Exhibit 4.1


 


Execution Version


 


AMENDED AND RESTATED
CREDIT AGREEMENT


 


DATED AS OF DECEMBER 23,
2009


 


AMONG


 


PANOLAM INDUSTRIES
INTERNATIONAL, INC.,


 


PANOLAM HOLDINGS CO.,


 


THE LENDERS LISTED HEREIN,

as Lenders,


 


and


 


CREDIT SUISSE AG,

Cayman Islands Branch,

as Administrative Agent


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
  DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Definitions

  	
  2

  
	
   

  	
   

  	
   

  
	
  1.2

  	
  Accounting Terms; Utilization of GAAP for Purposes of Calculations
  Under Agreement

  	
  32

  
	
   

  	
   

  	
   

  
	
  1.3

  	
  Other Definitional Provisions and Rules of Construction

  	
  33

  
	
   

  	
   

  	
   

  
	
  1.4

  	
  Rounding

  	
  33

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  AMOUNTS AND TERMS OF COMMITMENTS AND LOANS

  	
  34

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Existing Loans; Term Loans; Revolving Loans; Making of Loans; the
  Register; Optional Notes

  	
  34

  
	
   

  	
   

  	
   

  
	
  2.2

  	
  Interest on the Loans

  	
  37

  
	
   

  	
   

  	
   

  
	
  2.3

  	
  Fees

  	
  40

  
	
   

  	
   

  	
   

  
	
  2.4

  	
  Repayments, Prepayments and Reductions of Commitments and Loans;
  General Provisions Regarding Payments; Application of Proceeds of Collateral
  and Payments Under Guaranties

  	
  41

  
	
   

  	
   

  	
   

  
	
  2.5

  	
  Use of Proceeds

  	
  49

  
	
   

  	
   

  	
   

  
	
  2.6

  	
  Special Provisions Governing Eurodollar Rate Loans

  	
  49

  
	
   

  	
   

  	
   

  
	
  2.7

  	
  Increased Costs; Taxes; Capital Adequacy

  	
  51

  
	
   

  	
   

  	
   

  
	
  2.8

  	
  Statement of Lenders; Obligation of Lenders and Issuing Lenders to
  Mitigate

  	
  56

  
	
   

  	
   

  	
   

  
	
  2.9

  	
  Defaulting Lenders

  	
  57

  
	
   

  	
   

  	
   

  
	
  2.10

  	
  Replacement of a Lender

  	
  58

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  LETTERS
  OF CREDIT

  	
  59

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Issuance
  of Letters of Credit and Lenders’ Purchase of Participations Therein

  	
  59

  
	
   

  	
   

  	
   

  
	
  3.2

  	
  Letter of Credit Fees

  	
  62

  
	
   

  	
   

  	
   

  
	
  3.3

  	
  Drawings and Reimbursement of Amounts Paid Under Letters of Credit

  	
  62

  
	
   

  	
   

  	
   

  
	
  3.4

  	
  Obligations Absolute

  	
  65

  
	
   

  	
   

  	
   

  
	
  3.5

  	
  Nature of Issuing Lenders’ Duties

  	
  66

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  CONDITIONS TO LOANS AND LETTERS OF CREDIT

  	
  67

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Conditions to Restatement Date Loans

  	
  67

  



 


i

















 


TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  
	
  4.2

  	
  Conditions to All Loans

  	
  71

  
	
   

  	
   

  	
   

  
	
  4.3

  	
  Conditions to Letters of Credit

  	
  72

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  COMPANY’S REPRESENTATIONS AND WARRANTIES

  	
  72

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Organization, Powers, Qualification, Good Standing, Business and
  Subsidiaries

  	
  73

  
	
   

  	
   

  	
   

  
	
  5.2

  	
  Authorization of Borrowing, etc.

  	
  73

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Financial Condition

  	
  74

  
	
   

  	
   

  	
   

  
	
  5.4

  	
  No Material Adverse Change

  	
  74

  
	
   

  	
   

  	
   

  
	
  5.5

  	
  Title to Properties; Liens; Real Property; Intellectual Property

  	
  75

  
	
   

  	
   

  	
   

  
	
  5.6

  	
  Litigation; Adverse Facts

  	
  75

  
	
   

  	
   

  	
   

  
	
  5.7

  	
  Payment of Taxes

  	
  76

  
	
   

  	
   

  	
   

  
	
  5.8

  	
  Governmental Regulation

  	
  76

  
	
   

  	
   

  	
   

  
	
  5.9

  	
  Securities Activities

  	
  76

  
	
   

  	
   

  	
   

  
	
  5.10

  	
  Employee Benefit Plans

  	
  76

  
	
   

  	
   

  	
   

  
	
  5.11

  	
  Certain Fees

  	
  77

  
	
   

  	
   

  	
   

  
	
  5.12

  	
  Environmental Protection

  	
  77

  
	
   

  	
   

  	
   

  
	
  5.13

  	
  Employee Matters

  	
  78

  
	
   

  	
   

  	
   

  
	
  5.14

  	
  Solvency

  	
  78

  
	
   

  	
   

  	
   

  
	
  5.15

  	
  Matters Relating to Collateral

  	
  78

  
	
   

  	
   

  	
   

  
	
  5.16

  	
  Disclosure

  	
  78

  
	
   

  	
   

  	
   

  
	
  5.17

  	
  Deposit Accounts and Securities Accounts

  	
  79

  
	
   

  	
   

  	
   

  
	
  5.18

  	
  Insurance

  	
  79

  
	
   

  	
   

  	
   

  
	
  5.19

  	
  Second Lien Credit Agreement

  	
  79

  
	
   

  	
   

  	
   

  
	
  5.20

  	
  Sanctioned Persons

  	
  79

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  AFFIRMATIVE COVENANTS

  	
  80

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Financial Statements and Other Reports

  	
  80

  
	
   

  	
   

  	
   

  
	
  6.2

  	
  Existence, etc.

  	
  84

  
	
   

  	
   

  	
   

  
	
  6.3

  	
  Payment of Taxes and Claims; Tax

  	
  84

  
	
   

  	
   

  	
   

  
	
  6.4

  	
  Maintenance of Properties; Insurance

  	
  85

  
	
   

  	
   

  	
   

  
	
  6.5

  	
  Inspection Rights

  	
  85

  



 


ii

















 


TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  
	
  6.6

  	
  Compliance with Laws, etc.

  	
  86

  
	
   

  	
   

  	
   

  
	
  6.7

  	
  Environmental Matters

  	
  86

  
	
   

  	
   

  	
   

  
	
  6.8

  	
  Execution of Subsidiary Guaranty and Personal Property Collateral
  Documents After the Restatement Date

  	
  88

  
	
   

  	
   

  	
   

  
	
  6.9

  	
  Matters Relating to Additional Real Property Collateral

  	
  89

  
	
   

  	
   

  	
   

  
	
  6.10

  	
  Merger

  	
  90

  
	
   

  	
   

  	
   

  
	
  6.11

  	
  Ratings

  	
  90

  
	
   

  	
   

  	
   

  
	
  6.12

  	
  Recorded Leasehold Interests

  	
  90

  
	
   

  	
   

  	
   

  
	
  6.13

  	
  Further Assurances

  	
  90

  
	
   

  	
   

  	
   

  
	
  6.14

  	
  Deposit Accounts and Securities Accounts

  	
  90

  
	
   

  	
   

  	
   

  
	
  6.15

  	
  Post-Closing Items

  	
  90

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  NEGATIVE COVENANTS

  	
  91

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Indebtedness

  	
  91

  
	
   

  	
   

  	
   

  
	
  7.2

  	
  Liens and Related Matters

  	
  93

  
	
   

  	
   

  	
   

  
	
  7.3

  	
  Investments; Acquisitions

  	
  98

  
	
   

  	
   

  	
   

  
	
  7.4

  	
  Contingent Obligations

  	
  100

  
	
   

  	
   

  	
   

  
	
  7.5

  	
  Restricted Junior Payments

  	
  101

  
	
   

  	
   

  	
   

  
	
  7.6

  	
  Financial Covenants

  	
  103

  
	
   

  	
   

  	
   

  
	
  7.7

  	
  Restriction on Fundamental Changes; Asset Sales

  	
  105

  
	
   

  	
   

  	
   

  
	
  7.8

  	
  Consolidated Capital Expenditures

  	
  108

  
	
   

  	
   

  	
   

  
	
  7.9

  	
  Transactions with Shareholders and Affiliates

  	
  108

  
	
   

  	
   

  	
   

  
	
  7.10

  	
  Conduct of Business By Holdings

  	
  109

  
	
   

  	
   

  	
   

  
	
  7.11

  	
  Conduct of Business by Company

  	
  110

  
	
   

  	
   

  	
   

  
	
  7.12

  	
  Amendments to Organizational Documents; Amendments of Documents
  Relating to Subordinated Indebtedness; Designation of Senior Indebtedness

  	
  110

  
	
   

  	
   

  	
   

  
	
  7.13

  	
  Fiscal Year

  	
  110

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  EVENTS OF DEFAULT

  	
  111

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Failure to Make Payments When Due

  	
  111

  
	
   

  	
   

  	
   

  
	
  8.2

  	
  Default in Other Agreements

  	
  111

  



 


iii

















 


TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  
	
  8.3

  	
  Breach of Certain Covenants

  	
  111

  
	
   

  	
   

  	
   

  
	
  8.4

  	
  Breach of Warranty

  	
  112

  
	
   

  	
   

  	
   

  
	
  8.5

  	
  Other Defaults Under Loan Documents

  	
  112

  
	
   

  	
   

  	
   

  
	
  8.6

  	
  Involuntary Bankruptcy; Appointment of Receiver, etc.

  	
  112

  
	
   

  	
   

  	
   

  
	
  8.7

  	
  Voluntary Bankruptcy; Appointment of Receiver, etc.

  	
  113

  
	
   

  	
   

  	
   

  
	
  8.8

  	
  Judgments and Attachments

  	
  113

  
	
   

  	
   

  	
   

  
	
  8.9

  	
  Dissolution

  	
  113

  
	
   

  	
   

  	
   

  
	
  8.10

  	
  Employee Benefit Plans

  	
  113

  
	
   

  	
   

  	
   

  
	
  8.11

  	
  Change in Control

  	
  113

  
	
   

  	
   

  	
   

  
	
  8.12

  	
  Invalidity of Loan Documents; Failure of Security; Repudiation of
  Obligations

  	
  114

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
  ADMINISTRATIVE AGENT

  	
  115

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Appointment

  	
  115

  
	
   

  	
   

  	
   

  
	
  9.2

  	
  Powers and Duties; General Immunity

  	
  116

  
	
   

  	
   

  	
   

  
	
  9.3

  	
  Independent Investigation by Lenders; No Responsibility For Appraisal
  of Creditworthiness

  	
  118

  
	
   

  	
   

  	
   

  
	
  9.4

  	
  Right to Indemnity

  	
  118

  
	
   

  	
   

  	
   

  
	
  9.5

  	
  Resignation of Administrative Agent; Successor Administrative Agent

  	
  119

  
	
   

  	
   

  	
   

  
	
  9.6

  	
  Collateral Documents and Guaranties

  	
  119

  
	
   

  	
   

  	
   

  
	
  9.7

  	
  Duties of Other Agents

  	
  120

  
	
   

  	
   

  	
   

  
	
  9.8

  	
  Administrative Agent May File Proofs of Claim

  	
  120

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
  MISCELLANEOUS

  	
  121

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Successors and Permitted Assigns; Assignments and Participations in
  Loans and Letters of Credit

  	
  121

  
	
   

  	
   

  	
   

  
	
  10.2

  	
  Expenses

  	
  126

  
	
   

  	
   

  	
   

  
	
  10.3

  	
  Indemnity

  	
  127

  
	
   

  	
   

  	
   

  
	
  10.4

  	
  Set-Off

  	
  128

  
	
   

  	
   

  	
   

  
	
  10.5

  	
  Ratable Sharing

  	
  128

  
	
   

  	
   

  	
   

  
	
  10.6

  	
  Amendments and Waivers

  	
  129

  
	
   

  	
   

  	
   

  
	
  10.7

  	
  Notices; Effectiveness of Signatures

  	
  131

  



 


iv

















 


TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  
	
  10.8

  	
  Survival of Representations, Warranties and Agreements

  	
  133

  
	
   

  	
   

  	
   

  
	
  10.9

  	
  Failure or Indulgence Not Waiver; Remedies Cumulative

  	
  133

  
	
   

  	
   

  	
   

  
	
  10.10

  	
  Marshalling; Payments Set Aside

  	
  133

  
	
   

  	
   

  	
   

  
	
  10.11

  	
  Severability

  	
  134

  
	
   

  	
   

  	
   

  
	
  10.12

  	
  Obligations Several; Independent Nature of Lenders’ Rights; Damage
  Waiver

  	
  134

  
	
   

  	
   

  	
   

  
	
  10.13

  	
  Release of Security Interest or Guaranty

  	
  134

  
	
   

  	
   

  	
   

  
	
  10.14

  	
  Applicable Law

  	
  135

  
	
   

  	
   

  	
   

  
	
  10.15

  	
  Construction of Agreement; Nature of Relationship

  	
  135

  
	
   

  	
   

  	
   

  
	
  10.16

  	
  Consent to Jurisdiction and Service of Process

  	
  136

  
	
   

  	
   

  	
   

  
	
  10.17

  	
  Waiver of Jury Trial

  	
  136

  
	
   

  	
   

  	
   

  
	
  10.18

  	
  Confidentiality

  	
  137

  
	
   

  	
   

  	
   

  
	
  10.19

  	
  Counterparts; Effectiveness

  	
  138

  
	
   

  	
   

  	
   

  
	
  10.20

  	
  USA Patriot Act

  	
  138

  
	
   

  	
   

  	
   

  
	
  10.21

  	
  Entire Agreement; No Third Party Beneficiaries

  	
  139

  



 


v

















 


EXHIBITS


 


	
  I

  	
   

  	
  FORM OF NOTICE OF BORROWING

  
	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  FORM OF NOTICE OF CONVERSION/CONTINUATION

  
	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  FORM OF REQUEST FOR ISSUANCE

  
	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  FORM OF AMENDED AND RESTATED TERM NOTE

  
	
   

  	
   

  	
   

  
	
  V

  	
   

  	
  FORM OF AMENDED AND RESTATED REVOLVING NOTE

  
	
   

  	
   

  	
   

  
	
  VI

  	
   

  	
  FORM OF ACCOUNT CONTROL AGREEMENT

  
	
   

  	
   

  	
   

  
	
  VII

  	
   

  	
  FORM OF COMPLIANCE CERTIFICATE

  
	
   

  	
   

  	
   

  
	
  VIII

  	
   

  	
  FORM OF OPINION OF COMPANY COUNSEL

  
	
   

  	
   

  	
   

  
	
  IX

  	
   

  	
  FORM OF ASSIGNMENT AGREEMENT

  
	
   

  	
   

  	
   

  
	
  X

  	
   

  	
  FORM OF SOLVENCY CERTIFICATE

  
	
   

  	
   

  	
   

  
	
  XI

  	
   

  	
  FORM OF SUBSIDIARY GUARANTY

  
	
   

  	
   

  	
   

  
	
  XII

  	
   

  	
  FORM OF AMENDED AND RESTATED SECURITY AGREEMENT

  
	
   

  	
   

  	
   

  
	
  XIII

  	
   

  	
  FORM OF HOLDINGS GUARANTY

  
	
   

  	
   

  	
   

  
	
  XIV

  	
   

  	
  FORM OF NOTICE OF PREPAYMENT

  



 


1

















 


SCHEDULES


 


	
  1.1A

  	
   

  	
  EXISTING MORTGAGE POLICIES

  
	
   

  	
   

  	
   

  
	
  1.1B

  	
   

  	
  EXISTING MORTGAGES

  
	
   

  	
   

  	
   

  
	
  2.1A

  	
   

  	
  EXISTING LOANS

  
	
   

  	
   

  	
   

  
	
  2.1B

  	
   

  	
  TERM LOANS

  
	
   

  	
   

  	
   

  
	
  2.1C

  	
   

  	
  REVOLVING LOAN COMMITMENTS

  
	
   

  	
   

  	
   

  
	
  4.1H

  	
   

  	
  EXISTING MORTGAGED PROPERTIES

  
	
   

  	
   

  	
   

  
	
  5.1A

  	
   

  	
  JURISDICTIONS OF ORGANIZATION

  
	
   

  	
   

  	
   

  
	
  5.1C

  	
   

  	
  SUBSIDIARIES

  
	
   

  	
   

  	
   

  
	
  5.4

  	
   

  	
  MATERIAL ADVERSE CHANGE

  
	
   

  	
   

  	
   

  
	
  5.5B

  	
   

  	
  REAL PROPERTY

  
	
   

  	
   

  	
   

  
	
  5.5C

  	
   

  	
  INTELLECTUAL PROPERTY

  
	
   

  	
   

  	
   

  
	
  5.6

  	
   

  	
  LITIGATION

  
	
   

  	
   

  	
   

  
	
  5.12

  	
   

  	
  ENVIRONMENTAL MATTERS

  
	
   

  	
   

  	
   

  
	
  5.17

  	
   

  	
  DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS

  
	
   

  	
   

  	
   

  
	
  5.18

  	
   

  	
  INSURANCE

  
	
   

  	
   

  	
   

  
	
  6.15

  	
   

  	
  POST-CLOSING ITEMS

  
	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  CERTAIN EXISTING INDEBTEDNESS

  
	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  CERTAIN EXISTING LIENS

  
	
   

  	
   

  	
   

  
	
  7.3

  	
   

  	
  CERTAIN EXISTING INVESTMENTS

  
	
   

  	
   

  	
   

  
	
  7.4

  	
   

  	
  CERTAIN EXISTING CONTINGENT OBLIGATIONS

  
	
   

  	
   

  	
   

  
	
  7.9

  	
   

  	
  PERMITTED AGREEMENTS WITH AFFILIATES

  



 


2
















 


AMENDED
AND RESTATED CREDIT AGREEMENT


 


This AMENDED AND RESTATED
CREDIT AGREEMENT is dated as of December 23,
2009 and entered into by and among PANOLAM INDUSTRIES
INTERNATIONAL, INC., a Delaware corporation (“Company”),
PANOLAM HOLDINGS CO., a Delaware corporation
(“Holdings”), THE
FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each
individually referred to herein as a “Lender” and
collectively as “Lenders”), and CREDIT SUISSE AG, Cayman Islands Branch (“Credit Suisse”), as administrative agent for Lenders (in
such capacity, “Administrative Agent”).


 


R E C I T A L S


 


WHEREAS, Company,
Panolam Holdings II Co., Lenders and Administrative Agent are parties to, inter alia, that certain Credit Agreement, dated as of September 30,
2005 (as amended by that certain First Amendment to Credit Agreement and Waiver
dated as of February 27, 2006, as further amended by that certain Second
Amendment to Credit Agreement dated as of March 1, 2006, as further
amended by that certain Third Amendment to Credit Agreement and Limited Waiver
dated as of March 30, 2007 and as further amended by that certain Fourth
Amendment to Credit Agreement, dated as of September 14, 2009, and as may
have been further amended, restated, amended and restated, supplemented or
otherwise modified immediately prior to the date hereof, the “Existing Credit Agreement”).


 


WHEREAS, on November 4,
2009, Company, Holdings and the Domestic Subsidiaries (collectively, the “Debtors”) commenced Chapter 11 Case Nos. 09-13889 (MFW),
09-13893 (MFW), 09-13894 (MFW), 09-13896 (MFW), 09-13892 (MFW), 09-13895 (MFW),
09-13890 (MFW), and 09-13891 (MFW), as administratively consolidated as Chapter
11 Case No 09-13889 (MFW) (collectively, the “Bankruptcy
Case”) by filing voluntary petitions for reorganization under
Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (as now
and hereafter in effect, or any successor statute, the “Bankruptcy
Code”) with the United States Bankruptcy Court for the District of
Delaware (the “Bankruptcy Court”).


 


WHEREAS, as part of
the comprehensive financial restructuring (the “Restructuring”)
to be implemented by the Debtors’ Chapter 11 plan of reorganization (the “Plan”) that was confirmed by the Bankruptcy Court on December 10,
2009, Company, Holdings, Lenders and Administrative Agent have agreed to amend
and restate the Existing Credit Agreement in its entirety (the Existing Credit
Agreement, as so amended and restated, and as further amended, restated,
amended and restated, supplemented or otherwise modified from time to time,
this “Agreement”) to, among other things, (a) re-evidence,
ratify and reaffirm the Obligations (as such term, and other capitalized terms
used but not defined in these recitals, is defined in subsection 1.1) that
shall be repayable hereafter in accordance with the respective terms and
provisions hereof  and (b) set forth
the terms and conditions under which Lenders will from time to time hereafter
make further loans or extensions of credit, as the case may be, to or for the
account of Company;


 


WHEREAS, Company
desires to continue to secure all of the Obligations hereunder and under the
other Loan Documents (and it is the intent of Company, Holdings,


 


1

















 


Administrative
Agent and Lenders that such security be continued) by its grant to
Administrative Agent, on behalf of Lenders, of a First Priority Lien on
substantially all of its real, personal and mixed property, all of the Capital
Stock of its Domestic Subsidiaries and 100% of the non-voting Capital Stock (if
any) and 65% of the Capital Stock of its first-tier Foreign Subsidiaries;


 


WHEREAS, Holdings
and Subsidiary Guarantors have guaranteed the Obligations hereunder and under
the other Loan Documents and desire to continue to secure their guaranties (and
it is the intent of Company, Holdings, Administrative Agent and Lenders that
such security be continued) by granting to Administrative Agent, on behalf of
Lenders, a First Priority Lien on substantially all of their real, personal and
mixed property, all of the Capital Stock of their respective Domestic
Subsidiaries and 100% of the non-voting Capital Stock (if any) and 65% of the
Capital Stock of their respective first-tier Foreign Subsidiaries;


 


WHEREAS, it is the
intention of Company, Holdings, Lenders and Administrative Agent that this
Agreement be given in renewal and rearrangement of, and in substitution (but
not in payment) for the Existing Credit Agreement and shall not constitute a
novation thereof; and


 


WHEREAS, these
Recitals shall be construed as part of this Agreement.


 


NOW, THEREFORE, in
consideration of the premises and the agreements, provisions and covenants
herein contained, Company, Holdings, Lenders and Administrative Agent agree as
follows:


 


Section 1.                                          DEFINITIONS


 


1.1          Definitions.


 


The following terms used in this Agreement shall have the following
meanings:


 


“Account Control Agreement” shall
mean, as applicable (a) a control agreement with respect to Deposit
Accounts of each Loan Party (but not including any Trust Fund Accounts or De
Minimis Accounts), among such Loan Party, the bank at which such Deposit
Accounts are held, the Administrative Agent and the Second Lien Agent,
substantially in the form annexed as Exhibit VI hereto or otherwise
in form and substance satisfactory to the Administrative Agent, or (b) a
control agreement with respect to Securities Accounts of each Loan Party, among
such Loan Party, the securities intermediary with which such Securities
Accounts are held, the Administrative Agent and the Second Lien Agent, in form
and substance satisfactory to the Administrative Agent.


 


“Additional Mortgaged Property”
has the meaning assigned to that term in subsection 6.9.


 


“Additional Mortgages”
has the meaning assigned to that term in subsection 6.9.


 


“Administrative Agent”
has the meaning assigned to that term in the introduction to this Agreement and
also means and includes any successor Administrative Agent appointed pursuant
to subsection 9.5.


 


2

















 


“Affected Lender”
has the meaning assigned to that term in subsection 2.6C.


 


“Affected Loans” has
the meaning assigned to that term in subsection 2.6C.


 


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


 


“Aggregate Amounts Due”
has the meaning assigned to that term in subsection 10.5.


 


“Agreement” has the
meaning assigned to that term in the recitals hereto.


 


“Amendments to Mortgages”
has the meaning assigned to that term in subsection 4.1H(i).


 


“Approved Fund”
means a Fund that is administered or managed by (i) a Lender, (ii) an
Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that
administers or manages a Lender.


 


“Asset Sale” means
the sale by Company or any of its Subsidiaries to any Person other than Company
or any of its wholly owned Subsidiaries, in any single transaction or a series
of transactions, of (i) any of the Capital Stock of any of Company’s
Subsidiaries whether newly issued or outstanding, (ii) substantially all
of the assets of any division or line of business of Company or any of its
Subsidiaries, or (iii) any other property or assets (whether tangible or
intangible) of Company or any of its Subsidiaries.


 


“Assignment Agreement”
means an Assignment and Assumption in substantially the form of Exhibit IX
annexed hereto.


 


“Bankruptcy Case”  has the meaning assigned to that term in the recitals
hereto.


 


“Bankruptcy Code”
has the meaning assigned to that term in the recitals hereto.


 


“Bankruptcy Court”  has the meaning assigned to that term in the recitals
hereto.


 


“Base Rate” means,
at any time, an interest rate per annum equal to the sum of (a) 5.00% plus
(b) the highest of (i) the Prime Rate, (ii) the rate which is
1/2 of 1% in excess of the Federal Funds Effective Rate and (iii) the
Eurodollar Rate for a one month Interest Period on such day (or if such day is
not a Business Day, the next succeeding Business Day); provided that,
for the avoidance of doubt, the Eurodollar Rate for any day shall be based on
the rate determined on such day at approximately 11 a.m. (London time) by
reference to the British Bankers’ Association Interest Settlement Rates for
deposits in dollars (as set forth by any service selected by the Administrative
Agent that has been nominated by the British Bankers’ Association as an 


 


3

















 


authorized
vendor for the purpose of displaying such rates).  Any change in the Base Rate due to a change
in the Prime Rate, the Federal Funds Effective Rate or the Eurodollar Rate
shall be effective on the effective date of such change.


 


“Base Rate Loans”
means Loans bearing interest at rates determined by reference to the Base Rate
as provided in subsection 2.2A.


 


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


 


“Borrower Materials” has
the meaning assigned to that term in subsection 10.7C.


 


“Business Day” means
any day excluding Saturday, Sunday and any day which is a legal holiday under
the laws of the State of New York or is a day on which banking institutions
located in such state are authorized or required by law or other governmental
action to close.


 


“Canadian Subsidiary”
means Panolam Industries, Ltd. and any wholly-owned Subsidiary of Panolam
Industries, Ltd. incorporated or organized in Canada or any province or
territory thereof.


 


“Capital Lease”, as
applied to any Person, means any lease of any property (whether real, personal
or mixed) by that Person as lessee that, in conformity with GAAP, is accounted
for as a capital lease on the balance sheet of that Person.


 


“Capital Stock”
means the capital stock of or other equity interests in a Person.


 


“Cash” means money,
currency or a credit balance in a Deposit Account.


 


“Cash Equivalents”
means, as at any date of determination, (i) marketable securities (a) issued
or directly and unconditionally guaranteed as to interest and principal by the
United States or Canada or (b) issued by any agency or instrumentality of
the United States or Canada the obligations of which are backed by the full
faith and credit of the United States or Canada, respectively, in each case
maturing within one year after such date; (ii) marketable direct
obligations issued by any state, commonwealth or territory of the United States
or any province of Canada or any political subdivision of any such state, commonwealth,
territory or province, as applicable, or any public instrumentality thereof, in
each case maturing within one year after such date and having, at the time of
the acquisition thereof, one of the two highest ratings obtainable from any of
S&P, Moody’s or DBRS, as applicable; (iii) commercial paper maturing
no more than one year from the date of creation thereof and having, at the time
of the acquisition thereof, a rating of at least A-1 from S&P, at least P-1
from Moody’s or at least R-1 from DBRS, as may be applicable; (iv) certificates
of deposit or bankers’ acceptances maturing within one year after such date and
issued or accepted by any Lender or by any commercial bank organized under the
laws of the United States or any state thereof or the District of Columbia that
(a) is at least “adequately capitalized” (as defined in the regulations of
its primary Federal banking regulator) and (b) has Tier 1 capital (as
defined in such regulations) of not less than $100,000,000; (v) repurchase
agreements entered into by any Person with a bank or trust


 


4

















 


company
(including any of the Lenders) or recognized securities dealer having capital
and surplus in excess of $250,000,000 for direct obligations issued or fully
guaranteed by the United States; (vi) shares of any money market mutual
fund that (a) has at least 95% of its assets invested continuously in the
types of investments referred to in clauses (i), (ii), (iii), (iv) and (v) above,
and (b) has capital of not less than $500,000,000; and (vii) solely
with respect to Foreign Subsidiaries, non-Dollar denominated (a) 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 one year of the
date of acquisition and (b) equivalents of demand deposit accounts which
are maintained with an Approved Foreign Bank.


 


“Change in Control”
means any of the following:  (i) at
any time, any “person” or “group” (as such terms are used in sections 13(d) and
14(d) of the Exchange Act, but excluding any employee benefit plan of such
person and its subsidiaries, and any person or entity acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan), excluding
the Equity Holders, shall become the beneficial owner, directly or indirectly,
of a percentage of the Capital Stock of Company in excess of the greater of (a) the
percentage of Company’s Capital Stock (on a fully diluted basis) owned
beneficially by the Equity Holders at such time, or (b) 35% of the Capital
Stock (on a fully diluted basis), or (ii) during any period of twelve (12)
consecutive months, the Governing Body of Company shall not consist of a
majority of the Continuing Members; (iii) at any time prior to the
consummation of a Qualifying IPO of the Capital Stock of Company, the failure
at any time of Holdings to legally and beneficially own and control 100% of the
issued and outstanding shares of Capital Stock of Company or the failure at any
time of Holdings to have the ability to elect all of the Governing Body of
Company; or (iv) the occurrence of any “Change in Control” as defined in
the Second Lien Credit Agreement.  As
used herein, the term “beneficially own” or “beneficial ownership” shall have
the meaning set forth in the Exchange Act and the rules and regulations
promulgated thereunder.


 


“Change in Law”
means the occurrence, after the date of this Agreement, of any of the
following:  (i) the adoption or
taking effect of any law, rule, regulation, treaty or order, (ii) any
change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof by any Government Authority, (iii) any
determination of a court or other Government Authority or (iv) the making
or issuance of any request, guideline or directive (whether or not having the
force of law) by any Government Authority.


 


“Closing Date” means
September 30, 2005.


 


“Collateral” means,
collectively, all of the property in which Liens are purported to be granted
pursuant to the Collateral Documents as security for the Obligations.


 


“Collateral Account”
has the meaning assigned to that term in the Security Agreement.


 


5

















 


“Collateral Documents”
means the Security Agreement, the Mortgages, all Account Control Agreements and
all other instruments or documents delivered by any Loan Party pursuant to this
Agreement or any of the other Loan Documents in order to grant to
Administrative Agent, on behalf of Lenders, a Lien on any property of that Loan
Party as security for the Obligations.


 


“Commercial Letter of Credit”
means any letter of credit or similar instrument issued for the purpose of
providing the primary payment mechanism in connection with the purchase of any
materials, goods or services by Company or any of its Subsidiaries in the
ordinary course of business of Company or such Subsidiary.


 


“Commitments” means
the commitments of Lenders to make Loans as set forth in subsections 2.1 and
3.3.


 


“Communications” has
the meaning assigned to that term in subsection 10.7B.


 


“Company” has the
meaning assigned to that term in the introduction to this Agreement.


 


“Compliance Certificate”
means a certificate substantially in the form of Exhibit VII
annexed hereto.


