swingline Loan or a deemed Borrowing pursuant to Section 2.2(f), as to
which this Section 2.3 shall not apply), the Borrower shall hand deliver
or fax to the Administrative Agent (or give telephonic notice promptly confirmed
by written notice) a duly completed Borrowing Request (a) in the case of a
Eurocurrency Borrowing, not later than 12:00 (noon), Local Time, three Business
Days before a proposed Borrowing, and (b) in the case of an ABR Borrowing, not
later than 12:00 (noon), New York City time, one Business Day before a proposed
Borrowing.  Each Borrowing Request shall
be irrevocable, shall be signed by or on behalf of the Borrower and shall
specify the following information: (i) whether the Borrowing then being requested
is to be a US$ Term Loan Borrowing, a Euro Term Loan Borrowing, an Incremental
Term Loan Borrowing or a Revolving Credit Borrowing, whether such Borrowing is
denominated in Dollars, and whether such Borrowing is to be a Eurocurrency
Borrowing or an ABR Borrowing; (ii) the date of such Borrowing (which
shall be a Business Day); (iii) the number and location of the account to
which funds are to be disbursed; (iv) the amount of such Borrowing; and
(v) if such Borrowing is to be a Eurocurrency Borrowing, the Interest
Period with respect thereto; provided, however, that,
notwithstanding any contrary specification in any Borrowing Request, each
requested Borrowing shall comply with the requirements set forth in
Section 2.2.  If no election as to
the Type of Borrowing is specified in any such notice, then the requested
Borrowing shall be an ABR Borrowing.  If
no Interest Period with respect to any Eurocurrency Borrowing is specified in
any such notice, then the Borrower shall be deemed to have selected an Interest
Period of one month’s duration.  The
Administrative Agent shall promptly advise the applicable Lenders of any notice
given pursuant to this Section 2.3 (and the contents thereof), and of each
Lender’s portion of the requested Borrowing.


SECTION
2.4.  Evidence of Debt;
Repayment of Loans. 
(a)  The Borrower hereby
unconditionally promises to pay to each Lender, through the Administrative
Agent, (i) the principal amount of each Term Loan of such Lender as
provided in Section 2.11 and (ii) the then unpaid principal amount of
each Revolving Loan of such Lender on the Revolving Credit Maturity Date.  Polypore hereby promises to pay to the
Swingline Lender the then unpaid principal amount of each Swingline Loan on the
Revolving Credit Maturity Date.


(b)                                 Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement.


(c)                                  The
Administrative Agent shall maintain accounts in which it will record (i) the
amount of each Loan made hereunder, the Type thereof and, if applicable, the
Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder from the Borrower or any Guarantor and each Lender’s share
thereof.


(d)                                 The
entries made in the accounts maintained pursuant to paragraphs (b) and (c)
above shall be prima facie evidence of the
existence and amounts of the obligations therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligations of the Borrower to repay
the Loans in accordance with their terms.


(e)                                  Any
Lender may request that Loans made by it hereunder be evidenced by a promissory
note.  In such event, the Borrower shall
execute and deliver to such Lender a promissory note payable to



 38
 









such Lender
and its registered assigns and in a form and substance reasonably acceptable to
the Administrative Agent and the Borrower. Notwithstanding any other provision
of this Agreement, in the event any Lender shall request and receive such a
promissory note, the interests represented by such note shall at all times
(including after any assignment of all or part of such interests pursuant to
Section 9.4) be represented by one or more promissory notes payable to the
payee named therein or its registered assigns.


SECTION
2.5.  Fees.  (a) 
Polypore agrees to pay to each Lender, through the Administrative Agent,
on the last Business Day of March, June, September and December in each year
and on each date on which any Commitment of such Lender shall expire or be
terminated as provided herein, a commitment fee (a “Commitment Fee”)
equal to 0.50% per annum on the daily unused amount of the Commitments of such
Lender (other than the Swingline Commitment) during the preceding quarter (or
other period commencing with the Restatement Effective Date or ending with the
Revolving Credit Maturity Date or the date on which the Commitments of such
Lender shall expire or be terminated); provided that any commitment fee
accrued with respect to any of the Commitments of a Defaulting Lender during
the period prior to the time such Lender became a Defaulting Lender and unpaid
at such time shall not be payable by Polypore so long as such Lender shall be a
Defaulting Lender except to the extent that such commitment fee shall otherwise
have been due and payable by Polypore prior to such time; and provided, further,
that no commitment fee shall accrue on any of the Commitments of a Defaulting
Lender so long as such Lender shall be a Defaulting Lender.  All Commitment Fees shall be computed on the
basis of the actual number of days elapsed in a year of 360 days.  The Commitment Fee due to each Lender shall
commence to accrue on the Restatement Effective Date and shall cease to accrue
on the date on which the Commitment of such Lender shall expire or be
terminated as provided herein.  For
purposes of calculating Commitment Fees only, no portion of the Revolving
Credit Commitments shall be deemed utilized as a result of outstanding
Swingline Loans.


(b)                                 Polypore
agrees to pay to the Administrative Agent, for its own account, the
administration fees set forth in the Fee Letter at the times and in the amounts
specified therein (the “Administrative
Agent Fees”).


(c)                                  Polypore
agrees to pay (i) to each Revolving Credit Lender, through the Administrative
Agent, on each Fee Payment Date a fee (an “L/C Participation Fee”) calculated on such Lender’s Pro Rata
Percentage of the daily aggregate L/C Exposure (excluding the portion thereof
attributable to unreimbursed L/C Disbursements) during the preceding quarter
(or shorter period commencing with the Restatement Effective Date or ending
with the Revolving Credit Maturity Date or the date on which all Letters of
Credit have been canceled or have expired and the Revolving Credit Commitments
of all Lenders shall have been terminated) at a rate per annum equal to the
Applicable Percentage from time to time used to determine the interest rate on
Revolving Credit Borrowings comprised of Eurocurrency Loans pursuant to
Section 2.6, and (ii) to the Issuing Bank, for its own account, a fronting
fee of 0.25% per annum on the undrawn and unexpired amount of each Letter of
Credit, payable quarterly in arrears on each Fee Payment Date after the
issuance date (the “Issuing Bank
Fees”).  All L/C Participation
Fees and Issuing Bank Fees shall be computed on the basis of the actual number
of days elapsed in a year of 360 days.


(d)                                 All
Fees shall be paid in Dollars on the dates due, in immediately available funds,
to the Administrative Agent for distribution, if and as appropriate, among the
Lenders, except that the Issuing Bank Fees shall be paid directly to the
Issuing Bank.  Once paid, none of the
Fees shall be refundable under any circumstances.


SECTION
2.6.  Interest on Loans.  (a) 
Subject to the provisions of Section 2.7, the Loans comprising each
ABR Borrowing, including each Swingline Loan, shall bear interest (computed on
the basis of the actual number of days elapsed over a year of 365 or 366 days,
as the case may be, when the Alternate Base Rate



 39
 









is determined by reference to the Prime Rate and over
a year of 360 days at all other times and calculated from and including the
date of such Borrowing to but excluding the date of repayment thereof) at a
rate per annum equal to the Alternate Base Rate plus the Applicable Percentage
in effect from time to time.


(b)                                 Subject
to the provisions of Section 2.7, the Loans comprising each Eurocurrency
Borrowing shall bear interest (computed on the basis of the actual number of
days elapsed over a year of 360 days) at a rate per annum equal to the
Eurocurrency Rate for the Interest Period in effect for such Borrowing plus the
Applicable Percentage in effect from time to time.


(c)                                  Interest
on each Loan shall be payable to the applicable Lenders, through the
Administrative Agent, on the Interest Payment Dates applicable to such Loan
except as otherwise provided in this Agreement.  The applicable Alternate Base Rate or
Eurocurrency Rate for each Interest Period or day within an Interest Period, as
the case may be, shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.


SECTION
2.7.  Default Interest.  Any amount (whether of principal, interest,
Fees or otherwise) not paid when due hereunder or under any other Loan Document
shall bear interest, to the extent permitted by law (after as well as before
judgment), payable on demand, (a) in the case of principal, at the rate
otherwise applicable thereto pursuant to Section 2.6 plus 2.00% per annum
and (b) in all other cases, at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be, when determined by reference to the Prime Rate and over a year of 360 days
at all other times) equal to the rate that would be applicable to an ABR Term
Loan plus 2.00% per annum.


SECTION
2.8.  Alternate Rate of
Interest.  In the
event, and on each occasion, that on the day two Business Days prior to the
commencement of any Interest Period for a Eurocurrency Borrowing the
Administrative Agent shall have determined that dollar deposits in the
principal amounts of the Loans comprising such Borrowing are not generally
available in the London interbank market, or that the rates at which such
dollar deposits are being offered will not adequately and fairly reflect the
cost to a majority in interest of the Lenders participating or to participate
in such Loan of making or maintaining its Eurocurrency Loan during such
Interest Period, or that reasonable means do not exist for ascertaining the
Eurocurrency Rate, the Administrative Agent shall, as soon as practicable
thereafter, give written or fax notice of such determination to the Borrower
and the Lenders.  In the event of any
such determination, until the Administrative Agent shall have advised the
Borrower and the Lenders that the circumstances giving rise to such notice no
longer exist, any request by the Borrower for a Eurocurrency Borrowing pursuant
to Section 2.3 or 2.10 shall be deemed to be a request for an ABR
Borrowing.  Each determination by the
Administrative Agent under this Section 2.8 shall be conclusive absent
manifest error.


SECTION
2.9.  Termination and Reduction
of Commitments.  (a)  The US$ Term Loan Commitments and the Euro
Term Loan Commitments shall automatically terminate at 5:00 p.m., New York City
time, on the Restatement Effective Date. The Revolving Credit Commitments, the
Swingline Commitment and the L/C Commitment shall automatically terminate on
the Revolving Credit Maturity Date.


(b)                                 Upon
at least three Business Days’ prior irrevocable written or fax notice (or
telephonic notice promptly confirmed by written notice) to the Administrative
Agent, the Borrower may at any time in whole permanently terminate, or from
time to time in part permanently reduce, the Term Loan Commitments or the
Revolving Credit Commitments; provided, however, that
(i) each partial reduction of the Term Loan Commitments or the Revolving
Credit Commitments shall be in an integral multiple of $1,000,000 and in a
minimum amount of $1,000,000 and (ii) the Total Revolving Credit
Commitment shall not be reduced to an amount that is less than the Aggregate
Revolving Credit Exposure at the time.



 40















(c)                                  Each
reduction in the Term Loan Commitments or the Revolving Credit Commitments
hereunder shall be made ratably among the Lenders in accordance with their
respective applicable Commitments.  The
Borrower shall pay to the Administrative Agent for the account of the
applicable Lenders, on the date of termination of the Commitments of any Class,
all accrued and unpaid Commitment Fees relating to such Class to but excluding
the date of such termination.


SECTION
2.10.  Conversion and
Continuation of Borrowings.  The Borrower shall have the right at any time
upon prior irrevocable notice to the Administrative Agent (a) not later
than 12:00 (noon), New York City time, one Business Day prior to
conversion, to convert any Eurocurrency Borrowing denominated in Dollars into
an ABR Borrowing, (b) not later than 12:00 (noon), New York City time,
three Business Days prior to conversion or continuation, to convert any ABR
Borrowing into a Eurocurrency Borrowing denominated in Dollars or to continue
any Eurocurrency Borrowing as a Eurocurrency Borrowing for an additional
Interest Period, and (c) not later than 12:00 (noon), Local Time,
three Business Days prior to conversion, to convert the Interest Period with
respect to any Eurocurrency Borrowing to another permissible Interest Period,
subject in each case to the following:


(i)  
each conversion or continuation shall be made pro rata among the Lenders in
accordance with the respective principal amounts of the Loans comprising the
converted or continued Borrowing;


(ii)  
if less than all the outstanding principal amount of any Borrowing shall be
converted or continued, then each resulting Borrowing shall satisfy the
limitations specified in Sections 2.2(a) and 2.2(b) regarding the principal
amount and maximum number of Borrowings of the relevant Type;


(iii)  
each conversion shall be effected by each Lender and the Administrative Agent
by recording for the account of such Lender the new Loan of such Lender
resulting from such conversion and reducing the Loan (or portion thereof) of
such Lender being converted by an equivalent principal amount; accrued interest
on any Eurocurrency Loan (or portion thereof) being converted shall be paid by
the Borrower at the time of conversion;


(iv)  
if any Eurocurrency Borrowing is converted at a time other than the end of the
Interest Period applicable thereto, the Borrower shall pay, upon demand, any
amounts due to the Lenders pursuant to Section 2.15; and


(v)  
after the occurrence and during the continuance of a Default specified in clause
(b) or (c) of Article VII (without regard to any applicable grace period in
such clause (c)), no outstanding Loan denominated in Dollars may be converted
into, or continued as, a Eurocurrency Loan.


Each notice pursuant to this Section 2.10 shall be irrevocable
and shall refer to this Agreement and specify (i) the identity, currency
denomination and amount of the Borrowing that the Borrower requests be
converted or continued, (ii) whether such Borrowing is to be converted to or
continued as a Eurocurrency Borrowing or an ABR Borrowing, (iii) if such notice
requests a conversion, the date of such conversion (which shall be a Business
Day) and (iv) if such Borrowing is to be converted to or continued as a
Eurocurrency Borrowing, the Interest Period with respect thereto.  If no Interest Period is specified in any
such notice with respect to any conversion to or continuation as a Eurocurrency
Borrowing, the Borrower shall be deemed to have selected an Interest Period of one
month’s duration.  The Administrative
Agent shall advise the Lenders of any notice given pursuant to this Section
2.10 and of each Lender’s portion of any converted or continued Borrowing.  If the Borrower shall not have given notice
in accordance with this Section 2.10 to continue any Eurocurrency Borrowing
into a subsequent



 41
 









Interest
Period (and shall not otherwise have given notice in accordance with this
Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of
the Interest Period applicable thereto (unless repaid pursuant to the terms
hereof), automatically be converted into an ABR Borrowing.


SECTION
2.11.  Repayment of Term Loan
Borrowings.  (a)  The
Borrower shall pay to the applicable Lenders, through the Administrative Agent,
on the dates set forth below, or if any such date is not a Business Day, on the
next preceding Business Day (each such date being called a “Repayment Date”),
a principal amount of the US$ Term Loans and Euro Term Loans (as adjusted from
time to time pursuant to Sections 2.11(c), 2.12, 2.13(e) and 2.23(d))
equal to such Lender’s US$ Term Percentage or Euro Term Percentage, as the case
may be, multiplied by a percentage of the original aggregate principal amount
of the US$ Term Loans or the Euro Term Loans, as applicable, as set forth below
(together in each case with accrued and unpaid interest on the principal amount
to be paid to but excluding the date of such payment):


	
  Repayment Date

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  September 29,
  2007

  	
   

  	
  0.25

  	
  %

  
	
  December 29,
  2007

  	
   

  	
  0.25

  	
  %

  
	
  March 29, 2008

  	
   

  	
  0.25

  	
  %

  
	
  June 28, 2008

  	
   

  	
  0.25

  	
  %

  
	
  September 27,
  2008

  	
   

  	
  0.25

  	
  %

  
	
  January 3, 2009

  	
   

  	
  0.25

  	
  %

  
	
  April 4, 2009

  	
   

  	
  0.25

  	
  %

  
	
  July 4, 2009

  	
   

  	
  0.25

  	
  %

  
	
  October 3, 2009

  	
   

  	
  0.25

  	
  %

  
	
  January 2, 2010

  	
   

  	
  0.25

  	
  %

  
	
  April 3, 2010

  	
   

  	
  0.25

  	
  %

  
	
  July 3, 2010

  	
   

  	
  0.25

  	
  %

  
	
  October 2, 2010

  	
   

  	
  0.25

  	
  %

  
	
  January 1, 2011

  	
   

  	
  0.25

  	
  %

  
	
  April 2, 2011

  	
   

  	
  0.25

  	
  %

  
	
  July 2, 2011

  	
   

  	
  0.25

  	
  %

  
	
  October 1, 2011

  	
   

  	
  0.25

  	
  %

  
	
  December 31,
  2011

  	
   

  	
  0.25

  	
  %

  
	
  March 31, 2012

  	
   

  	
  0.25

  	
  %

  
	
  June 30, 2012

  	
   

  	
  0.25

  	
  %

  
	
  September 29,
  2012

  	
   

  	
  0.25

  	
  %

  
	
  December 29,
  2012

  	
   

  	
  0.25

  	
  %

  
	
  March 30, 2013

  	
   

  	
  0.25

  	
  %

  
	
  June 29, 2013

  	
   

  	
  0.25

  	
  %

  
	
  September 28,
  2013

  	
   

  	
  0.25

  	
  %

  
	
  December 28,
  2013

  	
   

  	
  0.25

  	
  %

  
	
  March 29, 2014

  	
   

  	
  0.25

  	
  %

  
	
  June 28, 2014

  	
   

  	
  0.25

  	
  %

  
	
  Term Loan Maturity Date

  	
   

  	
  93.00

  	
  %

  



(b)                                 Polypore
shall pay to the Administrative Agent, for the account of the Lenders, on each
Incremental Term Loan Repayment Date, a principal amount of the Other Term
Loans (as adjusted from time to time pursuant to Sections 2.11(c), 2.12
and 2.13(e)) equal to the amount set forth for such date in the applicable
Incremental Term Loan Assumption Agreement, together in each case with accrued
and unpaid interest on the principal amount to be paid to but excluding the
date of such payment.



 42
 









(c)                                  In
the event and on each occasion that any Term Loan Commitment (other than any
Incremental Term Loan Commitment) shall be reduced or shall expire or terminate
other than as a result of the making of a Term Loan, the installments payable
on each Repayment Date shall be reduced pro rata by an aggregate amount equal
to the amount of such reduction, expiration or termination.


(d)                                 To
the extent not previously paid, all Term Loans shall be due and payable on the
Term Loan Maturity Date and all Incremental Term Loans shall be due and payable
on the applicable Incremental Term Loan Maturity Date, together in each case
with accrued and unpaid interest on the principal amount to be paid to but
excluding the date of payment.


(e)                                  Notwithstanding anything to the contrary in
this Section 2.11, if any Senior Subordinated Notes are outstanding on February
1, 2012, then, on February 1, 2012, all outstanding Term Loans shall
automatically become due and payable. 
Any Senior Subordinated Notes
that have been defeased in accordance with the Senior Subordinated Note
Indenture shall be deemed to be no longer outstanding for the purposes of this
paragraph.


(f)                                    All
repayments pursuant to this Section 2.11 shall be subject to Section 2.15, but
shall otherwise be without premium or penalty.


SECTION
2.12.  Optional Prepayments.  (a) 
The Borrower shall have the right at any time and from time to time to
prepay any Borrowing, in whole or in part, upon at least three Business Days’
prior written or fax notice (or telephonic notice promptly confirmed by written
notice) in the case of Eurocurrency Loans, or written or fax notice (or
telephonic notice promptly confirmed by written notice) at least one Business
Day prior to the date of prepayment in the case of ABR Loans, to the
Administrative Agent before 12:00 (noon), Local Time; provided, however,
that (i) each partial prepayment of Loans denominated in Dollars shall be in an
amount that is an integral multiple of $100,000 and not less than $500,000 and
(ii) each partial prepayment of Loans denominated in Euros shall be in an
amount that is an integral multiple of €100,000 and not less than €500,000.


(b)                                 Optional
prepayments of outstanding Term Loans under this Agreement shall be allocated
between Euro Term Loans and all other Term Loans as directed by Polypore (with
any amount allocated to such other Term Loans being applied ratably thereto),
and shall be applied to the installments thereof as directed by Polypore.


(c)                                  Each
notice of prepayment shall specify the prepayment date and the principal amount
and currency denomination of each Borrowing (or portion thereof) to be prepaid,
shall be irrevocable and shall commit the Borrower to prepay such Borrowing by
the amount stated therein on the date stated therein.  All prepayments under this Section 2.12 shall
be subject to Section 2.15 but otherwise without premium or penalty.  All prepayments under this Section 2.12 shall
be accompanied by accrued and unpaid interest on the principal amount to be
prepaid to but excluding the date of payment; provided, however,
that in the case of a prepayment of an ABR Revolving Loan or a Swingline Loan
that is not made in connection with a termination of the Revolving Credit
Commitments, the accrued and unpaid interest on the principal amount prepaid
shall be payable on the next scheduled Interest Payment Date with respect to
such ABR Revolving Loan or Swingline Loan.


SECTION 2.13.  Mandatory Prepayments.  (a)  In
the event of any termination of all the Revolving Credit Commitments, Polypore
shall, on the date of such termination, repay or prepay all its outstanding
Revolving Credit Borrowings and all outstanding Swingline Loans and replace all
outstanding Letters of Credit. If as a result of any partial reduction of the
Revolving Credit Commitments the Aggregate Revolving Credit Exposure would
exceed the Total Revolving Credit Commitment after giving effect thereto, then
Polypore shall, on the date of such reduction, repay or prepay Revolving Credit
Borrowings



 43
 









or Swingline Loans (or a combination thereof) and/or
replace outstanding Letters of Credit in an amount sufficient to eliminate such
excess.


(b)                                 Not
later than the third Business Day following the completion of any Asset Sale or
Recovery Event, the Borrower shall apply 100% of the Net Cash Proceeds received
with respect thereto to prepay outstanding Term Loans in accordance with
Section 2.13(e).