 


“Consolidated Capital Expenditures”
means, for any period, the sum of the aggregate of all expenditures (whether
paid in cash or other consideration or accrued as a liability and including
that portion of Capital Leases which is capitalized on the consolidated balance
sheet of Company and its Subsidiaries) by Company and its Subsidiaries during that
period that, in conformity with GAAP, are included in “additions to property,
plant or equipment” or comparable items reflected in the consolidated statement
of cash flows of Company and its Subsidiaries. 
For purposes of this definition, the purchase price of any asset that is
purchased substantially simultaneously with the exchange of existing assets or
with Net Insurance/Condemnation Proceeds shall be included in Consolidated
Capital Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller for the assets being exchanged at
such time or the amount of such Net Insurance/Condemnation Proceeds, as the
case may be.


 


“Consolidated Cash Interest Expense”
means, for any period, Consolidated Interest Expense for such period excluding,
however, any interest expense not payable in Cash (including
amortization of discount and amortization of debt issuance costs); provided,
however, the parties agree that the Consolidated Cash Interest Expense
for the third Fiscal Quarter of 2009 shall equal $3,201,624 and the
Consolidated Cash Interest Expense for the fourth Fiscal Quarter of 2009 shall
equal $3,201,624.


 


“Consolidated Current Assets”
means, as at any date of determination, the total assets of Company and its Subsidiaries
on a consolidated basis which may properly be classified as current assets in
conformity with GAAP, excluding Cash and Cash Equivalents.


 


“Consolidated Current Liabilities”
means, as at any date of determination, the total liabilities of Company and
its Subsidiaries on a consolidated basis which may properly be 


 


6

















 


classified as
current liabilities in conformity with GAAP, excluding the current
portions of long-term Indebtedness and Capital Leases.


 


“Consolidated EBITDA”
means, for any period, the sum, without duplication, of the amounts for such
period of:


 


(i)            Consolidated
Net Income,


 


(ii)           Consolidated
Interest Expense,


 


(iii)          provisions
for taxes based on income or profits and franchise or similar taxes,


 


(iv)          total
depreciation expense,


 


(v)           total
amortization expense,


 


(vi)          actual
and documented customary fees, costs and expenses incurred in connection with
any equity or debt offering, Investment, recapitalization or Indebtedness (in
each case, as permitted by this Agreement) or in connection with the
consummation of Permitted Acquisitions,


 


(vii)         restructuring
charges or reserves (including, without limitation, retention, severance,
systems establishment cost, excess pension charges, contract termination costs
including future lease commitments, and costs to consolidate facilities and
relocate employees), which cash restructuring charges and reserves shall not
exceed $2,000,000 in any four (4) consecutive Fiscal Quarters.


 


(viii)        net
after-tax gains or losses (less all fees and expenses or charges relating
thereto) attributable to the early extinguishment of Indebtedness,


 


(ix)           net
gain or loss under any Hedge Agreement permitted by this Agreement,


 


(x)            other
non-cash items (including, without limitation, any impairment charges, the
impact of purchase accounting including, without limitation, the amortization
of inventory step-up and stock based compensation plans but excluding any such
non-cash item to the extent it represents an accrual of or reserve for cash
expenditures in any future period),


 


(xi)           to
the extent actually reimbursed (and to the extent such reimbursement is not
otherwise included in Consolidated Net Income), expenses incurred to the extent
covered by indemnification provisions in any agreement in connection with a
Permitted Acquisition,


 


(xii)          to
the extent covered by insurance (and to the extent the proceeds of such
insurance are not otherwise included in Consolidated Net Income) under which
the insurer has been properly notified and has not denied or contested
coverage, charges and 


 


7

















 


expenses with
respect to liability or casualty events, business interruption or product
recalls,


 


(xiii)         letter
of credit fees, and


 


(xiv)        Transaction
Costs,


 


but only, in
the case of clauses (ii)-(xiv), to the extent deducted in the calculation of
Consolidated Net Income, less non-cash items added in the calculation of
Consolidated Net Income (other than any such non-cash item to the extent it
will result in the receipt of cash payments in any future period), all of the
foregoing as determined on a consolidated basis for Company and its
Subsidiaries and in conformity with GAAP.


 


“Consolidated Excess Cash Flow”
means, for any period, an amount (if positive) equal to (i) the sum,
without duplication, of the amounts for such period of (a) Consolidated
EBITDA and (b) the Consolidated Working Capital Adjustment minus (ii) the
sum, without duplication, of the amounts for such period of (a) voluntary
and scheduled repayments of Consolidated Total Debt (excluding voluntary
repayments of Term Loans and repayments of Revolving Loans except to the extent
the Revolving Loan Commitment Amount is permanently reduced in connection with
such repayments), (b) Consolidated Capital Expenditures solely to the
extent permitted under subsection 7.8 (net of any proceeds of any related
financings classified as long-term Indebtedness with respect to such
expenditures), (c) Consolidated Cash Interest Expense (but including all amounts
in respect of items in clauses (i) and (ii) of the definition of “Consolidated
Interest Expense”), (d) current taxes based on income or profits and
franchise or similar taxes of Company and its Subsidiaries and paid or payable
in cash with respect to such period, (e) fees, costs and expenses paid in
cash in connection with any equity or debt offering, Investment,
recapitalization or Indebtedness permitted by this Agreement or in connection
with any Permitted Acquisition, to the extent added to Consolidated EBITDA
pursuant to clause (vi) of the definition thereof, (f) the portion of
the purchase price of Permitted Acquisitions funded with cash and not
constituting long-term Indebtedness, (g) restructuring charges or reserves
paid in cash with respect to such period, to the extent added to Consolidated
EBITDA pursuant to clause (vii) of the definition thereof, and (h) amounts
added to Consolidated EBITDA pursuant to clauses (viii), (ix), (xi), (xii),
(xiii) and (xiv) of the definition thereof.


 


“Consolidated Interest Expense”
means, for any period, total interest expense (including that portion
attributable to Capital Leases in accordance with GAAP and capitalized
interest) of Company and its Subsidiaries on a consolidated basis with respect
to all outstanding Indebtedness of Company and its Subsidiaries, net of
interest income, including amortization of all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers’ acceptance
financing, net payments under Interest Rate Agreements and amounts referred to
in subsection 2.3 payable to Administrative Agent and Lenders that are
considered interest expense in accordance with GAAP, but excluding, however (i) the
fees paid to Administrative Agent (in its capacity as Administrative Agent
under the Existing Credit Agreement), Noteholders and Senior Lender Group on
the Restatement Date in connection with the Restructuring, in an aggregate
amount not to exceed $3,500,000 and (ii) fees and expenses 


 


8

















 


associated
with an Investment permitted by subsection 7.3 and issuances of Capital Stock
of Company or its Subsidiaries.


 


“Consolidated Net Income”
means, for any period, the net income (or loss) of Company and its Subsidiaries
on a consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP; provided that there shall be
excluded (i) the income (or loss) of any Person (other than a Subsidiary
of Company) in which any other Person (other than Company or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) any after-tax gains
or losses attributable to asset sales, (iii) the net income (but not loss)
of any Subsidiary of Company (other than a Loan Party) to the extent that the
declaration of dividends or similar distributions by that Subsidiary of that
income is not at the time permitted by a contract, operation of law or
otherwise, (iv) the income (or loss) attributable to discontinued
operations (including, without limitation, operations disposed of during such
period, whether or not such operations were classified as discontinued), (v) any
gains realized on, or because of, the purchase or other acquisition by Company
or any of its Subsidiaries of any securities of such Person or any of its
Subsidiaries, (vi) the amount equivalent to the cumulative effect of a
change in accounting principles of Company or any of its Subsidiaries, and (vii) (to
the extent not included in clauses (i) through (vi) above) any net
extraordinary gains or net extraordinary losses.


 


“Consolidated Senior Debt”
means, as at any date of determination, the aggregate stated balance sheet
amount of the Indebtedness of Company and its Subsidiaries, set forth in the “Liabilities”
section of the balance sheet, in respect of the Indebtedness arising pursuant
to this Agreement, determined on a consolidated basis in accordance with GAAP,
net of unrestricted Cash and Cash Equivalents and Cash and Cash Equivalents
restricted only in favor of (i) Administrative Agent, the Lenders or the
other “Secured Parties” pursuant to the Loan Documents and (ii) the Second
Lien Agent, the Second Lien Lenders or the other “Secured Parties” pursuant to
the Second Lien Credit Documents.


 


“Consolidated Senior Leverage Ratio”
means, as of the last day of any Fiscal Quarter, the ratio of (i) Consolidated
Senior Debt as at such day to (ii) Consolidated EBITDA for the consecutive
four Fiscal Quarters ending on such day, calculated on a Pro Forma Basis.


 


“Consolidated Total Debt”
means, as at any date of determination, the aggregate stated balance sheet
amount of all Indebtedness of Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, net of unrestricted Cash and Cash
Equivalents and Cash or Cash Equivalents restricted only in favor of (i) Administrative
Agent, the Lenders or the other “Secured Parties” pursuant to the Loan
Documents and (ii) Second Lien Agent, the Second Lien Lenders or the other
“Secured Parties” pursuant to the Second Lien Credit Documents.


 


“Consolidated Total Leverage Ratio”
means, as of the last day of any Fiscal Quarter, the ratio of (i) Consolidated
Total Debt as at such day to (ii) Consolidated EBITDA for the consecutive
four Fiscal Quarters ending on such day, calculated on a Pro Forma Basis.


 


9

















 


“Consolidated Working Capital”
means, as at any date of determination, the excess (or deficit) of Consolidated
Current Assets over Consolidated Current Liabilities.


 


“Consolidated Working Capital Adjustment”
means, for any period on a consolidated basis, the amount (which may be a
negative number) by which Consolidated Working Capital as of the beginning of
such period exceeds (or is less than) Consolidated Working Capital as of the
end of such period.


 


“Contingent Obligation”,
as applied to any Person, means any direct or indirect liability, contingent or
otherwise, of that Person (i) with respect to any Indebtedness, lease,
dividend or other payment obligation of another if the primary purpose or
intent thereof by the Person incurring the Contingent Obligation is to provide
assurance to the obligee of such obligation of another that such obligation of
another will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation will be protected
(in whole or in part) against loss in respect thereof, (ii) with respect
to any letter of credit issued for the account of that Person or as to which
that Person is otherwise liable for reimbursement of drawings, or (iii) under
Hedge Agreements.  Contingent Obligations
shall include (a) the direct or indirect guaranty or endorsement (other
than for collection or deposit in the ordinary course of business) by such
Person of the payment obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such
Person for the obligation of another through any agreement (contingent or
otherwise) (1) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (2) to maintain the
solvency or any balance sheet item, level of income or financial condition of
another if, in the case of any agreement described under subclauses (1) or
(2) of this sentence, the primary purpose or intent thereof is as
described in clause (i) of the preceding sentence.  The amount of any Contingent Obligation shall
be equal to the amount of the obligation so guaranteed or otherwise supported
or, if less, the amount to which such Contingent Obligation is specifically
limited.


 


“Continuing Member”
means, as of any date of determination any member of the Governing Body of the
Qualifying IPO Issuer who (i) was a member of such Governing Body on the
Restatement Date or (ii) was nominated for election or elected to such
Governing Body with the affirmative vote of a majority of the members who were
either members of such Governing Body on the Restatement Date or whose
nomination or election was previously so approved or received the vote of the
Equity Holders in his or her election by the stockholders of the Qualifying IPO
Issuer.


 


“Contractual Obligation”,
as applied to any Person, means any provision of any Security issued by that
Person or of any material indenture, mortgage, deed of trust, contract,
undertaking, agreement or other instrument to which that Person is a party or
by which it or any of its properties is bound or to which it or any of its
properties is subject.


 


“Credit Suisse” has
the meaning assigned to that term in the introduction to this Agreement.


 


10




















 


“DBRS” means Dominion Bond Rating Service.


 


“Debtors” has the meaning assigned to that
term in the recitals hereto.


 


“Default Excess” has the meaning assigned to
that term in subsection 2.9.


 


“Default Period” has the meaning assigned to
that term in subsection 2.9.


 


“Defaulted Loan” has the meaning assigned to
that term in subsection 2.9.


 


“Defaulting Lender” has the meaning assigned
to that term in subsection 2.9.


 


“De Minimis Account” has the meaning assigned
to that term in subsection 5.17.


 


“Deposit Account” means a demand, time,
savings, passbook or similar account maintained with a Person engaged in the
business of banking, including a savings bank, savings and loan association,
credit union or trust company.


 


“Disclosure Statement” means the Disclosure
Statement Relating to the Debtors’ Joint Prepackaged Plan of Reorganization
under Chapter 11 of the Bankruptcy Code of Panolam Holdings Co., Panolam
Holdings II Co., Panolam Industries International, Inc., Panolam
Industries, Inc., Pioneer Plastics Corporation, Nevamar Holdings Corp.,
Nevamar Holdco, LLC and Nevamar Company, LLC, Docket No. 5.


 


“Dollars” and the sign “$”
mean the lawful money of the United States.


 


“Domestic Subsidiary” means any Subsidiary of
Company that is incorporated or organized under the laws of the United States,
any state thereof or in the District of Columbia other than a Subsidiary (x) which
is a disregarded entity for U.S. federal income tax purposes and (y) substantially
all of the assets of which are equity interests in Foreign Subsidiaries.


 


“Eligible Assignee” means (i) any Lender,
any Affiliate of any Lender or any Approved Fund of any Lender; and (ii) any
other Person (other than a natural person) approved by the Administrative Agent
and, in the case of any assignment of a Revolving Loan Commitment, each Issuing
Lender; provided that neither Company, nor any of its Affiliates (other
than the Equity Holders and their Permitted Successors) nor any Defaulting
Lender, Affiliate of a Defaulting Lender or Approved Fund of any Defaulting
Lender shall be an Eligible Assignee; provided, further that any
Lender may convert its Loans to Capital Stock of Holdings or its direct or
indirect parent and may contribute its Loans to Company or any of its
Affiliates via an Assignment Agreement in order to effectuate such conversion.


 


“Employee Benefit Plan” means any “employee
benefit plan” as defined in Section 3(3) of ERISA (i) which is
currently maintained or contributed to by Company, its Subsidiaries or any of
their ERISA Affiliates, (ii) which was at any time during the last six
years maintained, contributed to or terminated by Company, its Subsidiaries or
any of their ERISA Affiliates, including any Person which was at such time an
ERISA Affiliate of Company, or (iii) with respect to which there is any
potential or outstanding liability of Company.


 


11

















 


“Environmental Claim” means any investigation,
notice, notice of violation, claim, action, suit, proceeding, demand, abatement
order or other order or directive (conditional or otherwise), by any Government
Authority or any other Person, arising (i) pursuant to or in connection
with any actual or alleged violation of any Environmental Law, (ii) in
connection with any Hazardous Materials or any Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat or
harm to natural resources or the environment.


 


“Environmental Laws” means any and all current
or future applicable statutes, ordinances, orders, rules, regulations,
judgments, Governmental Authorizations, or any other requirements of any
Government Authority relating to (i) environmental matters, including
those relating to any Hazardous Materials Activity or (ii) the generation,
use, storage, transportation or disposal of Hazardous Materials in any manner
applicable to Company or any of its Subsidiaries or any Facility.


 


“Equity Holders” means, collectively, the
Persons receiving “New Capital Stock” under, and as defined in the Plan,
and/or, their respective Affiliates (including, as applicable, related funds,
general partners thereof and limited partners thereof) and, except for purposes
of the definitions of “Change in Control” and “Eligible Assignee,” the
Management Shareholders.


 


“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any successor thereto.


 


“ERISA Affiliate”, as applied to any Person,
means (i) any corporation that is a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal
Revenue Code of which that Person is a member; (ii) any trade or business
(whether or not incorporated) that is a member of a group of trades or
businesses under common control within the meaning of Section 414(c) of
the Internal Revenue Code of which that Person is a member; and (iii) any
member of an affiliated service group within the meaning of Section 414(m) or
(o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause
(ii) above is a member.


 


“ERISA Event” means (i) a “reportable
event” within the meaning of Section 4043 of ERISA and the regulations
issued thereunder with respect to any Pension Plan (excluding those for which
the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the
failure to meet the minimum funding standard of Section 412 of the
Internal Revenue Code with respect to any Pension Plan (whether or not waived
in accordance with Section 412(d) of the Internal Revenue Code) or
the failure to make by its due date a required installment under Section 412(m) of
the Internal Revenue Code with respect to any Pension Plan or the failure to
make any required contribution to a Multiemployer Plan; (iii) the
provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of
ERISA of a notice of intent to terminate such plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the withdrawal by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates
from any Pension Plan with two or more contributing sponsors or the termination
of any such Pension Plan resulting in liability pursuant to Section 4063
or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or the 


 


12

















 


appointment of a trustee to administer, any
Pension Plan; (vi) the imposition of liability on Company, any of its
Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or
4069 of ERISA or by reason of the application of Section 4212(c) of
ERISA; (vii) the withdrawal of Company, any of its Subsidiaries or any of
their respective ERISA Affiliates in a complete or partial withdrawal (within
the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if
there is any potential liability therefor, or the receipt by Company, any of
its Subsidiaries or any of their respective ERISA Affiliates of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A
or 4042 of ERISA; (viii) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan other than a
Multiemployer Plan or the assets thereof, or against  Company, any of its Subsidiaries or any of
their respective ERISA Affiliates in connection with any Employee Benefit Plan;
(ix) receipt from the Internal Revenue Service of notice of the failure of
any Pension Plan (or any other Employee Benefit Plan intended to be qualified
under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of
the Internal Revenue Code, or the failure of any trust forming part of any
Pension Plan to qualify for exemption from taxation under Section 501(a) of
the Internal Revenue Code; or (x) the imposition of a Lien pursuant to Section 401(a)(29)
or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect
to any Pension Plan.


 


“Eurodollar Rate” means, for any Interest Rate
Determination Date with respect to an Interest Period for a Eurodollar Rate
Loan, an interest rate equal to the greater of (a) 2.5% per annum and (b) the
interest rate per annum obtained by dividing (i) (A) the rate per
annum determined by the Administrative Agent at approximately 11:00 a.m.
(London time) on such Interest Rate Determination Date by reference to the
British Bankers’ Association Interest Settlement Rates for deposits in Dollars
(as set forth by the Bloomberg Information Service or any successor thereto or
any other service selected by the Administrative Agent which has been nominated
by the British Bankers’ Association as an authorized information vendor for the
purpose of displaying such rates) for a period equivalent to such Interest
Period or (B) to the extent that an interest rate is not ascertainable
pursuant to the foregoing provisions of this definition, the interest rate per
annum determined by the Administrative Agent to be the average of the rates per
annum at which deposits in Dollars are offered for such relevant Interest
Period to major banks in the London interbank market in London, England at
approximately 11:00 a.m. (London time) on such Interest Rate Determination
Date by (ii) a percentage equal to (A) 100% minus (B) the
aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) established by the Board of Governors and
any other banking authority, domestic or foreign, to which Administrative Agent
or any Lender (including any branch, Affiliate or other fronting office making
or holding a Loan) is subject for Eurocurrency Liabilities (as defined in
Regulation D (or any successor category of liabilities under Regulation
D)), which shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage. 
Eurodollar Rate Loans shall be deemed to constitute such Eurocurrency
Liabilities and to be subject to such reserve requirements without benefit of
or credit for proration, exemptions or offsets that may be available from time
to time to any Lender under such Regulation D.


 


“Eurodollar Rate Loans” means Loans bearing
interest at rates determined by reference to the Eurodollar Rate as provided in
subsection 2.2A.


 


13

















 


“Event of Default” means each of the events
set forth in Section 8.


 


“Exchange Act” means the Securities Exchange
Act of 1934, as amended from time to time, and any successor statute.


 


“Exchange Rate” means, on any date when an
amount expressed in a currency other than Dollars is to be determined with
respect to any Letter of Credit, the nominal rate of exchange of Administrative
Agent in the New York foreign exchange market for the sale of such currency in
exchange for Dollars at 12:00 noon (New York City time) one Business Day prior
to such date, expressed as a number of units of such currency per one Dollar.


 


“Excluded Taxes” means, with respect to
Administrative Agent, any Lender, or any other recipient of any payment to be
made by or on account of any obligation of Company hereunder (i) taxes
that are imposed on the overall net income and franchise taxes imposed in lieu
thereof (a) by the United States, (b) by any other Government
Authority under the laws of which such Lender is organized, has its principal
office or maintains its applicable lending office, or (c) by any
Government Authority solely as a result of a present or former connection
between such recipient and the jurisdiction of such Government Authority (other
than any such connection arising solely from such recipient having executed,
delivered or performed its obligations or received a payment under, or
enforced, any of the Loan Documents), (ii) gross receipts taxes imposed in
lieu of net income taxes by the jurisdiction under the laws of which such
Lender is organized, has its principal office or maintains its applicable
lending office, (iii) any branch profits taxes imposed by the United
States or any similar tax imposed by any other jurisdiction in which Company is
located, (iv) in the case of a Foreign Lender (other than an assignee
pursuant to a request of Company under subsection 2.10), any United States
withholding tax that (x) is imposed on amounts payable to such Foreign
Lender at the time it becomes a party hereto (or designates a new lending
office), (y) is attributable to such Foreign Lender’s failure or inability
(except as a result of a Change in Law other than a Change in Law described in
subsection 2.7B(iv)(g)) to comply with its obligations under subsection
2.7B(iv), 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 Company with respect to such
withholding tax pursuant to subsection 2.7B, or (z) is required to be
deducted under applicable law from any payment hereunder on the basis of the
information provided by such Foreign Lender pursuant to clause (d) of
subsection 2.7B(iv), and (v) all liabilities, penalties and interest with
respect to any of the foregoing excluded taxes.


 


“Existing Credit Agreement” has the meaning
assigned to that term in the recitals hereto.


 


“Existing Loans”  has
the meaning assigned to that term in subsection 2.1A.


 


“Existing Mortgage Policies” means,
collectively, the ALTA mortgagee title insurance policies listed on Schedule
1.1A; each, individually an “Existing Mortgage Policy.”


 


“Existing Mortgaged Properties” means,
collectively, the Real Property Assets listed on Schedule 4.1H; each,
individually an “Existing Mortgaged Property.”


 


14

















 


“Existing Mortgages” means, collectively, the
Mortgages listed on Schedule 1.1B; each, individually an “Existing Mortgage.”


 


“Existing Revolving Loans” means the “Revolving
Loans” as defined in the Existing Credit Agreement immediately prior to the
Restatement Date, in the aggregate outstanding principal balance of
$25,927,897.


 


“Existing Term Loans” means the “Term
Loans” as defined in the Existing Credit Agreement immediately prior to the
Restatement Date, in the aggregate outstanding principal balance of
$167,586,498.19.


 


“Facilities” means any and all real property
(including all buildings, fixtures or other improvements located thereon)
owned, leased, operated or used by Company or any of its Subsidiaries.


 


“Federal Funds Effective Rate” means, for any
period, a fluctuating interest rate equal for each day during such period to
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 for such day (or, if such day is not a Business Day, for the next
succeeding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by Administrative
Agent from three Federal funds brokers of recognized standing selected by
Administrative Agent.


 


“Financial Officer” means an Officer who is
the chief executive officer, chief financial officer or a vice president of
finance, or any other Officer who serves in a similar capacity to any of the
foregoing.


 


“Financial Plan” has the meaning assigned to
that term in subsection 6.1L(ii).


 


“First Priority” means, with respect to any
Lien purported to be created in any Collateral pursuant to any Collateral
Document, that such Lien is perfected and has priority over any other Lien on
such Collateral (other than Liens permitted pursuant to clauses (i)-(xvi),
(xviii)-(xx) or (xxii) of subsection 7.2A).


 


“Fiscal Month” means a fiscal month of any
Fiscal Year.


 


“Fiscal Quarter” means a fiscal quarter of any
Fiscal Year.


 


“Fiscal Year” means the fiscal year of Company
and its Subsidiaries ending on December 31 of each calendar year.  For purposes of this Agreement, any
particular Fiscal Year shall be designated by reference to the calendar year in
which such Fiscal Year ends.


 


“Flood Hazard Property” means an Existing
Mortgaged Property or an Additional Mortgaged Property located in an area
designated by the Federal Emergency Management Agency as having special flood
or mud slide hazards.


 


15

















 


“Foreign Lender” means any Lender that is
organized under the laws of a jurisdiction other than that in which Company is
resident for tax purposes.  For purposes
of this definition, the United States, each state thereof and the District of
Columbia shall be deemed to constitute a single jurisdiction.


 


“Foreign Plan” means any employee benefit plan
maintained by Company or any of its Subsidiaries that is mandated or governed
by any law, rule or regulation of any Government Authority other than the
United States, any state thereof or any other political subdivision thereof.


 


“Foreign Subsidiary” means any Subsidiary of
Company that is not a Domestic Subsidiary.


 


“Fund” means any Person (other than a natural
Person) that is (or will be) engaged in making, purchasing, holding or
otherwise investing in commercial loans and similar extensions of credit in the
ordinary course of business.


 


“Funding and Payment Account” means the
account specified in the payment instructions appearing below Administrative
Agent’s signature herein or at the account designated as such in any other
written notice delivered by Administrative Agent to Company and each Lender.


 


“Funding and Payment Office” means the office
of Administrative Agent located at Eleven Madison Avenue, New York, New
York  10010 or such other office of
Administrative Agent as may from time to time hereafter be designated as such
in a written notice delivered by Administrative Agent to Company and each
Lender.


 


“Funding Date” means the date of funding of a
Loan.


 


“Funding Default” has the meaning assigned to
that term in subsection 2.9.


 


“GAAP” means generally accepted accounting
principles set forth in opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession, in each case as the same are applicable
to the circumstances as of the date of determination, subject to subsection
1.2.


 


“Governing Body” means the board of directors
or other body having the power to direct or cause the direction of the
management and policies of a Person that is a corporation, partnership, trust
or limited liability company.


 


“Government Authority” means the government of
the United States or any other nation, or any state, regional or local
political subdivision or department thereof, and any other governmental or
regulatory agency, authority, body, commission, central bank, board, bureau,
court, instrumentality or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government, in each case 


 


16

















 


whether federal, state, local or foreign (including supra-national
bodies such as the European Union or the European Central Bank).


 


“Governmental Authorization” means any permit,
license, registration or other authorization of or from, or notice to, any
Government Authority.


 


“Granting Lender” has the meaning assigned to
that term in subsection 10.1B(iii).


 


“Guaranties” means the Holdings Guaranty and
the Subsidiary Guaranty.


 


“Hazardous Materials” means (i) any
chemical, material or substance at any time defined as or included in the
definition of “hazardous substances”, “hazardous wastes”, “hazardous materials”,
“extremely hazardous waste”, “acutely hazardous waste”, “radioactive waste”, “biohazardous
waste”, “pollutant”, “toxic pollutant”, “contaminant”, “restricted hazardous
waste”, “infectious waste”, “toxic substances”, or any other term or expression
intended to define, list or classify substances by reason of properties harmful
to the environment (including harmful properties such as ignitability,
corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, “TCLP
toxicity” or “EP toxicity” or words of similar import under any applicable
Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters
and other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (iv) any flammable
substances or explosives; (v) any radioactive materials; (vi) any
asbestos-containing materials; (vii) urea formaldehyde foam insulation; (viii) electrical
equipment which contains any oil or dielectric fluid containing polychlorinated
biphenyls; (ix) pesticides; and (x) any other chemical, material or
substance, exposure to which is prohibited, limited or regulated by any
Government Authority having jurisdiction over the foregoing.


 


“Hazardous Materials Activity” means any
activity, event or occurrence involving any Hazardous Materials, including the
use, manufacture, possession, storage, holding, presence, existence, location,
Release, placement, generation, transportation, processing, construction,
treatment, abatement, removal, remediation, disposition or handling of any
Hazardous Materials, and any corrective action or response action with respect
to any of the foregoing.


 


“Hedge Agreement” means an Interest Rate
Agreement or any exchange contract, swap agreement, futures contract, option
contract, synthetic cap or collar or other similar agreement or arrangement to
which Company or any of its Subsidiaries is a party.


 


“Holdings” has the meaning assigned to that
term in the introduction to this Agreement.


 


“Holdings Guaranty” means the Amended and
Restated Holdings First Lien Guaranty executed and delivered by Holdings on the
Restatement Date, substantially in the form of Exhibit XIII annexed
hereto.


 


17

















 


“Indebtedness”, as applied to any Person,
means, without duplication, (i) all indebtedness for borrowed money, (ii) that
portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity with GAAP, (iii) notes
payable and similar instruments representing extensions of credit whether or
not representing obligations for borrowed money, (iv) any obligation owed
for all or any part of the deferred purchase price of property or services,
which purchase price is (a) due more than six months from the date of
incurrence of the obligation in respect thereof or (b) evidenced by a note
or similar written instrument excluding, in each case (x) any such
obligations incurred under ERISA, (y) trade payables in the ordinary
course of business and (z) any earn out obligation until such obligation
appears in the liability section of the balance sheet of such Person, and (v) all
indebtedness secured by any Lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of that Person.


 


“Indemnified Liabilities” has the meaning
assigned to that term in subsection 10.3.


 


“Indemnified Taxes” means Taxes other than
Excluded Taxes.


 


“Indemnitee” has the meaning assigned to that
term in subsection 10.3.


 


“Intellectual Property” means all patents,
trademarks, tradenames, copyrights, technology, software, know-how and
processes used in or necessary for the conduct of the business of Company and
its Subsidiaries.


 


“Intercreditor Agreement” means that certain
Intercreditor Agreement dated as of the Restatement Date by and among Company,
the Subsidiary Grantors (as defined therein) and Subsidiaries of Company and
Holdings from time to time party thereto, Holdings, the Administrative Agent as
First Lien Collateral Agent and Second Lien Agent as Second Lien Collateral
Agent.


 


“Interest Payment Date” means (i) with
respect to any Base Rate Loan, the last Business Day of each March, June, September and
December of each year, commencing on December 31, 2009, and (ii) with
respect to any Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan; provided that in the case of each Interest
Period of longer than three months, “Interest Payment Date” shall also include
each date that is three months, or a multiple thereof, after the commencement
of such Interest Period.


 


“Interest Period” has the meaning assigned to
that term in subsection 2.2B.


 


“Interest Rate Agreement” means any interest
rate swap agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement or arrangement to which Company or any of
its Subsidiaries is a party.


 


“Interest Rate Determination Date”, with
respect to any Interest Period, means the second Business Day prior to the
first day of such Interest Period.


 


18

















 


“Internal Revenue Code” means the Internal Revenue
Code of 1986, as amended to the date hereof and from time to time hereafter,
and any successor statute.


 


“Investment” means (i) any direct or
indirect purchase or other acquisition by Company or any of its Subsidiaries
of, or of a beneficial interest in, any Securities of any other Person
(including any Subsidiary of Company) or any acquisition, by purchase or
otherwise, of all or substantially all the business, property or fixed assets
of any Person, or any division or line of business of any Person, (ii) any
direct or indirect redemption, retirement, purchase or other acquisition for
value, by any Subsidiary of Company from any Person other than Company or any
of its Subsidiaries, of any equity Securities of such Subsidiary or (iii) any
direct or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar expenditures in
the ordinary course of business) or capital contribution by Company or any of
its Subsidiaries to any other Person, including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business. The amount
of any Investment shall be the original cost of such Investment plus the
cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to
such Investment (other than adjustments for the repayment of, or the refund of
capital with respect to, the original principal amount of any such Investment).


 


“IP Collateral” means, collectively, the
Intellectual Property that constitutes Collateral under the Security Agreement.


 


“IP Filing Office” means the United States
Patent and Trademark Office, the United States Copyright Office or any
successor or substitute office in which filings are necessary or, in the
reasonable discretion of Administrative Agent, desirable in order to create or
perfect Liens on, or evidence the interest of Administrative Agent and Lenders
in, any IP Collateral.


 


“Issuing Lender”, with respect to any Letter
of Credit, means the Revolving Lender that agrees or is otherwise obligated to
issue such Letter of Credit, determined as provided in subsection 3.1B(ii).


 


“Joint Venture” means a joint venture,
partnership or other similar arrangement, whether in corporate, partnership or
other legal form.


 


“Leasehold Property” means any material
leasehold interest of any Loan Party (other than a Foreign Subsidiary) as
lessee under any lease of real property used for manufacturing, other than any
such leasehold interest designated from time to time by Administrative Agent in
its reasonable discretion as not being required to be included in the
Collateral, which designation may be made based upon a determination by
Administrative Agent in its reasonable discretion that the costs of obtaining a
security interest in such leasehold interest are unreasonably excessive in
relation to the benefit to Lenders of the security afforded thereby.


 


“Lender” and “Lenders”
means the Persons identified as “Lenders” and listed on the signature pages of
this Agreement, together with their successors and permitted assigns 


 


19

















 


pursuant to subsection 10.1; provided that the term “Lenders”,
when used in the context of a particular Commitment, shall mean Lenders having
that Commitment.


 


“Letter of Credit” or “Letters of
Credit” means Commercial Letters of Credit and Standby Letters of
Credit issued by Issuing Lenders for the account of Company pursuant to
subsection 3.1.


 


“Letter of Credit Usage” means, as at any date
of determination, the sum of (i) the maximum aggregate undrawn amount
under all Letters of Credit then outstanding plus (ii) the
aggregate amount of all drawings under Letters of Credit honored by Issuing
Lenders and not theretofore reimbursed out of the proceeds of Revolving Loans
pursuant to subsection 3.3B or otherwise reimbursed by Company.  For purposes of this definition, any amount
described in clause (i) or (ii) of the preceding sentence which is
denominated in a currency other than Dollars shall be valued based on the
applicable Exchange Rate for such currency as of the applicable date of
determination.


 


“Lien” means any lien, mortgage, pledge,
assignment, security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and any option, trust
or other preferential arrangement in the nature of security.


 


“Liquidity” means the sum of (i) Company’s
Cash and Cash Equivalents plus (ii) the difference between (a) the
Revolving Loan Commitment Amount and (b) the Total Utilization of
Revolving Loan Commitments, in each case as of the date of determination.


 


“Loan” or “Loans” means
one or more of the loans continued, exchanged or made pursuant to subsection
2.1.


 


“Loan Documents” means this Agreement, the
Notes, the Letters of Credit (and any applications for, or reimbursement
agreements or other documents or certificates executed by Company in favor of
an Issuing Lender relating to, the Letters of Credit (collectively, a “Letter of Credit Application”)), the Guaranties and the
Collateral Documents.  In the event that
any Letter of Credit Application includes representations and warranties,
covenants and/or events of default that do not contain the materiality
qualifiers, exceptions or thresholds that are applicable to the analogous
provisions of this Agreement or other Loan Documents, or are otherwise more
restrictive, the relevant qualifiers, exceptions and thresholds contained
herein shall be incorporated therein or, to the extent more restrictive, shall
be deemed for purposes of such Letter of Credit Application to be the same as
the analogous provisions herein. 
Further, in the event of any conflict between this Agreement and any
other Loan Document, this Agreement shall govern and control.


 


“Loan Exposure” means  the sum of (i) the aggregate Term Loan Exposure of all
Lenders plus (ii) the aggregate Revolving Loan Exposure of all
Lenders.


 


“Loan Party” means each of Holdings, Company
and any of Company’s Domestic Subsidiaries from time to time executing a Loan
Document, and “Loan Parties” means all such
Persons, collectively.


 


20
















 


“Management Shareholders” means Robert J.
Muller, Jr. and other members of management of Company and its
Subsidiaries, who own Capital Stock of Company as of the Restatement Date.


 


“Margin Stock” has the meaning assigned to
that term in Regulation U of the Board of Governors as in effect from time to
time.


 


“Material Adverse Effect” means a material
adverse effect upon (i) the business, results of operations or condition
(financial or otherwise) of Holdings, Company and their respective Subsidiaries
taken as a whole or (ii) the impairment of the ability of (a) Company
or the Loan Parties (taken as a whole) to perform their respective obligations
under the Loan Documents to which they are a party, or (b) Administrative
Agent or Lenders to enforce their rights and remedies in respect of the
Obligations.


 


“Maximum Consolidated Capital Expenditures Amount”
has the meaning assigned to that term in subsection 7.8.


 


“Modification Title Endorsements” has the
meaning assigned to that term in subsection 4.1H.


 


“Moody’s” means Moody’s Investors Service, Inc.


 


“Mortgage” means (i) a security
instrument (whether designated as a deed of trust or a mortgage or by any
similar title) executed and delivered by any Loan Party, in such form as may be
approved by Administrative Agent in its reasonable discretion, in each case
with such changes thereto as may be recommended by Administrative Agent’s local
counsel based on local laws or customary local mortgage or deed of trust
practices, or (ii) at Administrative Agent’s option, in the case of an
Additional Mortgaged Property, an amendment to an existing Mortgage, in form
reasonably satisfactory to Administrative Agent, adding such Additional
Mortgaged Property to the Real Property Assets encumbered by such existing
Mortgage.  “Mortgages”
means all such instruments, including the Existing Mortgages and any Additional
Mortgages, collectively.


 


“Multiemployer Plan” means any Employee
Benefit Plan that is a “multiemployer plan” as defined in Section 3(37) of
ERISA.


 


“Net Asset Sale Proceeds”, with respect to any
Asset Sale pursuant to subsections 7.7B(vi), (xiii) or (xvii) means Cash
payments (including any Cash received by way of deferred payment pursuant to,
or by monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including (i) income taxes
reasonably estimated to be actually payable as a result of any gain recognized
in connection with such Asset Sale, (ii) payment of the outstanding
principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Loans) that is secured by a Lien on the stock or
assets in question and that is repaid under the terms thereof as a result of
such Asset Sale, (iii) the
out-of-pocket expenses (including, without limitation, attorneys’ fees,
investment banking fees, survey costs, title insurance premiums, and related
search and recording charges, transfer taxes, deed or mortgage recording taxes,
other customary expenses and brokerage, consultant and other 


 


21

















 


customary
fees) incurred in connection with such Asset Sale, and (iv) for so long as
such reserve is maintained, any reserve for adjustment in respect of (a) the
sale price of such asset or assets established in accordance with GAAP and (b) any
liabilities associated with such asset or assets and retained 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,
however, that Net Asset Sale Proceeds shall not include any cash payments
received from any Asset Sale by a Foreign Subsidiary unless such proceeds may
be repatriated (by reason of a repayment of an intercompany note or otherwise)
to the United States without (in the reasonable judgment of Company) resulting
in a material Tax liability to Company.


 


“Net Insurance/Condemnation Proceeds” means
any Cash payments or proceeds received by Holdings or any of its Domestic
Subsidiaries (i) under any casualty insurance policy in respect of a
covered loss thereunder or (ii) as a result of the taking of any assets of
Holdings, Company or any of their respective Subsidiaries by any Person
pursuant to the power of eminent domain, condemnation or otherwise, or pursuant
to a sale of any such assets to a purchaser with such power under threat of
such a taking, in each case, net of any actual and reasonable documented costs
incurred by Holdings, Company or any of their respective Subsidiaries, as
applicable, in connection with the adjustment or settlement of any claims of
Holdings, Company or such Subsidiary in respect thereof including, without
limitation, (1) income taxes reasonably estimated to be actually payable
as a result of any gain recognized in connection with such event, (2) payment
of the outstanding principal amount of, premium or penalty, if any, and
interest on any Indebtedness (other than the Loans) that is secured by a Lien
on the stock or assets in question and that is repaid under the terms thereof
as a result of such event, (3) the
out-of-pocket expenses (including, without limitation, attorneys’ fees,
investment banking fees, survey costs, title insurance premiums, and related
search and recording charges, transfer taxes, deed or mortgage recording taxes,
other customary expenses and brokerage, consultant and other customary fees)
incurred in connection with such event, and (4) for so long as such
reserve is maintained, any reasonable reserve calculated in good faith for
adjustment in respect of (a) the sale price of such asset or assets
established in accordance with GAAP and (b) any liabilities associated
with such asset or assets and retained 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, however, that Net
Insurance/Condemnation Proceeds shall not include any cash payments received by
a Foreign Subsidiary unless such proceeds may be repatriated (by reason of a
repayment of an intercompany note or otherwise) to the United States without
(in the reasonable judgment of Company) resulting in a material Tax liability
to Company.


 


“Net Securities Proceeds” means the cash
proceeds (net of (i) underwriting discounts and commissions and other
reasonable out-of-pocket expenses associated therewith, including reasonable
attorneys fees, investment banking fees, other customary expenses and
brokerage, consultant and other customary fees, and (ii) taxes) from the
issuance of Capital Stock of or incurrence of Indebtedness by Holdings, Company
or any of their respective Subsidiaries.


 


“Non-Consenting Lender” has the meaning
assigned to that term in subsection 2.10.


 


22

















 


“Noteholders” means the holders of Senior
Subordinated Note Claims (as defined in the Plan).


 


“Notes” means one or more of the Term Notes or
Revolving Notes or any combination thereof.


 


“Notice of Borrowing” means a notice
substantially in the form of Exhibit I annexed hereto.


 


“Notice of Conversion/Continuation” means a
notice substantially in the form of Exhibit II annexed hereto.


 


“Notice of Prepayment” means a notice
substantially in the form of Exhibit XIV annexed hereto.


 


“Obligations” means all obligations of every
nature of each Loan Party from time to time owed to Administrative Agent,
Lenders or any of them under the Loan Documents, whether for principal,
interest, reimbursement of amounts drawn under Letters of Credit, fees,
expenses, indemnification or otherwise.


 


“OFAC” has the meaning assigned to that
term in subsection 5.20.


 


“Officer” means the president, chief executive
officer, any vice president, chief financial officer, treasurer, general
partner (if an individual), managing member (if an individual) or other
individual appointed by the Governing Body or the Organizational Documents of a
corporation, partnership, trust or limited liability company to serve in a
similar capacity as the foregoing.


 


“Officer’s Certificate”, as applied to any
Person that is a corporation, partnership, trust or limited liability company,
means a certificate executed on behalf of such Person by one or more Officers
of such Person or one or more Officers of a general partner or a managing
member if such general partner or managing member is a corporation,
partnership, trust or limited liability company.


 


“Operating Lease”, as applied to any Person,
means any lease (including leases that may be terminated by the lessee at any
time) of any property (whether real, personal or mixed) that is not a Capital
Lease other than any such lease under which that Person is the lessor.


 


“Organizational Documents” means the documents
(including bylaws, if applicable) pursuant to which a Person that is a
corporation, partnership, trust or limited liability company is organized.


 


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


 


23

















 


“Outstanding Tax Refunds” means such
portion of a Loan Party’s United States federal income Tax refunds, and
Canadian Tax refunds for the Fiscal Year ended December 31, 2008 that is
not received prior to the Restatement Date.


 


“Participant” means a purchaser of a
participation in the rights and obligations under this Agreement pursuant to
subsection 10.1C.


 


“Participant Register” has the meaning
assigned to that term in subsection 10.1C.


 


“Patriot Act” means the Uniting And
Strengthening America By Providing Appropriate Tools Required To Intercept And
Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed
into law October 26, 2001)).


 


“PBGC” means the Pension Benefit Guaranty
Corporation or any successor thereto.


 


“Pension Plan” means any Employee Benefit
Plan, other than a Multiemployer Plan, that is subject to Section 412 of
the Internal Revenue Code or Section 302 of ERISA, and for purposes of
subsection 8.10, any Foreign Plan.


 


“Permitted Acquisition” means the acquisition
of all or substantially all of a business, its assets, or the Capital Stock of
any Person, which acquisition is permitted pursuant to clause (xv) of
subsection 7.3.


 


“Permitted Cure Issuance” has the meaning
assigned to that term in subsection 8.3.


 


“Permitted Holders” means (i) the Equity
Holders or (ii) any of the Permitted Transferees of any Person in clause (i) hereof.


 


“Permitted Refinancing” means, with respect to
any Person, any modification, refinancing, refunding, renewal or extension of
any Indebtedness of such Person; provided that (a) the principal
amount (or accreted value, if applicable) thereof does not exceed the principal
amount (or accreted value, if applicable) of the Indebtedness so modified,
refinanced, refunded, renewed or extended (the “Refinanced
Indebtedness”) except by an amount equal to unpaid accrued interest
and premium, if any, thereon plus other reasonable amounts paid, and fees and
expenses reasonably incurred, in connection with such modification,
refinancing, refunding, renewal or extension and by any amount equal to any
existing commitments unutilized thereunder or as otherwise permitted pursuant
to subsection 7.1, (b) such modification, refinancing, refunding, renewal
or extension has a final maturity date equal to or later than the final
maturity date of the Refinanced Indebtedness, (c) if the Refinanced
Indebtedness is subordinated in right of payment to the Obligations, such
modification, refinancing, refunding, renewal or extension is subordinated in
right of payment to the Obligations on terms at least as favorable to the
Lenders as those contained in the documentation governing the Refinanced
Indebtedness, taken as a whole, (d) any Lien provided in connection with
such modification, refinancing, refunding, renewal or extension does not extend
to any additional property beyond the property subject to a Lien in favor of
the Refinanced Indebtedness, other than (1) after-


 


24

















 


acquired property that is affixed or incorporated into the property
covered by such Lien or financed by Indebtedness permitted under subsection
7.1, (2) proceeds and products thereof and (3) property serving as
collateral for a financing which is cross-collateralized to the financing
secured by such Lien provided by the same Person or its Affiliate, (e) the
direct or any contingent obligor with respect to the Refinanced Indebtedness is
not changed in any respect, and (f) at the time thereof, no Event of
Default shall have occurred and be continuing.


 


“Permitted Successors” means, with
respect to any Equity Holder, (i) the legal successor to such Equity
Holder or (ii) its Affiliates.


 


“Permitted Transferees” means, with respect to
any Person, (i) any Affiliate of such Person, (ii) the heirs,
executors, administrators, testamentary trustees, legatees or beneficiaries of
any such Person or (iii) a trust, the beneficiaries of which, or a
corporation or partnership, the stockholders, or general and limited partners,
of which, or a limited liability company, the members of which, include only
such Person or his or her spouse or lineal descendants, in each case to whom
such Person has transferred the beneficial ownership of any Securities of
Holdings (or any direct or indirect parent company).


 


“Person” means and includes natural persons,
corporations, limited partnerships, general partnerships, limited liability
companies, limited liability partnerships, joint stock companies, Joint
Ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
Government Authorities.


 


“Pioneer Plastics Maine Guaranty” means that
certain guaranty dated June 15, 2005 by Panolam Industries Holdings, Inc.
and Pioneer Plastics Corporation for the benefit of the Superintendent of the
Bureau of Insurance of Maine.


 


“Plan”  has
the meaning assigned to that term in the recitals hereto.


 


“Platform” has the meaning assigned to that
term in subsection 10.7C.


 


“Potential Event of Default” means a condition
or event that, after notice or lapse of time or both, would constitute an Event
of Default.


 


“Preliminary Financial Plan” has the
meaning assigned to that term in subsection 6.1L(i)


 


“Prepayment Excess” has the meaning
assigned to that term in subsection 2.4B(iv)(b)(1).


 


“Prime Rate” means the rate that Credit Suisse
announces from time to time as its prime lending rate, as in effect from time
to time at its principal office in New York City. The Prime Rate is based
upon various factors including Credit Suisse’s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such rate.  Credit Suisse or any other Lender may make
commercial loans or other loans at rates of interest at, above or below the Prime
Rate.


 


25

















 


“Proceedings” means any action, suit,
proceeding (whether administrative, judicial or otherwise) or arbitration.


 


“Pro Forma Basis” means, with respect to
compliance with any test or covenant hereunder, compliance with such test or covenant
after giving effect to (i) any Permitted Acquisition, (ii) any Asset
Sale of a Subsidiary or operating entity or (iii) any incurrence of
Indebtedness being given pro forma
effect or any incurrence of Indebtedness in connection with any Permitted Acquisition
being given pro forma effect (including (a) pro
forma adjustments arising out of events which are directly attributable to the
proposed Permitted Acquisition, Asset Sale or incurrence of Indebtedness, are
factually supportable and are expected to have a continuing impact, in each
case as determined on a basis consistent with Article 11 of Regulation S-X
of the Securities Act, as interpreted by the Staff of the Securities and
Exchange Commission, (b) pro forma adjustments reasonably acceptable to Administrative
Agent arising out of operating expense reductions attributable to such
transaction being given pro forma
effect that (1) have been implemented or (2) will be implemented
following such transaction and are supportable and quantifiable and, in each
case, including, but not limited to, (A) reduction in personnel expenses, (B) reduction
of costs related to administrative functions, (C) reductions of costs
related to leased or owned properties and (D) reductions from the
consolidation of operations and streamlining of corporate overhead and (c) such
other adjustments as are reasonably satisfactory to Administrative Agent, in
each case as certified by a Financial Officer of Company) using, for purposes
of determining such compliance, the historical financial statements of all
entities or assets so acquired or sold and the consolidated financial
statements of Company and its Subsidiaries, which shall be reformulated as if
such Permitted Acquisition or Asset Sale, and all other Permitted Acquisitions or
Asset Sales that have been consummated during the period, and any Indebtedness
or other liabilities repaid in connection therewith had been consummated and
incurred or repaid at the beginning of such period (and assuming that such
Indebtedness to be incurred bears interest during any portion of the applicable
measurement period prior to the relevant acquisition at the interest rate which
is or would be in effect with respect to such Indebtedness as at the relevant
date of determination).


 


“Pro Forma Compliance” means, at any date of
determination, that Company shall be in pro forma compliance with any or all of
the covenants set forth in subsections 7.6A and 7.6B, as applicable, as of the
date of such determination or the last day of the most recently completed
Fiscal Quarter, as the case may be (computed on the basis of (i) balance
sheet amounts as of such date and (ii) income statement amounts for the
most recently completed period of four consecutive Fiscal Quarters for which
financial statements shall have been delivered to Administrative Agent and
calculated on a Pro Forma Basis in respect of the event giving rise to such
determination).


 


“Proposed Act” has the meaning assigned to
that term in subsection 2.7B(iv)(g).


 


“Pro Rata Share” means (i) with respect
to all payments, computations and other matters relating to the Term Loan of
any Lender, the percentage obtained by dividing (a) the Term Loan
Exposure of that Lender by (b) the aggregate Term Loan Exposure of
all Lenders, (ii) with respect to all payments, computations and other
matters relating to the Revolving Loan Commitment or the Revolving Loans of any
Lender or any Letters of Credit issued or participations therein deemed
purchased by any Lender, the percentage obtained by dividing (a) 


 


26

















 


the Revolving Loan Exposure of that Lender by (b) the
aggregate Revolving Loan Exposure of all Lenders, and (iii) for all other
purposes with respect to each Lender, the percentage obtained by dividing
(a) the sum of the Term Loan Exposure of that Lender plus the Revolving
Loan Exposure of that Lender by (b) the Loan Exposure, in any such
case as the applicable percentage may be adjusted by assignments permitted
pursuant to subsection 10.1.


 


“Public Lender” has the meaning assigned to
that term in subsection 10.7C.


 


“Qualifying IPO” means the issuance by the
Qualifying IPO Issuer of its common Capital Stock in an underwritten primary
public offering (other than a public offering pursuant to a registration
statement on Form S-8) pursuant to an effective registration statement
filed with the Securities and Exchange Commission in accordance with the
Securities Act of 1933 (whether alone or in connection with a secondary public
offering).


 


“Qualifying IPO Issuer” means Holdings,
Company or a corporation or other legal entity which owns, directly or
indirectly, one hundred percent (100%) of the outstanding equity interests of
Holdings.


 


“Real Property Asset” means, at any time of
determination, any interest then owned by any Loan Party (other than any
Foreign Subsidiary) in any real property.


 


“Recorded Leasehold Interest” means a
Leasehold Property with respect to which a Record Document (as hereinafter
defined) has been recorded in all places necessary or desirable, in Administrative
Agent’s reasonable judgment, to give constructive notice of such Leasehold
Property to third-party purchasers and encumbrancers of the affected real
property.  For purposes of this
definition, the term “Record Document”
means, with respect to any Leasehold Property, (a) the lease evidencing
such Leasehold Property or a memorandum thereof, executed and acknowledged by
the owner of the affected real property, as lessor, or (b) if such
Leasehold Property was acquired or subleased from the holder of a Recorded
Leasehold Interest, the applicable assignment or sublease document, executed
and acknowledged by such holder.


 


“Register” has the meaning assigned to that
term in subsection 2.1F.


 


“Registered Loan” has the meaning assigned to
that term in subsection 2.1F.


 


“Regulation D” means Regulation D of the Board
of Governors, as in effect from time to time.


 


“Reimbursement Date” has the meaning assigned
to that term in subsection 3.3B.


 


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


 


“Release” means any release, spill, emission,
leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of 


 


27

















 


Hazardous Materials into the environment, including the movement of any
Hazardous Materials through the air, soil, surface water or groundwater.


 


“Request for Issuance” means a request
substantially in the form of Exhibit III annexed hereto.


 


“Requisite Lenders” means Lenders having or
holding more than 50% of the Loan Exposure; provided that, in accordance
with subsection 2.9, the Term Loan Exposure and Revolving Loan Exposure of any
Defaulting Lender shall not be included and such Defaulting Lender shall not be
deemed a “Lender” for purposes of calculating Requisite Lenders.


 


“Restatement Date” means December 23,
2009.


 


“Restatement Date Revolving Loans” has the
meaning assigned to that term in subsection 2.1C(i).


 


“Restricted Junior Payment” means (i) any
dividend or other distribution, direct or indirect, on account of any shares of
any class of Capital Stock of Company now or hereafter outstanding, except a
dividend payable solely in Capital Stock, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of Capital Stock of Company now
or hereafter outstanding, (iii) any payment made to retire, or to obtain
the surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of Capital Stock of Company now or hereafter outstanding,
and (iv) any payment or prepayment of principal of, premium, if any, or
interest on, or redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with respect
to, any Subordinated Indebtedness.


 


“Restructuring” has the meaning assigned to that term in the recitals
hereto.


 


“Revolving Lender” means a Lender that has a
Revolving Loan Commitment and/or that has an outstanding Revolving Loan.


 


“Revolving Loan Commitment” means the
commitment of a Revolving Lender to make Revolving Loans to Company pursuant to
subsection 2.1C, and “Revolving Loan
Commitments” means such commitments of all Revolving Lenders in the
aggregate.


 


“Revolving Loan Commitment Amount” means, at
any date, the aggregate amount of the Revolving Loan Commitments of all
Revolving Lenders.


 


“Revolving Loan Commitment Termination Date”
means June 30, 2013.


 


“Revolving Loan Exposure”, with respect to any
Revolving Lender, means, as of any date of determination (i) prior to the
termination of the Revolving Loan Commitments, the amount of that Lender’s
Revolving Loan Commitment, and (ii) after the termination of the Revolving
Loan Commitments, the sum of (a) the aggregate outstanding principal
amount of the Revolving Loans of that Lender plus (b) in the event
that Lender is an Issuing Lender, the aggregate Letter of Credit Usage in
respect of all Letters of Credit issued by that Lender (in each case net of any
participations purchased by other Lenders in such Letters of Credit or in any 


 


28

















 


unreimbursed drawings thereunder) plus (c) the aggregate
amount of all participations purchased by that Lender in any outstanding
Letters of Credit or any unreimbursed drawings under any Letters of Credit.


 


“Revolving Loans” means the Loans (i) continued
pursuant to subsection 2.1A and (ii) made by Revolving Lenders to Company
pursuant to subsection 2.1C.


 


“Revolving Notes” means the amended and
restated revolving promissory notes of Company issued to evidence the Revolving
Loans of any Revolving Lenders, substantially in the form of Exhibit V
annexed hereto.


 


“S&P” means Standard & Poor’s
Ratings Group.


 


“SEC” means the Securities and Exchange
Commission.


 


“Second Lien Agent” means Apollo Laminates
Agent LLC, as Administrative Agent for the Second Lien Lenders under the Second
Lien Credit Agreement.


 


“Second Lien Credit Agreement” means the
Second Lien Credit Agreement dated as of the date hereof by and among Company,
Holdings, the Second Lien Lenders and Second Lien Agent.


 


“Second Lien Credit Documents” means the
Second Lien Credit Agreement and all of the Loan Documents (as defined in the
Second Lien Credit Agreement).


 


“Second Lien Lenders” means the lenders from
time to time party to the Second Lien Credit Agreement.


 


“Second Lien Notes” means one or more of the
term notes issued pursuant to the Second Lien Credit Agreement.


 


“Securities” means any stock, shares,
partnership interests, voting trust certificates, certificates of interest or
participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes, or other evidences of indebtedness, secured
or unsecured, convertible, subordinated, certificated or uncertificated, or
otherwise, or in general any instruments commonly known as “securities.”


 


“Securities Account” has the meaning set forth
in Article 8 of the UCC.


 


“Securities Act” means the Securities Act of
1933, as amended from time to time, and any successor statute.


 


“Security Agreement” means the Amended and
Restated Security Agreement executed and delivered on the Restatement Date,
substantially in the form of Exhibit XII annexed hereto.


 


“Senior Lender Group”  means
the holders of Senior Lender Credit Agreement Claims (as defined in the Plan).


 


29

















 


“Solvent”, with respect to any Person, means
that as of the date of determination (i) the then fair saleable value of
the property of such Person is (a) greater than the total amount of
liabilities (including contingent liabilities) of such Person and (b) not
less than the amount that will be required to pay the probable liabilities on
such Person’s then existing debts as they become absolute and due considering
all financing alternatives and potential asset sales reasonably available to
such Person; (ii) such Person’s capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and (iii) such
Person does not intend to incur, or believe (nor should it reasonably believe)
that it will incur, debts beyond its ability to pay such debts as they become
due.  For purposes of this definition,
the amount of any contingent liability at any time shall be computed as the
amount that, in light of all of the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to become an actual
or matured liability.


 


“SPC” has the meaning assigned to that term in
subsection 10.1B(iii).


 


“Standby Letter of Credit” means any standby
letter of credit or similar instrument issued for the purpose of supporting (i) Indebtedness
of Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers’ compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with
respect to Capital Leases or Operating Leases of Company or any of its
Subsidiaries, (v) performance, payment, deposit or surety obligations of
Company or any of its Subsidiaries, in any case if required by law or
governmental rule or regulation or in accordance with custom and practice
in the industry and (vi) other lawful corporate purposes of Company or any
of its Subsidiaries.


 


“Subject Lender” has the meaning assigned to
that term in subsection 2.10.


 


“Subordinated Indebtedness” means (i) the
Indebtedness of Company incurred pursuant to the Second Lien Credit Agreement,
and (ii) any Indebtedness of Company incurred from time to time and
subordinated in right of payment to the Obligations.


 


“Subsidiary”, with respect to any Person,
means any corporation, partnership, trust, limited liability company,
association, Joint Venture or other business entity of which more than 50% of
the total ordinary voting power of shares of stock or other ownership interests
entitled (without regard to the occurrence of any contingency) to vote in the
election of the members of the Governing Body is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof.


 


“Subsidiary Guarantor” means any Domestic
Subsidiary of Company that executes and delivers a counterpart of the
Subsidiary Guaranty on the Restatement Date or from time to time thereafter
pursuant to subsection 6.8.


 


“Subsidiary Guaranty” means the Amended and
Restated Subsidiary First Lien Guaranty executed and delivered by existing
Domestic Subsidiaries of Company on the Restatement Date and to be executed and
delivered by additional Domestic Subsidiaries of


 


30
















 


Company from time to time
thereafter in accordance with subsection 6.8, substantially in the form of Exhibit XI
annexed hereto.


 


“Supplemental Collateral Agent” has the meaning assigned to
that term in subsection 9.1B.


 


“Swap Counterparty” means a Lender or an
Affiliate of a Lender that has entered into a Hedge Agreement with Company or
one of its Subsidiaries, the obligations under which are secured pursuant to
the Collateral Documents and guarantied pursuant to the Guaranties.


 


“Taking” means a
taking or voluntary conveyance during the term hereof of all or part of any
Existing Mortgaged Property, or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of, any condemnation or
other eminent domain proceeding by any Governmental Authority affecting such
Existing Mortgaged Property or any portion thereof whether or not the same
shall have actually been commenced.


 


“Tax” or “Taxes” means
any and all present or future tax, levy, impost, duty, fee, assessment, deduction,
withholding or other similar charge imposed by a Government Authority,
including interest, penalties, additions to tax and any similar liabilities
with respect thereto.


 


“Term Lender”
means a Lender that has an outstanding Term Loan pursuant to subsection 2.1B.


 


“Term Loan Exposure”, with respect to any
Lender, means, as of any date of determination the outstanding principal amount
of the Term Loan of that Lender.


 


“Term Loans” means the Loans evidenced by this Agreement
continued or given in exchange for a portion of the aggregate principal amount
of the Existing Term Loans and Existing Revolving Loans pursuant to the Plan.  “Term Loan” as to
any Term Lender shall mean the principal amount of such Term Loans set forth on
Schedule 2.1B with respect to such Term Lender.


 


“Term Notes” means those amended and restated promissory notes
of Company issued to evidence the Term Loans of any Lenders, substantially in
the form of Exhibit IV annexed hereto.


 


“Title Company” means one or more title insurance companies
reasonably satisfactory to Administrative Agent.


 


“Total Utilization of Revolving Loan Commitments” means, as at
any date of determination, the sum of (i) the aggregate principal amount
of all outstanding Revolving Loans plus (ii) the Letter of Credit
Usage.


 


“Transaction Costs” means the reasonable,
documented and out of pocket fees, costs and expenses payable by Company in
connection with the transactions contemplated by the Plan, the Restructuring
and the Loan Documents.


 


31

















 


“Trust Funds” shall mean any Cash and Cash Equivalents
constituting (i) accrued and unpaid compensation of Company’s or any of
its Subsidiaries’ employees  (including
salaries, wages and benefits arising under any “employee benefit plan” (as such
term is defined in Section 3(3) of ERISA) that is currently
maintained or contributed to by Company or any of its Subsidiaries), (ii) all
taxes required to be collected or withheld and paid over to a taxing authority
(including, without limitation, payroll taxes and federal and state withholding
taxes (including the employer’s share thereof)) and (iii) other trust or
fiduciary funds, in all cases for which Company or any of its Subsidiaries, or
any of their respective directors, officers or employees would have or would
reasonably be expected to have,  criminal
or personal liability for the failure to pay or remit such amounts to the
appropriate recipient.


 


“Trust Fund Accounts” means all Deposit Accounts
and/or Securities Accounts of any Loan Party containing only Trust Funds.


 


“UCC” means the Uniform Commercial Code as in effect in
any applicable jurisdiction.


 


“Unasserted Obligations” means, at any time,
Obligations for taxes, costs, indemnifications, reimbursements, damages and
other liabilities (except for (i) the principal of and interest on, and
fees relating to, the Indebtedness evidenced by this Agreement and (ii) contingent
reimbursement obligations in respect of amounts that may be drawn under Letters
of Credit) in respect of which no claim or demand for payment has been made
(or, in the case of Obligations for indemnification, no notice for
indemnification has been issued by the Indemnitee) at such time.