(c)                                  No
later than the earlier of (i) 90 days after the end of each fiscal year of
Polypore, commencing with the fiscal year ending on January 3, 2009, and (ii)
the date on which the financial statements with respect to such period are
delivered pursuant to Section 5.4(a), the Borrower shall prepay
outstanding Term Loans in accordance with Section 2.13(e) in an aggregate
principal amount equal to 50% of Excess Cash Flow for the fiscal year then
ended;  provided, however, that
in the event the Total Leverage Ratio at the end of such fiscal year was equal
to or less than 5.00 to 1.00 and greater than 4.00 to 1.00, then such amount
shall be reduced to 25% of such Excess Cash Flow and in the event the Total
Leverage Ratio at the end of such fiscal year was equal to or less than 4.00 to
1.00, no such prepayment shall be required.


(d)                                 In
the event that any Loan Party or any subsidiary of a Loan Party shall receive
Net Cash Proceeds from the issuance or other disposition of Indebtedness for
money borrowed (or similar transaction evidenced by bonds, debentures, notes or
similar instruments) of any Loan Party or any subsidiary of a Loan Party (other
than Indebtedness for money borrowed (or similar transaction evidenced by
bonds, debentures, notes or similar instruments) permitted pursuant to
Section 6.1, except for Indebtedness incurred under clause (xi) of the
definition of “Permitted Indebtedness”, for which a mandatory prepayment shall
be required), the Borrower shall, substantially simultaneously with (and in any
event not later than the third Business Day next following) the receipt of such
Net Cash Proceeds by such Loan Party or such subsidiary, apply an amount equal
to 100% of such Net Cash Proceeds to prepay outstanding Term Loans in
accordance with Section 2.13(e).


(e)                                  Mandatory
prepayments of outstanding Term Loans under this Agreement shall be allocated
between Euro Term Loans and all other Term Loans as directed by Polypore (with
any amount allocated to such other Term Loans being applied ratably thereto),
and shall be applied to the installments thereof as directed by Polypore.


(f)                                    The
Borrower shall deliver to the Administrative Agent, at the time of each
prepayment required under this Section 2.13, (i) a certificate signed by a
Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent
practicable, at least three days prior written notice of such prepayment.  Each notice of prepayment shall specify the
prepayment date, the Type of each Loan being prepaid and the principal amount
of each Loan (or portion thereof) to be prepaid.  All prepayments of Borrowings under this
Section 2.13 shall be subject to Section 2.15, but shall otherwise be without
premium or penalty.


SECTION 2.14.  Reserve Requirements; Change in Circumstances.  (a) 
Notwithstanding any other provision of this Agreement, if any Change in
Law shall impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of or
credit extended by any Lender or the Issuing Bank (except any such reserve
requirement which is reflected in the Eurocurrency Rate) or shall impose on
such Lender or the Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurocurrency Loans made by such Lender or
any Letter of Credit or participation therein, and the result of any of the
foregoing shall be to increase the cost to such Lender or the Issuing Bank of
making or maintaining any Eurocurrency Loan or increase the cost to any Lender
of issuing or maintaining any Letter of Credit or purchasing or maintaining a
participation therein or to reduce the amount of any sum received or receivable
by such Lender or the Issuing Bank



 44
 









hereunder (whether of principal, interest or
otherwise), in each case, by an amount deemed by such Lender or the Issuing
Bank to be material, then the Borrower will pay to such Lender or the Issuing
Bank, as the case may be, upon demand such additional amount or amounts as will
compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.


(b)                                 If
any Lender or the Issuing Bank shall have determined that any Change in Law
regarding capital adequacy has or would have the effect of reducing the rate of
return on such Lender’s or the Issuing Bank’s capital or on the capital of such
Lender’s or the Issuing Bank’s holding company, if any, as a consequence of
this Agreement or the Loans made or participations in Letters of Credit purchased
by such Lender pursuant hereto or the Letters of Credit issued by the Issuing
Bank pursuant hereto to a level below that which such Lender or the Issuing
Bank or such Lender’s or the Issuing Bank’s holding company could have achieved
but for such Change in Law (taking into consideration such Lender’s or the
Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s
holding company with respect to capital adequacy) by an amount deemed by such
Lender or the Issuing Bank to be material, then from time to time the Borrower
shall pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank
or such Lender’s or the Issuing Bank’s holding company for any such reduction
suffered.


(c)                                  A
certificate of a Lender or the Issuing Bank setting forth the amount or amounts
necessary to compensate such Lender or the Issuing Bank or its holding company,
as applicable, as specified in paragraph (a) or (b) above shall be delivered to
the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the
Issuing Bank the amount shown as due on any such certificate delivered by it
within 10 days after its receipt of the same.


(d)                                 Failure
or delay on the part of any Lender or the Issuing Bank to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital shall not constitute a waiver of such Lender’s
or the Issuing Bank’s right to demand such compensation; provided, that the Borrower shall not be under any obligation to
compensate any Lender or the Issuing Bank under paragraph (a) or (b) above with
respect to increased costs or reductions with respect to any period prior to the
date that is 180 days prior to such request if such Lender or the Issuing Bank
knew or could reasonably have been expected to know of the circumstances giving
rise to such increased costs or reductions and of the fact that such
circumstances would result in a claim for increased compensation by reason of
such increased costs or reductions; provided,  further, that the foregoing
limitation shall not apply to any increased costs or reductions arising out of
the retroactive application of any Change in Law within such 180-day
period.  The protection of this Section
shall be available to each Lender and the Issuing Bank regardless of any
possible contention of the invalidity or inapplicability of the Change in Law
that shall have occurred or been imposed.


SECTION 2.15.  Indemnity.  The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurocurrency Loan prior to the end of the Interest Period in effect
therefor, (ii) the conversion of any Eurocurrency Loan to an ABR Loan, or the conversion
of the Interest Period with respect to any Eurocurrency Loan, in each case
other than on the last day of the Interest Period in effect therefor, or (iii)
any Eurocurrency Loan to be made by such Lender (including any Eurocurrency
Loan to be made pursuant to a conversion or continuation under Section 2.10)
not being made after notice of such Loan shall have been given by the Borrower
hereunder (any of the events referred to in this clause (a) being called a “Breakage
Event”) or (b) any default in the making of any payment or prepayment
required to be made hereunder.  In the
case of any Breakage Event, such loss shall include an amount equal to the
excess, as reasonably determined by such Lender, of (i) its cost of obtaining
funds for the Eurocurrency Loan that is the subject of such Breakage Event for
the period from



 45
 









the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan
over (ii) the amount of interest likely to be realized by such Lender in
redeploying the funds released or not utilized by reason of such Breakage Event
for such period, but such loss shall not, in any event, include any lost profit
or loss of applicable margin.  A certificate
of any Lender setting forth any amount or amounts which such Lender is entitled
to receive pursuant to this Section 2.15 shall be delivered to the Borrower and
shall be conclusive absent manifest error.


SECTION
2.16.  Pro Rata Treatment.  Each Borrowing, each payment or prepayment of
principal of any Borrowing, each payment of interest on the Loans, each payment
of the Commitment Fees or the L/C Participation Fees, each reduction of the
Term Loan Commitments or the Revolving Credit Commitments and each conversion
of any Borrowing to or continuation of any Borrowing as a Borrowing of any Type
shall be allocated pro rata among the Lenders in accordance with their
respective applicable Commitments (or, if such Commitments shall have expired
or been terminated, in accordance with the respective principal amounts of
their outstanding Loans or participations in L/C Disbursements, as
applicable).  Each Lender agrees that in
computing such Lender’s portion of any Borrowing to be made hereunder, the
Administrative Agent may, in its discretion, round each Lender’s percentage of
such Borrowing to the next higher or lower whole dollar amount.


SECTION
2.17.  Sharing of Setoffs.  Each Lender agrees that if it shall, through
the exercise of a right of banker’s lien, setoff or counterclaim against the
Borrower or any other Loan Party, or pursuant to a secured claim under Section
506 of Title 11 of the United States Code or other security or interest arising
from, or in lieu of, such secured claim, received by such Lender under any
applicable bankruptcy, insolvency or other similar law or otherwise, or by any
other means, obtain payment (voluntary or involuntary) in respect of any Loan
or L/C Disbursement as a result of which the unpaid portion of its Loans and
participations in L/C Disbursements shall be proportionately less than the
unpaid portion of the Loans and participations in L/C Disbursements of any
other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the purchase
price for, a participation in the Loans and L/C Exposure of such other Lender,
so that the aggregate unpaid amount of the Loans and L/C Exposure and
participations in Loans and L/C Exposure held by each Lender shall be in the
same proportion to the aggregate unpaid amount of all Loans and L/C Exposure
then outstanding as the amount of its Loans and L/C Exposure prior to such
exercise of banker’s lien, setoff or counterclaim or other event was to the
amount of all Loans and L/C Exposure outstanding prior to such exercise of
banker’s lien, setoff or counterclaim or other event; provided, however,
that if any such purchase or purchases or adjustments shall be made pursuant to
this Section 2.17 and the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be rescinded to the
extent of such recovery and the purchase price or prices or adjustment restored
without interest.  Polypore, Daramic
Holding and Holdings expressly consent to the foregoing arrangements and agree
that any Lender holding a participation in a Loan or L/C Disbursement deemed to
have been so purchased may exercise any and all rights of banker’s lien, setoff
or counterclaim with respect to any and all moneys owing by Polypore, Daramic
Holding and Holdings to such Lender by reason thereof as fully as if such
Lender had made a Loan directly to the Borrower in the amount of such
participation.


SECTION 2.18.  Payments.  (a) 
The Borrower shall make each payment (including principal of or interest
on any Borrowing or any L/C Disbursement or any Fees or other amounts)
hereunder and under any other Loan Document not later than 12:00 (noon), Local
Time, on the date when due in Dollars or Euros, as applicable, and in
immediately available funds, without setoff, defense or counterclaim.  Each such payment (other than (i) Issuing
Bank Fees, which shall be paid directly to the Issuing Bank, and (ii) principal
of and interest on Swingline Loans, which shall be paid directly to the
Swingline Lender except as otherwise provided in Section 2.20(e)) shall be made
to the Administrative Agent at the Funding Office, or at such other location as
the Administrative Agent shall notify the Borrower from time to time



 46
 









in accordance with Section 9.1.  The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof.


(b)                                 Except
as otherwise expressly provided herein, whenever any payment (including
principal of or interest on any Borrowing or any Fees or other amounts)
hereunder or under any other Loan Document shall become due, or otherwise would
occur, on a day that is not a Business Day, such payment may be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or Fees, if applicable.


SECTION
2.19.  Taxes.  (a) 
Any and all payments by or on account of any obligation of the Borrower
or any Loan Party hereunder or under any other Loan Document shall be made free
and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided,
that if the Borrower or any Loan Party shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent or such Lender (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower or such Loan Party shall make such deductions and (iii) the
Borrower or such Loan Party shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.


(b)                                 In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.


(c)                                  The
Borrower shall indemnify the Administrative Agent and each Lender, within 10
days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by the Administrative Agent or such Lender, as the
case may be, on or with respect to any payment by or on account of any
obligation of the Borrower or any Loan Party hereunder or under any other Loan
Document (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto (other than
penalties or interest attributable to (i) a failure or delay by the
Administrative Agent or such Lender, as applicable, in making such written
demand to the Borrower or (ii) the gross negligence or willful misconduct of
the Administrative Agent or such Lender, as applicable), whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. 
A certificate as to the amount of such payment or liability delivered to
the Borrower by a Lender, or by the Administrative Agent on its behalf or on
behalf of a Lender, shall be conclusive absent manifest error.


(d)                                 As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by
the Borrower or any other Loan Party to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.


(e)                                  Any
Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.



 47
 









SECTION
2.20.  Assignment of
Commitments Under Certain Circumstances; Duty to Mitigate.  (a)  In
the event (i) any Lender or the Issuing Bank delivers a certificate requesting
compensation pursuant to Section 2.14, (ii) the Borrower is required to pay any
additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank pursuant to Section
2.19, (iii) any Lender becomes a Defaulting Lender or (iv) any Lender refuses
to consent to any amendment, waiver or other modification of any Loan Document
requested by Polypore or Daramic Holding that requires the consent of a greater
percentage of the Lenders than the Required Lenders and such amendment, waiver
or other modification is consented to by the Required Lenders, Polypore or
Daramic Holding may, at its sole expense and effort (including with respect to
the processing and recordation fee referred to in Section 9.4(b)), upon notice
to such Lender or the Issuing Bank and the Administrative Agent, require such
Lender or the Issuing Bank to transfer and assign, without recourse,
representation or warranty, except as to warranty as to its ownership of the
assigned obligations (in accordance with and subject to the restrictions
contained in Section 9.4), all of its interests, rights and obligations under
this Agreement to an assignee that shall assume such assigned obligations and,
with respect to clause (iv) above, shall consent to such requested amendment,
waiver or other modification of any Loan Document (which assignee may be
another Lender, if a Lender accepts such assignment); provided that (x) such
assignment shall not conflict with any law, rule or regulation or order of any
court or other Governmental Authority having jurisdiction, (y) Polypore or
Daramic Holding shall have received the prior written consent of the
Administrative Agent (and, if a Revolving Credit Commitment is being assigned,
of the Issuing Bank and the Swingline Lender), which consent shall not
unreasonably be withheld, and (z) the Borrower or such assignee shall have paid
to the affected Lender or the Issuing Bank in immediately available funds an
amount equal to the sum of the principal of and interest accrued to the date of
such payment on the outstanding Loans or L/C Disbursements of such Lender or
the Issuing Bank plus all Fees and other amounts accrued for the account of
such Lender or the Issuing Bank hereunder (including any amounts under Section
2.14 and Section 2.15); provided, further, that, if prior to
any such transfer and assignment the circumstances or event that resulted in
such Lender’s or the Issuing Bank’s claim for compensation under
Section 2.14 or the amounts paid pursuant to Section 2.19, as the case may
be, cease to cause such Lender or the Issuing Bank to suffer increased costs or
reductions in amounts received or receivable or reduction in return on capital
or cease to result in amounts being payable under Section 2.19, as the case may
be (including as a result of any action taken by such Lender or the Issuing
Bank pursuant to paragraph (b) below), or if such Lender or the Issuing Bank
shall waive its right to claim further compensation under Section 2.14 in
respect of such circumstances or event or shall waive its right to further
payments under Section 2.19 in respect of such circumstances or event or shall
consent to the proposed amendment, waiver, consent or other modification, as
the case may be, then such Lender or the Issuing Bank shall not thereafter be
required to make any such transfer and assignment hereunder.


(b)                                 If
(i) any Lender or the Issuing Bank shall request compensation under
Section 2.14 or (ii) the Borrower is required to pay any additional amount
to any Lender or the Issuing Bank or any Governmental Authority on account of
any Lender or the Issuing Bank, pursuant to Section 2.19, then such Lender
or the Issuing Bank shall use reasonable efforts (which shall not require such
Lender or the Issuing Bank to incur an unreimbursed loss or unreimbursed cost
or expense or otherwise take any action inconsistent with its internal policies
or legal or regulatory restrictions or suffer any disadvantage or burden deemed
by it to be significant) (x) to file any certificate or document reasonably
requested in writing by the Borrower or (y) to assign its rights and delegate
and transfer its obligations hereunder to another of its offices, branches or
Affiliates, if such filing or assignment would reduce its claims for
compensation under Section 2.14 or would reduce amounts payable pursuant to
Section 2.19, as the case may be, in the future.  The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender or the Issuing Bank in connection
with any such filing or assignment, delegation and transfer.


SECTION 2.21.  Swingline Loans.  (a)  Swingline
Commitment.  Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth, the Swingline Lender agrees to make loans to



 48
 









Polypore at any time and from time to time on and
after the Restatement Effective Date and until the earlier of the Revolving
Credit Maturity Date and the termination of the Revolving Credit Commitments in
accordance with the terms hereof, in an aggregate principal amount at any time
outstanding that will not result in (i) the aggregate principal amount of all
Swingline Loans exceeding $10,000,000 in the aggregate or (ii) the Aggregate
Revolving Credit Exposure, after giving effect to any Swingline Loan, exceeding
the Total Revolving Credit Commitment. 
Each Swingline Loan shall be in a principal amount that is an integral
multiple of $100,000 and not less than $100,000.  The Swingline Commitment may be terminated or
reduced from time to time as provided herein. 
Within the foregoing limits, Polypore may borrow, pay or prepay and
reborrow Swingline Loans hereunder, subject to the terms, conditions and limitations
set forth herein.


(b)                                 Swingline Loan Borrowing Procedure.
Polypore shall notify the Swingline Lender by fax, or by telephone (confirmed
by fax), not later than 12:00 (noon), New York City time, on the day of a
proposed Swingline Loan.  Such notice
shall be delivered on a Business Day, shall be irrevocable and shall refer to
this Agreement and shall specify the requested date (which shall be a Business
Day) and amount of such Swingline Loan and the wire transfer instructions for
the account of Polypore to which the proceeds of such Swingline Loan should be
transferred. The Swingline Lender shall promptly make each Swingline Loan by
wire transfer to the account specified by Polypore in such request.


(c)                                  Prepayment.  Polypore shall have the right at any time and
from time to time to prepay any Swingline Loan, in whole or in part, upon
giving written or fax notice (or telephonic notice promptly confirmed by
written notice) to the Swingline Lender and to the Administrative Agent before
12:00 (noon), New York City time on the date of prepayment at the Swingline
Lender’s address for notices specified in Section 9.1.


(d)                                 Interest.  Each Swingline Loan shall be an ABR Loan and,
subject to the provisions of Section 2.7, shall bear interest at the rate
provided for the ABR Revolving Loans as provided in Section 2.6(a).


(e)                                  Participations.  The Swingline Lender may by written notice
given to the Administrative Agent not later than 11:00 a.m., New York City
time, on any Business Day require the Revolving Credit Lenders to acquire
participations on such Business Day in all or a portion of the Swingline Loans
outstanding.  Such notice shall specify
the aggregate amount of Swingline Loans in which the Revolving Credit Lenders
will participate.  The Administrative
Agent will, promptly upon receipt of such notice, give notice to each Revolving
Credit Lender, specifying in such notice such Lender’s Pro Rata Percentage of
such Swingline Loan or Loans.  In
furtherance of the foregoing, each Revolving Credit Lender hereby absolutely
and unconditionally agrees, upon receipt of notice as provided above, to pay to
the Administrative Agent, for the account of the Swingline Lender, such
Revolving Credit Lender’s Pro Rata Percentage of such Swingline Loan or
Loans.  Each Revolving Credit Lender
acknowledges and agrees that its obligation to acquire participations in
Swingline Loans pursuant to this paragraph is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.  Each Revolving Credit Lender
shall comply with its obligation under this paragraph by wire transfer of
immediately available funds, in the same manner as provided in Section 2.2(c)
with respect to Loans made by such Lender (and Section 2.2(c) shall apply, mutatis mutandis, to the payment obligations of the Lenders)
and the Administrative Agent shall promptly pay to the Swingline Lender the
amounts so received by it from the Lenders. 
The Administrative Agent shall notify Polypore of any participations in
any Swingline Loan acquired pursuant to this paragraph and thereafter payments
in respect of such Swingline Loan shall be made to the Administrative Agent and
not to the Swingline Lender.  Any amounts
received by the Swingline Lender from Polypore (or other party on behalf of
Polypore) in respect of a Swingline Loan after receipt by the Swingline Lender
of the



 49
 









proceeds of a
sale of participations therein shall be promptly remitted to the Administrative
Agent; any such amounts received by the Administrative Agent shall be promptly
remitted by the Administrative Agent to the Lenders that shall have made their
payments pursuant to this paragraph and to the Swingline Lender, as their
interests may appear. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve Polypore (or other party liable
for obligations of Polypore) of any default in the payment thereof.


SECTION
2.22.  Letters of Credit.  (a)  General.  Polypore may request the issuance of a Letter
of Credit denominated in Dollars or in an Alternative Currency for its own
account or for the account of any Subsidiary, in a form reasonably acceptable to
the Administrative Agent and the Issuing Bank, at any time and from time to
time while the Revolving Credit Commitments remain in effect.  This Section shall not be construed to impose
an obligation upon the Issuing Bank to issue any Letter of Credit that is
inconsistent with the terms and conditions of this Agreement.


(b)                                 Notice of Issuance, Amendment, Renewal,
Extension; Certain Conditions. 
In order to request the issuance of a Letter of Credit (or to amend,
renew or extend an existing Letter of Credit), Polypore shall hand deliver or
fax to the Issuing Bank and the Administrative Agent (reasonably in advance of
the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, the date of issuance, amendment,
renewal or extension, the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) below), whether such Letter of Credit
shall be issued in Dollars or an Alternative Currency, the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare such Letter of Credit. The
Issuing Bank shall promptly (i) notify the Administrative Agent in writing of
the amount and expiry date of each Letter of Credit issued by it and (ii)
provide a copy of each such Letter of Credit (and any amendments, renewals or
extensions thereof) to the Administrative Agent.  A Letter of Credit shall be issued, amended,
renewed or extended only if, and upon issuance, amendment, renewal or extension
of each Letter of Credit Polypore shall be deemed to represent and warrant
that, after giving effect to such issuance, amendment, renewal or extension (i)
the L/C Exposure shall not exceed $50,000,000, (ii) the Aggregate Alternative
Currency Exposure shall not exceed $50,000,000 and (iii) the Aggregate
Revolving Credit Exposure shall not exceed the Total Revolving Credit
Commitment.


(c)                                  Expiration Date.  Each Letter of Credit shall expire at the
close of business on the earlier of the date one year after the date of the
issuance of such Letter of Credit and the date that is five Business Days prior
to the Revolving Credit Maturity Date, unless such Letter of Credit expires by
its terms on an earlier date; provided,
that a Letter of Credit may, upon the request of Polypore, include a provision
whereby such Letter of Credit shall be renewed automatically for additional
consecutive periods of 12 months or less (but not beyond the date that is five
Business Days prior to the Revolving Credit Maturity Date) unless the Issuing
Bank notifies the beneficiary thereof at least 30 days prior to the
then-applicable expiration date that such Letter of Credit will not be renewed.