 


“Uniform Customs” has the meaning assigned to that term in
subsection 10.14.


 


“United States” means the United States of America.


 


1.2                               Accounting
Terms; Utilization of GAAP for Purposes of Calculations Under Agreement.


 


A.                                   Except as
otherwise expressly provided in this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to them in conformity
with GAAP.  Financial statements and
other information required to be delivered by Company to Lenders pursuant to
this Agreement and calculations in connection with the definitions, covenants
and other provisions of this Agreement shall be prepared in accordance with
GAAP or the application thereof as in effect at the time of such
preparation.  If at any time any change
in GAAP or the application thereof  would
affect the computation of any financial ratio set forth in any Loan Document,
and Company or Requisite Lenders shall so request, Administrative Agent and
Company shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP or the
application thereof  (subject to the
approval of Requisite Lenders), provided that, until so amended, such ratio or
requirement shall continue to be computed in accordance with GAAP or the
application thereof  prior to such change
therein and Company shall provide to Administrative Agent and Lenders
reconciliation statements provided for in subsection 6.1G.


 


32

















 


B.                                     Notwithstanding
anything to the contrary contained herein, financial ratios and other financial
calculations pursuant to this Agreement (other than pursuant to subsection 7.8)
shall, following any Permitted Acquisition or any Asset Sale of a Subsidiary or
operating entity, be calculated on a Pro Forma Basis until the completion of
four full Fiscal Quarters following such transaction (or, in the case of pro
forma adjustments arising out of prospective annual operating expense
reductions attributable to a Permitted Acquisition, such longer period as is
acceptable to the Administrative Agent).


 


C.                                     Notwithstanding
the foregoing, the parties hereto hereby acknowledge and agree that for
purposes of calculating any financial covenant or similar ratio under this
Agreement, Indebtedness shall be valued at par (or par plus accrued
Indebtedness, as appropriate).


 


1.3                               Other
Definitional Provisions and Rules of Construction.


 


A.                                   Any of the
terms defined herein may, unless the context otherwise requires, be used in the
singular or the plural, depending on the reference.


 


B.                                     References to “Sections”
and “subsections” shall be to Sections and subsections of, and the words “herein,”
“hereof,” “hereto” and “hereunder” and words of similar import, respectively,
shall be references to, this Agreement unless otherwise specifically
provided.  Section and subsection
headings in any Loan Document are included herein for convenience of reference
only and shall not constitute a part of this Agreement for any other purpose or
be given any substantive effect.


 


C.                                     The use in any
of the Loan Documents of the word “include” or “including”, when following any
general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as “without limitation” or “but not limited to” or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement, term or matter.


 


D.                                    Unless
otherwise expressly provided herein, (a) references to Organizational
Documents, agreements (including the Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto; and (b) references
to any law shall include all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such law.


 


1.4                               Rounding.


 


Any financial ratios required to be maintained
pursuant to this Agreement (or required to be satisfied in order for a specific
action to be permitted under this Agreement) shall be calculated by dividing
the appropriate component by the other component, carrying the result to one
place more than the number of places by which such ratio is expressed herein
and rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).


 


33

















 


Section 2.                                          AMOUNTS AND
TERMS OF COMMITMENTS AND LOANS


 


2.1                               Existing
Loans; Term Loans; Revolving Loans; Making of Loans; the Register; Optional
Notes.


 


A.                                   Confirmation
of Existing Loans.  Each of
Holdings, Company, each Lender and Administrative Agent hereby confirms and
acknowledges that each Lender has heretofore made Existing Revolving Loans
and/or Existing Term Loans in the principal amounts set forth next to such
Lender’s name on Schedule 2.1A annexed hereto (collectively, “Existing Loans”), the aggregate outstanding principal amount
of which is $193,514,395.19, which amount consists of $25,927,897 in Existing
Revolving Loans and $167,586,498.19 in Existing Term Loans.  Company agrees, ratifies and confirms that
the Existing Loans, together with all accrued and unpaid interest thereon, are
due and owing to Lenders and are not subject to any offset, counterclaims or
defenses of any kind or nature.


 


B.                                     Term
Loans Following the Restructuring.  As of the Restatement Date and after giving
effect to the Plan, the Existing Term Loans shall be reduced to an aggregate
principal amount of $133,115,866.70 as of the Restatement Date, and shall
constitute “Term Loans” under this Agreement.  Term Loan amounts repaid or
prepaid may not be reborrowed.


 


C.                                     Revolving
Loans.  As of the Restatement Date and
after giving effect to the Plan, the Existing Revolving Loans shall be reduced
to an aggregate principal amount of $5,900,000 as of the Restatement Date, and
shall constitute “Revolving Loans” under this Agreement.  Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Company
herein set forth, each Revolving Lender hereby severally agrees to make the
Revolving Loans as follows:


 


(i)                                     Each Revolving
Lender severally agrees, subject to the limitations set forth below with
respect to the maximum amount of Revolving Loans permitted to be outstanding
from time to time, to lend to Company from time to time during the period from
the Restatement Date to but excluding the Revolving Loan Commitment Termination
Date an aggregate amount not exceeding its Pro Rata Share of the aggregate
amount of the Revolving Loan Commitments to be used for the purposes identified
in subsection 2.5B; provided that not more than $5,900,000 of the
Revolving Loans may be made on the Restatement Date (the “Restatement
Date Revolving Loans”).  The
amount of each Revolving Lender’s Revolving Loan Commitment is set forth on Schedule
2.1C annexed hereto and the Revolving Loan Commitment Amount is
$15,000,000, of which $5,000,000 is reserved for Letters of Credit issued in
accordance with Section 3; provided that the amount of the
Revolving Loan Commitment of each Revolving Lender shall be adjusted to give
effect to any assignment of such Revolving Loan Commitment pursuant to
subsection 10.1B and shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsection 2.4.  Each Revolving Lender’s Revolving Loan
Commitment shall expire on the Revolving Loan Commitment Termination Date and
all Revolving Loans and all other amounts owed hereunder with respect to the
Revolving Loans and the Revolving Loan Commitments shall be paid in full no
later than that date.  Amounts borrowed
under this subsection


 


34

















 


2.1C(i) may
be repaid and reborrowed to but excluding the Revolving Loan Commitment
Termination Date.


 


(ii)                                  Anything
contained in this Agreement to the contrary notwithstanding, the Revolving
Loans and the Revolving Loan Commitments shall be subject to the limitation
that in no event shall the Total Utilization of Revolving Loan Commitments at
any time exceed the Revolving Loan Commitment Amount then in effect.


 


D.                                    Borrowing
Mechanics.  Revolving
Loans made as Base Rate Loans on any Funding Date (other than Revolving Loans
made pursuant to subsection 3.3B) shall be in an aggregate minimum amount of
$1,000,000 and multiples of $100,000 in excess of that amount.  Revolving Loans made as Eurodollar Rate Loans
with a particular Interest Period shall be in an aggregate minimum amount of
$1,000,000 and multiples of $100,000 in excess of that amount.  Whenever Company desires that Lenders make
Revolving Loans it shall deliver to Administrative Agent a duly executed Notice
of Borrowing no later than 1:00 P.M. (New York City time) at least three
Business Days in advance of the proposed Funding Date (in the case of a
Eurodollar Rate Loan) or at least one Business Day in advance of the proposed
Funding Date (in the case of a Base Rate Loan). 
Revolving Loans may be continued as or converted into Base Rate Loans
and Eurodollar Rate Loans in the manner provided in subsection 2.2D.  In lieu of delivering a Notice of Borrowing,
Company may give Administrative Agent telephonic notice by the required time of
any proposed borrowing under this subsection 2.1D; provided that such
notice shall be promptly confirmed in writing by delivery of a duly executed
Notice of Borrowing to Administrative Agent on or before the applicable Funding
Date.


 


Neither Administrative Agent nor any Lender shall
incur any liability to Company in acting upon any telephonic notice referred to
above that Administrative Agent believes in good faith to have been given by an
Officer or other person authorized to borrow on behalf of Company.


 


Company shall notify Administrative Agent prior to
the funding of any Loans in the event that any of the matters to which Company
is required to certify in the applicable Notice of Borrowing is no longer true
and correct as of the applicable Funding Date, and the acceptance by Company of
the proceeds of any Loans shall constitute a re-certification by Company, as of
the applicable Funding Date, as to the matters to which Company is required to
certify in the applicable Notice of Borrowing.


 


Except as otherwise provided in subsections 2.6B,
2.6C and 2.6G, a Notice of Borrowing for a Eurodollar Rate Loan (or telephonic
notice in lieu thereof) shall be irrevocable and Company shall be bound to make
a borrowing in accordance therewith.


 


E.                                      Disbursement
of Funds.  All
Revolving Loans under this Agreement shall be made by Lenders simultaneously
and proportionately to their respective Pro Rata Shares, it being understood
that neither Administrative Agent nor any Lender shall be responsible for any
other Lender’s default in its obligation to make a Loan requested hereunder nor
shall the amount of the Commitment of any Lender to make the particular type of
Loan requested or Pro


 


35

















 


Rata Share of any Lender be increased or decreased
as a result of such other Lender’s default in its obligation to make a Loan
requested hereunder.


 


Promptly after receipt by Administrative Agent of a
Notice of Borrowing pursuant to subsection 2.1D (or telephonic notice in lieu
thereof), Administrative Agent shall notify each Revolving Lender.  Each Revolving Lender shall make the amount
of its Revolving Loan available to Administrative Agent at the Funding and
Payment Office not later than 1:00 P.M. (New York City time) on the
applicable Funding Date, in same day funds in Dollars.  Except as provided in subsection 3.3B with
respect to Revolving Loans used to reimburse any Issuing Lender for the amount
of a drawing under a Letter of Credit issued by it, upon satisfaction or waiver
of the conditions precedent specified in subsections 4.1 (in the case of
Revolving Loans made on the Restatement Date) and 4.2 (in the case of all
Revolving Loans), Administrative Agent shall make the proceeds of such
Revolving Loans available to Company on the applicable Funding Date by causing
an amount of same day funds in Dollars equal to the proceeds of all such
Revolving Loans received by Administrative Agent from Revolving Lenders to be
credited to the account designated by Company in the applicable Notice of
Borrowing.


 


Unless Administrative Agent shall have been notified
by any Revolving Lender prior to a Funding Date that such Revolving Lender does
not intend to make available to Administrative Agent such Revolving Lender’s
Pro Rata Share of the Loan requested on such Funding Date, Administrative Agent
may assume that such Revolving Lender has made such amount available to
Administrative Agent on such Funding Date and Administrative Agent may, in its
sole discretion, but shall not be obligated to, make available to Company a
corresponding amount on such Funding Date. 
If such corresponding amount is not in fact made available to
Administrative Agent by such Revolving Lender, Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Revolving
Lender together with interest thereon, for each day from such Funding Date
until the date such amount is paid to Administrative Agent, at the customary
rate set by Administrative Agent for the correction of errors among banks for
three Business Days and thereafter at the Base Rate.  If such Revolving Lender does not pay such
corresponding amount forthwith upon Administrative Agent’s demand therefor,
Administrative Agent shall promptly notify Company and Company shall
immediately pay such corresponding amount to Administrative Agent together with
interest thereon, for each day from such Funding Date until the date such
amount is paid to Administrative Agent, at the rate payable under this
Agreement for the applicable Revolving Loan. 
Nothing in this subsection 2.1E shall be deemed to relieve any Revolving
Lender from its obligation to fulfill its Commitments hereunder or to prejudice
any rights that Company may have against any Lender as a result of any default
by such Lender hereunder.


 


F.                                      The
Register. 
Administrative Agent, acting for these purposes solely as a
non-fiduciary agent of Company (it being acknowledged that Administrative
Agent, in such capacity, and its Related Parties shall constitute Indemnitees under
subsection 10.3), shall maintain (and make available for inspection by Company
and any Lender (solely in respect of its own entries and not that of any other
Lender) upon reasonable prior notice) at its address referred to in subsection
10.7 a register for the recordation of, and shall record, the names and
addresses of Lenders and the respective amounts of the Revolving Loan
Commitment, Term Loans and Revolving Loans (including principal and interest)
of each Lender from time to time (the “Register” and
each such Loan recorded thereon, a “Registered Loan”).  Company,


 


36

















 


Administrative Agent and Lenders shall,
absent manifest error, deem and treat the Persons listed as Lenders in the
Register as the holders and owners of the corresponding Commitments and Loans
listed therein for all purposes hereof; all amounts owed with respect to any
Commitment or Loan shall be owed to the Lender listed in the Register as the
owner thereof; and any request, authority or consent of any Person who, at the
time of making such request or giving such authority or consent, is listed in
the Register as a Lender shall be conclusive and binding on any subsequent
holder, assignee or transferee of the corresponding Commitments or Loans.  Each Lender shall record on its internal
records the amount of its Loans and Commitments and each payment in respect
hereof, and any such recordation shall be conclusive and binding on Company,
absent manifest error, subject to the entries in the Register, which shall,
absent manifest error, govern in the event of any inconsistency with any Lender’s
records.  Failure to make any recordation
in the Register or in any Lender’s records, or any error in such recordation,
shall not affect any Loans or Commitments or any Obligations in respect of any
Loans.


 


G.                                     Optional
Notes.  If so requested by any Lender
by written notice to Company (with a copy to Administrative Agent) at least two
Business Days prior to the Restatement Date or at any time thereafter, Company
shall execute and deliver to such Lender (and/or, if applicable and if so
specified in such notice, to any Person who is an assignee of such Lender
pursuant to subsection 10.1) on the Restatement Date (or, if such notice is
delivered after the Restatement Date, promptly after Company’s receipt of such
notice) a promissory note or promissory notes to evidence such Lender’s Term
Loans or Revolving Loans, substantially in the form of Exhibit IV
or Exhibit V annexed hereto, respectively, with appropriate
insertions.


 


2.2                               Interest
on the Loans.


 


A.                                   Rate of
Interest.  Subject to
the provisions of subsections 2.6 and 2.7, each Term Loan and each Revolving
Loan shall bear interest on the unpaid principal amount thereof from the
Restatement Date through maturity (whether by acceleration or otherwise) at a
rate determined by reference to the Base Rate or the Eurodollar Rate.  The applicable basis for determining the rate
of interest with respect to any Revolving Loan shall be selected by Company
initially at the time a Notice of Borrowing is given with respect to such
Revolving Loan pursuant to subsection 2.1D, and the basis for determining the
interest rate with respect to any Term Loan or any Revolving Loan may be
changed from time to time pursuant to subsection 2.2D.  If on any day a Term Loan or Revolving Loan
is outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
that Loan shall bear interest determined by reference to the Base Rate.


 


(i)                                     Term Loans.  Subject to the provisions of subsections
2.2E, 2.2G and 2.7, the Term Loans shall bear interest through maturity as
follows: (a) if a Base Rate Loan, then at the Base Rate; or (b) if a
Eurodollar Rate Loan, then at the sum of the Eurodollar Rate plus 6.00%.


 


(ii)                                  Revolving Loans.  Subject to the proviso at the end of this
clause (ii) and the provisions of subsections 2.2E, 2.2G and 2.7, the
Revolving Loans shall bear interest through maturity as follows:


 


(a)                                  if a Eurodollar
Rate Loan, then at the sum of the Eurodollar Rate plus 6.00%; or


 


37

















 


(b)                                 if a Base Rate
Loan, then at the Base Rate.


 


B.                                     Interest
Periods.  In connection with each
Eurodollar Rate Loan, Company may, pursuant to the applicable Notice of
Borrowing or Notice of Conversion/Continuation, as the case may be, select an
interest period (each an “Interest Period”)
to be applicable to such Loan, which Interest Period shall be, at Company’s
option, either a one, two, three or six month period or, if deposits in the
interbank Eurodollar market are generally available for such period (as
determined by Administrative Agent), a nine or twelve month period; provided
that:


 


(i)                                     the initial
Interest Period for any Eurodollar Rate Loan shall commence on the Funding Date
in respect of such Loan, in the case of a Loan initially made as a Eurodollar
Rate Loan, or on the date specified in the applicable Notice of
Conversion/Continuation, in the case of a Loan converted to a Eurodollar Rate
Loan;


 


(ii)                                  in the case of
immediately successive Interest Periods applicable to a Eurodollar Rate Loan
continued as such pursuant to a Notice of Conversion/Continuation, each
successive Interest Period shall commence on the day on which the next
preceding Interest Period expires;


 


(iii)                               if an Interest
Period would otherwise expire on a day that is not a Business Day, such
Interest Period shall expire on the next succeeding Business Day; provided
that, if any Interest Period would otherwise expire on a day that is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next succeeding
Business Day;


 


(iv)                              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, subject to clause (v) of this
subsection 2.2B, end on the last Business Day of a calendar month;


 


(v)                                 no Interest
Period with respect to any portion of the Term Loans shall extend beyond December 31,
2013, and no Interest Period with respect to any portion of the Revolving Loans
shall extend beyond the Revolving Loan Commitment Termination Date;


 


(vi)                              no Interest
Period with respect to any Term Loan shall extend beyond a date on which
Company is required to make a scheduled payment of principal of such Term Loan,
unless the sum of (a) the aggregate principal amount of such Term Loan
that is a Base Rate Loan plus (b) the aggregate principal amount of
such Term Loan that is a Eurodollar Rate Loan with Interest Periods expiring on
or before such date equals or exceeds the principal amount required to be paid
on such Term Loan on such date;


 


(vii)                           there shall be
no more than ten Interest Periods outstanding at any time; and


 


38

















 


(viii)                        in the event
Company fails to specify an Interest Period for any Eurodollar Rate Loan in the
applicable Notice of Borrowing or Notice of Conversion/Continuation, Company
shall be deemed to have selected an Interest Period of one month.


 


C.                                     Interest
Payments.  Subject to
the provisions of subsection 2.2E, interest on each Loan shall be payable in
arrears on and to each Interest Payment Date applicable to that Loan, upon any
prepayment of that Loan (to the extent accrued on the amount being prepaid) and
at maturity (including final maturity); provided that, in the event any
Revolving Loans that are Base Rate Loans are prepaid pursuant to subsection
2.4B(i), interest accrued on such Loans through the date of such prepayment
shall be payable on the next succeeding Interest Payment Date applicable to
Base Rate Loans (or, if earlier, at final maturity).


 


D.                                    Conversion
or Continuation.  Subject to
the provisions of subsection 2.6, Company shall have the option (i) to
convert at any time all or any part of its outstanding Term Loans or Revolving
Loans equal to $1,000,000 and multiples of $100,000 in excess of that amount
from Loans bearing interest at a rate determined by reference to one basis to
Loans bearing interest at a rate determined by reference to an alternative
basis or (ii) upon the expiration of any Interest Period applicable to a
Eurodollar Rate Loan, to continue the entire amount of such Loan remaining
outstanding at such time, or to continue any portion of such Loan equal to
$1,000,000 and multiples of $100,000 in excess of that amount, as a Eurodollar
Rate Loan; provided, however, that a Eurodollar Rate Loan may
only be converted into a Base Rate Loan on the expiration date of an Interest
Period applicable thereto.


 


Company shall deliver a duly executed Notice of
Conversion/Continuation to Administrative Agent no later than 1:00 P.M.
(New York City time) at least one Business Day in advance of the proposed
conversion date in the case of a conversion to a Base Rate Loan and at least
three Business Days in advance of the proposed conversion/continuation date (in
the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan).  In lieu of delivering a Notice of
Conversion/Continuation, Company may give Administrative Agent telephonic
notice by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed
in writing by delivery of a duly executed Notice of Conversion/Continuation to
Administrative Agent on or before the proposed conversion/continuation
date.  Administrative Agent shall notify
each Lender of any Loan subject to a Notice of Conversion/Continuation.


 


Except as otherwise provided in subsections 2.6B,
2.6C and 2.6G, a Notice of Conversion/Continuation for conversion to, or
continuation of, a Eurodollar Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable and Company shall be bound to effect a conversion or
continuation in accordance therewith.


 


E.                                      Default
Rate.  Upon the occurrence and during
the continuation of any Event of Default all amounts outstanding under this
Agreement and the other Loan Documents shall bear interest (after as well as
before judgment) payable on demand by Administrative Agent, to the extent
permitted by law, (i) in the case of principal, at a rate that is 2.0% per
annum in excess of the interest rate otherwise payable under this Agreement
with respect to the applicable Loans and (ii) in all other cases
(including post-petition interest in any proceeding


 


39

















 


under the Bankruptcy Code or other applicable
bankruptcy laws), at a rate that is 2.0% per annum in excess of the interest
rate otherwise then payable under this Agreement for Base Rate Loans; provided
that, in the case of Eurodollar Rate Loans, upon the expiration of the Interest
Period in effect at the time any such increase in interest rate is effective,
such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand by Administrative Agent at a rate
which is 2% per annum in excess of the interest rate otherwise then payable
under this Agreement for Base Rate Loans. 
Payment or acceptance of the increased rates of interest provided for in
this subsection 2.2E is not a permitted alternative to timely payment and shall
not constitute a waiver of any Event of Default or otherwise prejudice or limit
any rights or remedies of Administrative Agent or any Lender.


 


F.                                      Computation
of Interest.  Interest on
the Loans shall be computed (i) in the case of Base Rate Loans, on the
basis of a 365-day or 366-day year, as the case may be, and (ii) in the
case of Eurodollar Rate Loans, on the basis of a 360-day year, in each case for
the actual number of days elapsed in the period during which it accrues.  In computing interest on any Loan, the date
of the making of such Loan or the first day of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted from a
Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to
such Base Rate Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest Period applicable to
such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar
Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate
Loan, as the case may be, shall be excluded; provided that if a Loan is
repaid on the same day on which it is made, one day’s interest shall be paid on
that Loan.


 


G.                                     Maximum
Rate.  Notwithstanding the foregoing
provisions of this subsection 2.2, in no event shall the rate of interest
payable by Company with respect to any Loan exceed the maximum rate of interest
permitted to be charged under applicable law.


 


2.3                               Fees.


 


A.                                   Facility
Fee.  Company agrees to pay to
Administrative Agent, for distribution to each Revolving Lender in proportion
to that Lender’s Pro Rata Share, a facility fee equal to 1.0% per annum on the
daily unused amount of the Revolving Loan Commitment of such Revolving Lender
during the Fiscal Quarter preceding the date of payment of such facility fee
(or other period commencing with the Restatement Date or ending with the
Revolving Loan Commitment Termination Date or the date on which the Revolving
Loan Commitments of such Revolving Lender shall expire or be terminated)


 


All facility fees payable hereunder shall be
calculated on the basis of a 360-day year and the actual number of days elapsed
and to be payable quarterly in arrears on (i) the last Business Day of
each March, June, September and December of each year, commencing on
the first such date to occur after the Restatement Date, and (ii) the
Revolving Loan Commitment Termination Date.


 


B.                                     Other Fees.  Company
agrees to pay to Administrative Agent such fees in the amounts and at the times
separately agreed upon between Company and Administrative Agent.


 


40
















 


2.4                               Repayments,
Prepayments and Reductions of Commitments and Loans; General Provisions
Regarding Payments; Application of Proceeds of Collateral and Payments Under
Guaranties.


 


A.                                   Scheduled
Payments of Term Loans. 
Company shall make principal payments on the Term Loans in installments
on the dates and in the amounts set forth below:


 


	
  Date

  	
   

  	
  Scheduled Repayment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  December 31, 2012

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  June 30, 2013

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  December 31, 2013

  	
   

  	
  $

  	
  130,115,866.70

  	
   

  
	
  Total

  	
   

  	
  $

  	
  133,115,866.70

  	
   

  



 


; provided that the
scheduled installments of principal of the Term Loans set forth above shall be
reduced in connection with any voluntary or mandatory prepayments of the Term
Loans in accordance with subsection 2.4B(iv); and provided, further
that the Term Loans and all other amounts owed hereunder with respect to the
Term Loans shall be paid in full no later than December 31, 2013, and the
final installment payable by Company in respect of the Term Loans on such date
shall be in an amount, if such amount is different from that specified above,
sufficient to repay all amounts owing by Company under this Agreement with
respect to the Term Loans.


 


B.                                     Prepayments
and Reductions in Revolving Loan Commitment Amount and Loans.


 


(i)                                     Voluntary
Prepayments.  Company
may, upon not less than one Business Day’s prior written or telephonic notice,
in the case of Base Rate Loans, and three Business Days’ prior written or telephonic
notice, in the case of Eurodollar Rate Loans, in each case given to
Administrative Agent by 1:00 P.M. (New York City time) on the date
required and, if given by telephone, promptly confirmed in writing to
Administrative Agent, who will promptly notify each Lender whose Loans are to
be prepaid of such prepayment, at any time and from time to time prepay,
without premium or penalty but subject to subsection 2.6D, any Term Loans or
Revolving Loans on any Business Day in whole or in part in an aggregate minimum
amount of $1,000,000 and multiples of $100,000 in excess of that amount.  All written notices delivered pursuant to
this subsection 2.4B(i) shall be in the form of a Notice of Prepayment and
all notices whether written or telephonic delivered pursuant to this subsection
2.4B(i) shall be irrevocable, and once given as aforesaid, the principal
amount of the Loans specified in such notice shall become due and payable on
the prepayment date specified therein; provided, however, that
notwithstanding anything to the contrary contained in this Agreement, Company
may rescind a Notice of Prepayment under this subsection 2.4B(i) and/or
subsection 2.4B(ii) if such prepayment would have resulted from a
refinancing of


 


41

















 


the
Commitments and Loans outstanding hereunder, which refinancing shall not be
consummated or shall otherwise be delayed. 
Any such voluntary prepayment shall be applied as specified in
subsection 2.4B(iv).


 


(ii)                                  Voluntary
Reductions of Revolving Loan Commitments.  Company may, upon not less than three
Business Days’ prior written or telephonic notice confirmed in writing to
Administrative Agent, or upon such lesser number of days’ prior written or
telephonic notice, as determined by Administrative Agent in its sole
discretion, at any time and from time to time, terminate in whole or
permanently reduce in part, without premium or penalty, the Revolving Loan
Commitment Amount in an amount up to the amount by which the Revolving Loan
Commitment Amount exceeds the Total Utilization of Revolving Loan Commitments
at the time of such proposed termination or reduction; provided that any
such partial reduction of the Revolving Loan Commitment Amount shall be in an
aggregate minimum amount of $1,000,000 and multiples of $100,000 in excess of
that amount.  The Notice of Prepayment
shall designate the date (which shall be a Business Day) of such termination or
reduction and the amount of any partial reduction, and such termination or
reduction shall be effective on the date specified in Company’s notice and
shall reduce the amount of the Revolving Loan Commitment of each Revolving
Lender proportionately to its Pro Rata Share. 
Administrative Agent will promptly notify each Revolving Lender of such
notice.  Any such voluntary reduction of
the Revolving Loan Commitment Amount shall be applied as specified in
subsection 2.4B(iv)(b)(3).  All written
notices delivered pursuant to this subsection 2.4B(ii) shall be in the
form of a Notice of Prepayment, all notices, whether written or telephonic,
delivered pursuant to this subsection 2.4B(ii) shall be, subject to the
proviso set forth in subsection 2.4B(i), irrevocable and Company shall be bound
to the termination or reduction of the Revolving Loan Commitments referenced in
such notice.


 


(iii)                               Mandatory
Prepayments.  The Loans
shall be prepaid in the amounts and under the circumstances (including the
giving of the Notice of Prepayment and Officer’s Certificate required by
subsection 2.4B(iii)(g)), set forth below, all such prepayments to be applied
as provided in subsection 2.4B(iv) or as more specifically provided in
subsection 2.4D:


 


(a)                                  Prepayments
from Net Asset Sale Proceeds.  No later than the date which is ten (10) Business
Days after the date of receipt by Company or any Subsidiary Guarantor of any
Net Asset Sale Proceeds, Company shall either (1) prepay the Loans in an
aggregate amount equal to such Net Asset Sale Proceeds or (2) with respect
to any Asset Sale pursuant to subsection 7.7B(vi), so long as no Event of
Default shall have occurred and be continuing, deliver to Administrative Agent
an Officer’s Certificate setting forth (x) that portion of such Net Asset
Sale Proceeds that Holdings, Company or such Subsidiary intends to reinvest or
cause to be reinvested in the business of Company or a Subsidiary Guarantor
within 360 days of such date of receipt and (y) such other information
with respect to such reinvestment as Administrative Agent may reasonably
request.  Company shall, no later than
360 days after receipt of such Net Asset Sale Proceeds that have not
theretofore been applied to the Obligations or that


 


42

















 


have
not been so reinvested as provided above, make a prepayment of the Loans in the
full amount of all such Net Asset Sale Proceeds.


 


(b)                                 Prepayments
from Net Insurance/Condemnation Proceeds.  No later than the date which is ten (10) Business
Days after the date of receipt by Company or any Subsidiary Guarantor of any
Net Insurance/Condemnation Proceeds, Company shall either (1) prepay the
Loans in an aggregate amount equal to such Net Insurance/Condemnation Proceeds
or (2), so long as no Event of Default shall have occurred and be continuing,
deliver to Administrative Agent an Officer’s Certificate setting forth (x) that
portion of such Net Insurance/Condemnation Proceeds that Holdings, Company or
such Subsidiary intends to reinvest or cause to be reinvested in the business
of Company or a Subsidiary Guarantor within 360 days of such date of receipt
and (y) such other information with respect to such reinvestment as
Administrative Agent may reasonably request. 
Company shall, no later than 360 days after receipt of such Net
Insurance/Condemnation Proceeds that have not theretofore been applied to the
Obligations or that have not been so reinvested as provided above, make a
prepayment of the Loans in the full amount of all such Net
Insurance/Condemnation Proceeds.


 


(c)                                  Prepayments Due
to Issuance of Equity Securities.


 


(1)                                  No later than
the date which is five (5) Business Days after the date of receipt of the
Net Securities Proceeds from the issuance of any Capital Stock of Holdings or
Company (but excluding the Net Securities Proceeds of any issuance of Capital
Stock in connection with (1) the making of any Investment permitted by
subsection 7.3(xv) or 7.3(xvi), (2) a Permitted Cure Issuance (which Net
Securities Proceeds shall be applied pursuant to clause (2) of this
subsection 2.4B(iii)(c)) and (3) issuances of Capital Stock of Company to
Holdings), Company shall prepay the Loans in an aggregate amount equal to 50%
of such Net Securities Proceeds; provided, however, that if the
Consolidated Total Leverage Ratio is less than or equal to (y) 2.75:1.00
as of the last day of the most recently ended Fiscal Quarter, then Company
shall instead prepay the Loans in an aggregate amount equal to 25% of such Net
Securities Proceeds, and (z) 1.75:1.00 as of the last day of the most
recently ended Fiscal Quarter, then Company shall not be required to prepay the
Loans with any of such Net Securities Proceeds.


 


(2)                                  No later than
the date which is five (5) Business Days after the date of receipt of the
Net Securities Proceeds of any issuance of Capital Stock in connection with a
Permitted Cure Issuance, Company shall prepay the Loans in an aggregate amount
equal to 100% of such Net Securities Proceeds.


 


(d)                                 Prepayments Due
to Issuance of Indebtedness.  No later than the date which is five (5) Business
Days after the date of receipt of (1) the


 


43

















 


Net
Securities Proceeds from the issuance of any Indebtedness of Company, Holdings
or any of its Domestic Subsidiaries after the Restatement Date, other than
Indebtedness not prohibited pursuant to subsection 7.1, or (2) the Net Securities
Proceeds from the issuance of any Indebtedness of a Canadian Subsidiary
pursuant to subsection 7.1(xvii), Company shall prepay the Loans in an
aggregate amount equal to such Net Securities Proceeds.