(d)                                 Participations.  By the issuance of a Letter of Credit and
without any further action on the part of the Issuing Bank or the Lenders, the
Issuing Bank hereby grants to each Revolving Credit Lender, and each such
Lender hereby acquires from the Issuing Bank, a participation in such Letter of
Credit equal to such Lender’s Pro Rata Percentage of the aggregate amount
available to be drawn under such Letter of Credit, effective upon the issuance
of such Letter of Credit.  In
consideration and in furtherance of the foregoing, each Revolving Credit Lender
hereby absolutely and unconditionally agrees to pay to the Administrative
Agent, for the account of the Issuing Bank, such Lender’s Pro Rata Percentage
of each L/C Disbursement made by the Issuing Bank and not reimbursed by
Polypore (or, if applicable, another party pursuant to its obligations under
any other Loan Document) forthwith on the date due as provided in
Section 2.2(f).  Each Revolving
Credit Lender acknowledges and agrees that its obligation to acquire



 50
 









participations
pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever,
including the occurrence and continuance of a Default or an Event of Default,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.


(e)                                  Reimbursement.  If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, Polypore shall pay to the
Administrative Agent (or directly to the Issuing Bank, with concurrent notice
to the Administrative Agent) an amount (in the currency in which the Letter of
Credit was denominated) equal to such L/C Disbursement not later than two hours
after Polypore shall have received notice from the Issuing Bank that payment of
such draft will be made, or, if Polypore shall have received such notice later
than 10:00 a.m., Local Time, on any Business Day, not later than 10:00 a.m.,
Local Time, on the immediately following Business Day.


(f)                                    Obligations Absolute.  Polypore’s obligations to reimburse L/C
Disbursements as provided in paragraph (e) above shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement, under any and all circumstances whatsoever,
and irrespective of:


(i)  
any lack of validity or enforceability of any Letter of Credit or any Loan
Document, or any term or provision therein;


(ii)  
any amendment or waiver of or any consent to departure from all or any of the
provisions of any Letter of Credit or any Loan Document;


(iii)  
the existence of any claim, setoff, defense or other right that Polypore, any
other party guaranteeing, or otherwise obligated with, Polypore, any Subsidiary
or other Affiliate thereof or any other Person may at any time have against the
beneficiary under any Letter of Credit, the Issuing Bank, the Administrative
Agent or any Lender or any other Person, whether in connection with this
Agreement, any other Loan Document or any other related or unrelated agreement
or transaction;


(iv)  
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;


(v)  
payment by the Issuing Bank under a Letter of Credit against presentation of a
draft or other document that does not comply with the terms of such Letter of
Credit; and


(vi)  
any other act or omission to act or delay of any kind of the Issuing Bank, the
Lenders, the Administrative Agent or any other Person or any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of Polypore’s obligations hereunder.


Without limiting
the generality of the foregoing, it is expressly understood and agreed that the
absolute and unconditional obligation of Polypore hereunder to reimburse L/C
Disbursements will not be excused by the gross negligence or willful misconduct
of the Issuing Bank.  However, the
foregoing shall not be construed to excuse the Issuing Bank from liability to
Polypore to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by Polypore to the extent
permitted by applicable law) suffered by Polypore that are caused by the
Issuing Bank’s gross negligence or willful misconduct in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof; it is understood that the Issuing Bank may accept



 51
 









documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary and, in making any payment under any Letter of
Credit (i) the Issuing Bank’s exclusive reliance on the documents presented to
it under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be insufficient in any respect, if such document on
its face appears to be in order, and whether or not any other statement or any
other document presented pursuant to such Letter of Credit proves to be forged
or invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (ii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall,
in each case, be deemed not to constitute willful misconduct or gross
negligence of the Issuing Bank.


(g)                                 Disbursement Procedures.  The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit.  The
Issuing Bank shall as promptly as possible give telephonic notification,
confirmed by fax, to the Administrative Agent and Polypore of such demand for
payment and whether the Issuing Bank has made or will make an L/C Disbursement
thereunder; provided,
that any failure to give or delay in giving such notice shall not relieve
Polypore of its obligation to reimburse the Issuing Bank and the Revolving
Credit Lenders with respect to any such L/C Disbursement.  The Administrative Agent shall promptly give
each Revolving Credit Lender notice thereof.


(h)                                 Interim Interest.  If the Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless Polypore shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of the Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of
the date of payment by Polypore or the date on which interest shall commence to
accrue thereon as provided in Section 2.2(f), at the rate per annum that would
apply to such amount if such amount were an ABR Revolving Loan.


(i)                                     Resignation or Removal of the Issuing Bank.  The Issuing Bank may resign at any time by
giving 30 days’ prior written notice to the Administrative Agent, the Lenders
and Polypore, and may be removed at any time by Polypore by notice to the
Issuing Bank, the Administrative Agent and the Lenders.  Subject to the next succeeding paragraph,
upon the acceptance of any appointment as the Issuing Bank hereunder by a
Lender that shall agree to serve as successor Issuing Bank, such successor
shall succeed to and become vested with all the interests, rights and
obligations of the retiring Issuing Bank and the retiring Issuing Bank shall be
discharged from its obligations to issue additional Letters of Credit
hereunder.  At the time such removal or
resignation shall become effective, Polypore shall pay all accrued and unpaid
fees pursuant to Section 2.5(c)(ii).  The
acceptance of any appointment as the Issuing Bank hereunder by a successor
Lender shall be evidenced by an agreement entered into by such successor, in a
form satisfactory to Polypore and the Administrative Agent, and, from and after
the effective date of such agreement, (i) such successor Lender shall have all
the rights and obligations of the previous Issuing Bank under this Agreement
and the other Loan Documents and (ii) references herein and in the other Loan
Documents to the term “Issuing Bank” shall be deemed to refer to such successor
or to any previous Issuing Bank, or to such successor and all previous Issuing
Banks, as the context shall require. 
After the resignation or removal of the Issuing Bank hereunder, the
retiring Issuing Bank shall remain a party hereto and shall continue to have
all the rights and obligations of an Issuing Bank under this Agreement and the
other Loan Documents with respect to Letters of Credit issued by it prior to
such resignation or removal, but shall not be required to issue additional
Letters of Credit.


(j)                                     Cash Collateralization.  If any Event of Default shall occur and be continuing,
Polypore shall, on the Business Day it receives notice from the Administrative
Agent or the Required Lenders (or,



 52
 









if the
maturity of the Loans has been accelerated, Revolving Credit Lenders holding
participations in outstanding Letters of Credit representing greater than 50%
of the aggregate undrawn amount of all outstanding Letters of Credit) thereof
and of the amount to be deposited, deposit in an account with the
Administrative Agent, for the benefit of the Revolving Credit Lenders, an amount
in cash equal to the L/C Exposure as of such date; provided, however,
that the obligation to deposit such cash shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to Polypore described in clause (g) or (h) of Article VII.  Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
Obligations.  The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account.  Other
than any interest earned on the investment of such deposits in Permitted
Investments, which investments shall be made at the option and sole discretion
of the Administrative Agent, such deposits shall not bear interest.  Interest or profits, if any, on such
investments shall accumulate in such account. 
Moneys in such account shall (i) automatically be applied by the
Administrative Agent to reimburse the Issuing Bank for L/C Disbursements for
which it has not been reimbursed, (ii) be held for the satisfaction of the
reimbursement obligations of Polypore for the L/C Exposure at such time and
(iii) if the maturity of the Loans has been accelerated (but subject to the
consent of Revolving Credit Lenders holding participations in outstanding
Letters of Credit representing greater than 50% of the aggregate undrawn amount
of all outstanding Letters of Credit), be applied to satisfy the Obligations.  If Polypore is required to provide an amount
of cash collateral hereunder as a result of the occurrence of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be returned
to Polypore within three Business Days after all Events of Default have been
cured or waived.


(k)                                  Additional Issuing Banks.  Polypore may, at any time and from time to
time with the consent of the Administrative Agent (which consent shall not be
unreasonably withheld) and such Lender, designate one or more additional
Lenders to act as an Issuing Bank under the terms of the Agreement.  Any Lender designated as an Issuing Bank
pursuant to this paragraph (k) shall be deemed to be an “Issuing Bank” (in
addition to being a Lender) in respect of Letters of Credit issued or to be
issued by such Lender, and, with respect to such Letters of Credit, such term
shall thereafter apply to the other Issuing Bank and such Lender.


SECTION
2.23.  Increase in Term Loan
Commitments.  (a)  Polypore may, by written notice to the Administrative
Agent from time to time, request Incremental Term Loan Commitments in an amount
not to exceed the Incremental Term Loan Amount from one or more Incremental
Term Lenders (which may include any existing Lender) willing to provide such
Incremental Term Loans in their own discretion; provided, that each
Incremental Term Lender, if not already a Lender hereunder, shall be subject to
the approval of the Administrative Agent (which approval shall not be
unreasonably withheld).  Such notice
shall set forth (i) the amount of the Incremental Term Loan Commitments
being requested (which shall be in minimum increments of $1,000,000 and a
minimum amount of $25,000,000 or equal to the remaining Incremental Term Loan
Amount), (ii) the date on which such Incremental Term Loan Commitments are
requested to become effective (which shall not be less than 10 Business Days
after the date of such notice) and (iii) whether such Incremental Term
Loan Commitments are to be Term Loan Commitments or commitments to make term
loans with terms different from the Term Loans (“Other Term Loans”).


(b)                                 Polypore
and each Incremental Term Lender shall execute and deliver to the
Administrative Agent an Incremental Term Loan Assumption Agreement and such
other documentation as the Administrative Agent shall reasonably specify to
evidence the Incremental Term Loan Commitment of such Incremental Term
Lender.  Each Incremental Term Loan
Assumption Agreement shall specify the terms of the Incremental Term Loans to
be made thereunder; provided,
that, without the prior written consent of the Required Lenders, (i) the
final maturity date of any Other Term Loans



 53
 









shall be no
earlier than the Term Loan Maturity Date, (ii) the average life to
maturity of any Other Term Loans shall be no shorter than the average life to
maturity of the Term Loans, (iii) any Other Term Loans shall be denominated in
Dollars and (iv) after giving pro  forma effect to the incurrence
thereof and any substantially concurrent use of proceeds thereof, the Senior
Leverage Ratio determined as of the last day of the most recent fiscal quarter
for which financial statements are available shall not exceed (x) 3.25 to 1.00
for any such fiscal quarter ending on or prior to June 30, 2008 or (y) 3.00 to
1.00 for any such fiscal quarter ending thereafter.  The Administrative Agent shall promptly
notify each Lender as to the effectiveness of each Incremental Term Loan
Assumption Agreement.  Each of the parties
hereto hereby agrees that, upon the effectiveness of any Incremental Term Loan
Assumption Agreement, this Agreement shall be amended to the extent (but only
to the extent) necessary to reflect the existence and terms of the Incremental
Term Loan Commitment evidenced thereby as provided for in Section 9.8(b).  Any such deemed amendment may be memorialized
in writing by the Administrative Agent with Polypore’s consent (not to be
unreasonably withheld) and furnished to the other parties hereto.


(c)                                  Notwithstanding
the foregoing, no Incremental Term Loan Commitment shall become effective under
this Section 2.23 unless (i) on the date of such effectiveness, the conditions
set forth in paragraphs (b) and (c) of Section 4.1 shall be satisfied and the
Administrative Agent shall have received a certificate to that effect dated
such date and executed by a Financial Officer of Polypore and (ii) the
Administrative Agent shall have received (with sufficient copies for each of
the Incremental Term Lenders) legal opinions, board resolutions and other
closing certificates and documentation consistent with those delivered on the
Restatement Effective Date under Section 4.2.


(d)                                 Each
of the parties hereto hereby agrees that the Administrative Agent may take any
and all action as may be reasonably necessary to ensure that all Incremental
Term Loans (other than Other Term Loans), when originally made, are included in
each Borrowing of outstanding Term Loans on a pro rata basis, and Polypore
agrees that Section 2.15 shall apply to any conversion of Eurocurrency
Term Loans to ABR Term Loans reasonably required by the Administrative Agent to
effect the foregoing.  In addition, to
the extent any Incremental Term Loans are not Other Term Loans, the scheduled
amortization payments under Sections 2.11(a) required to be made after the
making of such Incremental Term Loans shall be ratably increased by the
aggregate principal amount of such Incremental Term Loans.


ARTICLE
III


Representations and Warranties


Each of Holdings and Polypore represents and warrants
to the Administrative Agent, the Issuing Bank and each of the Lenders that:


SECTION
3.1.  Organization; Powers.  Each Group Member (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite power and authority to own its property
and assets and to carry on its business as now conducted and as proposed to be
conducted, (c) is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required, except where the
failure so to qualify could not reasonably be expected to result in a Material
Adverse Effect, and (d) has the power and authority to execute, deliver
and perform its obligations under each of the Loan Documents and each other
agreement or instrument contemplated hereby or thereby to which it is or will
be a party and, in the case of the Borrower, to borrow hereunder.


SECTION 3.2.  Authorization.  The Transactions (a) have been duly
authorized by all requisite corporate and, if required, stockholder action and
(b) will not (i) violate (A) any provision of law, statute, rule
or regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws of any Group Member, (B) any order of
any Governmental Authority or (C) any provision of any indenture, material
agreement or other material instrument to which any Group Member is a party or
by which any



 54
 









of them or any of their property is or may be bound,
(ii) except as set forth on Schedule 3.2, be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under, or give rise to any right to accelerate or to require the
prepayment, repurchase or redemption of any obligation under any such
indenture, material agreement or other material instrument or (iii) result
in the creation or imposition of any Lien upon or with respect to any property
or assets now owned or hereafter acquired by any Group Member (other than any
Lien created hereunder or under the Security Documents).


SECTION
3.3.  Enforceability.  This Agreement has been duly executed and
delivered by Holdings, Polypore and Daramic Holding and constitutes, and each
other Loan Document when executed and delivered by each Loan Party party
thereto will constitute, a legal, valid and binding obligation of such Loan
Party enforceable against such Loan Party in accordance with its terms.


SECTION
3.4.  Governmental Approvals.  No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority
is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and filings
with the United States Patent and Trademark Office and the United States
Copyright Office, (b) recordation of any Mortgages, (c) such as have been
made or obtained and are in full force and effect or which are not material to
the consummation of the Transactions and (d) those approvals, consents,
exemptions, authorizations or other actions, notices or filings, the failure of
which to obtain or make could not reasonably be expected to have a Material
Adverse Effect.


SECTION
3.5.  Financial Statements.  (a) 
Polypore has heretofore furnished to the Lenders (i) the
consolidated balance sheets and related statements of income, stockholders’
equity and cash flows of Polypore and its consolidated subsidiaries as of and
for the fiscal year ended December 30, 2006, audited by and accompanied by the
unqualified opinion of Ernst & Young LLP, independent public accountants
and (ii) the unaudited consolidated balance sheet and related statements
of income, stockholders’ equity and cash flows of Polypore and its consolidated
subsidiaries as of and for each fiscal quarter subsequent to December 30, 2006
ended 45 days before the Restatement Effective Date.  Such financial statements present fairly, in
all material respects, the financial condition and results of operations and
cash flows of Polypore and its consolidated subsidiaries as of such dates and
for such periods.  Such balance sheets
and the notes thereto disclose all material liabilities, direct or contingent,
of Polypore and its consolidated subsidiaries as of the dates thereof.  Such financial statements were prepared in
accordance with GAAP applied on a consistent basis, except that the unaudited
financial statements are subject to normal year-end adjustments and do not
contain notes thereto.


(b)                                 Polypore
has heretofore delivered to the Lenders the unaudited pro forma consolidated
balance sheet of Polypore and its consolidated subsidiaries at March 31, 2007,
prepared giving effect to the Transactions as if they had occurred on such
date.  Such pro forma financial
statements have been prepared in good faith by Polypore, based on the
assumptions used to prepare the pro forma financial information contained in
the Confidential Information Memorandum (which assumptions are believed by
Polypore on the Restatement Effective Date to be reasonable), are based on the
best information available to Polypore as of the date of delivery thereof,
accurately reflect, in all material respects, all adjustments required to be
made to give effect to the Transactions and present fairly, in all material
respects, on a pro forma basis the estimated consolidated financial position of
Polypore and its consolidated subsidiaries as of such date and for such
periods, assuming that the Transactions had actually occurred at such date or
at the beginning of such period, as the case may be.


SECTION 3.6.  No Material Adverse Change.  No event, change or condition has occurred
that has had, or could reasonably be expected to have, a material adverse
effect on the business, operations, assets, liabilities,



 55
 









financial condition or results of operations of the
Group Members, taken as a whole, since December 30, 2006.


SECTION
3.7.  Title to Properties;
Possession Under Leases. 
(a)  Each Group Member has good
and marketable title to, or valid leasehold interests in, all its material
properties and material assets, except for
minor defects in title that do not materially interfere with its ability to
conduct its business or to utilize such assets for their intended purposes and
Liens permitted by Section 6.2 and except where the failure to have such title
could not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.  All such material
properties and assets are free and clear of Liens, other than Liens expressly
permitted by Section 6.2.


(b)                                 Each
Group Member has complied with all material obligations due and payable or
required to be performed under all material leases to which it is a party and
all such material leases are in full force and effect.  Each Group Member enjoys peaceful and
undisturbed possession under all such leases, except where the failure to so
enjoy could not reasonably be expected to have a Material Adverse Effect.


SECTION
3.8.  Subsidiaries.  Schedule 3.8 sets forth as of the
Restatement Effective Date a list of all Subsidiaries and the percentage
ownership interest of Holdings or Polypore therein.  The shares of Capital Stock so indicated on
Schedule 3.8 are owned by Holdings or Polypore, directly or indirectly, free
and clear of all Liens (other than Liens created under the Security Documents).


SECTION
3.9.  Litigation; Compliance
with Laws.  (a)  There are not any actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending or, to the knowledge of Holdings or Polypore, threatened against or
affecting any Group Member or any business, property or rights of any such
Person (i) that involve any Loan Document or the Transactions or
(ii) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.


(b)                                 No
Group Member nor any of their respective material properties or material assets
is in violation of, nor will the continued operation of their material
properties and material assets as currently conducted violate, any law, rule or
regulation (including any zoning, building, Environmental Law, ordinance, code
or approval or any building permits), or is in default with respect to any
judgment, writ, injunction, decree or order of any Governmental Authority,
where such violation or default could reasonably be expected to result in a
Material Adverse Effect.


SECTION
3.10.  Agreements.  (a)  No
Group Member is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to result
in a Material Adverse Effect.


(b)                                 No
Group Member is in default in any manner under any provision of any indenture
or other agreement or instrument evidencing Indebtedness, or any other
agreement or instrument to which it is a party or by which it or any of its
properties or assets are or may be bound, where such default could reasonably
be expected to result in a Material Adverse Effect.


SECTION
3.11.  Federal Reserve
Regulations.  (a)  No Group Member is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of buying or carrying Margin Stock.


(b)                                 No
part of the proceeds of any Loan or any Letter of Credit will be used, whether
directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation



 56
 









of, or that is
inconsistent with, the provisions of the Regulations of the Board, including
Regulation T, U or X.


SECTION
3.12.  Investment Company Act.  No Group Member is an “investment company” as
defined in, or subject to regulation under, the Investment Company Act of 1940.


SECTION
3.13.  Use of Proceeds.  The Borrower will use the proceeds of the
Loans (other than any Incremental Term Loans) and will request the issuance of
Letters of Credit only for the purposes specified in Section 5.8.  The Borrower will use the proceeds of any
Incremental Term Loans solely as set forth in the applicable Incremental Term
Loan Assumption Agreement.


SECTION
3.14.  Tax Returns.  Each Group Member has filed or caused to be
filed all Federal and all material state, local and foreign tax returns or
materials required to have been filed by it and has paid or caused to be paid
all material taxes due and payable by it and all assessments received by it,
except taxes that are being contested in good faith by appropriate proceedings
and for which the relevant Group Member shall have set aside on its books
adequate reserves and except for taxes the nonpayment of which could not
reasonably be expected to have a Material Adverse Effect.


SECTION
3.15.  No Material
Misstatements. 
None of (a) the Confidential Information Memorandum or (b) any other
information, report, financial statement, exhibit or schedule furnished by or
on behalf of Holdings or Polypore to the Administrative Agent or any Lender in
connection with the negotiation of any Loan Document or included therein or
delivered pursuant thereto contained, which, in the case of clauses (a) and
(b), when taken as a whole and together with the representations and warranties
contained in this Agreement, contains or will contain any material misstatement
of fact or omitted, omits or will omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were, are or will be made, not misleading; provided that to the extent any such
information, report, financial statement, exhibit or schedule was based upon or
constitutes a forecast or projection, each of Holdings and Polypore represents
only that it acted in good faith and utilized reasonable assumptions and due
care in the preparation of such information, report, financial statement,
exhibit or schedule and it is understood that actual results may differ from
forecasts and projections.


SECTION
3.16.  Employee Benefit Plans.  Each of Polypore and each of its ERISA
Affiliates is in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder.  No ERISA
Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events, could reasonably be expected to result in a
Material Adverse Effect.  The present
value of all benefit liabilities under any underfunded Plan (based on the
assumptions used to fund such plan and when considered together with all such
underfunded Plans) did not, as of the last annual valuation dates applicable
thereto, exceed the fair market value of the assets of such underfunded Plans
by an amount that could reasonably be expected to result in a Material Adverse
Effect.


SECTION
3.17.  Environmental Matters.  (a) 
Except as set forth in Schedule 3.17 and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, no Group Member (i) has
failed to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental
Law, (ii) has become subject to any Environmental Liability,
(iii) has received notice of any claim with respect to any Environmental
Liability or (iv) knows of any basis for any Environmental Liability.


(b)                                 Since
the Restatement Effective Date, there has been no change in the status of the
matters disclosed on Schedule 3.17 that, individually or in the aggregate,
has resulted in, or could reasonably be expected to result in, a Material
Adverse Effect.



 57
 









SECTION
3.18.  Insurance.  Schedule 3.18 sets forth a true,
complete and correct description of all insurance maintained by Polypore or by
Polypore for its Subsidiaries as of the Restatement Effective Date.  As of each such date, such insurance is in
full force and effect and all premiums have been duly paid if due.  Polypore and its Subsidiaries have insurance
in such amounts and covering such risks and liabilities as are, when considered
in its entirety, in the good faith judgment of Polypore prudent in the ordinary
course of business of Polypore and its Subsidiaries.


SECTION
3.19.  Security Documents.  (a) 
The Guarantee and Collateral Agreement is effective to create in favor
of the Administrative Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable security interest in the Collateral (as defined in
the Guarantee and Collateral Agreement) and the proceeds thereof and
(i) if the Pledged Collateral (as defined in the Guarantee and Collateral
Agreement) has been delivered to the Administrative Agent, the Guarantee and
Collateral Agreement shall constitute a fully perfected first priority Lien on,
and security interest in, all right, title and interest of the Loan Parties in
such Pledged Collateral, in each case prior and superior in right to any other
Person, and (ii) if financing statements in appropriate form have been filed in
the offices specified on Schedule 3.19(a), the Lien created under the Guarantee
and Collateral Agreement will constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in all
such Collateral as to which a security interest may be perfected by such a
filing (other than Intellectual Property, as defined in the Guarantee and
Collateral Agreement), in each case prior and superior in right to any other
Person, other than with respect to Liens expressly permitted by Section 6.2.


(b)                                 If
the Guarantee and Collateral Agreement has been recorded with the United States
Patent and Trademark Office and the United States Copyright Office, and
financing statements in appropriate form have been filed in the offices
specified on Schedule 3.19(a), the Guarantee and Collateral Agreement shall
constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in the Intellectual Property (as defined
in the Guarantee and Collateral Agreement) in which a security interest may be
perfected by filing in the United States and its territories and possessions,
in each case prior and superior in right to any other Person (it being
understood that subsequent recordings in the United States Patent and Trademark
Office and the United States Copyright Office may be necessary to perfect a
Lien on registered trademarks, trademark applications and copyrights acquired
by the Loan Parties after the Restatement Effective Date).


(c)                                  The
Mortgages are effective to create in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on
all of the Loan Parties’ right, title and interest in and to the Mortgaged
Property thereunder and the proceeds thereof, and if the Mortgages have been
filed in the offices specified on Schedule 3.19(d), the Mortgages shall
constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Mortgaged Property and the
proceeds thereof, in each case prior and superior in right to any other Person,
other than with respect to the rights of Persons pursuant to Liens expressly
permitted by Section 6.2.


SECTION
3.20.  Location of Real
Property and Leased Premises.  Schedule 3.20(a) lists completely and
correctly as of the Restatement Effective Date all domestic real property owned
by Polypore and the Subsidiaries and the addresses thereof.  Polypore and the Subsidiaries, as the case
may be, as of the Restatement Effective Date, own in fee all the real property
set forth on Schedule 3.20(a). 
Schedule 3.20(b) lists completely and correctly as of the Restatement
Effective Date all material domestic real property leased by Polypore and the
Subsidiaries and the addresses thereof. 
Polypore and the Subsidiaries, as the case may be, as of the Restatement
Effective Date, have valid leasehold interests in all the real property set
forth on Schedule 3.20(b).


SECTION 3.21.  Labor Matters.  As of the Restatement Effective Date, there
are no strikes, lockouts or slowdowns against any Group Member pending or, to
the knowledge of Holdings or Polypore, threatened.  The



 58
 









consummation of the Transactions will not give rise to
any right of termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which any Group Member is
bound.  Except to the extent any of the
following, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect, (a) the hours worked by and payments made to
employees of each Group Member have not been in violation in any material
respect of the Fair Labor Standards Act or any other applicable Federal, state,
local or foreign law dealing with such matters and (b) all payments due from
any Group Member, or for which any claim may be made against any Group Member,
on account of wages and employee health and welfare insurance and other
benefits, have been paid or accrued as a liability on the books of such Group
Member.


SECTION
3.22.  Solvency.  Immediately after the consummation of the
Transactions to occur on the Restatement Effective Date and immediately
following the making of each Loan and after giving effect to the application of
the proceeds of each Loan, (a) the fair value of the assets of the Loan Parties
taken as a whole, at a fair valuation, will exceed their debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value of
the property of the Loan Parties taken as a whole will be greater than the
amount that will be required to pay the probable liability of their debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) the Loan Parties taken as a
whole will be able to pay their debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured; and
(d) the Loan Parties taken as a whole will not have unreasonably small capital
with which to conduct the business in which they are engaged as such business
is now conducted and is proposed to be conducted following the Restatement
Effective Date.


SECTION
3.23.  Senior Indebtedness.  The Obligations constitute “Senior
Indebtedness” under and as defined in the Senior Subordinated Note Indenture.


SECTION
3.24.  Certain Treasury
Regulation Matters. 
The Borrower does not intend to treat the Loans and related transactions
as being a “reportable” transaction (within the meaning of Treasury Regulation
1.6011-4).  The Borrower acknowledges
that the Administrative Agent and one or more of the Lenders may treat its
Loans as part of a transaction that is subject to Treasury Regulation Section
301.6112-1 to the extent that the Borrower’s application of the proceeds of the
Loans requires the same and the Administrative Agent and such Lender or
Lenders, as applicable, may, in connection therewith, maintain such lists and
other records as they may determine is required by such Treasury Regulation.


SECTION
3.25.  Foreign Assets Control
Regulations, Etc. 
None of the requesting or borrowing of the Loans, the requesting or
issuance, extension or renewal of any Letters of Credit or the use of the
proceeds of any thereof will violate the Trading With the Enemy Act (50 U.S.C.
§ 1 et seq., as amended) (the “Trading With the Enemy Act”) or any of
the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign Assets Control
Regulations”) or any enabling legislation or executive order relating
thereto (which for the avoidance of doubt shall include, but shall not be
limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property
and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”)
and (b) the Patriot Act).  To the
knowledge of Polypore, neither Polypore nor any of its Subsidiaries (a) is a “blocked person” as described in the Executive
Order, the Trading With the Enemy Act or the Foreign Assets Control Regulations
or (b) engages transactions with any such “blocked person” blocked by such
order, law or regulation.



 59
 









ARTICLE
IV


Conditions of Lending


The obligations of the Lenders to make Loans and of
the Issuing Bank to issue Letters of Credit hereunder are subject to the
satisfaction of the following conditions:


SECTION
4.1.  All Credit Events.  On the date of each Borrowing, including each
Borrowing of a Swingline Loan and on the date of each issuance, amendment,
extension or renewal of a Letter of Credit (each such event being called a “Credit
Event”):


(a)                                  The
Administrative Agent shall have received a notice of such Borrowing as required
by Section 2.3 (or such notice shall have been deemed given in accordance
with Section 2.3) or, in the case of the issuance, amendment, extension or
renewal of a Letter of Credit, the Issuing Bank and the Administrative Agent
shall have received a notice requesting the issuance, amendment, extension or
renewal of such Letter of Credit as required by Section 2.22(b) or, in the
case of the Borrowing of a Swingline Loan, the Swingline Lender and the
Administrative Agent shall have received a notice requesting such Swingline
Loan as required by Section 2.21(b).


(b)                                 The
representations and warranties set forth in Article III hereof and in each
other Loan Document shall be true and correct in all material respects on and
as of the date of such Credit Event with the same effect as though made on and
as of such date, except to the extent such representations and warranties
expressly relate to an earlier date, in which case they shall be true and
correct in all material respects on and as of such earlier date.


(c)                                  At
the time of and immediately after such Credit Event, no Event of Default or
Default shall have occurred and be continuing.


(d)                                 If
(i) the Revolving Facility was unutilized as of the last day of the most recent
fiscal quarter for which financial statements have been delivered and (ii) such
Credit Event is the first Credit Event under the Revolving Facility to occur
after delivery of such financial statements, Polypore shall be in compliance
with Section 6.11, determined as if Polypore had been required to comply with
Section 6.11 as of such day.


Each Credit Event shall be deemed to constitute a
representation and warranty by Polypore and Holdings on the date of such Credit
Event as to the matters specified in paragraphs (b), (c) and, if applicable,
(d) of this Section 4.1.


SECTION
4.2.  First Credit Event.  On the Restatement Effective Date:


(a)                                  The
Administrative Agent shall have received, on behalf of itself, the Lenders and
the Issuing Bank, a favorable written opinion of (i) Willkie Farr &
Gallagher LLP, counsel for Holdings and Polypore, substantially to the effect
set forth in Exhibit E-1 and (ii) Willkie Farr & Gallagher LLP, counsel for
Daramic Holding, substantially to the effect set forth in Exhibit E-2, in each
case (A) dated the Restatement Effective Date, (B) addressed to the Issuing
Bank, the Administrative Agent and the Lenders and (C) covering such other
matters relating to the Loan Documents and the Transactions as the
Administrative Agent shall reasonably request, and Holdings, Polypore and
Daramic Holding hereby request such counsel to deliver such opinions.


(b)                                 The
Administrative Agent shall have received (i) a copy of the certificate or
articles of incorporation, including all amendments thereto, of each Loan
Party, certified as of a



 60















recent date by the Secretary of State of the
state of its organization, and a certificate as to the good standing of each
Loan Party as of a recent date, from such Secretary of State; (ii) a
certificate of the Secretary or Assistant Secretary of each Loan Party dated
the Restatement Effective Date and certifying (A) that attached thereto is a
true and complete copy of the by-laws of such Loan Party as in effect on the
Restatement Effective Date and at all times since a date prior to the date of
the resolutions described in clause (B) below, (B) that attached thereto is a
true and complete copy of resolutions duly adopted by the Board of Directors of
such Loan Party authorizing the execution, delivery and performance of the Loan
Documents to which such Person is a party and, in the case of the Borrower, the
borrowings hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) that the certificate
or articles of incorporation of such Loan Party have not been amended since the
date of the last amendment thereto shown on the certificate of good standing
furnished pursuant to clause (i) above and (D) as to the incumbency and
specimen signature of each officer executing any Loan Document or any other document
delivered in connection herewith on behalf of such Loan Party; (iii) a
certificate of another officer as to the incumbency and specimen signature of
the Secretary or Assistant Secretary executing the certificate pursuant to
clause (ii) above; and (iv) such other documents as the Lenders, the Issuing
Bank or the Administrative Agent may reasonably request.


(c)                                  The Administrative Agent shall have received
a certificate, dated the Restatement Effective Date and signed by a Financial
Officer of Polypore, confirming compliance with the conditions precedent set
forth in Sections 4.1(b), (c) and (d) (determined as if Polypore had been
required to comply with Section 6.11 as of the Restatement Effective Date).


(d)                                 The
Administrative Agent and the Syndication Agent shall have received all Fees and
other amounts due and payable on or prior to the Restatement Effective Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by Polypore hereunder
or under any other Loan Document.


(e)                                  An
amendment to the Guarantee and Collateral Agreement and a reaffirmation in
respect of the Security Documents, substantially in the form of Exhibit G,
shall have been duly executed by each Loan Party that is to be a party
thereto.  The Administrative Agent on
behalf of the Secured Parties shall have a security interest in the Collateral
of the type and priority described in each Security Document, except to the
extent otherwise provided herein or in such Security Documents.


(f)                                    The
Administrative Agent shall have received a Perfection Certificate with respect
to the Loan Parties dated the Restatement Effective Date and duly executed by a
Responsible Officer of Polypore, and shall have received the results of a search
of the Uniform Commercial Code filings (or equivalent filings) made with
respect to the Loan Parties in the states (or other jurisdictions) of formation
of such Persons, in which the chief executive office of each such Person is
located and in the other jurisdictions in which such Persons maintain property,
in each case as indicated on such Perfection Certificate, together with copies
of the financing statements (or similar documents) disclosed by such search,
and accompanied by evidence satisfactory to the Administrative Agent that the
Liens indicated in any such financing statement (or similar document) would be
permitted under Section 6.2 or have been or will be contemporaneously
released or terminated.


(g)                                 The
Administrative Agent shall have received a copy of, or a certificate as to
coverage under, the insurance policies required by Section 5.2 and the
applicable provisions of the Security Documents, each of which shall be
endorsed or otherwise amended to include a



 61
 









customary lender’s loss payable endorsement
and to name the Administrative Agent on behalf of the Secured Parties as
additional insured, in form and substance satisfactory to the Administrative
Agent.


(h)                                 All
amounts owing under the Existing Credit Agreement shall have been paid in full.


(i)                                     The
Public Equity Offering shall have been consummated.


(j)                                     The
Lenders shall have received the financial statements and opinion referred to in
Section 3.5.


(k)                                  All
requisite Governmental Authorities shall have approved or consented to the
Transactions and the other transactions contemplated hereby to the extent
required, all applicable appeal periods shall have expired and there shall not
be any pending or threatened litigation, governmental, administrative or
judicial action that could reasonably be expected to prevent or impose
materially burdensome conditions on the Transactions or the other transactions
contemplated hereby. All requisite third party consents necessary for the
consummation of the Transactions shall have been obtained except for those third
party consents where the failure to so obtain such consents would not have a
Material Adverse Effect.


(l)                                     The
Administrative Agent shall have received a solvency certificate from the chief
financial officer of Polypore documenting the solvency of Polypore and its
Subsidiaries after giving effect to the Transactions, in form and substance
reasonably satisfactory to the Administrative Agent.


(m)                               The
Lenders shall have received all documentation and other information required by
Governmental Authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including the Patriot Act, at least five
Business Days prior to the Restatement Effective Date.


ARTICLE
V


Affirmative Covenants


Each of Holdings
and Polypore covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under any Loan Document shall have been paid in full and all
Letters of Credit have been canceled or have expired and all amounts drawn
thereunder have been reimbursed in full, unless the Required Lenders shall
otherwise consent in writing, each of Holdings and Polypore will, and will cause
each of the Material Subsidiaries to:


SECTION
5.1.  Existence; Businesses and
Properties. 
(a)  Do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence, except as otherwise expressly permitted under Section 6.5.


(b)                                 Do
or cause to be done all things necessary to obtain, preserve, renew, extend and
keep in full force and effect all rights, licenses, permits, franchises,
authorizations, patents, copyrights, trademarks and trade names used in or
relating to the conduct of its business, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect; maintain
and operate such business in substantially the manner in which it is presently
conducted and operated, including any



 62
 









reasonable
extension, development or expansion thereof; comply with all applicable laws,
rules, regulations and decrees and orders of any Governmental Authority,
whether now in effect or hereafter enacted, except where the failure to do so could
not reasonably be expected to have a Material Adverse Effect; and at all times
maintain and preserve all property material to the conduct of such business and
keep such property in good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at all
times, except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect.


SECTION
5.2.  Insurance.  (a) 
Keep its insurable properties adequately insured at all times by
financially sound and reputable insurers; maintain such other insurance, to
such extent and against such risks, including fire and other risks insured
against by extended coverage, as is customary with companies in the same or
similar businesses operating in the same or similar locations, including public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law.


(b)                                 Cause
all such policies covering any Collateral to be endorsed or otherwise amended
to include a customary lender’s loss payable endorsement, in form and substance
satisfactory to the Administrative Agent, which endorsement shall provide that,
from and after the Restatement Effective Date, if the insurance carrier shall
have received written notice from the Administrative Agent of the occurrence of
an Event of Default, the insurance carrier shall pay all proceeds otherwise
payable to Polypore or the Loan Parties under such policies directly to the
Administrative Agent; cause all such policies to provide that neither Polypore,
the Administrative Agent nor any other party shall be a coinsurer thereunder
and to contain a “Replacement Cost Endorsement”, without any deduction for
depreciation, and such other provisions as the Administrative Agent may
reasonably require from time to time to protect their interests; deliver
evidence of all such policies to the Administrative Agent; upon the occurrence
of an Event of Default, deliver original or certified copies of all such
policies to the Administrative Agent upon its request; cause each such policy
to provide that it shall not be canceled, modified or not renewed (i) by reason
of nonpayment of premium upon not less than 10 days’ prior written notice thereof
by the insurer to the Administrative Agent (giving the Administrative Agent the
right to cure defaults in the payment of premiums) or (ii) for any other reason
upon not less than 30 days’ prior written notice thereof by the insurer to the
Administrative Agent; deliver to the Administrative Agent, prior to the
cancellation, modification or nonrenewal of any such policy of insurance,
evidence of a renewal or replacement policy (or other evidence of renewal of a
policy previously delivered to the Administrative Agent) together with evidence
satisfactory to the Administrative Agent of payment of the premium therefor.


(c)                                  If
at any time the area in which the Premises (as defined in the Mortgages) are
located is designated (i) a “flood hazard area” in any Flood Insurance Rate Map
published by the Federal Emergency Management Agency (or any successor agency),
obtain flood insurance in such total amount as the Administrative Agent or the
Required Lenders may from time to time require, and otherwise comply with the
National Flood Insurance Program as set forth in the Flood Disaster Protection
Act of 1973, as it may be amended from time to time, or (ii) a “Zone 1” area,
obtain earthquake insurance in such total amount as the Administrative Agent or
the Required Lenders may from time to time require.


(d)                                 With
respect to any Mortgaged Property, carry and maintain comprehensive general
liability insurance including a “broad form” commercial general liability
endorsement and coverage on an occurrence basis against claims made for
personal injury (including bodily injury, death and property damage) and
umbrella liability insurance against any and all claims, in no event for a
combined single



 63
 









limit of less
than $15,000,000, naming the Administrative Agent as an additional insured, on
forms satisfactory to the Administrative Agent.


(e)                                  Notify
the Administrative Agent immediately whenever any separate insurance concurrent
in form or contributing in the event of loss with that required to be
maintained under this Section 5.2 is taken out by Polypore; and promptly
deliver to the Administrative Agent a duplicate original copy of such policy or
policies.


SECTION
5.3.  Taxes.  Pay all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in respect
of its property, before the same shall become delinquent or in default;
provided, however, that such payment and discharge shall not be required with
respect to any such tax, assessment, charge or levy so long as (a) the validity
or amount thereof shall be contested in good faith by appropriate proceedings
and Polypore shall have set aside on its books adequate reserves with respect
thereto in accordance with GAAP and such contest operates to suspend collection
of the contested obligation, tax, assessment or charge and enforcement of a
Lien and, in the case of a Mortgaged Property, there is no risk of forfeiture
of such property or (b) the nonpayment thereof could not reasonably be expected
to result in a Material Adverse Effect.


SECTION
5.4.  Financial Statements,
Reports, etc.  In
the case of Polypore, furnish to the Administrative Agent (either physically or
through electronic delivery reasonably acceptable to the Administrative Agent),
which shall furnish to each Lender:


(a)                                  within
90 days after the end of each fiscal year, its consolidated balance sheet and
related statements of income, stockholders’ equity and cash flows showing the
financial condition of Polypore and its consolidated Subsidiaries as of the
close of such fiscal year and the results of its operations and the operations
of such Subsidiaries during such year, together with comparative figures for
the immediately preceding fiscal year, all audited by Ernst & Young LLP or
other independent public accountants of recognized national standing and
accompanied by an opinion of such accountants (which shall not be qualified in
any material respect) to the effect that such consolidated financial statements
fairly present the financial condition and results of operations of Polypore
and its consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied;


(b)                                 within
45 days after the end of each of the first three fiscal quarters of each fiscal
year, its consolidated balance sheet and related statements of income,
stockholders’ equity and cash flows showing the financial condition of Polypore
and its consolidated Subsidiaries as of the close of such fiscal quarter and
the results of its operations and the operations of such Subsidiaries during
such fiscal quarter and the then elapsed portion of the fiscal year, and
comparative figures for the same periods in the immediately preceding fiscal
year, all certified by one of its Financial Officers as fairly presenting the
financial condition and results of operations of Polypore and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments;


(c)                                  concurrently
with any delivery of financial statements under paragraph (a), or (b) above, a
certificate of the accounting firm (in the case of paragraph (a)) or Financial
Officer (in the case of paragraph (b)) opining on or certifying such statements
(which certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal interpretations and
which may be provided by a Financial Officer if accounting firms generally are
not providing such certificates) (i) certifying that no Event of Default or
Default has occurred or, if such an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto, (ii) setting



 64
 









forth computations in reasonable detail
satisfactory to the Administrative Agent demonstrating compliance with Section
6.10, (iii) setting forth computations in reasonable detail satisfactory to the
Administrative Agent of the Total Leverage Ratio and the Senior Leverage Ratio
as of the last day of the relevant fiscal period and (iv) setting forth
computations in reasonable detail satisfactory to the Administrative Agent of
any Specified Payment made during the relevant fiscal period (including
calculations of the Available Amount and, if applicable, the Consolidated Fixed
Charge Coverage Ratio as of each relevant date) and, in the case of a
certificate delivered with the financial statements required by paragraph (a)
above, (x) setting forth Polypore’s calculation of Excess Cash Flow and
(y) prior to consummation of the Merger, certifying that there has been no
change in the business activities, assets or liabilities of Holdings, or if
there has been any such change, describing such change in reasonable detail and
certifying that Holdings is in compliance with Section 6.8(a);


(d)                                 within
45 days after the commencement of each fiscal year of Polypore, a detailed
consolidated budget for such fiscal year (including a projected consolidated
balance sheet and related statements of projected operations and cash flows as
of the end of and for such fiscal year);


(e)                                  promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by any Group Member with
the SEC, or any Governmental Authority succeeding to any or all of the functions
of said Commission, or with any national securities exchange, or, after the
initial Public Equity Offering (disregarding for purposes of this
Section 5.4(e) the Net Cash Proceeds dollar threshold contained in the
definition of such term), distributed to its shareholders, as the case may be;


(f)                                    promptly
after the receipt thereof by any Group Member, a copy of any “management letter”
received by any such Person from its certified public accountants and the
management’s response thereto; and


(g)                                 promptly,
from time to time, such other information regarding the operations, business
affairs and financial condition of any Group Member, or compliance with the
terms of any Loan Document, as the Administrative Agent or any Lender may
reasonably request.