 


(e)                                  Prepayments
from Excess Cash.


 


(1)                                  No later than February 1,
2010 Company shall prepay the Loans in an aggregate amount equal to 100% of the
Cash and Cash Equivalents reflected on Company’s consolidated balance sheet as
at December 31, 2009 (including, without limitation, the amount of any
Outstanding Tax Refunds received on or prior to December 31, 2009) in
excess of $20,000,000 of Liquidity, if any.


 


(2)                                  In the event
that there shall be Consolidated Excess Cash Flow for any Fiscal Year
(commencing with Fiscal Year 2010), Company shall, no later than the date which
is five (5) Business Days after the audited financial statements are
required to be delivered pursuant to subsection 6.1D(ii), prepay the Loans in
an aggregate amount equal to 100% of such Consolidated Excess Cash Flow; provided,
however, that if the Consolidated Senior Leverage Ratio is less than or
equal to (1) 5.00:1.00 as of the last day of the most recently ended
Fiscal Quarter, then Company shall instead prepay the Loans in an aggregate
amount equal to 75% of such Consolidated Excess Cash Flow, and (2) 4.00:1.00
as of the last day of the most recently ended Fiscal Quarter, then Company
shall instead prepay the Loans in an aggregate amount equal to 50% of such
Consolidated Excess Cash Flow; provided, further, that the amount
payable under this subsection 2.4B(iii)(e) with respect to any Fiscal Year
shall be reduced on a dollar-for-dollar basis by the amount of voluntary
prepayments of the Term Loans and voluntary reductions of the Revolving Loan
Commitments made during such Fiscal Year.


 


(f)                                    Prepayments
from Outstanding Tax Refunds.  No later than the date which is five (5) Business
Days after the date of receipt by any Loan Party of any Outstanding Tax Refunds
(if such date of receipt is on or after January 1, 2010), Company shall
prepay the Loans in an aggregate amount equal to 100% of such Outstanding Tax
Refunds received after January 1, 2010.


 


(g)                                 Calculations of
Net Proceeds Amounts; Additional Prepayments Based on Subsequent Calculations.  Company shall provide Administrative Agent
with not less than one Business Day’s prior written notice by delivery of a
Notice of Prepayment or prior telephonic notice promptly confirmed in writing
by the delivery of a Notice of Prepayment, of any prepayment of the Loans
pursuant to subsections 2.4B(iii)(a)-(f). 
Such written or telephonic notice shall be irrevocable and Company shall
be bound to make the


 


44

















 


mandatory
prepayment referenced in such notice on the date indicated in such notice.  Administrative Agent shall promptly notify
each Lender of such prepayment and of the amount of the prepayment proposed to
be applied to such Lender’s Loans. 
Concurrently with any prepayment of the Loans, Company shall deliver to
Administrative Agent an Officer’s Certificate demonstrating the calculation of
the amount of the applicable Net Asset Sale Proceeds, Net
Insurance/Condemnation Proceeds, Net Securities Proceeds, or Consolidated
Excess Cash Flow, as the case may be, that gave rise to such prepayment.  In the event that Company shall subsequently
determine that the actual amount was greater than the amount set forth in such
Officer’s Certificate, Company shall promptly make an additional prepayment of
the Loans in an amount equal to the amount of such excess, and Company shall
concurrently therewith deliver to Administrative Agent an Officer’s Certificate
demonstrating the derivation of the additional amount resulting in such excess.


 


(h)                                 Prepayments Due
to Reductions of Revolving Loan Commitment Amount.  Company shall from time to time prepay the
Revolving Loans (and, after prepaying all Revolving Loans, Cash collateralize
any outstanding Letters of Credit by depositing the requisite amount in the
Collateral Account) to the extent necessary so that the Total Utilization of
Revolving Loan Commitments shall not at any time exceed the Revolving Loan
Commitment Amount then in effect.  At
such time as the Total Utilization of Revolving Loan Commitments shall be equal
to or less than the Revolving Loan Commitment Amount, if no Event of Default
has occurred and is continuing, to the extent any Cash collateral was provided
by Company and has not been applied to any Obligations as provided in the
Security Agreement, such amount shall automatically be released to Company.


 


(iv)                              Application of
Prepayments and Reductions of Commitments and Loans.


 


(a)                                  Application of
Voluntary Prepayments by Type of Loans and Order of Maturity.  Any voluntary prepayments pursuant to
subsection 2.4B(i) shall be applied as specified by Company in the
applicable Notice of Prepayment; provided that in the event Company fails to
specify the Loans to which any such prepayment shall be applied, such
prepayment shall be applied first to repay outstanding Revolving Loans to the
full extent thereof, and second to repay outstanding Term Loans to the full
extent thereof on a pro rata basis (in accordance with the respective
outstanding principal amounts thereof) by application of such prepayment in
direct chronological order to any unpaid installments of principal of the Term
Loans.


 


(b)                                 Application of
Mandatory Prepayments by Type of Loans.


 


(1)                                  Subject to the
terms of subsection 2.4D and clause (2) of this subsection 2.4B(iv)(b),
any amount required to be applied as a mandatory prepayment of the Loans shall
be applied to prepay all


 


45

















 


outstanding
Loans proportionately to each Lender’s Pro Rata Share (as determined pursuant
to clause (iii) of the definition of “Pro Rata Share”); provided
that to the extent that any Revolving Lender’s Pro Rata Share of the applicable
prepayment is in excess of the amount of such Revolving Lender’s outstanding
Revolving Loans (the “Prepayment Excess”),
the amount of the Prepayment Excess shall be applied as an additional prepayment
of such Revolving Lender’s outstanding Term Loans; provided, further,
that if the Prepayment Excess is in excess of the amount of such Revolving
Lender’s outstanding Term Loans, such excess shall be deposited in the
Collateral Account to Cash collateralize any outstanding Letters of Credit; provided,
further, that if there still remains a Prepayment Excess once all
outstanding Letters of Credit have been Cash collateralized, the remaining
amount of the Prepayment Excess shall be deposited in the Collateral Account to
Cash collateralize such Revolving Lender’s Revolving Loan Commitment (and then
all other Revolving Loan Commitments); and provided, further,
that if any amount of the Prepayment Excess still remains once all Revolving
Loan Commitments have been Cash collateralized, such remaining amount shall be
applied as an additional prepayment of all outstanding Term Loans
proportionately to each Term Lender’s Pro Rata Share.


 


(2)                                  Notwithstanding
the foregoing, if at the time of any mandatory prepayment, the Revolving Loan
Commitments have been terminated, such mandatory prepayment shall be first,
applied to prepay the Term Loans to the full extent thereof, second, to
the extent of any remaining portion of such prepayment, applied to prepay the
Revolving Loans to the full extent thereof, and third, to the extent of
any still remaining portion of such prepayment, deposited in the Collateral
Account to Cash collateralize any outstanding Letters of Credit.


 


(3)                                  Any mandatory
reduction of the Revolving Loan Commitment Amount pursuant to this subsection
2.4B shall be in proportion to each Revolving Lender’s Pro Rata Share.


 


(c)                                  Application of
Mandatory Prepayments of Term Loans and the Scheduled Installments of Principal
Thereof.  Except as provided in subsection
2.4D, any mandatory prepayments of the Term Loans pursuant to subsection 2.4B(iii) shall
be applied first, to reduce in direct chronological order any unpaid
installments of principal of the Term Loans scheduled to be made within the
first twelve months from the date of such prepayment and, second, to reduce the
remaining scheduled installments of principal of the Term Loans on a pro rata
basis (in accordance with the respective outstanding principal amounts
thereof).


 


(d)                                 Application of
Prepayments to Base Rate Loans and Eurodollar Rate Loans.  Considering Term Loans and Revolving Loans
being prepaid separately, any prepayment thereof shall be applied first to Base
Rate


 


46

















 


Loans
to the full extent thereof before application to Eurodollar Rate Loans, in each
case in a manner that minimizes the amount of any payments required to be made
by Company pursuant to subsection 2.6D; provided, however, that Company may
elect that the remainder of such prepayments not applied to prepay Base Rate
Loans be deposited in the Collateral Account and applied thereafter to prepay
the Eurodollar Rate Loan or Loans with Interest Periods expiring on a date or
dates nearest the date of deposit in accordance with this subsection 2.4B(iv),
upon expiration of such Interest Periods.


 


C.                                     General
Provisions Regarding Payments.


 


(i)                                     Manner and Time
of Payment.  All
payments by Company of principal, interest, fees and other Obligations shall be
made in Dollars in same day funds, without defense, setoff or counterclaim,
free of any restriction or condition, and delivered to Administrative Agent not
later than 3:00 P.M. (New York City time) on the date due at the Funding
and Payment Account for the account of Lenders; funds received by Administrative
Agent after that time on such due date shall be deemed to have been paid by
Company on the next succeeding Business Day. 
Notwithstanding the foregoing, payments of amounts deposited in the
Collateral Account pursuant to the proviso to subsection 2.4B(iv)(d) shall
be deemed to have been paid by Company on the applicable date or dates such
amounts are applied to prepay Eurodollar Rate Loans and Company hereby
authorizes Administrative Agent to charge the Collateral Account in order to
cause timely payment to be made to Administrative Agent of such Eurodollar Rate
Loans.


 


(ii)                                  Application of
Payments to Principal and Interest.  Except as provided in subsection 2.2C, all
payments in respect of the principal amount of any Loan shall include payment of
accrued interest on the principal amount being repaid or prepaid, and all such
payments shall be applied to the payment of interest before application to
principal.


 


(iii)                               Apportionment
of Payments.  Aggregate
principal and interest payments in respect of Term Loans and Revolving Loans
shall be apportioned among all outstanding Loans to which such payments relate,
in each case proportionately to Lenders’ respective Pro Rata Shares; provided,
that all payments in respect of Revolving Loans shall first be applied in the
following priority to repay any amounts owing to Issuing Lenders due to the
failure of any Revolving Lender to (A) fund a Revolving Loan for the
purpose of repaying any unreimbursed amounts of a drawing under a Letter of
Credit pursuant to subsection 3.3B or (B) fund a participation in any such
unreimbursed Letter of Credit drawing pursuant to subsection 3.3C.  Administrative Agent shall promptly
distribute to each Lender, at the account specified in the payment instructions
delivered to Administrative Agent by such Lender, its Pro Rata Share of all
such payments received by Administrative Agent and the facility fees and letter
of credit fees of such Lender, if any, when received by Administrative Agent
pursuant to subsections 2.3 and 3.2.  Notwithstanding
the foregoing provisions of this subsection 2.4C(iii), if, pursuant to the
provisions of subsection 2.6C, any Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate
Loans


 


47

















 


in
lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent
shall give effect thereto in apportioning interest payments received
thereafter.


 


(iv)                              Payments and
Performance on Business Days.  Whenever any payment or performance to be
made hereunder shall be stated to be due on a day that is not a Business Day,
subject to the provisions of subsection 2.2B with respect to payments of
interest on Eurodollar Rate Loans, such payment or performance shall be made on
the next succeeding Business Day.


 


(v)                                 Notation of
Payment.  Each Lender agrees that before
disposing of any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all Loans
evidenced by that Note and all principal payments previously made thereon and
of the date to which interest thereon has been paid; provided that the
failure to make (or any error in the making of) a notation of any Loan made
under such Note shall not limit or otherwise affect the obligations of Company
hereunder or under such Note with respect to any Loan or any payments of
principal or interest on such Note.


 


D.                                    Application
of Proceeds of Collateral and Payments after Event of Default.  Upon the occurrence and during the
continuation of an Event of Default, if requested by Requisite Lenders, or upon
acceleration of the Obligations pursuant to Section 8, (a) all
payments received by Administrative Agent, whether from Company, Holdings or
any Subsidiary Guarantor or otherwise, and (b) all proceeds received by
Administrative Agent in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral under any Collateral
Document may, in the discretion of Administrative Agent, be held by
Administrative Agent as Collateral for, and/or (then or at any time thereafter)
applied in full or in part by Administrative Agent, in each case in the
following order of priority:


 


(i)                                     to the payment
of all costs and expenses of such sale, collection or other realization, all
other expenses, liabilities and advances made or incurred by Administrative
Agent in connection therewith, and all amounts for which Administrative Agent
is entitled to compensation (including the fees described in subsection 2.3),
reimbursement and indemnification under any Loan Document and all advances made
by Administrative Agent thereunder for the account of the applicable Loan
Party, and to the payment of all costs and expenses paid or incurred by
Administrative Agent in connection with the Loan Documents, all in accordance
with subsections 9.4, 10.2 and 10.3 and the other terms of this Agreement and
the Loan Documents;


 


(ii)                                  thereafter, to
the Cash collateralization of any outstanding Letter of Credit (by deposit of
the applicable amount into the Collateral Account);


 


(iii)                               thereafter, to
the payment of all other Obligations and obligations of Loan Parties under any
Hedge Agreement between a Loan Party and a Swap Counterparty for the ratable
benefit of the holders thereof (subject to the provisions of subsection 2.4C(ii) hereof);
and


 


48

















 


(iv)                              thereafter, to
the payment to or upon the order of such Loan Party or to whosoever may be
lawfully entitled to receive the same or as a court of competent jurisdiction
may direct.


 


2.5                                 Use of Proceeds.


 


A.                                   [Reserved.]


 


B.                                     Revolving
Loans.  The proceeds of any Revolving
Loans made hereunder shall be applied by Company for working capital and other
general corporate purposes, which may include the making of intercompany loans
to any of Company’s Domestic Subsidiaries, in accordance with subsection
7.1(iv), for their own general corporate purposes (including the payment of any
expenses incurred in connection with the Restructuring) and Investments
permitted by subsection 7.3.


 


C.                                     Margin
Regulations.  No portion
of the proceeds of any borrowing under this Agreement shall be used by Company
or any of its Subsidiaries in any manner that would cause the borrowing or the
application of such proceeds to violate Regulation U, Regulation T or
Regulation X of the Board of Governors or any other regulation of the Board of
Governors or to violate the Exchange Act, in each case as in effect on the date
or dates of such borrowing and such use of proceeds.


 


2.6                                 Special Provisions Governing
Eurodollar Rate Loans.


 


Notwithstanding any other provision of this
Agreement to the contrary, the following provisions shall govern with respect
to Eurodollar Rate Loans as to the matters covered:


 


A.                                   Determination
of Applicable Interest Rate.  On each Interest Rate Determination Date,
Administrative Agent shall determine in accordance with the terms of this
Agreement (which determination shall, absent manifest error, be conclusive and
binding upon all parties) the interest rate that shall apply to the Eurodollar
Rate Loans for which an interest rate is then being determined for the
applicable Interest Period and shall promptly give notice thereof (in writing
or by telephone confirmed in writing) to Company and each applicable Lender.


 


B.                                     Inability
to Determine Applicable Interest Rate.  In the event that Administrative Agent shall
have determined (which determination shall be conclusive and binding upon all
parties hereto), on any Interest Rate Determination Date that by reason of
circumstances affecting the interbank Eurodollar market adequate and reasonable
means do not exist for ascertaining the interest rate applicable to such Loans
on the basis provided for in the definition of Eurodollar Rate, Administrative Agent
shall on such date give notice (by telefacsimile or by telephone confirmed in
writing) to Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans until such time as
Administrative Agent notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of Borrowing or
Notice of Conversion/Continuation given by Company with respect to the Loans in
respect of which such determination was made shall be deemed to be for a Base
Rate Loan.


 


49

















 


C.                                     Illegality
of Eurodollar Rate Loans.  In
the event that on any date any Lender shall have determined (which
determination shall be conclusive and binding upon all parties hereto but shall
be made only after consultation with Company and Administrative Agent) that the
making, maintaining or continuation of its Eurodollar Rate Loans has become
unlawful as a result of compliance by such Lender in good faith with any law,
treaty, governmental rule, regulation, guideline or order, then, and in any
such event, such Lender shall be an “Affected Lender”
and it shall on that day give notice (by telefacsimile or by telephone
confirmed in writing) to Company and Administrative Agent of such
determination.  Administrative Agent
shall promptly notify each other Lender of the receipt of such notice.  Thereafter (i) the obligation of the
Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans
shall be suspended until such notice shall be withdrawn by the Affected Lender,
(ii) to the extent such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by Company pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, the Affected Lender shall
make such Loan as (or convert such Loan to, as the case may be) a Base Rate
Loan, (iii) the Affected Lender’s obligation to maintain its outstanding
Eurodollar Rate Loans (the “Affected Loans”)
shall be terminated at the earlier to occur of the expiration of the Interest
Period then in effect with respect to the Affected Loans or when required by
law, and (iv) the Affected Loans shall automatically convert into Base
Rate Loans on the date of such termination. 
Notwithstanding the foregoing, to the extent a determination by an
Affected Lender as described above relates to a Eurodollar Rate Loan then being
requested by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Administrative Agent of such rescission
on the date on which the Affected Lender gives notice of its determination as
described above.  Administrative Agent
shall promptly notify each other Lender of the receipt of such notice.  Except as provided in the immediately
preceding sentence, nothing in this subsection 2.6C shall affect the obligation
of any Lender other than an Affected Lender to make or maintain Loans as, or to
convert Loans to, Eurodollar Rate Loans in accordance with the terms of this
Agreement.


 


D.                                    Compensation
For Breakage or Non-Commencement of Interest Periods.  Company shall compensate each Lender, upon
written request by that Lender pursuant to subsection 2.8, for all reasonable
losses, expenses and liabilities (including any interest paid by that Lender to
lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and
any loss, expense or liability sustained by that Lender in connection with the
liquidation or re-employment of such funds) which that Lender may sustain:  (i) if for any reason (other than a
default by that Lender) a borrowing of any Eurodollar Rate Loan does not occur
on a date specified therefor in a Notice of Borrowing or a telephonic request
therefor, or a conversion to or continuation of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Conversion/Continuation
or a telephonic request therefor, (ii) if any prepayment or other
principal payment or any conversion of any of its Eurodollar Rate Loans
(including any prepayment or conversion occasioned by the circumstances
described in subsection 2.6C) occurs on a date prior to the last day of an
Interest Period applicable to that Loan, (iii) if any prepayment of any of
its Eurodollar Rate Loans is not made on any date specified in a Notice of
Prepayment given by Company, or (iv) as a consequence of any other default
by Company in the repayment of its Eurodollar Rate Loans when required by the
terms of this Agreement.


 


50
















 


E.                                      Booking
of Eurodollar Rate Loans.  Any
Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the
account of any of its branch offices or the office of an Affiliate of that
Lender.


 


F.                                      Assumptions
Concerning Funding of Eurodollar Rate Loans.  Calculation of all amounts payable to a
Lender under this subsection 2.6 and under subsection 2.7A shall be made as
though that Lender had funded each of its Eurodollar Rate Loans through the
purchase of a Eurodollar deposit bearing interest at the greater of the rates
obtained pursuant to clause (a) and clause (b)(i) of the definition
of Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate
Loan and having a maturity equivalent to the relevant Interest Period, whether
or not its Eurodollar Rate Loans had been funded in such manner.


 


G.                                     Eurodollar
Rate Loans After Default. 
After the occurrence of and during the continuation of an Event of
Default, (i) Company may not elect to have a Loan be made or maintained
as, or converted to, a Eurodollar Rate Loan after the expiration of any
Interest Period then in effect for that Loan and (ii) subject to the
provisions of subsection 2.6D, any Notice of Borrowing or Notice of
Conversion/Continuation given by Company with respect to a requested borrowing
or conversion/continuation that has not yet occurred shall be deemed to be for
a Base Rate Loan or, if the conditions to making a Loan set forth in subsection
4.2 cannot then be satisfied, to be rescinded by Company.


 


2.7                               Increased
Costs; Taxes; Capital Adequacy.


 


A.                                   Compensation
for Increased Costs.  Subject to the provisions of
subsection 2.7B (which shall be controlling with respect to the matters covered
thereby), in the event that any Lender (including any Issuing Lender) shall
reasonably determine (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto) that any Change in
Law:


 


(i)                                     imposes,
modifies or holds applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets held by, or deposits or
other liabilities in or for the account of, or advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of such
Lender (other than any such reserve or other requirements with respect to
Eurodollar Rate Loans that are reflected in the definition of Eurodollar Rate);
or


 


(ii)                                  imposes any other condition (other than
with respect to Taxes) on or affecting such Lender or its obligations hereunder
or the interbank Eurodollar market;


 


and the result of any of the foregoing is to increase the cost to such
Lender of agreeing to make, making or maintaining its Loans or Commitments or
agreeing to issue, issuing or maintaining any Letter of Credit or agreeing to
purchase, purchasing or maintaining any participation therein or to reduce any
amount received or receivable by such Lender with respect thereto; then, in any
such case, Company shall promptly pay to such Lender, upon receipt of the
statement referred to in subsection 2.8A, such additional amount or amounts (in
the form of an increased rate of, or a different method of calculating,
interest or otherwise as such Lender shall reasonably determine) as may be
necessary to compensate such Lender for any such increased cost or reduction in


 


51

















 


amounts received or
receivable hereunder.  Company shall not
be required to compensate a Lender pursuant to this subsection 2.7A for any
increased cost or reduction in respect of a period occurring more than ninety
(90) days prior to the date on which such Lender notifies Company of such
Change in Law and such Lender’s intention to claim compensation therefor,
except, if the Change in Law giving rise to such increased cost or reduction is
retroactive, no such time limitation shall apply to such retroactive period so
long as such Lender requests compensation within ninety (90) days from the date
on which the applicable Government Authority informed such Lender of such
Change in Law.


 


B.                                     Taxes.


 


(i)                                     Payments to Be
Free and Clear.  Any and all
payments by or on account of any obligation of Company under this Agreement and
the other Loan Documents shall be made free and clear of, and without any
deduction or withholding on account of, any Indemnified Taxes or Other Taxes
(which Other Taxes Company shall pay to the relevant Government Authority in
accordance with applicable law).


 


(ii)                                  Grossing-up of
Payments.  If Company
or any other Loan Party is required by law to make any deduction or withholding
on account of any Tax from any sum paid or payable by Company to Administrative
Agent or any Lender under any of the Loan Documents:


 


(a)                                  Company or such
Loan Party, as the case may be, shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company or such
Loan Party, as the case may be, becomes aware of it;


 


(b)                                 Company or such
Loan Party, as the case may be, shall timely pay any such Tax to the relevant
Government Authority when such Tax is due, in accordance with applicable law;


 


(c)                                  unless such Tax
is an Excluded Tax, the sum payable by Company shall be increased to the extent
necessary to ensure that, after making the required deductions (including
deductions applicable to additional sums payable under this subsection
2.7B(ii)), Administrative Agent or such Lender, as the case may be, receives on
the due date a net sum equal to the sum it would have received had no such
deduction been required or made; and


 


(d)                                 within 30 days
after paying any sum from which it is required by law to make any such
deduction, and within 30 days after the due date of payment of any Tax which it
is required by clause (b) above to pay, Company shall deliver to
Administrative Agent the original or a certified copy of an official receipt or
other document reasonably satisfactory to the Administrative Agent and other
affected parties to evidence the payment and its remittance to the relevant
Government Authority.


 


(iii)                               Indemnification
by Company.  Company
shall indemnify Administrative Agent and each Lender, within 30 days after
demand therefor, for the full


 


52

















 


amount
of any Indemnified Taxes or Other Taxes (including for the full amount of any
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this subsection 2.7B(iii)) paid by Administrative Agent
or such Lender, as the case may be, and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Government Authority.  A
certificate as to the amount of such payment or liability delivered to Company
by a Lender (with a copy to Administrative Agent), or by Administrative Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.


 


(iv)                              Tax Status of
Lenders.  Unless not legally entitled to
do so:


 


(a)                                  any Lender, if
requested by Company or Administrative Agent, shall deliver such forms or other
documentation prescribed by applicable law or reasonably requested by Company
or Administrative Agent as will enable Company or Administrative Agent to
determine whether or not such Lender is subject to backup withholding or
information reporting requirements;


 


(b)                                 any Foreign
Lender that is entitled to an exemption from or reduction of any Tax with
respect to payments hereunder or under any other Loan Document shall deliver to
Company and Administrative Agent, on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter,
as may be necessary in the determination of Company or Administrative Agent,
each in the reasonable exercise of its discretion), such properly completed and
duly executed forms or other  documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate of withholding;


 


(c)                                  without
limiting the generality of the foregoing, in the event that Company is resident
for tax purposes in the United States, any Foreign Lender shall deliver to
Company and Administrative Agent (in such number of copies as shall be
requested by the recipient) on or prior to the date on which such Foreign Lender
becomes a Lender under this Agreement (and from time to time thereafter, as may
be necessary in the determination of Company or Administrative Agent, each in
the reasonable exercise of its discretion), whichever of the following is
applicable:


 


(1)                                  properly
completed and duly executed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United
States is a party,


 


(2)                                  properly
completed and duly executed copies of Internal Revenue Service Form W-8ECI,


 


(3)                                  in the case of
a Foreign Lender claiming the benefits of the “portfolio interest” exemption
under Section 881(c) of the Internal Revenue Code, (A) a duly
executed certificate to the effect that


 


53

















 


such
Foreign Lender is not (i) a “bank” within the meaning of Section 881(c)(3)(A) of
the Internal Revenue Code, (ii) a ten-percent shareholder (within the
meaning of Section 881(c)(3)(B) of the Internal Revenue Code) of
Company or Holdings or (iii) a controlled foreign corporation described in
Section 881(c)(3)(C) of the Internal Revenue Code and (B) properly
completed and duly executed copies of Internal Revenue Service Form W-8BEN,


 


(4)                                  properly
completed and duly executed copies of any other form prescribed by applicable
law as a basis for claiming exemption from or a reduction in any Tax,


 


in each case together with
such supplementary documentation as may be prescribed by applicable law to
permit Company and Administrative Agent to determine the withholding or
deduction required to be made, if any;


 


(d)                                 without
limiting the generality of the foregoing, in the event that Company is resident
for tax purposes in the United States, any Foreign Lender that does not act or
ceases to act for its own account with respect to any portion of any sums paid
or payable to such Lender under any of the Loan Documents (for example, in the
case of a typical participation by such Lender) shall deliver to Administrative
Agent and Company (in such number of copies as shall be requested by the
recipient), on or prior to the date such Foreign Lender becomes a Lender, or on
such later date when such Foreign Lender ceases to act for its own account with
respect to any portion of any such sums paid or payable, and from time to time
thereafter, as may be necessary in the determination of Company or
Administrative Agent (each in the reasonable exercise of its discretion):


 


(1)                                  duly executed
and properly completed copies of the forms and statements required to be
provided by such Foreign Lender under clause (c) of subsection 2.7B(iv),
to establish the portion of any such sums paid or payable with respect to which
such Lender acts for its own account and may be entitled to an exemption from
or a reduction of the applicable Tax, and


 


(2)                                  duly executed
and properly completed copies of Internal Revenue Service Form W-8IMY (or
any successor forms) properly completed and duly executed by such Foreign
Lender, together with any information, if any, such Foreign Lender chooses to
transmit with such form, and any other certificate or statement of exemption
required under the Internal Revenue Code or the regulations thereunder, to
establish that such Foreign Lender is not acting for its own account with
respect to a portion of any such sums payable to such Foreign Lender;


 


(e)                                  without
limiting the generality of the foregoing, in the event that Company is resident
for tax purposes in the United States, any Lender that is not a Foreign Lender
and has not otherwise established to the reasonable


 


54

















 


satisfaction
of Company and Administrative Agent that it is an exempt recipient (as defined
in section 6049(b)(4) of the Internal Revenue Code and the United States
Treasury Regulations thereunder) shall deliver to Company and Administrative
Agent (in such number of copies as shall be requested by the recipient) on or
prior to the date on which such Lender becomes a Lender under this Agreement
(and from time to time thereafter as prescribed by applicable law or upon the
request of Company or Administrative Agent), duly executed and properly
completed copies of Internal Revenue Service Form W-9;


 


(f)                                    without
limiting the generality of the foregoing, each Lender hereby agrees, from time
to time after the initial delivery by such Lender of such forms, whenever a
lapse in time or change in circumstances renders such forms, certificates or
other evidence so delivered obsolete or inaccurate in any material respect,
that such Lender shall promptly (1) deliver to Administrative Agent and
Company two original copies of renewals, amendments or additional or successor
forms, properly completed and duly executed by such Lender, together with any
other certificate or statement of exemption required in order to confirm or establish
that such Lender is entitled to an exemption from or reduction of any Tax with
respect to payments to such Lender under the Loan Documents and, if applicable,
that such Lender does not act for its own account with respect to any portion
of such payment, or (2) notify Administrative Agent and Company of its
inability to deliver any such forms, certificates or other evidence;


 


(g)                                 without
limiting the generality of the foregoing, each Foreign Lender shall comply with
any information gathering and reporting requirements, in each case, that are
required to obtain the maximum available exemption from U.S. federal
withholding taxes under Title I of the proposed Foreign Account Tax Compliance
Act of 2009 (the “Proposed Act”)
if such proposed legislation is enacted into law (or under enacted legislation
that is substantially similar to Title I of the Proposed Act) with respect to
payments received by or on behalf of such Foreign Lender;


 


(h)                                 If
Administrative Agent or a Lender has received a refund of any Taxes or Other
Taxes as to which it has been indemnified by Company or with respect to which
Company has paid additional amounts pursuant to this subsection 2.7, it shall
pay over such refund to Company (but only to the extent of indemnity payments
made, or additional amounts paid by Company under this subsection 2.7 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of Administrative Agent or such Lender and without
interest (other than any interest paid by the relevant Government Authority
with respect to such refund); provided that Company, upon the request of
Administrative Agent or such Lender, agrees to repay the amount paid over to
Company (plus any penalties, interest or other charges imposed by the relevant
Government Authority) to Administrative Agent or such Lender in the event
Administrative Agent or such Lender is required to repay such refund to such
Government Authority. This subsection shall not be construed to require


 


55

















 


Administrative
Agent or Lender to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to Company or any other
Person; and


 


(i)                                     In the event of
any inconsistency between any other provision contained herein and this
subsection 2.7B, this subsection 2.7B shall govern.


 


C.                                     Capital
Adequacy Adjustment.  If any
Lender shall have determined that any Change in Law regarding capital adequacy
has or would have the effect of reducing the rate of return on the capital of
such Lender or any corporation controlling such Lender as a consequence of, or
with reference to, such Lender’s Loans or Commitments or Letters of Credit or
participations therein or other obligations hereunder with respect to the Loans
or the Letters of Credit (in each case other than any such reserve or other
requirements with respect to Eurodollar Rate Loans that are reflected in the
definition of Eurodollar Rate) to a level below that which such Lender or such
controlling corporation could have achieved but for such Change in Law (taking
into consideration the policies of such Lender or such controlling corporation
with regard to capital adequacy), then from time to time, within 30 Business
Days after receipt by Company from such Lender of the statement referred to in
subsection 2.8A, Company shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation for such
reduction, increased to the extent necessary to take into account any Tax
incurred or payable by such Lender as a result of the obligation of Company to
pay such additional amounts.  Company
shall not be required to compensate a Lender pursuant to this subsection 2.7C
for any reduction in respect of a period occurring more than ninety (90) days
prior to the date on which such Lender notifies Company of such Change in Law
and such Lender’s intention to claim compensation therefor, except, if the
Change in Law giving rise to such reduction is retroactive, no such time
limitation shall apply to such retroactive period so long as such Lender
requests compensation within ninety (90) days from the date on which the
applicable Government Authority informed such Lender of such Change in Law.


 


2.8                               Statement
of Lenders; Obligation of Lenders and Issuing Lenders to Mitigate.


 


A.                                   Statements.  Each Lender claiming compensation or
reimbursement pursuant to subsection 2.6C, 2.6D, 2.7 or 2.8B shall deliver to
Company (with a copy to Administrative Agent) a written statement, setting
forth in reasonable detail the basis of the calculation of such compensation or
reimbursement, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.


 


B.                                     Mitigation.  Each Lender and Issuing Lender agrees that,
as promptly as practicable after the officer of such Lender or Issuing Lender
responsible for administering the Loans or Letters of Credit of such Lender or
Issuing Lender, as the case may be, becomes aware of the occurrence of an event
or the existence of a condition that would cause such Lender to become an
Affected Lender or that would entitle such Lender or Issuing Lender to receive
payments under subsection 2.7, it will use reasonable efforts to make, issue,
fund or maintain the Commitments of such Lender or the Loans or Letters of
Credit of such Lender or Issuing Lender through another lending or letter of
credit office of such Lender or Issuing Lender, if (i) as a


 


56

















 


result thereof the circumstances which would
cause such Lender to be an Affected Lender would cease to exist or the
additional amounts which would otherwise be required to be paid to such Lender
or Issuing Lender pursuant to subsection 2.7 would be materially reduced and (ii) as
determined by such Lender or Issuing Lender in its sole discretion, such action
would not otherwise be materially disadvantageous to such Lender or Issuing
Lender; provided that such Lender or Issuing Lender will not be
obligated to utilize such other lending or letter of credit office pursuant to
this subsection 2.8B unless Company agrees to pay all incremental expenses
incurred by such Lender or Issuing Lender as a result of utilizing such other
lending or letter of credit office as described above.


 


2.9                               Defaulting
Lenders.


 


Anything contained herein to the contrary
notwithstanding, in the event that any Lender (a “Defaulting
Lender”) defaults (a “Funding Default”)
in its obligation to fund any Loan (a “Defaulted Loan”)
in accordance with subsection 2.1 or to fund its participation in a Letter of
Credit pursuant to subsection 3.3, then (i) during any Default Period
(as defined below) with respect to such Defaulting Lender, such Defaulting
Lender shall be deemed not to be a “Lender”, and the amount of  such Defaulting Lender’s Commitments and
Loans shall be excluded for purposes of voting, and the calculation of voting,
on any matters (including the granting of any consents or waivers) with respect
to any of the Loan Documents, (ii) to the extent permitted by applicable
law, until such time as the Default Excess (as defined below) with respect to
such Defaulting Lender shall have been reduced to zero, (a) any voluntary
prepayment of such Loans pursuant to subsection 2.4B(i) shall, if Company
so directs at the time of making such voluntary prepayment, be applied to the
Loans of other Lenders as if such Defaulting Lender had no such Loans
outstanding and the Revolving Loan Exposure or the Term Loan Exposure, as
applicable, of such Defaulting Lender were zero, and (b) any mandatory
prepayment of the Loans pursuant to subsection 2.4B(iii) shall, if Company
so directs at the time of making such mandatory prepayment, be applied to the
Loans of other Lenders (but not to the Loans of such Defaulting Lender) as if
such Defaulting Lender had funded all Defaulted Loans of such Defaulting
Lender, it being understood and agreed that Company shall be entitled to retain
any portion of any mandatory prepayment of the Loans that is not paid to such
Defaulting Lender solely as a result of the operation of the provisions of this
clause (b), (iii) the unfunded portion of such Defaulting Lender’s
Revolving Loan Commitment shall be excluded for purposes of calculating the
facility fee payable to Revolving Lenders pursuant to subsection 2.3A in
respect of any day during any Default Period with respect to such Defaulting
Lender, and such Defaulting Lender shall not be entitled to receive any
facility fee pursuant to subsection 2.3A with respect to the unfunded portion
of such Defaulting Lender’s Revolving Loan Commitment in respect of any Default
Period with respect to such Defaulting Lender, and (iv) the Total
Utilization of Revolving Loan Commitments as at any date of determination shall
be calculated as if such Defaulting Lender had funded all Defaulted Loans that
are Revolving Loans of such Defaulting Lender.


 


For purposes of this Agreement, (I) “Default Period” means, with respect to any Defaulting
Lender, the period commencing on the date of the applicable Funding Default and
ending on the earliest of the following dates: 
(A) the date on which all Revolving Loan Commitments are cancelled
or terminated and/or the Obligations are declared or become immediately due and
payable, (B) the date on which (1) the Default Excess with respect to
such


 


57

















 


Defaulting Lender shall have
been reduced to zero (whether by the funding by such Defaulting Lender of any
Defaulted Loans of such Defaulting Lender or by the non-pro rata application of
any voluntary or mandatory prepayments of the Revolving Loans in accordance
with the terms hereof or any combination thereof), and (2) such Defaulting
Lender shall have delivered to Company and Administrative Agent a written
reaffirmation of its intention to honor its obligations under this Agreement
with respect to its Loans and Commitments, and (C) the date on which
Company, Administrative Agent and Requisite Lenders waive all Funding Defaults
of such Defaulting Lender in writing, and (II) “Default
Excess” means, with respect to any Defaulting Lender, the excess, if
any, of such Defaulting Lender’s Pro Rata Share of the aggregate outstanding
principal amount of Loans of all Lenders (calculated as if all Defaulting
Lenders (including such Defaulting Lender) had funded all of their respective
Defaulted Loans) over the aggregate outstanding principal amount of Loans of
such Defaulting Lender.


 


No amount of the Commitment of any Lender shall be
increased or otherwise affected, and, except as otherwise expressly provided in
this subsection 2.9, performance by Company of its obligations under this
Agreement and the other Loan Documents shall not be excused or otherwise
modified, as a result of any Funding Default or the operation of this
subsection 2.9.  The rights and remedies
against a Defaulting Lender under this subsection 2.9 are in addition to other
rights and remedies that Company may have against such Defaulting Lender with
respect to any Funding Default and that Administrative Agent or any Lender may
have against such Defaulting Lender with respect to any Funding Default.


 


2.10                        Replacement
of a Lender.


 


If Company receives a statement of amounts due
pursuant to subsection 2.8A from a Lender, a Lender is a Defaulting Lender, a
Lender becomes an Affected Lender, Company is required to pay any additional
amounts under subsection 2.7 or a Lender (a “Non-Consenting
Lender”) refuses to consent to an amendment, modification or waiver
of this Agreement that, pursuant to subsection 10.6, either (i) requires
consent of 100% of the Lenders or 100% of the Lenders with Obligations directly
affected or (ii) requires consent of Requisite Lenders, (any such Lender,
a “Subject Lender”), so long as (1) Company
has obtained a commitment from another Lender or an Eligible Assignee to
purchase at par the Subject Lender’s Loans and assume the Subject Lender’s
Commitments and all other obligations of the Subject Lender hereunder, (2) such
Lender is not an Issuing Lender with respect to any Letters of Credit
outstanding (unless all such Letters of Credit are terminated or arrangements
acceptable to such Issuing Lender (such as a “back-to-back” letter of credit)
are made) and (3), if applicable, the Subject Lender is unwilling or unable to
withdraw the notice delivered to Company pursuant to subsection 2.8, Company
may require the Subject Lender to assign all of its Loans and Commitments to
such other Lender, Lenders, Eligible Assignee or Eligible Assignees pursuant to
the provisions of subsection 10.1B; provided that, prior to or
concurrently with such replacement, (A) Company has paid to the Lender
giving such notice all amounts under subsections 2.6D, 2.7 and/or 2.8B (if
applicable) through such date of replacement, (B) the processing fee
required to be paid by subsection 10.1B(i) shall have been paid to
Administrative Agent, (C) all of the requirements for such assignment
contained in subsection 10.1B have been fulfilled, including, the consent of
Administrative Agent and, with respect to assignments of Revolving Loans and
Revolving Loan Commitments, any Issuing Lender, and the receipt by
Administrative Agent of an executed Assignment Agreement and other supporting
documents,


 


58

















 


and (D) in the event
such Subject Lender is a Non-Consenting Lender, each assignee shall consent, at
the time of such assignment, to each matter in respect of which such Subject
Lender was a Non-Consenting Lender and Company requires each other Subject
Lender that is a Non-Consenting Lender to assign its Loans and Commitments.


 


Each Lender and each Issuing Bank hereby grants to
Administrative Agent an irrevocable power of attorney (which power is coupled
with an interest) to execute and deliver, on behalf of such Lender or such
Issuing Bank, as the case may be, as assignor, any Assignment Agreement
necessary to effectuate any assignment of such Lender’s or such Issuing Bank’s
interests hereunder in the circumstances contemplated by this
subsection 2.10.


 


For the avoidance of doubt, if a Lender is a
Non-Consenting Lender solely because it refused to consent to an amendment,
modification or waiver that required the consent of 100% of Lenders with
Obligations directly affected thereby (which amendment, modification or waiver
did not accordingly require the consent of 100% of all Lenders) the Loans and
Commitments of such Non-Consenting Lender that are subject to the assignments
required by this subsection 2.10 shall include only those Loans and Commitments
that constitute the Obligations directly affected by the amendment, modification
or waiver to which such Non-Consenting Lender refused to provide its consent.


 


Section 3.                                          LETTERS OF
CREDIT


 


3.1                               Issuance
of Letters of Credit and Lenders’ Purchase of Participations Therein.


 


A.                                   Letters
of Credit.  Company may
request, in accordance with the provisions of this subsection 3.1, from time to
time during the period from the Restatement Date to but excluding the tenth
Business Day prior to the Revolving Loan Commitment Termination Date, that
Administrative Agent or one or more Revolving Lenders issue Letters of Credit
payable on a sight basis for the account of Company for the purposes specified
in the definitions of Commercial Letters of Credit and Standby Letters of
Credit.  Subject to the terms and conditions
of this Agreement and in reliance upon the representations and warranties of
Company herein set forth, any one or more Revolving Lenders may, but (except as
provided in subsection 3.1B(ii)) shall not be obligated to, issue such Letters
of Credit in accordance with the provisions of this subsection 3.1; provided
that Company shall not request that any Revolving Lender issue (and no
Revolving Lender shall issue):


 


(i)                                     any Letter of
Credit if, after giving effect to such issuance, the Total Utilization of
Revolving Loan Commitments would exceed the Revolving Loan Commitment Amount
then in effect;


 


(ii)                                  any Letter of
Credit if, after giving effect to such issuance, the Letter of Credit Usage
would exceed $5,000,000, it being understood that as of the Restatement Date,
the Letter of Credit Usage equals $4,072,103;


 


(iii)                               any Standby
Letter of Credit having an expiration date later than the earlier of (a) five
Business Days prior to the Revolving Loan Commitment Termination Date and (b) the
date which is one year from the date of issuance of such


 


59

















 


Standby
Letter of Credit; provided that the immediately preceding clause (b) shall
not prevent any Issuing Lender from agreeing that a Standby Letter of Credit
will automatically be extended for one or more successive periods not to exceed
one year each, which in no event may extend beyond the period specified in the
preceding clause (a), unless such Issuing Lender elects not to extend for any
such additional period; and provided, further that such Issuing
Lender may elect not to extend such Standby Letter of Credit if it has
knowledge that an Event of Default has occurred and is continuing (and has not
been waived in accordance with subsection 10.6) at the time such Issuing Lender
must elect whether or not to allow such extension;


 


(iv)                              any Standby
Letter of Credit issued for the purpose of supporting (a) trade payables
or (b) any Indebtedness constituting “antecedent debt” (as that term is
used in Section 547 of the Bankruptcy Code);


 


(v)                                 any Commercial
Letter of Credit having an expiration date (a) later than the earlier of (1) the
date which is five Business Days prior to the Revolving Loan Commitment
Termination Date and (2) the date which is one year from the date of
issuance of such Commercial Letter of Credit; provided that the
immediately preceding clause (2) shall not prevent any Issuing Lender from
agreeing that a Commercial Letter of Credit will automatically be extended for
one or more successive periods not to exceed one year each, which in no event
may extend beyond the period specified in the preceding clause (1), unless such
Issuing Lender elects not to extend for any such additional period; and provided,
further that such Issuing Lender may elect not to extend such Commercial
Letter of Credit if it has knowledge that an Event of Default has occurred and
is continuing (and has not been waived in accordance with subsection 10.6) at
the time such Issuing Lender must elect whether or not to allow such extension
or (b) that is otherwise unacceptable to the applicable Issuing Lender in
its reasonable discretion; or


 


(vi)                              any Letter of
Credit denominated in a currency that in the reasonable judgment of
Administrative Agent or the applicable Issuing Lender is not readily and freely
available.


 


B.                                     Mechanics of
Issuance.


 


(i)                                     Request for
Issuance.  Whenever
Company desires the issuance of a Letter of Credit, it shall deliver to
Administrative Agent a Request for Issuance no later than 1:00 P.M. (New
York City time) at least three Business Days, or such shorter period as may be
agreed to by the Issuing Lender in any particular instance, in advance of the
proposed date of issuance.  The Issuing
Lender, in its reasonable discretion, may require changes in the text of the
proposed Letter of Credit or any documents described in or attached to the
Request for Issuance.  In furtherance of
the provisions of subsection 10.7, and not in limitation thereof, Company may
submit Requests for Issuance by telefacsimile and Administrative Agent and
Issuing Lenders may rely and act upon any such Request for Issuance without
receiving an original signed copy thereof. 
No Letter of Credit shall require payment against a conforming demand
for payment to be made thereunder on the same business day (under the laws of
the jurisdiction in which the


 


60
















 


office
of the Issuing Lender to which such demand for payment is required to be
presented is located) that such demand for payment is presented if such
presentation is made after 1:00 P.M. (in the time zone of such office of
the Issuing Lender) on such business day.


 


Company shall notify the applicable Issuing
Lender (and Administrative Agent, if Administrative Agent is not such Issuing
Lender) prior to the issuance of any Letter of Credit in the event that any of
the matters to which Company is required to certify in the applicable Request
for Issuance is no longer true and correct as of the proposed date of issuance
of such Letter of Credit, and upon the issuance of any Letter of Credit Company
shall be deemed to have re-certified, as of the date of such issuance, as to
the matters to which Company is required to certify in the applicable Request
for Issuance.


 


(ii)                                  Determination
of Issuing Lender.  Upon
receipt of a Request for Issuance pursuant to subsection 3.1B(i) requesting
the issuance of a Letter of Credit by Administrative Agent or another Revolving
Lender acceptable to Company and Administrative Agent, Administrative Agent or
the Revolving Lender so requested to issue such Letter of Credit shall promptly
notify Company (and Administrative Agent, if Administrative Agent is not the
requested issuer) whether or not, in its sole discretion, it has elected to
issue such Letter of Credit, and Administrative Agent or such Revolving Lender
that so elects to issue such Letter of Credit shall be the Issuing Lender with
respect thereto.  With respect to Standby
Letters of Credit only, in the event that all other Revolving Lenders shall
have declined to issue such Standby Letter of Credit, notwithstanding the prior
election of Administrative Agent not to issue such Standby Letter of Credit,
Administrative Agent shall be obligated to issue such Standby Letter of Credit
and shall be the Issuing Lender with respect thereto, notwithstanding the fact
that the Letter of Credit Usage with respect to such Standby Letter of Credit
and with respect to all other Letters of Credit issued by Administrative Agent,
when aggregated with Administrative Agent’s outstanding Revolving Loans, may
exceed the amount of Administrative Agent’s Revolving Loan Commitment then in
effect.


 


(iii)                               Issuance of
Letter of Credit.  Upon
satisfaction or waiver (in accordance with subsection 10.6) of the conditions
set forth in subsection 4.3, the Issuing Lender shall issue the requested
Letter of Credit in accordance with the Issuing Lender’s standard operating
procedures.


 


(iv)                              Notification to
Revolving Lenders.  Upon the
issuance of or amendment to any Letter of Credit the applicable Issuing Lender
shall promptly notify Administrative Agent and Company of such issuance or
amendment in writing.  Upon receipt of
such notice (or, if Administrative Agent is the Issuing Lender, together with
such notice), Administrative Agent shall notify each Revolving Lender in
writing of such issuance or amendment and the amount of such Revolving Lender’s
respective participation in such  Letter
of Credit or amendment, and, if so requested by a Revolving Lender,
Administrative Agent shall provide such Lender with a copy of such Letter of
Credit or amendment.  In the case of
Commercial Letters of Credit, in the event that Issuing Lender is other than
Administrative Agent, such Issuing Lender will send by facsimile transmission
to Administrative Agent, promptly upon the first Business Day of


 


61

















 


each
week, a report of its daily aggregate maximum amount available for drawing
under Commercial Letters of Credit for the previous week.  Administrative Agent shall notify each
Revolving Lender in writing on a quarterly basis of the contents thereof.


 


C.                                     Revolving
Lenders’ Purchase of Participations in Letters of Credit.  Immediately upon the issuance of each Letter
of Credit, each Revolving Lender shall be deemed to, and hereby agrees to, have
irrevocably purchased from the Issuing Lender a participation in such Letter of
Credit and any drawings honored thereunder in an amount equal to such Revolving
Lender’s Pro Rata Share of the maximum amount that is or at any time may become
available to be drawn thereunder.


 


3.2                               Letter
of Credit Fees.


 


Company agrees to pay the following amounts with
respect to Letters of Credit issued hereunder:


 


(i)                                     with respect to
each Letter of Credit, (a) a fronting fee, payable directly to the
applicable Issuing Lender for its own account, equal to 0.125% per annum of the
daily amount available to be drawn under such Letter of Credit and (b) a
letter of credit fee, payable to Administrative Agent for the account of
Revolving Lenders, equal to 2.25% plus, upon the application of
increased rates of interest pursuant to subsection 2.2E, 2% per annum, multiplied
by the daily amount available to be drawn under such Letter of Credit, each
such fronting fee or letter of credit fee to be payable quarterly in arrears on
and to (but excluding) the last Business Day of each March, June, September and
December of each year, and on the Revolving Loan Commitment Termination
Date, and computed on the basis of a 360-day year for the actual number of days
elapsed; and


 


(ii)                                  with respect to
the issuance, amendment or transfer of each Letter of Credit and each payment
of a drawing made thereunder (without duplication of the fees payable under
clause (i) above), documentary and processing charges payable directly to
the applicable Issuing Lender for its own account in accordance with such
Issuing Lender’s standard schedule for such charges in effect at the time of
such issuance, amendment, transfer or payment, as the case may be.


 


For purposes of calculating
any fees payable under clauses (i) and (ii) of this subsection 3.2, (1) the
daily amount available to be drawn under any Letter of Credit shall be
determined as of the close of business on any date of determination and (2) any
amount described in such clauses which is denominated in a currency other than
Dollars shall be valued based on the applicable Exchange Rate for such currency
as of the applicable date of determination (such date to be determined at the
discretion of Administrative Agent). 
Promptly upon receipt by Administrative Agent of any amount described in
clause (i)(b) of this subsection 3.2, Administrative Agent shall
distribute to each Revolving Lender its Pro Rata Share of such amount.


 


3.3                               Drawings
and Reimbursement of Amounts Paid Under Letters of Credit.


 


A.                                   Responsibility
of Issuing Lender With Respect to Drawings.  In determining whether to honor any drawing
under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall
be responsible only to examine the documents delivered under such


 


62

















 


Letter of Credit with reasonable care so as
to ascertain whether they appear on their face to be in accordance with the
terms and conditions of such Letter of Credit.


 


B.                                     Reimbursement
by Company of Amounts Paid Under Letters of Credit.  In the event an Issuing Lender has determined
to honor a drawing under a Letter of Credit issued by it, such Issuing Lender
shall immediately notify Company and Administrative Agent, and Company shall
reimburse such Issuing Lender on or before the Business Day immediately
following the date on which such drawing is honored (the “Reimbursement
Date”) in an amount in Dollars (which amount, in the case of a
payment under a Letter of Credit which is denominated in a currency other than
Dollars, shall be calculated by reference to the applicable Exchange Rate) or,
at the option of such Issuing Lender, in the case of a Letter of Credit
denominated in a currency other than Dollars, in such other currency and in
same day funds equal to the amount of such payment; provided that,
anything contained in this Agreement to the contrary notwithstanding, (i) unless
Company shall have notified Administrative Agent and such Issuing Lender prior
to 1:00 P.M. (New York City time) on the date such drawing is honored that
Company intends to reimburse such Issuing Lender for the amount of such payment
with funds other than the proceeds of Revolving Loans, Company shall be deemed
to have given a timely Notice of Borrowing to Administrative Agent requesting
Revolving Lenders to make Revolving Loans that are Base Rate Loans on the
Reimbursement Date in an amount in Dollars (which amount, in the case of a
payment under a Letter of Credit which is denominated in a currency other than
Dollars, shall be calculated by reference to the applicable Exchange Rate)
equal to the amount of such payment and (ii) subject to satisfaction or
waiver (in accordance with subsection 10.6) of the conditions specified in
subsection 4.2B, Revolving Lenders shall, on the Reimbursement Date, make
Revolving Loans that are Base Rate Loans in the amount of such payment, the
proceeds of which shall be applied directly by Administrative Agent to
reimburse such Issuing Lender for the amount of such payment; and provided,
further that if for any reason proceeds of Revolving Loans are not
received by such Issuing Lender on the Reimbursement Date in an amount equal to
the amount of such payment, Company shall reimburse such Issuing Lender, on
demand, in an amount in same day funds equal to the excess of the amount of
such payment over the aggregate amount of such Revolving Loans, if any, which are
so received.  Nothing in this subsection
3.3B shall be deemed to relieve any Revolving Lender from its obligation to
make Revolving Loans on the terms and conditions set forth in this Agreement,
and Company shall retain any and all rights it may have against any Revolving
Lender resulting from the failure of such Revolving Lender to make such
Revolving Loans under this subsection 3.3B.


 


C.                                     Payment by
Lenders of Unreimbursed Amounts Paid Under Letters of Credit.


 


(i)                                     Payment by
Revolving Lenders.  In the
event that Company shall fail for any reason to reimburse any Issuing Lender as
provided in subsection 3.3B in an amount (calculated, in the case of a payment
under a Letter of Credit denominated in a currency other than Dollars, by
reference to the applicable Exchange Rate) equal to the amount of any payment
by such Issuing Lender under a Letter of Credit issued by it, such Issuing
Lender shall promptly notify Administrative Agent, who shall notify each other
Revolving Lender of the unreimbursed amount of such honored drawing and of such
other Revolving Lender’s respective participation therein based on such
Revolving Lender’s Pro Rata Share.  Each
Revolving Lender (other than such Issuing Lender) shall


 


63

















 


make
available to Administrative Agent an amount equal to its respective
participation, in Dollars and in same day funds, at the Funding and Payment
Account, not later than 12:00 Noon (New York City time) on the first Business
Day after the date notified by Administrative Agent and Administrative Agent
shall make available to such Issuing Lender in Dollars in same day funds, at
the office of such Issuing Lender on such Business Day, the aggregate amount of
the participation payments so received by Administrative Agent.  In the event that any Revolving Lender fails
to make available to Administrative Agent on such Business Day the amount of
such Revolving Lender’s participation in such Letter of Credit as provided in
this subsection 3.3C, such Issuing Lender shall be entitled to recover such
amount on demand from such Revolving Lender together with interest thereon at
the Federal Funds Effective Rate. 
Nothing in this subsection 3.3C shall be deemed to prejudice the right
of Administrative Agent to recover, for the benefit of Revolving Lenders, from
any Issuing Lender any amounts made available to such Issuing Lender pursuant
to this subsection 3.3C in the event that it is determined by the final
judgment of a court of competent jurisdiction that the payment with respect to
a Letter of Credit by such Issuing Lender in respect of which such
participation payments were made by Revolving Lenders constituted gross
negligence or willful misconduct on the part of such Issuing Lender.


 


(ii)                                  Distribution to
Lenders of Reimbursements Received From Company.  In the event any Issuing Lender shall have
been reimbursed by other Revolving Lenders pursuant to subsection 3.3C(i) for
all or any portion of any payment by such Issuing Lender under a Letter of
Credit issued by it, and Administrative Agent or such Issuing Lender thereafter
receives any payments from Company in reimbursement of such payment under the
Letter of Credit, to the extent any such payment is received by such Issuing
Lender, it shall distribute such payment to Administrative Agent, and
Administrative Agent shall distribute to each other Revolving Lender that has
paid all amounts payable by it under subsection 3.3C(i) with respect to
such payment such Revolving Lender’s Pro Rata Share of all payments subsequently
received by Administrative Agent or by such Issuing Lender from Company.  Any such distribution shall be made to a
Revolving Lender at the account specified in subsection 2.4C(iii).


 


D.                                    Interest on
Amounts Paid Under Letters of Credit.


 


(i)                                     Payment of Interest
by Company.  Company
agrees to pay to Administrative Agent, with respect to payments under any
Letters of Credit issued by any Issuing Lender, interest on the amount paid by
such Issuing Lender in respect of each such payment from the date a drawing is
honored to but excluding the date such amount is reimbursed by Company
(including any such reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B) at a rate equal to, (a) for the period from
the date such drawing is honored to but excluding the Reimbursement Date, the
rate then in effect under this Agreement with respect to Revolving Loans that
are Base Rate Loans and (b) thereafter, a rate which is 2% per annum in
excess of the rate of interest otherwise payable under this Agreement with
respect to Revolving Loans that are Base Rate Loans.  Interest payable pursuant to this subsection
3.3D(i) shall be computed on the basis of a 365-day or 366-day year for
the actual number of days elapsed in the period during which


 


64

















 


it
accrues and shall be payable on demand or, if no demand is made, on the date on
which the related drawing under a Letter of Credit is reimbursed in full.


 


(ii)                                  Distribution of
Interest Payments by Administrative Agent.  Promptly upon receipt by Administrative Agent
of any payment of interest pursuant to subsection 3.3D(i) with respect to
a payment under a Letter of Credit, (a) Administrative Agent shall
distribute to (x) each Revolving Lender (including the Revolving Lender
that paid such drawing), out of the interest received by Administrative Agent
in respect of the period from the date such drawing is honored to but excluding
the date on which the applicable Issuing Lender is reimbursed for the amount of
such payment (including any such reimbursement out of the proceeds of Revolving
Loans pursuant to subsection 3.3B), the amount that such Revolving Lender would
have been entitled to receive in respect of the letter of credit fee that would
have been payable in respect of such Letter of Credit for such period pursuant
to subsection 3.2 if no drawing had been honored under such Letter of Credit
and (y) such Issuing Lender the amount, if any, remaining after payment of
the amounts applied pursuant to the immediately preceding clause (x), and (b) in
the event such Issuing Lender shall have been reimbursed by other Revolving
Lenders pursuant to subsection 3.3C(i) for all or any portion of such
payment, Administrative Agent shall distribute to each Revolving Lender (including
such Issuing Lender) that has paid all amounts payable by it under subsection
3.3C(i) with respect to such payment such Revolving Lender’s Pro Rata
Share of any interest received by Administrative Agent in respect of that
portion of such payment so made by Revolving Lenders for the period from the
date on which such Issuing Lender was so reimbursed to but excluding the date
on which such portion of such payment is reimbursed by Company.  Any such distribution shall be made to a
Revolving Lender at the account specified in subsection 2.4C(iii).


 


E.                                      Cash
Collateralization.  If
Administrative Agent notifies Company at any time that, due to a fluctuation in
the applicable Exchange Rate or otherwise, the Letter of Credit Usage at such
time exceeds 105% of the sublimit for Letters of Credit specified in subsection
3.1A(ii), then, within two Business Days after receipt of such notice, Company
shall deposit in the Collateral Account established pursuant to the Security
Agreement an amount equal to the amount by which the Letter of Credit Usage
exceeds such sublimit, which amount shall constitute Collateral and be subject
to the provisions of the Security Agreement. 
At such time as the Letter of Credit Usage shall be equal to or less
than such sublimit, if no Event of Default has occurred and is continuing, such
amount shall be released to Company.


 


3.4                               Obligations
Absolute.


 


The obligation of Company to reimburse each Issuing
Lender for payments under the Letters of Credit issued by it and to repay any
Revolving Loans made by Revolving Lenders pursuant to subsection 3.3B and the
obligations of Revolving Lenders under subsection 3.3C(i) shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances including any of the following
circumstances:


 


(i)                                     any lack of
validity or enforceability of any Letter of Credit;


 


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(ii)                                  the existence
of any claim, set-off, defense or other right which Company or any Lender may
have at any time against a beneficiary or any transferee of any Letter of
Credit (or any Persons for whom any such transferee may be acting), any Issuing
Lender or other Revolving Lender or any other Person or, in the case of a
Revolving Lender, against Company, whether in connection with this Agreement,
the transactions contemplated herein or any unrelated transaction (including
any underlying transaction between Company or one of its Subsidiaries and the
beneficiary for which any Letter of Credit was procured);


 


(iii)                               any draft or
other document presented under any 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;


 


(iv)                              payment by the
applicable Issuing Lender under any Letter of Credit against presentation of a
draft or other document which does not substantially comply with the terms of
such Letter of Credit;


 


(v)                                 any adverse
change in the business, operations, properties, assets, condition (financial or
otherwise) or prospects of Company or any of its Subsidiaries;


 


(vi)                              any breach of
this Agreement or any other Loan Document by any party thereto;


 


(vii)                           any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing; or


 


(viii)                        the fact that
an Event of Default or a Potential Event of Default shall have occurred and be
continuing;


 


provided, in each case,
that payment by the applicable Issuing Lender under the applicable Letter of
Credit shall not have constituted gross negligence or willful misconduct of
such Issuing Lender under the circumstances in question (as determined by a
final judgment of a court of competent jurisdiction).


 


3.5                               Nature
of Issuing Lenders’ Duties.


 


As between Company and any Issuing Lender, Company
assumes all risks of the acts and omissions of, or misuse of the Letters of
Credit issued by such Issuing Lender by, the respective beneficiaries of such
Letters of Credit.  In furtherance and not
in limitation of the foregoing, such Issuing Lender shall not be responsible
for:  (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any such
Letter of Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity
or sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit; (iv) errors, omissions, interruptions
or delays in transmission or delivery of any


 


66

















 


messages, by mail, cable,
telegraph, telex, telefacsimile or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or
delay in the transmission or otherwise of any document required in order to
make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences
arising from causes beyond the control of such Issuing Lender, including any
act or omission by a Government Authority, and none of the above shall affect
or impair, or prevent the vesting of, any of such Issuing Lender’s rights or
powers hereunder.


 


In furtherance and extension and not in limitation
of the specific provisions set forth in the first paragraph of this subsection
3.5, any action taken or omitted by any Issuing Lender under or in connection
with the Letters of Credit issued by it or any documents and certificates
delivered thereunder, if taken or omitted in good faith, shall not put such
Issuing Lender under any resulting liability to Company.


 


Notwithstanding anything to the contrary contained
in this subsection 3.5, Company shall retain any and all rights it may have
against any Issuing Lender for any liability arising solely out of the gross
negligence or willful misconduct of such Issuing Lender, as determined by a
final judgment of a court of competent jurisdiction.


 


Section 4.                                          CONDITIONS TO
LOANS AND LETTERS OF CREDIT


 


The obligations of Lenders to make Loans and the
issuance of Letters of Credit hereunder are subject to the satisfaction of the
following conditions.