Documents required to be delivered
pursuant to Section 5.4(a), (b) or (e) (to the extent any such documents are
included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on the
date (i) on which Polypore posts such documents, or provides a link thereto on
Polypore’s website on the Internet at Polypore’s website address; or (ii) on
which such documents are posted on Polypore’s behalf on IntraLinks/IntraAgency
or another relevant website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent).


SECTION
5.5.  Litigation and Other
Notices.  Furnish
to the Administrative Agent, the Issuing Bank and each Lender prompt written
notice of the following:


(a)                                  any
Event of Default or Default, specifying the nature and extent thereof and the
corrective action (if any) taken or proposed to be taken with respect thereto;


(b)                                 the
filing or commencement of, or any threat or notice of intention of any Person
to file or commence, any action, suit or proceeding, whether at law or in
equity or by or before any Governmental Authority, against Polypore or any
Affiliate thereof that could reasonably be expected to result in a Material
Adverse Effect;



 65
 









(c)                                  the
occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of Polypore and its ERISA Affiliates in an aggregate amount exceeding
$2,500,000; and


(d)                                 any
development that has resulted in, or could reasonably be expected to result in,
a Material Adverse Effect.


SECTION
5.6.  Information Regarding
Collateral.  (a)  Furnish to the Administrative Agent prompt
written notice of any change in (i) any Loan Party’s legal name, (ii) the
jurisdiction of organization or formation of any Loan Party, (iii) any Loan
Party’s identity or corporate structure or (iv) any Loan Party’s Federal
Taxpayer Identification Number.  Holdings
and Polypore agree not to effect or permit any change referred to in the
preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Administrative
Agent to continue at all times following such change to have a valid, legal and
perfected security interest in all the Collateral.  Holdings and Polypore also agree promptly to
notify the Administrative Agent if any material portion of the Collateral is
damaged or destroyed.


(b)                                 In
the case of Polypore, each year, at the time of delivery of the annual
financial statements with respect to the preceding fiscal year pursuant to
Section 5.4(a), deliver to the Administrative Agent a certificate of a
Financial Officer setting forth the information required pursuant to Section 2
of the Perfection Certificate or confirming that there has been no change in
such information since the date of the Perfection Certificate delivered on the
Restatement Effective Date or the date of the most recent certificate delivered
pursuant to this Section 5.6.


SECTION
5.7.  Maintaining Records;
Access to Properties and Inspections.  Keep proper books of record and account in
which full, true and correct entries in conformity with GAAP and all requirements
of law are made of all dealings and transactions in relation to its business
and activities.  Each Loan Party will,
and will cause each of its subsidiaries to, permit any representatives
designated by the Administrative Agent or any Lender to visit and inspect the
financial records and the properties of Holdings, Polypore or any Material
Subsidiary at reasonable times and as often as reasonably requested (but not,
except during the continuance of an Event of Default, more than two times per
fiscal year) and to make extracts from and copies of such financial records,
and permit any representatives designated by the Administrative Agent or any
Lender to discuss the affairs, finances and condition of Holdings, Polypore or
any Material Subsidiary with the officers thereof and independent accountants
therefor.  Except following the
occurrence and during the continuance of any Default, Polypore shall be
entitled to have a representative present at all such discussions and to obtain
a copy of all written requests for information relating to any Loan Party made
by the Administrative Agent or any Lender to any third party.


SECTION
5.8.  Use of Proceeds.  Use the proceeds of (a) the Term Loans (other
than the Incremental Term Loans) to pay (i) a portion of the amounts owing
under the Existing Credit Agreement and other existing Indebtedness of Polypore
and (ii) transaction costs incurred in connection with the Transactions, (b)
the Revolving Loans and Swingline Loans for working capital and general
corporate purposes (including to pay (i) a portion of the amounts owing under
the Existing Credit Agreement and other existing Indebtedness of Polypore and
(ii) transaction costs incurred in connection with the Transactions), (c) the
Letters of Credit for general corporate purposes and (d) Incremental Term Loans
for general corporate purposes (including Permitted Acquisitions).


SECTION 5.9.  Further Assurances.  Execute any and all further documents,
financing statements, agreements and instruments, and take all further action
(including (i) filing Uniform Commercial Code and other financing statements,
mortgages and deeds of trust and (ii) delivering duly executed deposit account
control agreements as contemplated by, and within the time period referred to
in, the Guarantee and



 66
 









Collateral Agreement) that may be required under
applicable law, or that the Required Lenders or the Administrative Agent may
reasonably request, in order to effectuate the transactions contemplated by the
Loan Documents and in order to grant, preserve, protect and perfect the
validity and first priority of the security interests created or intended to be
created by the Security Documents. 
Polypore will cause any subsequently acquired or organized Domestic Subsidiary
(other than any Inactive Subsidiary) or any Domestic Subsidiary that ceases to
be an Inactive Subsidiary to become a Loan Party by executing the Guarantee and
Collateral Agreement and each other applicable Security Document in favor of
the Administrative Agent.   In addition,
subject to the last sentence of this Section 5.9, from time to time, Polypore
will, at its cost and expense, promptly secure the Obligations by pledging or
creating, or causing to be pledged or created, perfected security interests
with respect to such of its assets and properties as the Administrative Agent
or the Required Lenders shall designate (it being understood that it is the
intent of the parties that the Obligations shall be secured by substantially
all the assets of Polypore and its Subsidiaries (including real and other
properties acquired subsequent to the Restatement Effective Date, but excluding
real property with a value of less than $5,000,000, leasehold real property,
other immaterial leasehold property, and other Excluded Property (as defined in
the Guarantee and Collateral Agreement). 
Such security interests and Liens will be created under the Security
Documents and other security agreements, mortgages, deeds of trust and other
instruments and documents in form and substance satisfactory to the Administrative
Agent, and Polypore shall deliver or cause to be delivered to the Lenders all
such instruments and documents (including legal opinions, title insurance
policies and lien searches) as the Administrative Agent shall reasonably
request to evidence compliance with this Section 5.9.  Polypore agrees to provide such evidence as
the Administrative Agent shall reasonably request as to the perfection and
priority status of each such security interest and Lien.  In furtherance of the foregoing, Polypore will
give prompt notice to the Administrative Agent of the acquisition by it or any
of the Domestic Subsidiaries of any real property (or any interest in real
property) having a value in excess of $5,000,000.  The actions required under this Section 5.9
shall be taken with 30 days (or such later time as may be acceptable to the
Administrative Agent) after the event giving rise to the requirement to take
such action.  Notwithstanding the
foregoing, (x) the Administrative Agent shall not take a security interest in
those assets as to which the Administrative Agent shall determine, in its
reasonable discretion, that the cost of obtaining such Lien (including any
mortgage, stamp, intangibles or other tax) are excessive in relation to the
benefit to the Lenders of the security afforded thereby and (y) Liens required
to be granted pursuant to this Section 5.9 shall be subject to exceptions and
limitations consistent with those set forth in the Collateral Documents as in
effect on the Restatement Effective Date (to the extent appropriate in the
applicable jurisdiction).


SECTION
5.10.  Certain Treasury
Regulation Matters. 
In the event the Borrower determines to take any action inconsistent
with its intention as set forth in the first sentence of Section 3.24, it will
promptly notify the Administrative Agent thereof.


SECTION
5.11.  Hedging Agreements.  In the case of Polypore, maintain Hedging
Agreements with one or more Lenders (or Affiliates thereof) to the extent
necessary to provide that at least 50% of the aggregate principal amount of
Funded Debt of Polypore outstanding on the Restatement Effective Date is
subject to either a fixed interest rate or interest rate protection for a
period of not less than two years from the Restatement Effective Date, which
Hedging Agreements shall have terms and conditions reasonably satisfactory to
the Administrative Agent.


SECTION
5.12.  Environmental Laws.  Except, in each case, as would not,
individually or in the aggregate, have a Material Adverse Effect:


(a)  Comply in
all material respects with, and use reasonable efforts to ensure compliance in
all material respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws, and obtain and comply in all material respects
with and maintain, and use reasonable efforts to ensure that all



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tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
Environmental Permits required of them by any applicable Environmental
Laws.  For purposes of this Section
5.12(a), noncompliance with the foregoing shall be deemed not to constitute a
breach of this covenant, provided, that upon learning of any actual or
suspected noncompliance, Polypore shall promptly undertake reasonable efforts
to achieve compliance.


(b)                               Conduct
and complete in all material respects all investigations, studies, sampling and
testing, and all remedial, removal and other actions required to be undertaken
by any Group Member under Environmental Laws and promptly comply with all
orders and directives applicable to any Group Member of all Governmental
Authorities regarding Environmental Laws; provided, however, that
this covenant shall be deemed not violated if the relevant Group Member
promptly challenges in good faith any such order or directive in a manner
consistent with all applicable Environmental Laws and other Requirements of Law
and pursues such challenge or challenges diligently.


(c)                                Generate,
use, treat, store, release, dispose of, and otherwise manage Materials of
Environmental Concern in a manner that would not reasonably be expected to
result in a material liability to any Group Member or to materially affect any
real property owned or leased by any of them; and take reasonable efforts to
prevent any other Person from generating, using, treating, storing, releasing,
disposing of, or otherwise managing Materials of Environmental Concern in a
manner that could reasonably be expected to result in a material liability to,
or materially affect any real property owned or operated by, any Group Member.  For purposes of this Section 5.12(c),
noncompliance with the foregoing shall be deemed not to constitute a breach of
this covenant, provided, that, upon learning of any actual or suspected
noncompliance, Polypore shall promptly undertake reasonable efforts to remove
such Materials of Environmental Concern or otherwise remediate them in a manner
consistent with applicable Environmental Law.


(d)                               Maintain,
update as appropriate, and implement in all material respects an ongoing
program reasonably designed to ensure that all the properties and operations of
the Group Members are regularly and reasonably reviewed by competent
professionals to identify and promote compliance with and to reasonably and
prudently manage any liabilities or potential liabilities under any Environmental
Law that may affect any Group Member, including, without limitation, compliance
and liabilities relating to:  discharges
to air and water; acquisition, transportation, storage and use of hazardous
materials; waste disposal; repair, maintenance and improvement of properties;
employee health and safety; species protection; and recordkeeping.


ARTICLE
VI


Negative Covenants


Each of Holdings
and Polypore covenants and agrees with each Lender that, so long as this
Agreement shall remain in effect and until the Commitments have been terminated
and the principal of and interest on each Loan, all Fees and all other expenses
or amounts payable under any Loan Document have been paid in full and all
Letters of Credit have been cancelled or have expired and all amounts drawn
thereunder have been reimbursed in full, unless the Required Lenders (or, in
the case of Sections 6.10 and 6.11, the Required Revolving Lenders) shall
otherwise consent in writing, neither Holdings nor Polypore will, nor will they
cause or permit any of the Material Subsidiaries (or, in the case of Section
6.1, any of the Subsidiaries) to:


SECTION 6.1.  Indebtedness.  Directly
or indirectly, create, incur, issue, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, “incur”) any Indebtedness (other than Permitted
Indebtedness); provided,



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however, that if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, Polypore and the Guarantors may incur
Indebtedness (including Acquired Indebtedness), and Subsidiaries of Polypore
that are not Guarantors may incur Acquired Indebtedness in an aggregate amount
not to exceed $20,000,000 at any time outstanding, in each case if on the date
of the incurrence of such Indebtedness, after giving effect to the incurrence
thereof, the Consolidated Fixed Charge Coverage Ratio would have been greater
than 2.0 to 1.0.  The maximum amount of
Indebtedness that Polypore and its Subsidiaries may incur pursuant to this
covenant shall not be deemed to be exceeded, with respect to any outstanding
Indebtedness, solely as a result of fluctuations in the exchange rate of
currencies.  When calculating capacity
for the incurrence of additional Indebtedness by Polypore and its Subsidiaries
pursuant to this covenant the exchange rate of currencies shall be measured as
of the date of such calculation.


SECTION
6.2.  Liens.  Create, incur, assume or suffer to exist any
Lien on any property or assets (including Capital Stock or other securities of
any Person, including any Subsidiary) now owned or hereafter acquired by it or
on any income or revenues or rights in respect of any thereof, except:


(a)                                  Liens
on property or assets of Polypore and its Subsidiaries existing on the
Restatement Effective Date and set forth in Schedule 6.2; provided, that such Liens shall secure only those obligations which they
secure on the Restatement Effective Date and any extensions, renewals and
replacements thereof permitted hereunder;


(b)                                 any
Lien created under the Loan Documents;


(c)                                  any
Lien existing on any property or asset prior to the acquisition thereof by
Polypore or any Subsidiary; provided, that (i) such Lien is not created
in contemplation of or in connection with such acquisition, (ii) such Lien does
not apply to any other property or assets of Polypore or any Subsidiary, (iii)
such Lien does not materially interfere with the use, occupancy and operation
of any Mortgaged Property and (iv) the aggregate principal amount of
Indebtedness secured by all Liens incurred pursuant to this paragraph (c) does
not exceed the greater of (A) $35,000,000 and (B) 2.5% of Total Assets at any
one time;


(d)                                 Liens
for taxes not yet due or which are being contested in compliance with
Section 5.3;


(e)                                  carriers’,
landlords’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business and securing obligations
that are not due and payable or which are being contested in compliance with
Section 5.3;


(f)                                    pledges
and deposits made in the ordinary course of business in compliance with workmen’s
compensation, unemployment insurance and other social security laws or
regulations;


(g)                                 deposits
to secure the performance of bids, trade contracts (other than for
Indebtedness), leases (other than Capital Lease Obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business;


(h)                                 zoning
restrictions, easements, rights-of-way, restrictions on use of real property
and other similar encumbrances incurred in the ordinary course of business
which, in the aggregate, do not materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the business
of Polypore or any of its Subsidiaries as currently operated;



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(i)                                     purchase
money security interests in real property, improvements thereto or equipment
hereafter acquired (or, in the case of improvements, constructed) by Polypore
or any Subsidiary; provided, that (i) such security interests
secure Indebtedness either (A) permitted by clause (vi) of the definition of “Permitted
Indebtedness” or (B) otherwise permitted by Section 6.1 so long as, in the case
of this clause (B), after giving pro forma effect to the incurrence of such
Indebtedness, Polypore is in compliance with Section 6.11 (determined whether
or not Polypore is otherwise required to comply with Section 6.11), (ii) such
security interests are originally incurred within 180 days after such
acquisition (or construction), (iii) the Indebtedness secured thereby is
created within 180 days after such acquisition (or construction) or is
Refinancing Indebtedness of such Indebtedness, and (iv) such security interests
do not apply to any other property or assets of Polypore or any Subsidiary (it
being agreed that transactions with the same vendor or any Affiliate of such
vendor may be cross-collateralized);


(j)                                     Liens
arising out of judgments or awards in respect of which any Group Member shall
in good faith be prosecuting an appeal or proceedings for review in respect of
which there shall be secured a subsisting stay of execution pending such appeal
or proceedings; provided,
that the aggregate amount of all such judgments or awards (and any cash and the
fair market value of any property subject to such Liens) does not exceed
$20,000,000 at any time outstanding;


(k)                                  any
interest or title of a licensor, lessor or sublessor under any license or lease
agreement pursuant to which rights are granted to Polypore or any Subsidiary;


(l)                                     licenses,
leases or subleases granted by Polypore or any Subsidiary to third Persons in
the ordinary course of business not interfering in any material respect with
the business of Polypore or any Subsidiary;


(m)                               Liens
in favor of customs or revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods;


(n)                                 restrictions
imposed in the ordinary course of business on the sale or distribution of
designated inventory pursuant to agreements with customers under which such
inventory is consigned by the customer or such inventory is designated for sale
to one or more customers;


(o)                                 (i)
Liens on the assets of a Foreign Subsidiary that is not a Subsidiary Guarantor
securing Indebtedness permitted to be incurred by such Foreign Subsidiary
pursuant to clause (xiv) of the definition of “Permitted Indebtedness” and (ii)
other Liens on the assets of a Foreign Subsidiary that is not a Subsidiary
Guarantor securing Indebtedness by such Foreign Subsidiary not, in the case of
this clause (ii), in excess of $1,000,000;


(p)                                 any
interest of a lessor under Liens arising from precautionary UCC financing
statement filings regarding leases entered into by Polypore or any of its
Subsidiaries in the ordinary course of business;


(q)                                 Liens
arising out of conditional sale, title retention, consignment or similar
arrangements for the sale of goods entered into by Polypore or any of its
Subsidiaries in the ordinary course of business;


(r)                                    Liens
deemed to exist in connection with investments in repurchase agreements
permitted under this Agreement;



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(s)                                  Liens
that are contractual or statutory setoff rights arising in the ordinary course
of business with financial institutions, relating to pooled deposit accounts or
sweep accounts of any Group Member to permit satisfaction of overdraft or
similar obligations incurred in the ordinary course of business or relating to
purchase orders or other agreements entered into with customers of any Group
Member in the ordinary course of business;


(t)                                    Liens
solely on any cash earnest money deposits by Polypore or any of its
Subsidiaries in connection with any letter of intent or purchase agreement
permitted under this Agreement;


(u)                                 Liens on accounts receivable and related
assets or equipment and related assets incurred in connection with Qualified
Securitization Transactions; and


(v)                                 other
Liens securing obligations incurred in the ordinary course of business that do
not, individually or in the aggregate, secure obligations (or encumber property
with a fair market value) in excess of the greater of (i) $50,000,000 and (ii)
3.5% of Total Assets at any one time.


SECTION
6.3.  Sale and Lease-Back
Transactions. 
Enter into any arrangement, directly or indirectly, with any Person
whereby it shall sell or transfer any property, real or personal, used or
useful in its business, whether now owned or hereafter acquired, and thereafter
rent or lease such property or other property which it intends to use for
substantially the same purpose or purposes as the property being sold or
transferred unless (a) the sale of such property is permitted by Section 6.5
and (b) any Capital Lease Obligations, Synthetic Lease Obligations or Liens
arising in connection therewith are permitted by clause (vi) of the definition
of “Permitted Indebtedness” and Section 6.2, as applicable.