 


4.1                               Conditions
to Restatement Date Loans.


 


The obligations of Lenders to continue the Term
Loans and Revolving Loans and to make any Revolving Loans to be made on the
Restatement Date are, in addition to the conditions precedent specified in
subsection 4.2, subject to prior or substantially concurrent satisfaction of
the following conditions:


 


A.                                   Loan
Party Documents.  On or
before the Restatement Date, Company shall, and shall cause each other Loan Party
to, deliver to Administrative Agent with sufficient originally executed copies,
where appropriate, for each Lender the following with respect to Company or
such Loan Party, as the case may be, each, unless otherwise noted, dated the
Restatement Date:


 


(i)                                     Copies of the
Organizational Documents of such Person, certified by the Secretary of State of
its jurisdiction of organization or, if such document is of a type that may not
be so certified, certified by the secretary or similar officer of the applicable
Loan Party, together with a good standing certificate from the Secretary of
State of its jurisdiction of organization and, to the extent generally
available, a certificate or other evidence of good standing as to payment of
any applicable franchise or similar taxes of such jurisdiction of organization,
each dated a recent date prior to the Restatement Date;


 


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(ii)                                  Resolutions of
the Governing Body of such Person approving and authorizing the execution, delivery
and performance of the Loan Documents to which it is a party, certified as of
the Restatement Date by the secretary or similar officer of such Person as
being in full force and effect without modification or amendment;


 


(iii)                               Signature and
incumbency certificates of the officers of such Person executing the Loan
Documents to which it is a party;


 


(iv)                              Executed
originals of the Loan Documents to which such Person is a party; and


 


(v)                                 Such other
documents as Administrative Agent may reasonably request.


 


B.                                     Fees.  Company shall have paid to Administrative
Agent, for distribution (as appropriate) to Administrative Agent and Lenders,
the fees payable on the Restatement Date referred to in subsection 2.3.


 


C.                                     Financial
Statements; Financial Plan.  On or before the Restatement Date, Company
shall have made available to Lenders (i) unaudited financial statements of
Panolam Industries International, Inc. and its Subsidiaries for the eleven
(11) months ended November 30, 2009; and (ii) the Preliminary
Financial Plan for Fiscal Year 2010.


 


D.                                    Opinions
of Counsel to Loan Parties.  Lenders shall have received originally
executed copies of one or more written opinions of Weil, Gotshal &
Manges LLP, counsel for Loan Parties, in form reasonably satisfactory to
Administrative Agent and its counsel, dated as of the Restatement Date and
setting forth substantially the matters in the opinions designated in Exhibit VIII
annexed hereto and as to such other matters as Administrative Agent acting on
behalf of Lenders may reasonably request (this Agreement constituting a written
request by Company to such counsel to deliver such opinions to Lenders).


 


E.                                      Evidence
of Insurance. 
Administrative Agent shall have received a certificate from Company’s
insurance broker or other evidence satisfactory to it that all insurance
required to be maintained pursuant to subsection 6.4 is in full force and
effect and that Administrative Agent on behalf of Lenders has been named as
additional insured and/or loss payee thereunder to the extent required under
subsection 6.4.


 


F.                                      Necessary
Governmental Authorizations and Consents; Expiration of Waiting Periods, Etc.  Company shall have obtained all Governmental
Authorizations and all consents of other material Persons, in each case that
are necessary in connection with the transactions contemplated by the Loan
Documents.  All applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority that would restrain, prevent or otherwise impose adverse
conditions on the Restructuring or the transactions contemplated by the Loan
Documents.  No action, request for stay,
petition for review or rehearing, reconsideration, or appeal with respect to
any of the foregoing shall be pending.


 


G.                                     Security
Interests in Personal and Mixed Property.  To the extent not otherwise satisfied (with
respect to real property) pursuant to subsection 4.1H, Administrative


 


68

















 


Agent shall have received evidence
satisfactory to it that Holdings, Company and Subsidiary Guarantors shall have
taken or caused to be taken all such actions, executed and delivered or caused
to be executed and delivered all such agreements, documents and instruments, in
the reasonable opinion of Administrative Agent, desirable in order to create in
favor of Administrative Agent, for the benefit of Lenders, a valid and (upon
such filing and recording) perfected First Priority security interest in the
entire personal and mixed property Collateral. 
Except as otherwise provided in subsection 6.15, such actions shall
include the following:


 


(i)                                     Stock
Certificates and Instruments.  Delivery to Administrative Agent of (a) certificates
(which certificates shall be accompanied by irrevocable undated stock powers,
duly endorsed in blank and otherwise satisfactory in form and substance to
Administrative Agent) representing all Capital Stock pledged pursuant to the
Security Agreement and (b) all promissory notes or other instruments (duly
endorsed, where appropriate, in a manner satisfactory to Administrative Agent)
evidencing any Collateral;


 


(ii)                                  Lien Searches
and UCC Termination Statements.  Delivery to Administrative Agent of (a) the
results of a recent search of all effective UCC financing statements and
fixture filings which may have been made with respect to any personal or mixed
property of any Loan Party, together with copies of all such filings disclosed
by such search, and (b) duly completed UCC termination statements, and
authorization of the filing thereof from the applicable secured party, as may
be necessary to terminate any effective UCC financing statements or fixture
filings disclosed in such search (other than any such financing statements or
fixture filings in respect of Liens permitted to remain outstanding pursuant to
the terms of this Agreement);


 


(iii)                               UCC Financing
Statements and Fixture Filings.  Delivery to Administrative Agent of duly
completed UCC financing statements and, where appropriate, fixture filings,
with respect to all personal and mixed property Collateral of such Loan Party,
for filing in all jurisdictions as may be necessary or, in the reasonable
opinion of Administrative Agent, desirable to perfect the security interests
created in such Collateral pursuant to the Collateral Documents; and


 


(iv)                              IP Filings.  Delivery to Administrative Agent of releases
duly executed (if necessary) of security interests by all applicable Persons
for filing in all applicable jurisdictions as may be necessary to terminate any
effective filings in any IP Filing Office in respect of any IP Collateral
(other than any such filings in respect of Liens permitted to remain
outstanding pursuant to the terms of this Agreement).


 


H.                                    Existing
Mortgages; Existing Mortgage Policies; Etc.  On or before the Restatement Date, Administrative
Agent shall have received from Company and each applicable Subsidiary
Guarantor:


 


(i)                                     Amendments to
Existing Mortgages.  Fully
executed and notarized amendments to the Existing Mortgages (each an “Amendment to Mortgage” and, collectively, the “Amendments to Mortgages”), either with evidence of
recordation or, if not recorded, in proper form for recording in all
appropriate places, in all applicable jurisdictions, amending each of the
Existing Mortgages;


 


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(ii)                                  Opinions of
Local Counsel.  An opinion
of counsel (which counsel shall be reasonably satisfactory to Administrative
Agent) in each state in which an Existing Mortgaged Property is located with
respect to the (a) enforceability of the form(s) of the Amendments to
Mortgages to be recorded in such state, (b) the continued enforceability
of the Existing Mortgages recorded prior to the Restatement Date, as amended by
the Amendments to Mortgages, and (c) such other matters as Administrative
Agent may reasonably request, in each case in form reasonably satisfactory to
Administrative Agent; 


 


(iii)                               Title Insurance.  (a) Date down and ALTA 110.5
modification endorsements to the Existing Mortgage Policies (collectively, the “Modification  Title Endorsements”)  assuring Administrative Agent that the applicable Existing
Mortgages, as amended by the Amendments to Mortgage, continue to create valid
and enforceable First Priority mortgage Liens on the respective Existing
Mortgaged Properties encumbered thereby, subject only to a standard survey
exception; and (b) evidence satisfactory to Administrative Agent that such
Loan Party has (i) delivered to the Title Company all certificates and
affidavits required by the Title Company in connection with the issuance of the
Modification Title Endorsements and (ii) paid to the Title Company or to
the appropriate Government Authorities all expenses and premiums of the Title
Company in connection with the issuance of the Modification Title Endorsements
and all recording and stamp taxes (including mortgage recording and intangible
taxes) payable in connection with recording the Amendment to Mortgages in the
appropriate real estate records;


 


(iv)                              Title Reports.  With respect to each Existing Mortgaged
Property listed in Schedule 4.1H annexed hereto, a title date down
report issued by the Title Company with respect thereto, satisfactory in form
and substance to Administrative Agent;


 


(v)                                 Copies of
Documents Relating to Title Exceptions.  Copies of all recorded documents listed as
exceptions to title or otherwise referred to in the title reports delivered
pursuant to subsection 4.1H(iv); and


 


(vi)                              Matters
Relating to Flood Hazard Properties.  (a) Evidence, which may be in the form
of a letter from an insurance broker or a municipal engineer, as to whether (1) any
Existing Mortgaged Property is a Flood Hazard Property and (2) the
community in which any such Flood Hazard Property is located is participating
in the National Flood Insurance Program, (b) if there are any such Flood Hazard
Properties, such Loan Party’s written acknowledgement of receipt of written
notification from Administrative Agent (1) as to the existence of each
such Flood Hazard Property and (2) as to whether the community in which
each such Flood Hazard Property is located is participating in the National
Flood Insurance Program, and (c) in the event any such Flood Hazard
Property is located in a community that participates in the National Flood
Insurance Program, evidence that Company has obtained flood insurance in
respect of such Flood Hazard Property to the extent required under the
applicable regulations of the Board of Governors.


 


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I.                                         Solvency
Assurances.  On the
Restatement Date, Administrative Agent and Lenders shall have received an
Officer’s Certificate of Company and its Subsidiaries, certified by a Financial
Officer of Company, dated the Restatement Date, substantially in the form of Exhibit X
annexed hereto, certifying that, after giving effect to the consummation of the
transactions contemplated by the Loan Documents and Second Lien Credit
Documents, Company and its Subsidiaries on a consolidated basis will be
Solvent.


 


J.                                        Patriot
Act Compliance. 
Administrative Agent shall have received, at least five Business Days
prior to the Restatement Date, all documentation and other information required
by bank regulatory authorities under the applicable “know your customer” and
anti-money laundering rules and regulations, including without limitation
the Patriot Act.


 


K.                                    Bankruptcy
Court.  The Plan shall have been
confirmed by the Bankruptcy Court.


 


L.                                      Second
Lien Credit Documents.


 


(i)                                     Form of
Second Lien Credit Agreement.  The Second Lien Credit Documents shall be
reasonably satisfactory in form and substance to Administrative Agent.


 


(ii)                                  Officer’s
Certificate. 
Administrative Agent shall have received an Officer’s Certificate to the
effect that the Second Lien Credit Documents attached thereto are in full force
and effect and are true and correct copies of the executed versions of such
agreements.


 


M.                                 [Reserved].


 


N.                                    [Reserved].


 


O.                                    No
Material Adverse Effect. 
Other than events giving rise to, arising or occurring in connection
with or as a result of the Bankruptcy Case, or the Restructuring, there shall
have been (a) no material adverse effect on the business, operations,
properties, assets, condition (financial or otherwise) or operating results of
Holdings and its Subsidiaries, taken as a whole or (b) no condition or
event or series of events that has resulted in, or could reasonably be expected
to result in, any losses, liabilities, obligations, damages, costs and expenses
of any kind to such Person of $15,000,000 or more; provided, however,
that any such effect shall not include an effect resulting from (i) a
change in applicable laws, (ii) a change in economic, business or
financial market conditions generally, so long as such conditions do not
disproportionately affect Holdings, Company and Company’s Subsidiaries or (iii) any
act of war.


 


4.2                               Conditions
to All Loans.


 


The obligation of each Lender to continue its Loans
on the Restatement Date and to make its Loans on each Funding Date are subject
to the following further conditions precedent:


 


71

















 


A.                                   Administrative
Agent shall have received on or before a Funding Date, in accordance with the
provisions of subsection 2.1D, a duly executed Notice of Borrowing, in each
case signed by a duly authorized Officer of Company.


 


B.                                     As of the
Restatement Date and any Funding Date:


 


(i)                                     The
representations and warranties contained herein and in the other Loan Documents
shall be true, correct and complete in all material respects on and as of that
Funding Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties shall have been
true, correct and complete in all material respects on and as of such earlier
date; and


 


(ii)                                  No event shall
have occurred and be continuing or would result from the continuance of the
Loans or the consummation of the borrowing contemplated by such Notice of
Borrowing, as applicable, that would constitute an Event of Default or a
Potential Event of Default.


 


4.3                               Conditions
to Letters of Credit.


 


The issuance of any Letter of Credit hereunder is
subject to the following conditions precedent:


 


A.                                   On or before
the date of issuance of such Letter of Credit, Administrative Agent shall have
received, in accordance with the provisions of subsection 3.1B(i), an
originally executed Request for Issuance (or a facsimile copy thereof) in each
case signed by a duly authorized Officer of Company, together with all other
information specified in subsection 3.1B(i) and such other documents or
information as the applicable Issuing Lender may reasonably require in
connection with the issuance of such Letter of Credit.


 


B.                                     On the date of
issuance of such Letter of Credit, all conditions precedent described in
subsection 4.2B shall be satisfied to the same extent as if the issuance of
such Letter of Credit were the making of a Loan and the date of issuance of
such Letter of Credit were a Funding Date.


 


Section 5.                                          COMPANY’S
REPRESENTATIONS AND WARRANTIES


 


In order to induce (a) the Agent, the Issuing
Lenders and the Lenders to amend and restate the Existing Credit Agreement
hereby and continue and restructure the outstanding extensions of credit under
the Existing Credit Agreement, (b) the Issuing Lenders to continue the
Existing Letters of Credit and issue Letters of Credit hereunder, and (c) the
Revolving Lenders to make the Revolving Loans, Company represents and warrants
to the Agent, the Issuing Lenders and the Lenders that as of the Restatement
Date and each Funding Date thereafter (unless specified otherwise below):


 


72

















 


5.1                               Organization,
Powers, Qualification, Good Standing, Business and Subsidiaries.


 


A.                                   Organization
and Powers.  Each of
Holdings and Company is a corporation duly organized or formed, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization as specified in Schedule 5.1A annexed hereto.  Each of Holdings and Company has all
requisite power and authority to own, lease and operate its assets, to carry on
its business, except, in each of the foregoing cases, where the failure to have
such power and authority could not reasonably be expected to have a Material
Adverse Effect, and to enter into the Loan Documents to which it is a party and
to carry out the transactions contemplated thereby.


 


B.                                     Qualification
and Good Standing.  Each of
Holdings and Company is qualified to do business and in good standing in every
jurisdiction where ownership, lease or operation of its assets or conduct of
its business and operations require such qualification, except in jurisdictions
where the failure to be so qualified or in good standing could not reasonably
be expected to result in a Material Adverse Effect.


 


C.                                     Subsidiaries.  As of the Restatement Date, all of the
Subsidiaries of Holdings, their jurisdictions of organization and the ownership
interest of Holdings and each of its Subsidiaries in each of the Subsidiaries
of Holdings are identified in Schedule 5.1C annexed hereto.  The Capital Stock of each of the Subsidiaries
of Holdings identified in Schedule 5.1C annexed hereto is duly
authorized, validly issued, fully paid, nonassessable and is owned by Holdings
or Company, directly or indirectly, free and clear of all consensual Liens
(other than Liens created under the Collateral Documents and the Second Lien
Credit Documents).  Each of the
Subsidiaries of Holdings identified in Schedule 5.1C annexed hereto is a
corporation, partnership, trust or limited liability company duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth therein, has all
requisite power and authority to own, lease and operate its assets and to carry
on its business, and is qualified to do business and in good standing in every
jurisdiction where ownership, lease or operation of its assets or conduct of
its business and operations require such qualification, in each case except
where failure to be so qualified or in good standing or a lack of such power
and authority could not reasonably be expected to result in a Material Adverse
Effect.  Except as set forth on Schedule
5.1C, as of the Restatement Date, there are no outstanding subscriptions,
options, warrants, calls, put rights or any other agreements or commitments of
any nature with respect to the Capital Stock of any Subsidiary of Holdings.


 


5.2                               Authorization
of Borrowing, etc.


 


A.                                   Authorization
of Borrowing.  The
execution, delivery and performance of the Loan Documents have been duly
authorized by all necessary action on the part of each Loan Party that is a
party thereto.


 


B.                                     No
Conflict.  The
execution, delivery and performance by Loan Parties of the Loan Documents to
which they are parties and the consummation of the transactions contemplated by
the Loan Documents do not and will not (i) violate any provision of any
law or any governmental rule or regulation applicable to Holdings or any
of its Subsidiaries, the Organizational Documents of Holdings or any of its
Subsidiaries or any order, judgment or decree of any court or other Government
Authority binding on Holdings or any of its Subsidiaries, (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time


 


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or both) a default under any Contractual
Obligation of Holdings or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Holdings or any of its Subsidiaries (other than any Liens permitted
by subsection 7.2), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of Holdings
or any of its Subsidiaries, except for such approvals or consents which will be
obtained on or before the Restatement Date and except, in each case, to the
extent such violation, conflict, Lien or failure to obtain such approval or
consent could not reasonably be expected to result in a Material Adverse
Effect.


 


C.                                     Governmental
Consents.  The
execution, delivery and performance by Loan Parties of the Loan Documents to
which they are parties and the consummation of the transactions contemplated by
the Loan Documents do not and will not require any Governmental Authorization,
except (i) Governmental Authorizations that have been obtained, (ii) filings
necessary to perfect the Liens on the Collateral granted by the Loan Parties in
favor of Administrative Agent on behalf of Lenders and (iii) Governmental
Authorizations the failure of which to obtain or make could not reasonably be
expected to have a Material Adverse Effect.


 


D.                                    Binding
Obligation.  Each of the
Loan Documents has been duly executed and delivered by each Loan Party that is
a party thereto and is the legally valid and binding obligation of such Person,
enforceable against such Person in accordance with its respective terms, except
as may be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or similar laws relating to or limiting creditors’ rights generally
or by equitable principles relating to enforceability.


 


5.3                               Financial
Condition.


 


Company has heretofore delivered to Lenders (i) audited
financial statements for the Fiscal Years ended 2006, 2007 and 2008, (ii) unaudited
financial statements for the first three Fiscal Quarters of 2009 and (iii) unaudited
financial statements for the portion of the Fiscal Year 2009 ended November 30,
2009.  All such statements (other than the
statements for the eleven (11) month portion of the Fiscal Year ended November 30,
2009) were, and all financials statements which shall hereafter be furnished by
or on behalf of any Loan Party to the Agent pursuant to subsection 6.1B, C or D
will be, prepared in conformity with GAAP (except as otherwise expressly noted
therein) and fairly present, in all material respects, the financial position
(on a consolidated basis) of the entities described in such financial
statements as at the respective dates thereof and the results of operations and
cash flows (on a consolidated basis) of the entities described therein for each
of the periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.


 


5.4                               No
Material Adverse Change.


 


Except for events giving rise to, arising or
occurring in connection with or as a result of the Bankruptcy Case or the
Restructuring or as set forth on Schedule 5.4, since December 31,
2008, no event or change has occurred that has resulted in or evidences, either
in any case or in the aggregate, a Material Adverse Effect.


 


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5.5                               Title
to Properties; Liens; Real Property; Intellectual Property.


 


A.                                   Title
to Properties; Liens.  Company and
its Subsidiaries have (i) good and legal title to (in the case of fee
interests in real property), (ii) valid leasehold interests in (in the
case of leasehold interests in real or personal property), or (iii) good
title to (in the case of all other personal property), all of their respective
properties and assets necessary in the ordinary conduct of its business, and
all such properties and assets are free and clear of Liens, except for (a) Liens
permitted by this Agreement, (b) minor defects on title that do not
materially interfere with Company’s or its Subsidiaries’ ability to conduct its
business or to utilize such assets for their intended purposes and (c) where
the failure to have such title or other property interests described above
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.


 


B.                                     Real
Property.  As of the
Restatement Date, Schedule 5.5B annexed hereto contains a true, accurate
and complete list of (i) all fee interests in any Real Property Assets and
(ii) all leases, subleases or assignments of leases (together with all
amendments, modifications, supplements, renewals or extensions of any thereof)
affecting each Real Property Asset, regardless of whether a Loan Party is the
landlord or tenant (whether directly or as an assignee or successor in
interest) under such lease, sublease or assignment.


 


(i)                                     Condemnation.  No Taking has been commenced or, to Company’s
knowledge, is contemplated with respect to all or any portion of any Existing
Mortgaged Property or for the relocation of roadways providing access to such
Existing Mortgaged Property, which Taking, contemplated Taking or condemnation
could reasonably be expected to materially and adversely affect the use of such
Existing Mortgaged Property.


 


C.                                     Intellectual
Property.  Company and
its Subsidiaries own or have the right to use, all Intellectual Property
necessary for the conduct of their business, except where the failure to own or
have such right to use in the aggregate could not reasonably be expected to
result in a Material Adverse Effect.  No
claim has been asserted and is pending by any Person challenging or questioning
the use of any such Intellectual Property or the validity or effectiveness of
any such Intellectual Property, nor does Company know of any valid basis for
any such claim, except for such claims that in the aggregate could not
reasonably be expected to result in a Material Adverse Effect.  The use of such Intellectual Property by
Company and its Subsidiaries does not infringe on the rights of any Person,
except for such claims and infringements that, in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.  All material federal, state and foreign
registrations of and applications for Intellectual Property that are owned or
licensed by Company or any of its Subsidiaries on the Restatement Date are
described on Schedule 5.5C annexed hereto.


 


5.6                               Litigation;
Adverse Facts.


 


Except as disclosed on Schedule 5.6, there
are no Proceedings (whether or not purportedly on behalf of Company or any of
its Subsidiaries) at law or in equity, before or by any court or other
Government Authority (including any Environmental Claims) that are pending or,
to the knowledge of Company, threatened in writing against Company or any of
its Subsidiaries or any property of Company or any of its Subsidiaries and
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect.  Neither
Company nor any of its Subsidiaries (i) is in violation of any applicable
laws (including


 


75

















 


Environmental Laws) or (ii) is
subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or other
Government Authority, except for such violations or defaults (a) that are
being contested in good faith by appropriate proceedings or (b) that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.


 


5.7                               Payment
of Taxes.


 


Except to the extent permitted by subsection 6.3,
all Tax returns and reports of Holdings and its Subsidiaries required to be
filed by any of them have been timely filed, and all Taxes shown on such Tax
returns to be due and payable and all assessments, fees, other governmental
charges and any other Tax upon Holdings and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises that are due
and payable have been paid when due and payable except those (i) which are
not overdue by more than thirty (30) days and intended to be contested in good
faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP, (ii) which are being
contested in good faith by appropriate proceedings diligently conducted and for
which adequate reserves have been provided in accordance with GAAP or (iii) with
respect to which the failure to make such filing or payment could not
reasonably be expected to have a Material Adverse Effect and will not result in
a Lien securing such Taxes, assessments, fees or other governmental charges in
excess of $900,000.


 


5.8                               Governmental
Regulation.


 


Neither Company nor any of its Subsidiaries is
subject to regulation under the Public Utility Holding Company Act of 1935 or
the Investment Company Act of 1940.


 


5.9                               Securities
Activities.


 


A.                                   Neither Company
nor any of its Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying any Margin Stock.


 


B.                                     Following
application of the proceeds of each Loan, not more than 25% of the value of the
assets (either of Company only or of Company and its Subsidiaries on a
consolidated basis) subject to the provisions of subsection 7.2 or 7.7 or
subject to any restriction contained in any agreement or instrument, between
Company and any Lender or any Affiliate of any Lender, relating to Indebtedness
and within the scope of subsection 8.2, will be Margin Stock.


 


5.10                        Employee
Benefit Plans.


 


A.                                   Company, each
of its Subsidiaries and each of their respective ERISA Affiliates are in
compliance in all material respects with all applicable provisions and
requirements of ERISA and the regulations and published interpretations
thereunder with respect to each Employee Benefit Plan, and have performed in
all material respects all their obligations under each Employee Benefit Plan,
except to the extent that the failure to comply therewith could not reasonably
be expected to have a Material Adverse Effect. 
Each Employee Benefit


 


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Plan that is intended to qualify under Section 401(a) of
the Internal Revenue Code is so qualified except as would reasonably be
expected to have a Material Adverse Effect.


 


B.                                     No ERISA Event
has occurred or is reasonably expected to occur (i) other than in
connection with the Bankruptcy Case or (ii) that could reasonably be
expected to have a Material Adverse Effect.


 


C.                                     As of the most
recent valuation date for any Pension Plan, the amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA), individually or
in the aggregate for all Pension Plans (excluding for purposes of such computation
any Pension Plans with respect to which assets exceed benefit liabilities),
could not reasonably be expected to have a Material Adverse Effect.


 


D.                                    As of the most
recent valuation date for each Multiemployer Plan for which the actuarial
report is available, the potential liability of Company, its Subsidiaries and
their respective ERISA Affiliates for a complete withdrawal from such
Multiemployer Plan (within the meaning of Section 4203 of ERISA), when
aggregated with such potential liability for a complete withdrawal from all
Multiemployer Plans, based on information available pursuant to Section 4221(e) of
ERISA, could not reasonably be expected to have a Material Adverse Effect.


 


E.                                      As of the date
hereof, Company and its Subsidiaries have made full payment when due of all
required contributions to any Foreign Plan, except to the extent the failure to
make such contributions could not reasonably be expected to have a Material
Adverse Effect.


 


5.11                        Certain
Fees.


 


No broker’s or finder’s fee or commission will be
payable with respect to this Agreement.


 


5.12                        Environmental
Protection.


 


Except as set forth in Schedule 5.12 annexed
hereto:


 


(i)                                     neither Company
nor any of its Subsidiaries nor any of their respective Facilities or
operations are subject to any outstanding written order, consent decree or
settlement agreement with any Person relating to (a) any Environmental
Law, (b) any Environmental Claim, or (c) any Hazardous Materials
Activity that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect;


 


(ii)                                  there are and,
to Company’s knowledge, have been no conditions, occurrences, or Hazardous
Materials Activities that, as of the date of this Agreement, could reasonably
be expected to form the basis of an Environmental Claim against Company or any
of its Subsidiaries that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect; and


 


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(iii)                               Company and its
Subsidiaries are in compliance with all Environmental Laws, except for such
non-compliance as would not, individually or in the aggregate, be reasonably
expected to result in a Material Adverse Effect.


 


5.13                        Employee
Matters.


 


There is no strike or work stoppage in
existence or threatened involving Company or any of its Subsidiaries that could
reasonably be expected to result in a Material Adverse Effect.


 


5.14                        Solvency.


 


Immediately after the consummation of the
Restructuring and other transactions to occur on the Restatement Date and on
each Funding Date and after giving effect to the application of the proceeds of
each Loan, the Loan Parties, on a consolidated basis, are Solvent.


 


5.15                        Matters
Relating to Collateral.


 


A.                                   Governmental
Authorizations.  No authorization,
approval or other action by, and no notice to or filing with, any Government
Authority is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Administrative Agent pursuant
to any of the Collateral Documents or (ii) the exercise by Administrative
Agent of any rights or remedies in respect of any Collateral (whether
specifically granted or created pursuant to any of the Collateral Documents or
created or provided for by applicable law), except (a) for filings or
recordings contemplated by the Collateral Documents, (b) authorizations,
approvals, actions, notices or filings which have been obtained, (c) authorizations,
approvals, actions, notices or filings the failure of which to obtain or make
could not reasonably be expected to have a Material Adverse Effect and (d) as
may be required, in connection with the disposition of any Collateral, by laws
generally affecting the offering and sale of securities.


 


B.                                     Margin
Regulations.  The pledge
of the Collateral pursuant to the Collateral Documents does not violate
Regulation T, U or X of the Board of Governors.


 


5.16                        Disclosure.


 


To the knowledge of Company, no representation or
warranty of Holdings or any of its Subsidiaries contained in the Disclosure
Statement, in any Loan Document, or in any other document, certificate or
written statement furnished to Lenders by Company or its agents or
representatives or, after the Restatement Date, on behalf of Holdings or any of
its Subsidiaries for use in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
herein or therein not materially misleading in light of the circumstances in
which the same were made.  Any
projections, pro forma financial information and other forward-looking
information contained in such materials are based upon good faith estimates and
assumptions believed by Company to be reasonable at the time made, it being
recognized by Lenders that such projections as to future events are not to be
viewed as facts and that actual results during the period or periods covered by
any such projections may differ from the


 


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projected results and that
such differences may be material.  No
representation is made with respect to information of a general economic or
general industry nature.


 


5.17                        Deposit
Accounts and Securities Accounts.


 


Neither Holdings, Company or any Loan Party has any
Deposit Accounts into which cash is deposited by or on behalf of either
Holdings, Company or any Loan Party other than the Deposit Accounts (i) which
are either (a) subject to an Account Control Agreement in full force and
effect and which, as of the Restatement Date, are listed on Schedule 5.17,
(b) the Deposit Accounts in which the average aggregate daily balance in
Dollars shall not exceed $35,000 for any period of five (5) consecutive
Business Days (each a “De Minimis Account”)
which, as of the Restatement Date, are listed on Schedule 5.17 or (c) are
the Trust Fund Accounts or (ii) that are held on deposit with the
Agent.  Neither Holdings, Company nor any
Loan Party has any Securities Accounts other than the Securities Accounts which
are each subject to an Account Control Agreement in full force and effect and
which, as of the Restatement Date, are listed on Schedule 5.17.


 


5.18                        Insurance.


 


Schedule 5.18 sets forth a complete and
correct description of all material insurance maintained by Company or its
Subsidiaries as of the Restatement Date. As of each such date, such insurance
is in full force and effect and all premiums have been duly paid. The Company
reasonably believes that it and its Subsidiaries have insurance in such amounts
and covering such risks and liabilities as are in accordance with normal
industry practice for Persons of their respective size in the locations where
such Persons conduct business.


 


5.19                        Second
Lien Credit Agreement.


 


A.                                   On the
Restatement Date, Company has delivered to the Administrative Agent a complete
and correct copy of the Second Lien Credit Documents (including all schedules
and exhibits thereto) as in effect on the date thereof.


 


B.                                     The Obligations
constitute Consolidated Senior Debt under and as defined in the Second Lien
Credit Agreement.


 


5.20                        Sanctioned
Persons.


 


None of Holdings, Company or any of their respective
Subsidiaries nor, to the knowledge of Company, any director, officer, agent,
employee or Affiliate of Holdings, Company or any of their respective
Subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and Company will not, to its knowledge, directly or
indirectly use the proceeds of the Loans or the Letters of Credit or otherwise
make available such proceeds to any Person, for the purpose of financing the
activities of any Person currently subject to any U.S. sanctions administered
by OFAC.


 


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Section 6.                                          AFFIRMATIVE
COVENANTS


 


Company covenants and agrees that, so long as any of
the Commitments hereunder shall remain in effect and until payment in full of
all of the Loans and other Obligations (other than Unasserted Obligations) and
the cancellation or expiration or the provision for cash collateral or other
support in a manner reasonably satisfactory to the Issuing Lender of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its Subsidiaries to
perform, all covenants in this Section 6.