SECTION
6.4.  Investments, Loans and
Advances. 
Purchase, hold or acquire any Capital Stock, evidences of indebtedness
or other securities of, make or permit to exist any loans or advances to, or
make or permit to exist any investment or any other interest in, any other
Person (each, an “Investment” or an “investment”), except:


(a)                                  Permitted Investments;


(b)                                 loans or advances made by Polypore or any
Subsidiary to Polypore or any other Subsidiary; provided, that (i) any such loans and advances made by
a Loan Party shall be evidenced by a promissory note pledged to the Administrative
Agent for the ratable benefit of the Secured Parties pursuant to the Guarantee
and Collateral Agreement and (ii) the outstanding amount of such loans
and advances made by Loan Parties to Subsidiaries that are not Loan Parties
shall not exceed the greater of (A)
$35,000,000 and (B) 2.5% of Total Assets;


(c)                                  investments received in connection with the
bankruptcy or reorganization of, or settlement of delinquent accounts and
disputes with, customers and suppliers, in each case in the ordinary course of
business;


(d)                                 Polypore and the Subsidiaries may make loans
and advances in the ordinary course of business to their respective employees
so long as the aggregate principal amount thereof at any time outstanding
(determined without regard to any write-downs or write-offs of such loans and
advances) shall not exceed $10,000,000 at any time and advances in the ordinary
course of business of payroll payments to employees;


(e)                                  Polypore may enter into Hedging Agreements
that are not speculative in nature;



 71
 









(f)                                    Polypore and its Subsidiaries may acquire and
hold receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms
(including the dating of receivables) of Polypore or such Subsidiary;


(g)                                 Holdings (or, after the Merger, Polypore) may
acquire and hold obligations of one or more officers or other employees of
Holdings (or, after the Merger, Polypore) or its subsidiaries in connection
with such officers’ or employees’ acquisition of Capital Stock of Holdings (or,
after the Merger, Polypore);


(h)                                 Polypore and its Subsidiaries may acquire and
hold non-cash consideration issued by the purchaser of assets in connection
with a sale of such assets to the extent permitted by Section 6.5;


(i)                                     investments, loans and advances existing on
the Restatement Effective Date and set forth in Schedule 6.4;


(j)                                     prior to consummation of the Merger, Polypore
and Holdings may make loans and advances to Holdings and/or the Parent (x) the
proceeds of which shall be applied by Holdings and/or the Parent (A) to pay its
franchise taxes and other fees required to maintain its corporate existence and
(B) to pay out of pocket general corporate and overhead expenses incurred by
Holdings and/or the Parent not to exceed in the case of this clause (B)
(together with the total amount of Restricted Payments made for such purpose
under Section 6.6(c)) $5,000,000 during any fiscal year of Polypore and (y) in
the form of Tax Payments, to the extent directly attributable to (or arising as
a result of) the operations of Polypore and the Subsidiaries; provided, however,
in the case of this clause (y), that (A) the amount of such loans and
advances (together with dividends made pursuant to Section 6.6(c) for the
purpose of funding Tax Payments) shall not exceed the amount that Polypore and
the Subsidiaries would be required to pay in respect of Federal, State and
local taxes were Polypore and the Subsidiaries to pay such taxes as stand-alone
taxpayers, (B) all loans and advances made to Holdings and/or the Parent
pursuant to this clause (j) are used by Holdings and/or the Parent for the
purposes specified herein within 20 days of the receipt thereof and (C) in the
case of any loan or advance made to Holdings pursuant to this clause (j),
Holdings owns, beneficially and of record, 100% of the issued and outstanding
Capital Stock of Polypore at the time of such Investment;


(k)                                  investments that are made with the proceeds
of substantially concurrent Excluded Contributions;


(l)                                     investments made using the Available Amount;


(m)                               the sale or transfer of all or
substantially all of the assets of Daramic LLC related to its operations in
Norderstedt, Germany, to a newly-formed private German limited liability
company (Gesellschaft mit beschränkter Haftung) that is a Wholly Owned Subsidiary of Polypore
Acquisition GmbH;


(n)                                 additional Investments having an aggregate
fair market value, taken together with all other Investments made pursuant to
this clause (r) that are at that time outstanding, not to exceed the greater of
(A) $50,000,000 and (B) 3.5% of Total Assets (provided that any
investments in joint ventures pursuant to this clause (n) will not exceed the
greater of (A) $25,000,000 and (B) 1.75% of Total Assets;



 72
 









(o)                                 Investments in a Securitization Entity or any
Investment by a Securitization Entity in any other Person in connection with a
Qualified Securitization Transaction; provided that any Investment in a
Securitization Entity is in the form of a Purchase Money Note or an equity
interest or interests in receivables and related assets generated by Polypore
or a Subsidiary and transferred to any Person in connection with a Qualified
Securitization Transaction or any such Person owning such receivables;


(p)                                 Investments the payment for which consists
exclusively of Qualified Capital Stock;


(q)                                 any Investment in any Person to the extent it
consists of prepaid expenses, negotiable instruments held for collection and
lease, utility and workers’ compensation, performance and other similar
deposits made in the ordinary course of business; and


(r)                                    Investments
in Unrestricted Subsidiaries not to exceed $5,000,000 at any one time
outstanding.


SECTION
6.5.  Mergers, Consolidations
and Sales of Assets. 
(a)  In the case of Polypore, in a single
transaction or series of related transactions, consolidate or merge with or
into any Person, or sell, assign, transfer, lease, convey or otherwise dispose
of (or cause or permit any Subsidiary to sell, assign, transfer, lease, convey
or otherwise dispose of) all or substantially all of Polypore’s assets
(determined on a consolidated basis for Polypore and the Subsidiaries) to any
Person unless:


(i)  
either: (A) Polypore shall be the surviving or continuing corporation; or (B)
the Person (if other than Polypore) formed by such consolidation or into which
Polypore is merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and assets of Polypore
and of the Subsidiaries substantially as an entirety (the “Surviving Entity”):
(x) shall be a corporation organized and validly existing under the laws of the
United States of America or any State thereof or the District of Columbia; and
(y) shall expressly assume pursuant to supplements to the Loan Documents or
other documents or instruments in form reasonably satisfactory to the
Administrative Agent, executed and delivered to the Administrative Agent, the
Obligations;


(ii)  
except in the case of a merger of Polypore with or into a Wholly Owned
Subsidiary that is not a Securitization Entity or Unrestricted Subsidiary of
Polypore and except in the case of a merger entered into solely for the purpose
of reincorporating Polypore in another jurisdiction, immediately after giving
effect to such transaction and the assumption contemplated by clause (i)(B)(y)
above (including giving effect to any Indebtedness and Acquired Indebtedness
incurred in connection with or in respect of such transaction), Polypore or
such Surviving Entity, as the case may be, shall be able to incur at least
$1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 6.1
hereof,


(iii)  
except in the case
of a merger of Polypore with or into a Wholly Owned Subsidiary that is
not a Securitization Entity or Unrestricted Subsidiary and except in the case of a merger entered into solely for the purpose
of reincorporating Polypore in another jurisdiction, immediately after giving
effect to such transaction and the assumption contemplated by clause (i)(B)(y)
above (including, without limitation, giving effect to any Indebtedness and
Acquired Indebtedness incurred and any Lien granted in connection with or in
respect of the transaction), no Default or Event of Default shall have occurred
or be continuing;



 73
 









(iv)  
Polypore or the Surviving Entity shall have delivered to the Administrative
Agent an Officers’ Certificate and an opinion of counsel, each stating that
such consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition and, if supplements to the Loan Documents are required in
connection with such transaction, such supplements comply with the applicable
provisions of the Loan Documents and that all conditions precedent in this
Agreement relating to such transaction have been satisfied.


For purposes
of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a
single transaction or series of transactions) of all or substantially all of
the properties or assets of one or more Subsidiaries the Capital Stock of which
constitutes all or substantially all of the properties and assets of Polypore,
shall be deemed to be the transfer of all or substantially all of the
properties and assets of Polypore. However, transfer of assets (i) between or
among Polypore and the Subsidiaries, (ii) between and among Foreign
Subsidiaries or (iii) from Foreign Subsidiaries to Polypore or a Loan Party
will not be subject to this Section 6.5(a).


Notwithstanding
anything in this Section 6.5 to the contrary, the Merger may be consummated if,
and only if, (i) the Parent Notes shall have been paid in full, (ii) the
representations and warranties set forth in Article III hereof and in each
other Loan Document shall be true and correct in all material respects on and
as of the date of the Merger with the same effect as though made on and as of
such date, except to the extent such representations and warranties expressly
relate to an earlier date, in which case they shall be true and correct in all
material respects on and as of such earlier date and (iii) the other conditions
set forth in Section 6.5(a) have been satisfied.  For the purposes of this paragraph, in
determining whether a Default or Event of Default shall have occurred and be
continuing and whether the representations and warranties described in this
paragraph can be made, each transaction, circumstance or event relating to the
Parent or Holdings that is in existence at the time of the Merger shall be
deemed to be in existence with respect to Polypore.


Upon any
consolidation, combination or merger, or any transfer of all or substantially
all of the assets of Polypore in accordance with Section 6.5 hereof, in which
Polypore is not the continuing corporation, the successor Person formed by such
consolidation or into which Polypore is merged or to which such conveyance,
lease or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of Polypore under this Agreement and the other
Loan Documents with the same effect as if such surviving entity had been named
as such and that, in the event of a conveyance or transfer (but not a lease),
the conveyor or transferor (but not a lessor) shall be released from the
provisions of this Agreement and the other Loan Documents.


(b)                                 In
the case of any Guarantor, consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of, in a single transaction or
series of related transactions, all or substantially all of its assets to any
Person unless:


(i)  
(except in the case of such Guarantor that has been disposed of in its entirety
to another Person (other than to Polypore or an Affiliate of Polypore), whether
through a merger, consolidation or sale of Capital Stock or through the sale of
all or substantially all of its assets (such sale constituting the disposition
of such Guarantor in its entirety), if in connection therewith Polypore
provides an Officers’ Certificate to the Administrative Agent to the effect
that Polypore will comply with its obligations under Section 2.13 hereof in
respect of such disposition) the resulting, surviving or transferee Person (if
not such Guarantor) shall be a Person organized and validly existing under the
laws of the jurisdiction under which such Guarantor was organized or under the
laws of the United States of America, any State thereof or the District of
Columbia, and such Person shall expressly assume, pursuant to supplements to
the Loan Documents or other



 74
 









documents or instruments in form reasonably
satisfactory to the Administrative Agent, executed and delivered to the
Administrative Agent, the Guarantee of such Guarantor;


(ii)  
except in the case of a merger of such Guarantor with or into Polypore or
another Guarantor and except in the case of a merger entered into solely for
the purpose of reincorporating such Guarantor in another jurisdiction,
immediately after giving effect to such transaction and the assumption
contemplated by the immediately preceding clause (b)(i) (including, without
limitation, giving effect to any Indebtedness and Acquired Indebtedness
incurred and any Lien granted in connection with or in respect of the
transaction), no Default or Event of Default shall have occurred and be
continuing; and


(iii)  
Polypore shall have delivered to the Administrative Agent an Officers’
Certificate and an opinion of counsel, each stating that such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other disposition and,
if supplements to the Loan Documents are required in connection with such
transaction, such supplements comply with the applicable provisions of the Loan
Documents and that all conditions precedent in this Agreement relating to such
transaction have been satisfied


In case of any
such consolidation, merger, sale or conveyance and upon the assumption by the
successor Person, by supplements to the Loan Documents, executed and delivered
to the Administrative Agent and reasonably satisfactory in form to the
Administrative Agent, of the Guarantee of the relevant Guarantor, such
successor Person shall succeed to and be substituted for the Guarantor with the
same effect as if it had been named herein as a Guarantor.


(c)                                  Consummate any Asset Sale unless
(i) such Asset Sale is for consideration at least 75% of which is cash or
Permitted Investments (other than in the case of a like-kind exchange or
trade-in of one asset for another asset used or useful in the business of
Polypore and its Subsidiaries) and (ii) such consideration is at least equal to
the fair market value of the assets being sold, transferred, leased or disposed
of.


SECTION
6.6.  Restricted Payments.  Declare
or make, or agree to declare or make, directly or indirectly, any Restricted
Payment (including pursuant to any Synthetic Purchase Agreement), or incur any
obligation (contingent (unless the contingency is the repayment of the
Obligations or receipt of consent from the requisite Lenders under this
Agreement) or otherwise) to do so; provided, however, that the
following Restricted Payments shall be permitted:


(a)                                  any
Subsidiary may declare and pay dividends or make other distributions ratably to
its equity holders;


(b)                                 so
long as no Event of Default or Default shall have occurred and be continuing or
would result therefrom, Holdings may (and Polypore may make distributions to
Holdings to enable Holdings to repurchase or make distributions to Parent to
enable it to) repurchase Capital Stock of Holdings or Parent owned by employees
of Holdings or Parent, Polypore or the Subsidiaries or make payments to
employees of Holdings or Parent, Polypore or the Subsidiaries upon termination
of employment of such employees (including as a result of retirement or
severance) in connection with the exercise of stock options, stock appreciation
rights or similar equity incentives or equity based incentives pursuant to
management incentive plans or in connection with the death or disability of
such employees in an aggregate amount not to exceed $5,000,000 in any fiscal
year (it being agreed that (i) any amount not utilized in any fiscal year may
be carried forward and utilized in any subsequent fiscal year, (ii) such amount
shall be increased by the amount of cash proceeds received by Holdings from the
sale of Capital Stock of Holdings or Parent to such employees after the
Restatement Effective Date to the extent such proceeds are contributed



 75
 









directly or
indirectly to Polypore as common equity and (iii) any proceeds of key man life
insurance actually received by Polypore or Holdings may be used or distributed
by Polypore or Holdings for purposes of such repurchases without regard to such
amount); provided, that after consummation of the Merger, all references
in this clause (b) to the Parent or Holdings shall be deemed to be references
to Polypore;


(c)                                  prior
to consummation of the Merger, Polypore and Holdings may make Restricted
Payments to Holdings and/or Parent (x)
the proceeds of which shall be applied by Holdings and/or the Parent (A) to pay its franchise taxes and other fees
required to maintain its corporate existence and (B) to pay out of pocket
general corporate and overhead expenses incurred by Holdings and/or the Parent
not to exceed in the case of this clause (B) (together with the total amount of
Investments made for such purpose under Section 6.4(j)) $5,000,000 during any
fiscal year of Polypore and (y) in the form of Tax Payments, to the
extent directly attributable to (or arising as a result of) the operations of
Polypore and the Subsidiaries; provided, however, that
(A) the amount of such dividends (together
with loans and advances made pursuant to Section 6.4(j) for the purpose of
funding Tax Payments) shall not exceed the amount that Polypore and the
Subsidiaries would be required to pay in respect of Federal, State and local
taxes were Polypore and the Subsidiaries to pay such taxes as stand-alone
taxpayers, (B) all Restricted Payments made to Holdings and/or Parent
pursuant to this clause (c) are used by Holdings and/or Parent for the purposes
specified herein within 20 days of the receipt thereof and (C) in the case of
any Restricted Payment made to Holdings pursuant to this clause (c), Holdings
owns, beneficially and of record, 100% of the issued and outstanding Capital
Stock of Polypore at the time of such Restricted Payment;


(d)                                 the
payment of any dividend or the consummation of any irrevocable redemption
within 60 days after the date of declaration of such dividend or notice of such
redemption if the dividend or payment of the redemption price, as the case may
be, would have been permitted on the date of declaration or notice;


(e)                                  any
Restricted Payment made out of the net cash proceeds of the substantially
concurrent sale of, or made by exchange for, Qualified Capital Stock of
Polypore (other than Capital Stock issued or sold to a Subsidiary of Polypore
or an employee stock ownership plan or to a trust established by Polypore or
any Subsidiary for the benefit of their respective employees) or a
substantially concurrent cash capital contribution received by Polypore from
its shareholders; provided, however, that the net cash proceeds
from such sale or such cash capital contribution (to the extent so used for
such Restricted Payment) shall be excluded from the calculation of the
Available Amount;


(f)                                    if
no Default or Event of Default shall have occurred and be continuing or would
occur as a consequence thereof, the declaration and payment of dividends to
holders of any class or series of Designated Preferred Stock (other than
Disqualified Capital Stock), issued after the Restatement Effective Date; provided
that, at the time of the declaration of such dividend, Polypore, after
giving effect to the payment of such dividend on a pro forma basis, would have
had a Consolidated Fixed Charge Coverage Ratio of at least 2.0 to 1.0;


(g)                                 payments
to Holdings for the purpose of permitting, and in an amount equal to the amount
required to permit, Holdings to redeem or repurchase Holdings’ common equity or
options in respect thereof, in each case in connection with the repurchase
provisions of employee stock option or stock purchase agreements or other agreements
to compensate management employees or upon the death, disability, retirement,
severance or termination of employment of management employees; provided
that all such redemptions or repurchases pursuant to this clause (g) shall not
exceed in any fiscal year the sum of (i) $5,000,000 plus (ii) any
amounts not utilized in any preceding fiscal year following the Restatement
Effective Date that were otherwise available under this clause for such
purchases (which aggregate



 76
 









amount shall
be increased by the amount of any net cash proceeds received from the sale
since the Restatement Effective Date of Capital Stock (other than Disqualified
Capital Stock) to members of Polypore’s management team that have not otherwise
been applied to the payment of Restricted Payments through application of the
Available Amount or clause (e) of this Section 6.6 and by the cash proceeds of
any “key-man” life insurance policies which are used to make such redemptions
or repurchases); provided, further, that the cancellation of Indebtedness
owing to Polypore from members of management of Polypore or any Subsidiary in
connection with any repurchase of Capital Stock of Holdings (or warrants or
options or rights to acquire such Capital Stock) will not be deemed to
constitute a Restricted Payment;


(h)                                 repurchases
of Capital Stock deemed to occur upon the exercise of stock options, warrants
or other convertible securities if such Capital Stock represents a portion of
the exercise price thereof;


(i)                                     payments
of dividends on Disqualified Capital Stock issued in compliance with Section
6.1 hereof;


(j)                                     so
long as no Default or Event of Default has occurred and is continuing or would
be caused thereby, the payment of dividends on Polypore’s Common Stock (or,
prior to the Merger, dividends, distributions or advances to Holdings or the
Parent to allow the Parent to pay dividends on its Common Stock), of up to 6%
per annum of the Net Cash Proceeds received by the Parent in the Public Equity
Offering; and


(k)                                  in
addition to the foregoing Restricted Payments, Polypore (and, prior to the
Merger, Holdings) may make additional Restricted Payments using the Available
Amount.


SECTION 6.7.  Transactions with Affiliates.


(a)                                  Polypore shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, enter into or permit to occur
any transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any of its Affiliates
involving aggregate consideration in excess of $3,000,000 (an “Affiliate
Transaction”), other than Affiliate Transactions on terms that are not
materially less favorable than those that might reasonably have been obtained
in a comparable transaction at such time on an arm’s-length basis from a Person
that is not an Affiliate of Polypore; provided, however, that for a transaction or series of related
transactions with an aggregate value of $10,000,000 or more, at Polypore’s
option, either: (i) a majority of the disinterested members of the Board of
Directors of Polypore shall determine in good faith that such Affiliate
Transaction is on terms that are not materially less favorable than those that
might reasonably have been obtained in a comparable transaction at such time on
an arm’s-length basis from a Person that is not an Affiliate of Polypore, or
(ii) the Board of Directors of Polypore or any such Subsidiary party to such
Affiliate Transaction shall have received an opinion from a nationally recognized
investment banking, appraisal or accounting firm that such Affiliate
Transaction is either fair, from a financial standpoint, to Polypore and its
Subsidiaries or is on terms not materially less favorable than those that might
reasonably have been obtained in a comparable transaction at such time on an
arm’s-length basis from a Person that is not an Affiliate of Polypore; and provided, further,
that for an Affiliate Transaction with an aggregate value of $20,000,000 or
more the Board of Directors of Polypore or any such Subsidiary party to such
Affiliate Transaction shall have received a written opinion from a nationally
recognized investment banking, appraisal or accounting firm that such Affiliate
Transaction is either fair, from a financial standpoint, to Polypore and its
Subsidiaries or is on terns not materially less favorable than those that might
reasonably have been obtained in a comparable transaction at such time on an
arm’s-length basis from a Person that is not an Affiliate of Polypore.



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(b)                                 The restrictions set forth in Section 6.7(a)
hereof shall not apply to: (i) reasonable fees and compensation paid to, and
indemnity provided on behalf of, officers, directors, employees or consultants
of Polypore or any Subsidiary of Polypore as determined in good faith by
Polypore’s Board of Directors or senior management; (ii) transactions
exclusively between or among Polypore and any of its Subsidiaries or any entity
that becomes a Subsidiary as a result of such transaction (other than a
Securitization Entity) or exclusively between or among such Subsidiaries or any
entity that becomes a Subsidiary as a result of such transaction, provided that such transactions
are not otherwise prohibited by this Agreement; (iii) any agreement as in
effect as of the Restatement Effective Date and described on Schedule 6.7 or
any amendment thereto or any transaction contemplated thereby (including
pursuant to any amendment thereto) or by any replacement agreement thereto so
long as any such amendment or replacement agreement is not more disadvantageous
to the Lenders in any material respect than the original agreement as in effect
on the Restatement Effective Date as determined in good faith by the Board of
Directors of Polypore; (iv) Restricted Payments or Investments (other than
Investments made pursuant to Section 6.4(l)) permitted by this Agreement; (v)
transactions effected as part of a Qualified Securitization Transaction; (vi)
the payment of customary annual management, consulting and advisory fees and
related expenses to the Permitted Investors and their Affiliates made pursuant
to any financial advisory, financing, underwriting or placement agreement or in
respect of other investment banking activities, including, without limitation,
in connection with acquisitions or divestitures which are approved by the Board
of Directors of Polypore or such Subsidiary in good faith; (vii) payments or
loans allowed by law to employees or consultants that are approved by the Board
of Directors of Polypore in good faith; (viii) sales of Qualified Capital
Stock; (ix) the existence of, or the performance by Polypore or any of its
Subsidiaries of its obligations under the terms of, any stockholders’ agreement
(including any registration rights agreement or purchase agreement related thereto)
to which it is a party as of the Restatement Effective Date and any similar
agreements which it may enter into thereafter; provided, however, that the existence of, or the
performance by Polypore or any of its Subsidiaries of obligations under, any future
amendment to any such existing agreement or under any similar agreement entered
into after the Restatement Effective Date shall only be permitted by this
clause (ix) to the extent that the terms of any such amendment or new agreement
are not disadvantageous to the Lenders in any material respect; (x)
transactions permitted by, and complying with, the provisions of Section 6.5;
(xi) any issuance of securities or other payments, awards, grants in cash,
securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board of
Directors of Polypore; (xii) transactions in which Polypore or any Subsidiary
delivers to the Administrative Agent a letter from a nationally recognized
investment banking, appraisal or accounting firm stating that such transaction
is fair to Polypore or such Subsidiary from a financial point of view; and
(xiii) transactions with customers, clients, suppliers, or purchasers or
sellers of goods or services, in each case in the ordinary course of business
and otherwise in compliance with the terms of this Agreement that are fair to
Polypore or the Subsidiaries, in the reasonable determination of the members of
the Board of Directors of Polypore, which determinations shall be conclusive,
or are on terms at least as favorable as might reasonably have been obtained at
such time from an unaffiliated party.


SECTION
6.8.  Business of Holdings,
Polypore and Subsidiaries.  (a) 
With respect to Holdings, engage in any business activities or have any
assets or liabilities other than (i) its ownership of the Capital Stock of
Polypore and liabilities incidental thereto, including its liabilities
hereunder and pursuant to the Guarantee and Collateral Agreement and (ii)
Indebtedness permitted under Section 6.1. 
This covenant shall automatically cease to be effective if the Merger is
consummated.


(b)                                 With
respect to Polypore and its Subsidiaries, engage
in any businesses a majority of whose revenues are not derived from businesses
that are the same or reasonably similar, ancillary or related to, or a
reasonable extension, development or expansion of, the businesses in which
Polypore and its Subsidiaries are engaged on the Restatement Effective Date
(which shall include, without limitation, business or operations of Polypore’s
suppliers and customers).



 78
 









SECTION
6.9.  Amendments to Senior
Subordinated Note Indenture; Certain Payments of Subordinated Debt.  (a) 
Permit any supplement, modification or amendment of the Senior
Subordinated Note Indenture if the effect of such supplement, modification or
amendment as a whole would materially increase the obligations (including,
without limitation, the pricing thereof) of the obligor or confer additional
material rights on the holders of the Indebtedness outstanding thereunder in a
manner that would be, or could reasonably be expected to be, materially
detrimental to Polypore or  materially
adverse to the interests of the Lenders, as determined in good faith by
Polypore.


(b)                                 Make
any distribution, whether in cash, property, securities or a combination
thereof in excess of $15,000,000 in the aggregate during the term of this
Agreement, other than regular scheduled payments of principal and interest as
and when due (to the extent not prohibited by applicable subordination
provisions), in respect of, or pay, or offer or commit to pay, or directly or
indirectly (including pursuant to any Synthetic Purchase Agreement) redeem,
repurchase, retire or otherwise acquire for consideration, or set apart any sum
for the aforesaid purposes, any subordinated Indebtedness (provided, however, that the foregoing shall
not prohibit (i) any Refinancings of Indebtedness in accordance with Section
6.1, (ii) the conversion of any such Indebtedness into equity securities or
(iii) any such transaction funded with the Available Amount).


SECTION
6.10.  Capital Expenditures.  (a) 
Permit the aggregate amount of Capital Expenditures made by Polypore and
the Subsidiaries in any fiscal year of Polypore to exceed the sum of (i)
$60,000,000 and (ii) the Acquired CapEx Amount (the “CapEx Basket”).  For purposes of this Section 6.10, the “Acquired
CapEx Amount”, with respect to any Acquired Entity, shall equal the product
of (x) the aggregate amount of Capital Expenditures made by the Acquired Entity
in the two fiscal years prior to the date of the Permitted Acquisition and (y)
0.50.


(b)                                 The
amount of permitted Capital Expenditures set forth in paragraph (a) above
(as adjusted in accordance with the terms thereof) in respect of any fiscal
year (i) shall be increased (but not decreased) by the amount of unused
permitted Capital Expenditures for the two immediately preceding fiscal years; provided,
that Capital Expenditures made pursuant to this Section during any fiscal year
shall be deemed made, first, in respect of amounts carried over from the
fiscal year two years prior thereto pursuant to the preceding sentence, second,
in respect of amounts carried over from the immediately prior fiscal year
pursuant to the preceding sentence, and, third, in respect of amounts
permitted for such fiscal year as provided above and (ii) may, at the option of
Polypore, be increased by up to 50% of the CapEx Basket then in effect (in
which case there shall be a corresponding reduction in the CapEx Basket for the
next succeeding fiscal year).


(c)                                  In
addition to the foregoing, (i) Polypore and its Subsidiaries may make Capital
Expenditures in an aggregate amount not to exceed $10,000,000 during the term
of this Agreement, (ii) Polypore and its Subsidiaries may make Capital
Expenditures using the Available Amount and
(iii) if no Default or Event of Default shall have occurred and be
continuing, Capital Expenditures made with the net cash proceeds from any
Specified Disposition (so long as such expenditures are made or committed to be
made within 365 days after receipt of such proceeds).


(d)                                 This
Section 6.10 shall automatically cease to be effective if the Revolving
Commitments have been terminated and all amounts owing in respect of the
Revolving Facility have been paid in full (or, in the case of Letters of
Credit, cash collateralized at 105% of
the face amount thereof).


SECTION
6.11.  Financial Condition
Covenant.  With respect to the Revolving Facility, for
so long as and solely to the extent that (a) the Revolving Commitments are
outstanding and (b) any Revolving Loans, Letters of Credit (unless cash
collateralized at 105% of the face amount thereof) or Swingline Loans are



 79
 









outstanding, permit the
Senior Leverage Ratio as at the last day of any fiscal quarter of Polypore
ending during any period set forth below to exceed the ratio set forth below
opposite such day.


	
  Fiscal Quarter Ending

  	
   

  	
  Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Restatement
  Effective Date through and including June 28, 2008

  	
   

  	
  3.25
  to 1.00

  	
   

  
	
  Thereafter

  	
   

  	
  3.00 to 1.00

  	
   

  



 


SECTION
6.12.  Fiscal Year.  With respect to Polypore, change its fiscal
year-end to a date other than the end of the 52 or 53-week period ending the Saturday nearest to December 31.


ARTICLE
VII


Events of Default


In case of the happening
of any of the following events (“Events
of Default”):


(a)                                  any
representation or warranty made or deemed made in or in connection with any
Loan Document or the borrowings or issuances of Letters of Credit hereunder, or
any representation, warranty, statement or information contained in any report,
certificate, financial statement or other instrument furnished in connection
with or pursuant to any Loan Document, shall prove to have been false or
misleading in any material respect when so made, deemed made or furnished;


(b)                                 default
shall be made in the payment of any principal of any Loan or the reimbursement
with respect to any L/C Disbursement when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment
thereof or by acceleration thereof or otherwise;


(c)                                  default
shall be made in the payment of any interest on any Loan or L/C Disbursement or
of any Fee or any other amount (other than an amount referred to in (b) above)
due under any Loan Document, when and as the same shall become due and payable,
and such default shall continue unremedied for a period of 10 days;


(d)                                 default
shall be made in the due observance or performance by any Group Member of any
covenant, condition or agreement contained in Section 5.1(a), 5.5(a) or in
Article VI; provided that the
failure to comply with the Financial Performance Covenant or the CapEx Covenant
shall not constitute an Event of Default with respect to the Term Facility
until the earlier of (i) the date that is 30 days after the date the compliance
certificate demonstrating such breach is required to be delivered to the
Lenders under the Revolving Facility and (ii) the date on which the Revolving
Credit Lenders accelerate their Revolving Loans, terminate their Revolving
Credit Commitments or foreclose upon the Collateral with respect to the
Revolving Facility in accordance with Article VII; and provided, further,
that prior to the time it becomes an Event of Default with respect to the Term
Facility, any Event of Default under Section 6.10 or 6.11 may be waived,
amended, terminated or otherwise modified from time to time by the Required
Revolving Lenders;


(e)                                  default
shall be made in the due observance or performance by any Group Member of any
covenant, condition or agreement contained in any Loan Document (other than
those specified in (b), (c) or (d) above) and such default shall continue
unremedied for a period of 30 days after notice thereof from the Administrative
Agent or any Lender to Polypore;



 80















(f)                                    (i)  Holdings, Polypore or any Material Subsidiary
shall fail to pay any principal or interest, regardless of amount, due in
respect of any Material Indebtedness, when and as the same shall become due and
payable, or (ii) any other event or condition occurs that results in any
Material Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or agent
on its or their behalf to cause any Material Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof, prior to
its scheduled maturity; provided, that this clause (ii) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;


(g)                                 an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed in a court of competent jurisdiction seeking (i) relief in respect of
Holdings, Polypore or any Material Subsidiary, or of a substantial part of the
property or assets of Holdings, Polypore or a Material Subsidiary, under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other Federal, state or foreign bankruptcy, insolvency, receivership or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for Holdings, Polypore or any Material
Subsidiary or for a substantial part of the property or assets of Holdings,
Polypore or a Material Subsidiary or (iii) the winding-up or liquidation of
Holdings, Polypore or any Material Subsidiary; and such proceeding or petition
shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;


(h)                                 Holdings,
Polypore or any Material Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described in (g) above,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for Holdings, Polypore
or any Material Subsidiary or for a substantial part of the property or assets of
Holdings, Polypore or any Material Subsidiary, (iv) file an answer admitting
the material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors, (vi) become unable,
admit in writing its inability or fail generally to pay its debts as they
become due or (vii) take any action for the purpose of effecting any of the
foregoing;


(i)                                     one
or more judgments for the payment of money in an aggregate amount in excess of
$20,000,000 (net of amounts covered by independent third party insurance as to
which the insurer has been notified of such judgment or order and does not deny
coverage and of amounts covered by an indemnity from a Person that, in the
reasonable judgment of the Administrative Agent, is creditworthy) from a
party  shall be rendered against
Holdings, Polypore, any Material Subsidiary or any combination thereof and the
same shall remain undischarged for a period of 30 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to levy upon assets or properties of Holdings, Polypore
or any Material Subsidiary to enforce any such judgment;


(j)                                     an
ERISA Event shall have occurred that, in the opinion of the Required Lenders,
when taken together with all other ERISA Events that have occurred, could
reasonably be expected to have a Material Adverse Effect;


(k)                                  any
Guarantee under the Guarantee and Collateral Agreement for any reason shall
cease to be in full force and effect (other than in accordance with its terms),
or any Guarantor shall deny in writing that it has any further liability under
the Guarantee and Collateral Agreement (other than as a result of the discharge
of such Guarantor in accordance with the terms of the Loan Documents);



 81
 









(l)                                     any
security interest in any material item of Collateral  purported
to be created by any Security Document shall cease to be, or shall be asserted
by Polypore or any other Loan Party not to be, a valid, perfected, first
priority (except as otherwise expressly provided in this Agreement or such
Security Document) security interest in the securities, assets or properties
covered thereby, except to the extent that any such loss of perfection or
priority results from the failure of the Administrative Agent to maintain
possession of certificates representing securities pledged under the Guarantee
and Collateral Agreement and except to the extent that such loss is covered by
a lender’s title insurance policy and the related insurer shall not have denied
or disclaimed in writing that such loss is covered by such title insurance
policy;


(m)                               the
Indebtedness under the Senior Subordinated Notes or any Guarantees thereof
shall cease, for any reason, to be validly subordinated to the Obligations, as
provided in the Senior Subordinated Note Indenture, or any Loan Party or any
Affiliate of any Loan Party shall so assert; or


(n)                                 there
shall have occurred a Change in Control;


then, and in every such event (other than an event
with respect to Holdings or Polypore described in paragraph (g) or (h) (i) -
(v) above), and at any time thereafter during the continuance of such event,
the Administrative Agent may, and at the request of the Required Lenders shall,
by notice to Polypore, take either or both of the following actions, at the
same or different times:  (i) terminate
forthwith the Commitments and (ii) declare the Loans then outstanding to be
forthwith due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of Polypore accrued
hereunder and under any other Loan Document, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by Polypore, anything contained herein
or in any other Loan Document to the contrary notwithstanding; and in any event
with respect to Holdings, Polypore or Daramic Holding described in paragraph
(g) or (h) (i) - (v) above, the Commitments shall automatically terminate and
the principal of the Loans (or, in the case of any such event relating solely
to Daramic Holding, the Euro Term Loans) then outstanding, together with
accrued interest thereon and any unpaid accrued Fees and all other liabilities
of Polypore or Daramic Holding, as applicable, accrued hereunder and under any
other Loan Document, shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by Polypore and Daramic Holding, anything contained
herein or in any other Loan Document to the contrary notwithstanding.


Notwithstanding anything to the contrary contained in
this Article VII, in the event that Polypore would otherwise fail to comply
with the requirements of Sections 6.11 (the “Financial Performance Covenant”) at the end of any fiscal
quarter, at any time within ten days after the date on which a compliance
certificate must be delivered for the end of such fiscal quarter, Polypore
shall have the right (the “Cure
Right”) to include the net cash proceeds of Permitted Cure
Securities (as defined below) received by Polypore during such period in the
calculation of Consolidated EBITDA to the extent provided below (provided
that (a) in each four
fiscal quarter period there shall be a period of at least one fiscal quarter
during which no Cure Right is exercised and (b) in each eight fiscal quarter
period there shall be a period of at least four fiscal quarters during which no
Cure Right is exercised), and upon the receipt by Polypore of such net
cash proceeds (which shall be in the form of a common equity contribution from
Holdings if such Permitted Cure Securities are issued by Holdings) (the “Cure Amount”), the Financial
Performance Covenant shall be recalculated giving effect to the following pro
forma adjustments:


(i)                     Consolidated
EBITDA shall be increased solely for the purpose of measuring the Financial
Performance Covenant and not for any other purpose under this Agreement, by an
amount equal to the Cure Amount; and



 82
 









(ii)                  if,
after giving effect to the foregoing recalculations, Polypore shall then be in
compliance with the requirements of all Financial Performance Covenant,
Polypore shall be deemed to have satisfied the requirements of the Financial
Performance Covenant as of the relevant date of determination with the same
effect as though there had been no failure to comply therewith at such date,
and the applicable breach or default of the Financial Performance Covenant that
would have otherwise occurred on such date but for the application of the
foregoing recalculations shall be deemed not to have occurred.


As used in this Article VII, the term “Permitted Cure Securities” shall
mean an equity security (which shall be deemed to include any common equity
contribution) of Holdings (or, after the Merger, Polypore) having no mandatory
redemption, repurchase, repayment or similar requirements prior to the
six-month anniversary of the Term Loan Maturity Date and upon which all
dividends or distributions, at the election of Holdings or Polypore, as
applicable, may be payable in additional shares of such equity security.


ARTICLE
VIII


The Agents


SECTION
8.1.  Appointment.  Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes the Administrative Agent, in such capacity, to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental
thereto.  Notwithstanding any provision
to the contrary elsewhere in this Agreement, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.


SECTION
8.2.  Delegation of Duties.  The Administrative Agent may execute any of
its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.


SECTION
8.3.  Exculpatory Provisions.  Neither any Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from its or such Person’s own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Loan Party or
any officer thereof contained in this Agreement or any other Loan Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agents under or in connection with, this Agreement
or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any Loan Party a party thereto to perform its
obligations hereunder or thereunder.  The
Agents shall not be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or



 83
 









conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.


SECTION
8.4.  Reliance by
Administrative Agent. 
The Administrative Agent shall be entitled to rely, and shall be fully
protected in relying, upon any instrument, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including counsel to Holdings
or Polypore), independent accountants and other experts selected by the
Administrative Agent.  The Administrative
Agent may deem and treat the payee of any Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Administrative Agent.  The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action.  The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
and the other Loan Documents in accordance with a request of the Required
Lenders (or, if so specified by this Agreement, all Lenders), and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Loans.


SECTION
8.5.  Notice of Default.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Administrative Agent has received notice from a Lender,
Holdings or Polypore referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders.  The Administrative Agent
shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Required Lenders (or, if so specified by
this Agreement, all Lenders); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Lenders.


SECTION
8.6.  Non-Reliance on Agents
and Other Lenders. 
Each Lender expressly acknowledges that neither the Agents nor any of
their respective officers, directors, employees, agents, attorneys-in-fact
or affiliates have made any representations or warranties to it and that no act
by any Agent hereafter taken, including any review of the affairs of a Loan
Party or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender.  Each Lender represents to the Agents that it
has, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and
their affiliates and made its own decision to make its Loans hereunder and
enter into this Agreement.  Each Lender
also represents that it will, independently and without reliance upon any Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property, financial
and other condition and creditworthiness of the Loan Parties and their
affiliates.  Except for notices, reports
and other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of any



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Loan Party or any affiliate of a Loan Party that may
come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.


SECTION
8.7.  Indemnification.  The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by Holdings or Polypore and
without limiting the obligation of Holdings or Polypore to do so), ratably
according to their respective Aggregate Exposure Percentages in effect on the
date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Aggregate Exposure Percentages immediately prior to such date), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time (whether before or after the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by such Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements that are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from such Agent’s gross negligence or willful misconduct.  The agreements in this Section shall survive
the payment of the Loans and all other amounts payable hereunder.


SECTION
8.8.  Agent in Its Individual
Capacity.  Each
Agent and its affiliates may make loans to, accept deposits from and generally
engage in any kind of business with any Loan Party as though such Agent were
not an Agent.  With respect to its Loans
made or renewed by it and with respect to any Letter of Credit issued or
participated in by it, each Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not an Agent, and the terms “Lender” and “Lenders” shall
include each Agent in its individual capacity.


SECTION
8.9.  Successor Administrative
Agent.  The
Administrative Agent may resign as Administrative Agent upon 10 days’ notice to
the Lenders and Polypore.  If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from
among the Lenders a successor agent for the Lenders, which successor agent
shall (unless an Event of Default under Section 7(b), (c), (g) or (h) with
respect to Polypore shall have occurred and be continuing) be subject to
approval by Polypore (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers
and duties of the Administrative Agent, and the term “Administrative Agent”
shall mean such successor agent effective upon such appointment and approval,
and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. 
If no successor agent has accepted appointment as Administrative Agent
by the date that is 10 days following a retiring Administrative Agent’s notice
of resignation, the retiring Administrative Agent’s resignation shall
nevertheless thereupon become effective, and the Lenders shall assume and
perform all of the duties of the Administrative Agent hereunder until such
time, if any, as the Required Lenders appoint a successor agent as provided for
above.  After any retiring Administrative
Agent’s resignation as Administrative Agent, the provisions of this Article
VIII shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement and the other Loan
Documents.


SECTION
8.10.  Co-Documentation Agents
and Syndication Agent. 
Neither the Co-Documentation Agents nor the Syndication Agent shall have
any duties or responsibilities hereunder in its capacity as such.



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ARTICLE
IX


Miscellaneous


SECTION
9.1.  Notices.  Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as
follows:


(a)                                  if
to Polypore or Holdings, to it at 13800 South Lakes Drive, Charlotte, NC 
28273, Attention: Lynn Amos, Fax No. (704)
587-8722, with a copy to Warburg Pincus, 466 Lexington Avenue, New York,
NY 10017, Attention: Jamie Dimitri, Fax No. (212) 922-0933


(b)                                 if to Daramic Holding, to it at 13800 South
Lakes Drive, Charlotte, NC  28273, Attention: Lynn Amos, Fax No. (704)
587-8722, with a copy to Warburg Pincus, 466 Lexington Avenue, New York, NY
10017, Attention: Jamie Dimitri, Fax No. (212) 922-0933;


(c)                                  if
to the Administrative Agent or the Swingline Lender, to JPMorgan Chase Bank,
Loan and Agency Services Group, 1111 Fannin, 10th Floor, Houston, TX, 77002 Attention: James DeLeon,
Fax No. (713) 750-2666, with a copy to JPMorgan Chase Bank, 270 Park Avenue,
New York, NY, 10017, Attention: Peter Dedousis, Fax No. (212) 270-5100;


(d)                                 if
to the Funding Office with respect to Euro Term Loans, to                ,
Attention:                ,
Fax No.                ;
and


(e)                                  if
to a Lender, to it at its address (or fax number) set forth on
Schedule 2.1 or in the Assignment and Assumption pursuant to which such
Lender shall have become a party hereto.


All notices and other communications given to any
party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt if delivered by hand or
overnight courier service or sent by fax or on the date five Business Days
after dispatch by certified or registered mail if mailed, in each case
delivered, sent or mailed (properly addressed) to such party as provided in
this Section 9.1 or in accordance with the latest unrevoked direction from
such party given in accordance with this Section 9.1.  As agreed to among Polypore, the
Administrative Agent, the Swingline Lender and the applicable Lenders from time
to time, notices and other communications may also be delivered by e-mail to
the e-mail address of a representative of the applicable Person provided from
time to time by such Person.


SECTION
9.2.  Survival of Agreement.  All covenants, agreements, representations
and warranties made by Polypore, Daramic Holding or Holdings herein 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 the Issuing Bank and shall survive the
making by the Lenders of the Loans and the issuance of Letters of Credit by the
Issuing Bank, regardless of any investigation made by the Lenders or the
Issuing Bank or on their behalf, 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 this Agreement or any other Loan Document is
outstanding and unpaid or any Letter of Credit is outstanding and so long as
the Commitments have not been terminated. 
The provisions of Sections 2.14, 2.15, 2.19 and 9.5 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby,
the repayment of any of the Loans, the expiration of the Commitments, the
expiration of any Letter of Credit, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan



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Document, or any investigation made by or on behalf of
the Administrative Agent, any Lender or the Issuing Bank.


SECTION
9.3.  Binding Effect.  This Agreement shall become effective when it
shall have been executed by Polypore, Daramic Holding, Holdings and the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto.


SECTION
9.4.  Successors and Assigns.  (a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any affiliate of
the Issuing Bank that issues any Letter of Credit), except that (i) Polypore
may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by Polypore without such consent shall be null and void), (ii)
Daramic Holding may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Euro Term
Lender (and any attempted assignment or transfer by Daramic Holding without
such consent shall be null and void) and (iii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance
with this Section.


(b)         (i) 
Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees (each, an “Assignee”) all or
a portion of its rights and obligations under this Agreement (including all or
a portion of its Commitments and the Loans at the time owing to it) with the
prior written consent (such consent not to be unreasonably withheld) of:


(A)  Polypore, provided that no consent of
Polypore shall be required for an assignment to a Lender, an affiliate of a
Lender, an Approved Fund (as defined below) or, if an Event of Default has occurred
and is continuing, any other Person;


(B)  the Administrative Agent, provided
that no consent of the Administrative Agent shall be required for an assignment
of all or any portion of a Term Loan to a Lender, an Affiliate of a Lender or
an Approved Fund; and


(C)  the Issuing Bank, provided that no
consent of the Issuing Bank shall be required for an assignment of all or any
portion of a Term Loan.


(ii) 
Assignments shall be subject to the following additional conditions:


(A)  except in the case of an assignment to a
Lender, an affiliate of a Lender or an Approved Fund or an assignment of the
entire remaining amount of the assigning Lender’s Commitments or Loans under
any Facility, the amount of the Commitments or Loans of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Assumption with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 (or, in the case of (x) US$ Term Loans
and Incremental Term Loans, $1,000,000 or (y) Euro Term Loans, €1,000,000)
unless each of Polypore and the Administrative Agent otherwise consent, provided
that (1) no such consent of Polypore shall be required if an Event of Default
has occurred and is continuing and (2) such amounts shall be aggregated in
respect of each Lender and its affiliates or Approved Funds, if any;


(B)  the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment and Assumption, together
with a processing and recordation fee of $3,500; and



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(C)  the Assignee, if it shall not be a Lender,
shall deliver to the Administrative Agent an administrative questionnaire in which the Assignee designates one or more
credit contacts to whom all syndicate-level information (which may contain
material non-public information about Polypore and its Affiliates and their
related parties or their respective securities) will be made available and who
may receive such information in accordance with the assignee’s compliance
procedures and applicable laws, including Federal and state securities laws.


For the purposes of this Section 9.4, “Approved
Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions
of credit in the ordinary course of its business and that is administered or
managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a Lender.


(iii)  Subject
to acceptance and recording thereof pursuant to paragraph (b)(iv) below,
from and after the effective date specified in each Assignment and Assumption
the Assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obliga­tions under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of
Sections 2.14, 2.15, 2.19 and 9.5). 
Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this Section 9.4 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (c) of this Section.


(iv)  The
Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitments of, and principal amount of the Loans and
L/C Obligations owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”).  The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent, the Issuing Bank and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.


(v)  Upon its
receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an Assignee, the Assignee’s completed administrative questionnaire
(unless the Assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) of this Section and any
written consent to such assignment required by paragraph (b) of this Section,
the Administrative Agent shall accept such Assignment and Assumption and record
the information contained therein in the Register.  No assignment shall be effective for purposes
of this Agreement unless it has been recorded in the Register as provided in
this paragraph.


(c)          (i) 
Any Lender may, without the consent of Polypore or the Administrative
Agent, sell participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitments and the Loans owing to
it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Bank and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any agreement pursuant to which a Lender
sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any



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amendment, modification or waiver of any provision of this Agreement; provided
that such agreement may provide that such Lender will not, without the consent
of the Participant, agree to any amendment, modification or waiver that (1)
requires the consent of each Lender directly affected thereby pursuant to
Section 9.8(b) and (2) directly affects such Participant.  Subject to paragraph (c)(ii) of this Section,
Polypore agrees that each Participant shall be entitled to the benefits of
Sections 2.14, 2.15 and 2.19 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this
Section.  To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 2.17 as
though it were a Lender, provided such Participant shall be subject to
Section 9.6 as though it were a Lender.


(ii)  A
Participant shall not be entitled to receive any greater payment under Section
2.14 or 2.19 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of
the participation to such Participant is made with Polypore’s prior written
consent.  Any Participant that is a
Non-U.S. Lender shall not be entitled to the benefits of Section 2.19
unless such Participant complies with Section 2.19(e).


(d)                                 Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or Assignee for such Lender as a party hereto.


(e)                                  Notwithstanding
the foregoing, any Conduit Lender may assign any or all of the Loans it may
have funded hereunder to its designating Lender without the consent of Polypore
or the Administrative Agent and without regard to the limitations set forth in
Section 9.4(b).  Each of Holdings, the
Borrower, each Lender and the Administrative Agent hereby confirms that it will
not institute against a Conduit Lender or join any other Person in instituting
against a Conduit Lender any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding under any state bankruptcy or similar law,
for one year and one day after the payment in full of the latest maturing
commercial paper note issued by such Conduit Lender; provided, however,
that each Lender designating any Conduit Lender hereby agrees to indemnify,
save and hold harmless each other party hereto for any loss, cost, damage or
expense arising out of its inability to institute such a proceeding against
such Conduit Lender during such period of forbearance.


SECTION
9.5.  Expenses; Indemnity.  (a) 
Polypore and Holdings agree, jointly and severally, to pay all
reasonable documented out-of-pocket expenses incurred by the Administrative
Agent, the Issuing Bank and the Swingline Lender in connection with the
syndication of the credit facilities provided for herein and the preparation
and administration of this Agreement and the other Loan Documents or in
connection with any amendments, modifications or waivers of the provisions
hereof or thereof (whether or not the transactions hereby or thereby
contemplated shall be consummated) or incurred by the Administrative Agent or
any Lender in connection with the enforcement or protection of its rights in
connection with this Agreement and the other Loan Documents or in connection
with the Loans made or Letters of Credit issued hereunder, including the
reasonable fees, charges and disbursements of Simpson Thacher & Bartlett
LLP, counsel for the Administrative Agent, and, in connection with any such
enforcement or protection, the fees, charges and disbursements of any other
counsel for the Administrative Agent or any Lender.


(b)                                 Polypore
and Holdings agree, jointly and severally, to indemnify the Administrative
Agent, each Lender, the Issuing Bank and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”)
against, and to hold each Indemnitee harmless from, any and all



 89
 









losses,
claims, damages, liabilities and related expenses, including reasonable counsel
fees, charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties
hereto or thereto of their respective obligations hereunder or thereunder or
the consummation of the Transactions and the other transactions contemplated
hereby or thereby, (ii) the use of the proceeds of the Loans or issuance of
Letters of Credit, (iii) any claim, litigation, investigation or proceeding
relating to any of the foregoing, whether or not any Indemnitee is a party
thereto, or (iv) any actual or alleged presence or Release of Hazardous
Materials on any property currently or formerly owned or operated by Polypore
or any of the Subsidiaries, or any Environmental Liability related in any way
to Polypore or the Subsidiaries; provided, that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee or for a breach of the Loan Documents by such
Indemnitee.


(c)                                  To
the extent that Holdings and Polypore fail to pay any amount required to be
paid by them to the Administrative Agent, the Issuing Bank or the Swingline
Lender under paragraph (a) or (b) of this Section, each Lender severally agrees
to pay to the Administrative Agent, the Issuing Bank or the Swingline Lender, as
the case may be, such Lender’s pro rata share (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided, that the unreimbursed expense or indemnified
loss, claim, damage, liability or related expense, as the case may be, was
incurred by or asserted against the Administrative Agent, the Issuing Bank or
the Swingline Lender in its capacity as such. 
For purposes hereof, a Lender’s “pro rata share” shall be determined
based upon its share of the sum of the Aggregate Revolving Credit Exposure,
outstanding Term Loans and unused Commitments at the time.


(d)                                 To
the extent permitted by applicable law, neither Holdings nor Polypore shall
assert, and each hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as
a result of, this Agreement or any agreement or instrument contemplated hereby,
the Transactions, any Loan or Letter of Credit or the use of the proceeds
thereof.


(e)                                  The
provisions of this Section 9.5 shall remain operative and in full force and
effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the expiration of any Letter of
Credit, the invalidity or unenforceability of any term or provision of this
Agreement or any other Loan Document, or any investigation made by or on behalf
of the Administrative Agent, any Lender or the Issuing Bank.  All amounts due under this Section 9.5 shall
be payable on written demand therefor.


SECTION
9.6.  Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time
to time, except to the extent prohibited by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Lender to or for the
credit or the account of Polypore, Daramic Holding or Holdings against any of
and all the obligations of Polypore, Daramic Holding or Holdings now or
hereafter existing under this Agreement and other Loan Documents held by such
Lender, irrespective of whether or not such Lender shall have made any demand
under this Agreement or such other Loan Document and although such obligations
may be unmatured.  The rights of each
Lender under this Section 9.6 are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.



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SECTION
9.7.  Applicable Law.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.  EACH LETTER OF
CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE
LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES
ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS MOST
RECENTLY PUBLISHED AND IN EFFECT, ON THE DATE SUCH LETTER OF CREDIT WAS ISSUED,
BY THE INTERNATIONAL CHAMBER OF COMMERCE (THE “UNIFORM CUSTOMS”) AND, AS
TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW
YORK.


SECTION
9.8.  Waivers; Amendment.  (a)  No
failure or delay of the Administrative Agent, any Lender or the Issuing Bank in
exercising any power or right 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, the Issuing Bank
and the Lenders hereunder and under the other Loan 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 any other Loan Document or consent to any departure by Polypore or
any other Loan Party therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.  No notice or demand on Polypore,
Daramic Holding or Holdings in any case shall entitle Polypore, Daramic Holding
or Holdings to any other or further notice or demand in similar or other
circumstances.


(b)                                 Neither
this Agreement nor any of the Security Documents nor any provision hereof or
thereof may be waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by Polypore, Holdings, the Required Lenders
and, if directly affected thereby, Daramic Holding; provided, however, that (w) Polypore,
Holdings and the Administrative Agent may enter into an amendment to effect the
provisions of Section 2.23(b) upon the effectiveness of any Incremental Term
Loan Assumption Agreement (and any such amendment shall in any event be deemed
to have occurred upon such effectiveness); (x) no such agreement under this
Section 9.8(b) shall (i) decrease the principal amount of, or extend the
maturity of or any scheduled principal payment date or date for the payment of
any interest on any Loan or any date for reimbursement of an L/C Disbursement,
or waive or excuse any such payment or any part thereof, or decrease the rate
of interest on any Loan or L/C Disbursement, without the prior written consent
of each Lender directly affected thereby, (ii) increase or extend the
Commitment or decrease or extend the date for payment of any Fees of or any
other amount actually due and payable hereunder to any Lender without the prior
written consent of such Lender, (iii) amend or modify the pro rata requirements
of Section 2.16, the provisions of this Section 9.8, or release any Guarantor
or all or substantially all of the Collateral, without the prior written
consent of each Lender directly affected thereby, (iv) change the provisions of
any Loan Document in a manner that by its terms adversely affects the rights in
respect of payments due to Lenders holding Loans of one Class differently from
the rights of Lenders holding Loans of any other Class without the prior
written consent of Lenders holding a majority in interest of the outstanding
Loans and unused Commitments of each adversely affected Class, (v) amend,
modify or waive compliance by Holdings or Polypore with the provisions of
Section 4.1, as it relates to an Event of Default following a breach of any
provision of this Agreement without the prior written consent of the Required
Revolving Lenders, (vi) reduce the percentage contained in the definition of
the term “Required Lenders” without the prior written consent of each Lender or
reduce the percentage contained in the definition of the term “Required
Revolving Lenders” without the prior written consent of each Revolving Credit
Lender (it being understood that with the consent of the



 91
 









Required
Lenders, additional extensions of credit pursuant to this Agreement may be
included in the determination of the Required Lenders on substantially the same
basis as the Term Loan Commitments and Revolving Credit Commitments on the
Restatement Effective Date) or (vii) without the prior written consent of each
Lender directly affected thereby, amend the definition of the term “Interest
Period” in any way which would permit Interest Periods to be in excess of six
months without regard to availability to Lenders; (y) amendments, waivers and
other modifications may be made to Sections 6.10, 6.11 and the last two
paragraphs of Article VII with only the written consent of the Required
Revolving Lenders (unless an Event of Default under Section 6.10 or 6.11 has
occurred with respect to the Term Facility as provided in paragraph (d) of
Article VII, in which case this clause (y) shall cease to apply in respect of
such Event of Default); and (z) amendments, waivers and other modifications to
the definition of “Total Leverage Ratio” shall not affect the determination of
the Applicable Percentage for the Revolving Facility or the Term Loans without
the prior written consent of the Required Revolving Lenders or the holders of
more than 50% of the aggregate unpaid principal amount of the affected Term
Loans then outstanding, respectively; provided, further, that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent, the Issuing Bank or the
Swingline Lender hereunder or under any other Loan Document without the prior
written consent of the Administrative Agent, the Issuing Bank or the Swingline
Lender.  Notwithstanding anything to the
contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender (it being understood that any Commitments or Loans held or
deemed held by any Defaulting Lender shall be excluded for a vote of the
Lenders hereunder requiring any consent of the Lenders).


SECTION
9.9.  Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan or
participation in any L/C Disbursement, together with all fees, charges and
other amounts which are treated as interest on such Loan or participation in
such L/C Disbursement under applicable law (collectively the “Charges”),
shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such
Loan or participation in accordance with applicable law, the rate of interest
payable in respect of such Loan or participation hereunder, together with all
Charges payable in respect thereof, shall be limited to the Maximum Rate and,
to the extent lawful, the interest and Charges that would have been payable in
respect of such Loan or participation but were not payable as a result of the
operation of this Section 9.9 shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or participations or periods
shall be increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate to
the date of repayment, shall have been received by such Lender.


SECTION
9.10.  Entire Agreement.  This Agreement, the Fee Letter and the other
Loan Documents constitute the entire contract between the parties relative to
the subject matter hereof.  Any other
previous agreement among the parties with respect to the subject matter hereof
is superseded by this Agreement and the other Loan Documents.  Nothing in this Agreement or in the other
Loan Documents, expressed or implied, is intended to confer upon any Person
(other than the parties hereto and thereto, their respective successors and
assigns permitted hereunder (including any Affiliate of the Issuing Bank that
issues any Letter of Credit) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, the Issuing Bank and
the Lenders) any rights, remedies, obligations or liabilities under or by
reason of this Agreement or the other Loan Documents.


SECTION
9.11.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT



 92
 









OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.11.


SECTION
9.12.  Severability.  In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
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 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
9.13.  Counterparts.  This Agreement 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, and shall become effective as provided in
Section 9.3.  Delivery of an executed
signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.


SECTION
9.14.  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
9.15.  Jurisdiction; Consent to
Service of Process. 
(a)  Each of Holdings, Polypore
and Daramic Holding hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this
Agreement shall affect any right that the Administrative Agent, the Issuing
Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against Polypore,
Daramic Holding, Holdings or their respective properties in the courts of any
jurisdiction.


(b)                                 Each
of Holdings, Polypore and Daramic Holding hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.


(c)                                  Each
of Holdings, Polypore and Daramic Holding irrevocably consents to service of
process in the manner provided for notices in Section 9.1.  Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law.



 93
 









SECTION
9.16.  Confidentiality.  Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (i) to its and its
Affiliates’ officers, directors, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (ii) to the
extent requested by any regulatory authority or quasi-regulatory authority
(such as the National Association of Insurance Commissioners), (iii) to the
extent required by applicable laws or regulations or by any subpoena or similar
legal process, (iv) in connection with the exercise of any remedies hereunder
or under the other Loan Documents or any suit, action or proceeding relating to
the enforcement of its rights hereunder or thereunder, (v) subject to an
agreement containing provisions substantially the same as those of this
Section 9.16, to (A) any actual or prospective assignee or pledgee of
or participant in any of its rights or obligations under this Agreement and the
other Loan Documents or (B) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to Polypore or any
Subsidiary or any of their respective obligations, (vi) with the consent
of Polypore or (vii) to the extent such Information becomes publicly
available other than as a result of a breach of this Section 9.16.  For the purposes of this Section, “Information”
shall mean all information received from Polypore or Holdings and related to
Polypore or Holdings or their business, other than any such information that
was available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis prior to its disclosure by Polypore or Holdings; provided
that, in the case of Information received from Polypore or Holdings after the
Restatement Effective Date, such information is clearly identified at the time
of delivery as confidential.  Any Person
required to maintain the confidentiality of Information as provided in this
Section 9.16 shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord its own
confidential information.


Each Lender acknowledges
that information furnished to it pursuant to this Agreement or the other Loan
Documents may include material non-public information concerning Polypore and
its Affiliates and their related parties or their respective securities, and
confirms that it has developed compliance procedures regarding the use of
material non-public information and that it will handle such material
non-public information in accordance with those procedures and applicable law,
including Federal and state securities laws.


All information, including
requests for waivers and amendments, furnished by any Loan Party or the
Administrative Agent pursuant to, or in the course of administering, this
Agreement or the other Loan Documents will be syndicate-level information,
which may contain material non-public information about Polypore and its
Affiliates and their related parties or their respective securities.  Accordingly, each Lender represents to
Polypore and the Administrative Agent that it has identified in its
administrative questionnaire a credit contact who may receive information that
may contain material non-public information in accordance with its compliance
procedures and applicable law, including Federal and state securities laws.


SECTION
9.17.  USA Patriot Act.  Each
Lender hereby notifies the Borrower that pursuant to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
(the “Patriot Act”), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow such Lender
to identify the Borrower in accordance with the Act.


SECTION
9.18.  Releases of Guarantees
and Liens.  (a)
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the Administrative Agent is hereby irrevocably authorized by each
Lender (without requirement of notice to or consent of any Lender except as
expressly required by Section 9.8) to take any action requested by Polypore
having the effect of releasing any Collateral or guarantee



 94
 









obligations (i) to the extent necessary to permit
consummation of any transaction not prohibited by any Loan Document or that has
been consented to in accordance with Section 9.8 or (ii) under the
circumstances described in paragraph (b) below.


(b)  At such time as the Loans, the Reimbursement
Obligations and the other obligations under the Loan Documents (other than
obligations under or in respect of Hedging Agreements and Cash Management
Agreements) shall have been paid in full, the Commitments have been terminated
and no Letters of Credit shall be outstanding, the Collateral shall be released
from the Liens created by the Security Documents, and the Security Documents
and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Loan Party under the Security
Documents shall terminate, all without delivery of any instrument or
performance of any act by any Person.


SECTION
9.19.  Judgment Currency.  (a) The Borrower’s obligations hereunder and
under the other Loan Documents to make payments in a specified currency (the “Obligation
Currency”) shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any currency other than
the Obligation Currency, except to the extent that such tender or recovery
results in the effective receipt by the Administrative Agent or a Lender of the
full amount of the Obligation Currency expressed to be payable to the
Administrative Agent or such Lender under this Agreement or the other Loan
Documents.  If, for the purpose of
obtaining or enforcing judgment against any Loan Party in any court or in any
jurisdiction, it becomes necessary to convert into or from any currency other
than the Obligation Currency (such other currency being hereinafter referred to
as the “Judgment Currency”) an amount due in the Obligation Currency,
the conversion shall be made, at the rate of exchange (as quoted by the
Administrative Agent or if the Administrative Agent does not quote a rate of
exchange on such currency, by a known dealer in such currency designated by the
Administrative Agent) determined, in each case, as of the Business Day
immediately preceding the date on which the judgment is given (such Business
Day being hereinafter referred to as the “Judgment Currency Conversion Date”).


(b)  If there is a change in the rate of exchange
prevailing between the Judgment Currency Conversion Date and the date of actual
payment of the amount due, the Borrower covenants and agrees to pay, or cause
to be paid, such additional amounts, if any (but in any event not a lesser
amount), as may be necessary to ensure that the amount paid in the Judgment
Currency, when converted at the rate of exchange prevailing on the date of
payment, will produce the amount of the Obligation Currency which could have
been purchased with the amount of Judgment Currency stipulated in the judgment
or judicial award at the rate of exchange prevailing on the Judgment Currency
Conversion Date.


(c)  For purposes of determining any rate of
exchange or currency equivalent for this Section, such amounts shall include
any premium and costs payable in connection with the purchase of the Obligation
Currency.


SECTION 9.20.   Taux
Effectif Global.   In order to comply with
the provisions of Articles L. 313-4 and L. 313-5 of the French Code monétaire et
financier, the effective global rate (“taux effectif global”) calculated in
accordance with the articles referred to above is as set out in a letter dated
the date of this Agreement from the Original Lenders to Daramic Holding
substantially in the form of Exhibit H. Such rate is given on an indicative
basis and shall not be binding on the Lenders in the future. 



 95
 









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.


	
  

  	
  PP HOLDING
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Lynn K. Amos

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Lynn K. Amos

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial
  Officer, Secretary and Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
  POLYPORE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Lynn K. Amos
  

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Lynn K. Amos

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial
  Officer, Executive Vice

  	
   

  
	
   

  	
   

  	
   

  	
  President,
  Secretary and Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
  DARAMIC HOLDING
  SAS

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
  /s/ Jean-François Gsell

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jean François
  Gsell

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  	
   

  



 



 96
 









 


	
  

  	
  JPMORGAN CHASE
  BANK, N.A., individually and as

  Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Peter A.
  Dedousis

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Peter A.
  Dedousis

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT SUISSE
  SECURITIES (USA) LLC,

  individually and as Syndication Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jon Moneypenny

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Jon Moneypenny

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
  GENERAL ELECTRIC
  CAPITAL CORPORATION,

  individually and as Co-Documentation Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Robert M. Kadlick

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Robert M.
  Kadlick

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Duly Authorized
  Signatory

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BEAR, STEARNS
  & CO. INC., individually and as Co-

  Documentation Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Keith C.
  Barnish

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Keith C. Barnish

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Senior Managing
  Director

  	
   

  



 



 97
 









 


	
  

  	
  JPMORGAN EUROPE
  LTD

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Denis J. Hurley

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Denis J. Hurley

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  



 



 98
 









SIGNATURE PAGE TO


POLYPORE, INC.


CREDIT AGREEMENT


	
  Name of
  Institution:  

  	
  Credit Suisse,
  Cayman Islands Branch

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Vanessa
  Gomez

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Vanessa Gomez

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ James Neira

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James Neira

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Associate

  	
   

  



 



 99
 









 


SIGNATURE PAGE TO


POLYPORE, INC.


CREDIT AGREEMENT


	
  Name of
  Institution:  

  	
  Bear Sterns
  Corporate Lending, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Linda A.
  Carper

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Linda A. Carper

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  



 


 



 100
 









 


SIGNATURE PAGE TO


POLYPORE, INC.


CREDIT AGREEMENT


	
  Name of
  Institution:  

  	
  National City
  Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Tom Gurbach

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Tom Gurbach

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  



 



 101