 


6.1                               Financial
Statements and Other Reports.


 


Company will deliver to Administrative Agent and
Lenders:


 


A.                                   Events
of Default, etc.  Promptly
upon any Officer of Holdings or Company obtaining knowledge (i) of any
condition or event that constitutes an Event of Default or Potential Event of
Default, or (ii) of the occurrence of any event or change that has caused
or evidences, either in any case or in the aggregate, a Material Adverse
Effect, an Officer’s Certificate specifying the nature and period of existence
of such condition, event or change, or specifying the notice given or action
taken by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, event or condition, and what action Company has
taken, is taking and proposes to take with respect thereto;


 


B.                                     Monthly
Financials. For so long as the Consolidated Senior Leverage
Ratio is greater than 4.00:1.00, as soon as available and in any event within
30 days after the end of each of the first two Fiscal Months of each Fiscal
Quarter, the consolidated balance sheets of Company and its Subsidiaries as at
the end of such Fiscal Month and the related consolidated statements of income and
cash flows of Company and its Subsidiaries for such Fiscal Month and for the
period from the beginning of the then current Fiscal Year to the end of such
Fiscal Month, setting forth in each case commencing with the financial
statements for January 2011, in comparative form the corresponding figures
for the corresponding periods of the previous Fiscal Year, all in reasonable
detail and certified by a Financial Officer of Company that they fairly
present, in all material respects, the financial condition of Company and its
Subsidiaries as at the dates indicated and the results of their operations and
their cash flows for the periods indicated, subject to changes resulting from
audit and normal year-end adjustments and the absence of footnotes;


 


C.                                     Quarterly
Financials.  As soon as
available and in any event within 45 days after the end of each of the first
three Fiscal Quarters of each Fiscal Year, the consolidated balance sheets of
Company and its Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated statements of income and cash flows of Company and its
Subsidiaries for such Fiscal Quarter and for the period from the beginning of
the then current Fiscal Year to the end of such Fiscal Quarter, setting forth
in each case commencing with the first Fiscal Quarter of 2011, in comparative
form the corresponding figures for the corresponding periods of the previous
Fiscal Year and, commencing with the financial statements for the first Fiscal
Quarter of 2010, the corresponding figures from the Financial Plan for the
current Fiscal Year, to the extent prepared for such fiscal period, all in
reasonable detail and certified by a Financial Officer of Company that they
fairly present, in all material respects, the financial condition of Company and
its Subsidiaries as at the dates indicated and the results of their operations
and their cash


 


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flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments and the absence of
footnotes;


 


(i)                                     Within ten (10) Business
Days (or such later date to which the Administrative Agent may agree) after the
delivery, as required above, of quarterly financials reflecting a Consolidated
Senior Leverage Ratio greater than 3.50:1.00, Company shall host a telephone
conference for a discussion of such financial statements with the
Administrative Agent and those Lenders desiring to participate in such call; provided,
however, that for so long as the Consolidated Senior Leverage Ratio is less
than or equal to 3.50:1.00, such telephone conference shall only be required to
be held within ten (10) Business Days (or such later date to which the
Administrative Agent may agree) after the delivery of the quarterly financials,
as required above, for the first and third Fiscal Quarters of each Fiscal Year
to discuss the financial statements for the immediately preceding six (6) month
period.


 


D.                                    Year-End
Financials.


 


(i)                                     Unaudited
Financials.  As soon as
available and in any event within 120 days after the end of Fiscal Year 2009
and within 90 days after the end of each Fiscal Year thereafter, the unaudited
consolidated balance sheet of Company and its Subsidiaries as at the end of
such Fiscal Year and the related unaudited consolidated statements of income,
stockholders’ equity and cash flows of Company and its Subsidiaries for such
Fiscal Year, setting forth in each case in comparative form the corresponding
figures for the previous Fiscal Year and, starting with the financial
statements for Fiscal Year 2010, the corresponding figures from the Financial
Plan for the Fiscal Year covered by such financial statements, all in
reasonable detail and certified by a Financial Officer of Company that they
fairly present, in all material respects, the financial condition of Company
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments and the absence of
footnotes, provided, that Company may deliver the audited financials
described in subsection 6.1(D)(ii) in lieu of the unaudited financials if
such audited financial are delivered within 120 days or 90 days (as the case
may be) after the end of the relevant Fiscal Year;


 


(ii)                                  Audited
Financials.  As soon as
available and in any event within 150 days after the end of Fiscal Year 2009
and within 120 days after the end of each 
Fiscal Year thereafter, or such earlier date as may be required of
Company by the SEC or any applicable Government Authority (after giving effect
to any extensions), the audited consolidated balance sheet of Company and its
Subsidiaries as at the end of such Fiscal Year and the related audited
consolidated statements of income, stockholders’ equity and cash flows of
Company and its Subsidiaries for such Fiscal Year, setting forth in each case
in comparative form the corresponding figures for the previous Fiscal Year and,
starting with the financial statements for Fiscal Year 2010, the corresponding
figures from the Financial Plan for the Fiscal Year covered by such financial
statements, all in reasonable detail and certified by a Financial Officer of
Company that they fairly present, in all material respects, the financial
condition of Company and its Subsidiaries as at the


 


81

















 


dates
indicated and the results of their operations and their cash flows for the
periods indicated;


 


E.                                      Accountant’s
Report. As soon as available and in any event within 150 days after the end of
Fiscal Year 2009 and within 120 days after the end of each Fiscal Year
thereafter, or such earlier date as may be required of Company by the SEC or
any applicable Government Authority (after giving effect to any extensions), in
the case of the audited consolidated financial statements described in
subsection 6.1(D)(ii), a report thereon of Deloitte & Touche LLP or
other independent certified public accountants of recognized national standing
selected by Company and reasonably satisfactory to Administrative Agent, which
report shall not be subject to any “going concern” or like qualification or
exception, and shall state that such consolidated financial statements fairly
present, in all material respects, the consolidated financial position of
Company and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity with
GAAP applied on a basis consistent with the prior year (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards;


 


F.                                      Compliance
Certificates.  Not later
than five (5) days after the relevant financial statements are required to
be delivered pursuant to subsection 6.1(C) and subsection 6.1(D)(ii) above,
(i) an Officer’s Certificate of Company stating that the signers have
reviewed the terms of this Agreement and have made, or caused to be made under
their supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period covered
by such financial statements and that such review has not disclosed the
existence during or at the end of such accounting period, and that the signers
do not have knowledge of the existence as at the date of such Officer’s
Certificate, of any condition or event that constitutes an Event of Default or
Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with respect thereto; and (ii) a
Compliance Certificate demonstrating in reasonable detail compliance during and
at the end of the applicable accounting periods with the restrictions contained
in subsection 7.6, in each case to the extent compliance with such restrictions
is required to be tested at the end of the applicable accounting period;


 


G.                                     Reconciliation
Statements.  If, as a
result of any change in accounting principles and policies from those used in
the preparation of the audited financial statements for the Fiscal Year ended December 31,
2008 or any subsequent Fiscal Year thereafter, the consolidated financial
statements of Holdings and its Subsidiaries delivered pursuant to subsections
6.1(C) and 6.1(D) will differ in any material respect from the
consolidated financial statements that would have been delivered pursuant to
such subsections had no such change in accounting principles and policies been
made, then not later than five (5) days after the first delivery of financial
statements pursuant to subsections 6.1(C) and 6.1(D) following such
change, pursuant to subsection 1.2, a written statement of a Financial Officer
of Company setting forth the differences (including any differences that would
affect any calculations relating to the financial covenants set forth in
subsection 7.6) which would have resulted if such financial statements had been
prepared without giving effect to such change;


 


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H.                                    Accountants’
Certification.  Not later
than five (5) days after each delivery of consolidated financial
statements pursuant to subsection 6.1(D)(ii) above, a written statement by
the independent certified public accountants giving the report thereon (i) stating
that their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to subsection 7.6
and (ii) stating whether, in connection with their audit examination, any
condition or event that constitutes an Event of Default or Potential Event of
Default under subsection 7.6 has come to their attention and, if such a
condition or event has come to their attention, specifying the nature and
period of existence thereof; provided that such accountants shall not be
liable by reason of any failure to obtain knowledge of any such Event of
Default or Potential Event of Default that would not be disclosed in the course
of their audit examination;


 


I.                                         Government
Filings.  Promptly upon their becoming
available, copies of all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses, if
any, filed by Company or any of its Subsidiaries with any securities exchange
or with the Securities and Exchange Commission or any governmental or private
regulatory authority;


 


J.                                        Litigation
or Other Proceedings.  Promptly
upon any Officer of Company obtaining knowledge of (i) the institution of,
or non-frivolous threat of, any Proceeding against or affecting Company or any
of its Subsidiaries not previously disclosed in writing by Company to Lenders
or (ii) any material development in any such Proceeding that, in any such
case has a reasonable possibility after giving effect to the coverage and
policy limits of insurance policies issued to Company and its Subsidiaries of
giving rise to a Material Adverse Effect, written notice thereof together with
such other information as may be reasonably requested by Lenders and their
counsel to evaluate such matters;


 


K.                                    ERISA
Events.  Promptly upon becoming aware of
the occurrence of or forthcoming occurrence of any ERISA Event (other than any
ERISA Event occurring in connection with the Bankruptcy Case) which could
reasonably be expected to have a Material Adverse Effect, a written notice
specifying the nature thereof, what action Company, any of its Subsidiaries or
any of their respective ERISA Affiliates has taken, is taking or proposes to
take with respect thereto and, when known, any action taken or threatened by
the Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto;


 


L.                                      Financial
Plans.


 


(i)                                     At least 30
days prior to end of each Fiscal Year, a preliminary budget for the upcoming
Fiscal Year (the “Preliminary Financial Plan”);
and


 


(ii)                                  As soon as
practicable and in any event no later than 60 days after the beginning of each
Fiscal Year, a final budget for such Fiscal Year (the “Financial
Plan” for such Fiscal Year), including, in the case of both the
Preliminary Financial Plan and the Financial Plan, (a) forecasted consolidated
balance sheets and forecasted consolidated statements of income and cash flows
of Holdings and its Subsidiaries for each Fiscal Quarter of such Fiscal Year,
and (b) such other financial information as Administrative Agent may
reasonably request;


 


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M.                                 Notices
from Holders of Subordinated Indebtedness.  Promptly, upon receipt, copies of all notices
of events of default from holders of Subordinated Indebtedness or a trustee,
agent or other representative of such a holder;


 


N.                                    Other
Information.  With
reasonable promptness, such other information and data with respect to Company
or any of its Subsidiaries as from time to time may be reasonably requested by
Administrative Agent; and


 


O.                                    Patriot
Act.  With reasonable promptness,
information to confirm compliance with the Patriot Act.


 


P.                                      Second
Lien Credit Documents. 
Promptly (i) after all parties thereto have executed and delivered
such document, any amendment, restatement, amendment and restatement, supplement
or other modification of any Second Lien Credit Document entered into by any
Loan Party and (ii) after receipt, copies of any material notices
(including notices of default and acceleration) received from Second Lien Agent
or any Second Lien Lender, under or with respect to the Second Lien Credit
Agreement.


 


Provided, that any documents
required to be delivered pursuant to subsections 6.1C, 6.1D, 6.1E or 6.1I shall
be deemed to have been delivered on the earliest to occur of the date on which (i) Company
delivers such documents in accordance with subsection 10.7A; (ii) Company
notifies Agent that Company has posted such documents, or has provided a link
thereto on Company’s website on the Internet at the website address which
Company specifies to the Administrative Agent in accordance with subsection
10.7; provided, in each case, that such documents are then-accessible
via such posting or link; and (iii) on which such documents are posted on
Company’s behalf on the Platform.


 


6.2                               Existence,
etc.


 


Except as permitted under subsection 7.7, Company
will, and will cause each of its Subsidiaries to, at all times preserve and
keep in full force and effect its existence in its jurisdiction of organization
or formation and all rights and franchises necessary or desirable to its
business, except to the extent the failure to do so could not reasonably be
expected to have a Material Adverse Effect.


 


6.3                               Payment
of Taxes and Claims; Tax.


 


A.                                   Holdings will,
and will cause each of its Subsidiaries to, duly and timely file complete and
correct material Tax returns and duly and timely, before the same shall become
delinquent or in default (after giving effect to all properly obtained
extensions thereof), pay all Taxes, assessments and other governmental charges
imposed upon it or any of its properties or assets or in respect of any of its
income, businesses or franchises, and all claims (including claims for labor,
services, materials and supplies) for sums that have become due and payable and
that by law have or may become a Lien upon any of its properties or assets; provided
that no such Tax, assessment, charge or claim need be paid (or Tax returns
filed) if (i) it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long as (a) such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor and (b) in the case of
a Tax, assessment,


 


84

















 


charge or claim which has or may become a
Lien against any of the Collateral, such proceedings operate to stay the sale
of any portion of the Collateral to satisfy such charge or claim or (ii) the
failure to make such filing or such payment thereof could not reasonably be
expected to have a Material Adverse Effect and will not result in a Lien
securing such Taxes, assessments and other governmental charges in excess of
$900,000.


 


6.4                               Maintenance
of Properties; Insurance.


 


A.                                   Maintenance
of Properties.  Except if
the failure to do so could not reasonably be expected to have a Material
Adverse Effect, Company will, and will cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition,
ordinary wear and tear, casualty and condemnation excepted, all material
properties used or useful in the business of Company and its Subsidiaries
(including all Intellectual Property) and from time to time will make or cause
to be made all appropriate repairs, renewals and replacements thereof in
accordance with prudent industry practice.


 


B.                                     Insurance.  Company will maintain or cause to be
maintained, with financially sound and reputable insurers, insurance with
respect to liabilities, losses or damage in respect of the assets, properties
and businesses of Company and its Subsidiaries as may customarily be carried or
maintained under similar circumstances by organizations of established
reputation engaged in similar businesses, in each case in such amounts (giving
effect to self-insurance), with such deductibles, covering such risks and
otherwise on such terms and conditions as shall be customary for organizations
similarly situated in the industry. 
Company shall have delivered evidence prior to the Restatement Date that
each such policy of insurance (a) names Administrative Agent for the
benefit of Lenders as an additional insured thereunder as its interests may
appear and (b) in the case of each casualty insurance policy, contains a
loss payable clause or endorsement, reasonably satisfactory in form and
substance to Administrative Agent, that names Administrative Agent for the
benefit of Lenders as the loss payee thereunder for any covered loss and
provides for at least 30 days prior written notice to Administrative Agent of
any material reduction or cancellation of such policy; provided that such
insurance may be cancelable for non-payment upon no less than 10 days’ prior
written notice.


 


6.5                               Inspection
Rights.


 


Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by
Administrative Agent and any Lender to visit and inspect any of the properties
of Company or of any of its Subsidiaries, to inspect, copy and take extracts
from its and their financial and accounting records, and to discuss its and
their affairs, finances and accounts with its and their officers and
independent public accountants (provided that Company may, if it so
chooses, be present at or participate in any such discussion), all upon
reasonable prior written notice to Company and at such reasonable times during
normal business hours and as often as may reasonably be requested or at any
time or from time to time following the occurrence and during the continuation
of an Event of Default, provided that, excluding any such visits and
inspections during the continuation of an Event of Default, only Administrative
Agent on behalf of the Lenders may exercise rights under this subsection 6.5
and the Administrative Agent shall not exercise such rights more often than two
(2) times during any calendar year


 


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absent the existence of an
Event of Default and only one (1) such time shall be at Company’s expense.


 


6.6                               Compliance
with Laws, etc.


 


Company shall comply, and shall cause each of its
Subsidiaries to comply, with the requirements of all applicable laws, rules,
regulations and orders of any Government Authority (including all Environmental
Laws), noncompliance with which could reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect.


 


6.7                               Environmental
Matters.


 


A.                                   Environmental
Disclosure.  Company
will deliver to Administrative Agent and Lenders:


 


(i)                                     Environmental
Audits and Reports.  As soon as
practicable following receipt thereof, copies of all non-privileged
environmental audits, investigations, analyses and reports of any kind or
character, whether prepared by personnel of Company or any of its Subsidiaries
or by independent consultants, Government Authorities or any other Persons,
with respect to significant environmental matters at any Facility that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect or with respect to any Environmental Claims that,
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect.


 


(ii)                                  Notice of
Certain Releases, Remedial Actions, Etc.  Promptly upon the occurrence thereof, written
notice describing in reasonable detail (a) any unauthorized, non-routine
Release required to be reported to any Government Authority under any
applicable Environmental Laws (but excluding standard reports for routine
Releases), (b) any remedial action taken by Company or any other Person in
response to (1) any Hazardous Materials Activities the existence of which
could reasonably be expected to result in one or more Environmental Claims
having, individually or in the aggregate, a Material Adverse Effect, or (2) any
Environmental Claims that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect, and (c) Company’s
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of any Facility that could reasonably be expected to cause such
Facility or any part thereof to be subject to any restrictions on the
ownership, occupancy, transferability or use thereof under any Environmental
Laws which could reasonably be expected to result in a Material Adverse Effect.


 


(iii)                               Written
Communications Regarding Environmental Claims, Releases, Etc.  As soon as practicable following the sending
or receipt thereof by Company or any of its Subsidiaries, a copy of any and all
written non-privileged communications with respect to (a) any
Environmental Claims that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect, (b) any unauthorized,
non-routine Release required to be reported to any Government Authority (but
excluding standard reports for routine Releases), and (c) any request for
information


 


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from
any Government Authority that suggests such Government Authority is
investigating whether Company or any of its Subsidiaries may be potentially
responsible for any Hazardous Materials Activity which could reasonably be
expected to result in a Material Adverse Effect.


 


(iv)                              Notice of
Certain Proposed Actions Having Environmental Impact.  Prompt written notice describing in
reasonable detail (a) any proposed acquisition of stock, assets, or property
by Company or any of its Subsidiaries that could reasonably be expected to (1) expose
Company or any of its Subsidiaries to, or result in, Environmental Claims that
could reasonably be expected to result in, individually or in the aggregate, a
Material Adverse Effect or (2) affect the ability of Company or any of its
Subsidiaries to maintain in full force and effect all material Governmental
Authorizations required under any Environmental Laws for their respective
operations and (b) any proposed action to be taken by Company or any of
its Subsidiaries to modify current operations in a manner that could reasonably
be expected to subject Company or any of its Subsidiaries to any additional
obligations or requirements under any Environmental Laws that could reasonably
be expected to result in, individually or in the aggregate, a Material Adverse
Effect.


 


B.                                     Company’s
Actions Regarding Hazardous Materials Activities, Environmental Claims and
Violations of Environmental Laws.


 


(i)                                     Remedial
Actions Relating to Hazardous Materials Activities.  Company shall, in compliance with all
applicable Environmental Laws, promptly undertake, and shall cause each of its
Subsidiaries promptly to undertake, any and all investigations, studies,
sampling, testing, abatement, cleanup, removal, remediation or other response
actions necessary to remove, remediate, clean up or abate any Hazardous
Materials Activity on, under or about any Facility that is a violation of any
Environmental Laws or that presents a risk of giving rise to an Environmental
Claim which violation or risk, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.


 


(ii)                                  Actions with
Respect to Environmental Claims and Violations of Environmental Laws.  Company shall promptly take, and shall cause
each of its Subsidiaries promptly to take, any and all actions necessary to (i) cure
any violation of applicable Environmental Laws by Company or its Subsidiaries
that could reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect and (ii) make an appropriate response
to any Environmental Claim against Company or any of its Subsidiaries and
discharge any obligations it may have to any Person thereunder where failure to
do so could reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect.


 


C.                                     Environmental
Review and Investigation. 
Company agrees that Administrative Agent may, from time to time and in
its reasonable discretion, retain, at Company’s expense, an independent
professional consultant to review any non-privileged environmental audits,
investigations, analyses and reports relating to Hazardous Materials prepared
by or for Company in the event (a) Administrative Agent reasonably
believes that


 


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Company has breached any representation,
warranty or covenant contained in subsection 5.6, 5.12, 6.6 or 6.7 as a result
of a violation of Environmental Laws at any Facility then owned, leased or
operated by Company or its Subsidiaries, or by Company or any of its
Subsidiaries at any other location or (b) an Event of Default has occurred
and is continuing, and conduct its own investigation of any Facility then
owned, leased or operated by Company or its Subsidiaries.  For purposes of conducting such a review
and/or investigation, Company hereby grants to Administrative Agent and its
agents, employees, consultants and contractors the right to enter into or onto
any such Facilities and to perform such tests on such property (including
taking samples of soil, groundwater and suspected asbestos-containing
materials) as are reasonably necessary in connection therewith, subject to any
restrictions in applicable leases.  Any
such investigation of any Facility shall be conducted, unless otherwise agreed
to by Company and Administrative Agent, during normal business hours and, to
the extent reasonably practicable, shall be conducted so as not to interfere
with the ongoing operations at such Facility or to cause any damage or loss to
any property at such Facility and shall be conducted by a qualified
environmental professional possessing reasonable levels of insurance.  Company and Administrative Agent hereby
acknowledge and agree that any report of any investigation conducted at the
request of Administrative Agent pursuant to this subsection 6.7C will be
obtained and shall be used by Administrative Agent and Lenders for the purposes
of Lenders’ internal credit decisions, to monitor compliance with and to
protect Lenders’ security interests, if any, created by the Loan
Documents.  Administrative Agent agrees
to deliver a copy of any such report to Company with the understanding that
Company acknowledges and agrees that (x) it will indemnify and hold
harmless Administrative Agent and each Lender from any costs, losses or
liabilities relating to Company’s use of or reliance on such report, (y) neither
Administrative Agent nor any Lender makes any representation or warranty with
respect to such report, and (z) by delivering such report to Company,
neither Administrative Agent nor any Lender is requiring or recommending the
implementation of any suggestions or recommendations contained in such report.


 


6.8                               Execution
of Subsidiary Guaranty and Personal Property Collateral Documents After the
Restatement Date.


 


A.                                   Execution
of Subsidiary Guaranty and Personal Property Collateral Documents.  In the event that any Person becomes a
Subsidiary of Company after the date hereof, Company will promptly notify
Administrative Agent of that fact and cause any such Subsidiary that is
required to become a guarantor hereunder to execute and deliver to
Administrative Agent a counterpart of the Subsidiary Guaranty and Security
Agreement and to take all such further actions and execute all such further
documents and instruments (including actions, documents and instruments
comparable to those described in subsection 4.1G) as may be necessary or, in
the reasonable opinion of Administrative Agent, desirable to create in favor of
Administrative Agent, for the benefit of Lenders, a valid and perfected First
Priority Lien on all of the personal and mixed property assets of such
Subsidiary described in the applicable forms of Collateral Documents.  In addition, as provided in the Security
Agreement, Company shall, or shall cause the Subsidiary that owns the Capital
Stock of such Person to, execute and deliver to Administrative Agent a
supplement to the Security Agreement and to deliver to Administrative Agent all
certificates representing such Capital Stock of such Person (accompanied by
irrevocable undated stock powers, duly endorsed in blank).  Anything contained herein to the contrary
notwithstanding, the Collateral shall exclude those assets as to which
Administrative


 


88

















 


Agent shall reasonably determine that the
costs of obtaining a security interest are unreasonably excessive in relation
to the benefit to the Lenders of the security afforded thereby.


 


B.                                     Foreign
Subsidiaries. 
Notwithstanding anything to the contrary in any Loan Document, (i) no
Foreign Subsidiary shall be required to guaranty the Obligations, (ii) no
more than 65% of the voting stock of any first-tier Foreign Subsidiary (and
such stock shall not represent more than 65% of the total combined voting power
of all classes of stock of such Subsidiary entitled to vote) shall be pledged
to as security for the Obligations, (iii) no Foreign Subsidiary shall be
required to pledge as security for the Obligations the stock of any other
Foreign Subsidiary, and (iv) no assets of any Foreign Subsidiary shall be
pledged as security for the Obligations.


 


C.                                     Subsidiary
Organizational Documents, Legal Opinions, Etc.  Company shall within thirty (30) days after
the reasonable request therefor by Administrative Agent deliver to
Administrative Agent, together with such Loan Documents, (i) certified
copies of such Subsidiary’s Organizational Documents, together with, if such
Subsidiary is a Domestic Subsidiary, a good standing certificate from the
Secretary of State of the jurisdiction of its organization, (ii) a
certificate executed by the secretary or similar officer of such Subsidiary as
to (a) the fact that the attached resolutions of the Governing Body of
such Subsidiary approving and authorizing the execution, delivery and
performance of such Loan Documents are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the
officers of such Subsidiary executing such Loan Documents, and (iii) if
requested by Administrative Agent, an opinion of counsel to such Subsidiary as
to (a) the due organization and good standing of such Subsidiary, (b) the
due authorization, execution and delivery by such Subsidiary of such Loan
Documents, (c) the enforceability of such Loan Documents against such
Subsidiary and (d) such other matters (including matters relating to the
creation and perfection of Liens in any Collateral pursuant to such Loan
Documents) as Administrative Agent may reasonably request, all of the foregoing
to be reasonably satisfactory in form and substance to Administrative Agent and
its counsel.


 


6.9                               Matters
Relating to Additional Real Property Collateral.


 


From and after the Restatement Date, in the event
that (i) Company or any Subsidiary Guarantor acquires any fee interest in
real property or any Leasehold Property or (ii) at the time any Person
becomes a Subsidiary Guarantor, such Person owns or holds any fee interest in
real property or any Leasehold Property, excluding any such Real Property Asset
the encumbrancing of which requires the consent of any applicable lessor or
then-existing senior lienholder, where Company and its Subsidiaries have
attempted in good faith, but are unable, to obtain such lessor’s or senior
lienholder’s consent (any such non-excluded Real Property Asset described in
the foregoing clause (i) or (ii) being an “Additional
Mortgaged Property”), Company or such Subsidiary Guarantor shall
deliver to Administrative Agent, as soon as practicable after such Person
acquires such Additional Mortgaged Property or becomes a Subsidiary Guarantor,
as the case may be, a fully executed and notarized Mortgage (an “Additional Mortgage”), in proper form for recording in all
appropriate places in all applicable jurisdictions, encumbering the interest of
such Loan Party in such Additional Mortgaged Property; and such opinions,
appraisals, documents, title insurance, and environmental reports that would
have been delivered on or before the Restatement Date if such Additional
Mortgaged


 


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Property were an Existing
Mortgaged Property or that may be reasonably required by Administrative Agent.


 


6.10                        Merger.


 


The merger of Panolam Holdings II Co. with and into
Company shall occur on the Effective Date (as defined in the Plan).


 


6.11                        Ratings.


 


Holdings shall use commercially reasonable efforts
to obtain and maintain ratings of the Loans by Moody’s and S&P.


 


6.12                        Recorded
Leasehold Interests.


 


To the extent not delivered on or prior to the
Restatement Date, Company shall, and shall cause each of its Subsidiaries to,
use commercially reasonable efforts to deliver within 90 days after the
Restatement Date, for each Existing Mortgaged Property consisting of a
Leasehold Property, evidence that such Leasehold Property is a Recorded
Leasehold Interest.


 


6.13                        Further
Assurances.


 


Company and Holdings agree that from time to time,
at Administrative Agent’s reasonable request, Company and Holdings shall, and
shall cause their Subsidiaries to, at their expense, promptly execute and deliver,
or cause to be executed and delivered, all further agreements, documents and
instruments, and do or cause to be done all further acts as may be necessary or
desirable, in order to effectuate the Liens and security interests purported to
be granted pursuant to this Agreement and the other Loan Documents.


 


6.14                        Deposit
Accounts and Securities Accounts.


 


A.                                   Prior to the
deposit of any cash into any Deposit Account (other than into any De Minimis
Account or any Trust Fund Account) not already subject to an Account Control
Agreement, Company shall enter into an Account Control Agreement with respect
to such Deposit Account.


 


B.                                     Prior to the
establishment of any Securities Account, Company shall enter into an Account
Control Agreement with respect to such Securities Account.


 


6.15                        Post-Closing
Items.


 


The
Company shall, and shall cause each of the other Loan Parties to, take all
necessary actions to satisfy the requirements set forth on Schedule 6.15
within the applicable time period set forth on such schedule (and the
Administrative Agent may, in its sole discretion, extend the applicable time
periods).


 


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Section 7.                                          NEGATIVE
COVENANTS


 


Company covenants and agrees that, so long as any of
the Commitments hereunder shall remain in effect and until payment in full of
all of the Loans and other Obligations (other than Unasserted Obligations) and
the cancellation or expiration of, or the provision for cash collateral or
other support in a manner reasonably satisfactory to the Issuing Lender in
respect of, all Letters of Credit, unless Requisite Lenders shall otherwise
give prior written consent, Company shall perform, and shall cause each of its
Subsidiaries to, perform all covenants in this Section 7.


 


7.1                                 Indebtedness.


 


Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur or assume, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except:


 


(i)                                     the
Obligations;


 


(ii)                                  Contingent
Obligations permitted by subsection 7.4;


 


(iii)                               Indebtedness in
respect of Capital Leases and purchase money obligations within the limitations
of subsection 7.2A(xii) aggregating not in excess of $3,000,000 at any time
outstanding;


 


(iv)                              Indebtedness of
Company or any Subsidiary owing to Company or any Subsidiary in respect of an
Investment permitted by subsection 7.3(ii) or 7.3(xvi); provided
that if such intercompany Indebtedness is evidenced by a promissory note or
other instrument, such promissory note or instrument shall have been pledged to
Administrative Agent pursuant to the Security Agreement;


 


(v)                                 Indebtedness
described in Schedule 7.1 annexed hereto and any Permitted Refinancing
thereof;


 


(vi)                              Indebtedness of
the Company or any Subsidiary under the Second Lien Credit Documents in an
aggregate principal amount not to exceed $25,000,000, which principal amount
may be increased, in accordance with the terms of the Intercreditor Agreement,
up to a total aggregate amount of $37,500,000 (plus the amount of any interest
paid in kind in accordance with the terms of the Second Lien Credit Documents);


 


(vii)                           Indebtedness
assumed in connection with a Permitted Acquisition and of a Person that becomes
a direct or indirect Subsidiary of Company as a result of a Permitted
Acquisition; provided that such Indebtedness is not created in
anticipation of such acquisition, and any Permitted Refinancing thereof;


 


(viii)                        Indebtedness of
Foreign Subsidiaries in an aggregate principal amount at any time outstanding
for all such Persons taken together not exceeding $5,000,000;


 


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(ix)                                Indebtedness
(other than for borrowed money or with respect to Capital Leases or purchase
money obligations) subject to Liens permitted under subsection 7.2;


 


(x)                                   Indebtedness
representing deferred compensation to directors, officers, members of
management or employees of Company or any of its Subsidiaries incurred in the
ordinary course of business or in connection with any Permitted Acquisitions;


 


(xi)                                Indebtedness
consisting of promissory notes issued to future, present or former directors,
officers, members of management, employees or consultants of Holdings or any of
its Subsidiaries or their respective estates, heirs, family members, spouses or
former spouses to finance the purchase or redemption of Capital Stock of
Holdings or any of its direct or indirect parent companies;


 


(xii)                             Cash management
obligations and other Indebtedness in respect of netting services, overdraft
protections and similar arrangements in each case in connection with cash
management and deposit accounts;


 


(xiii)                          Indebtedness
consisting of the financing of insurance premiums, so long as the aggregate
amount payable pursuant to such Indebtedness does not materially exceed the
amount of the premium for such insurance;


 


(xiv)                         Subordinated
Indebtedness owed to the seller of any property acquired in a Permitted
Acquisition on an unsecured basis, which subordination shall be on terms
reasonably satisfactory to the Administrative Agent, so long as both
immediately prior and after giving effect thereto (1) no Event of Default
shall exist or result therefrom, (2) Company shall be in Pro Forma
Compliance with the covenants set forth in subsection 7.6 after giving effect
to the issuance of such Indebtedness; provided that the Consolidated
Senior Leverage Ratio, calculated on a Pro Forma Basis, shall be lower by at least
0.25:1.00 than the Consolidated Senior Leverage Ratio then required pursuant to
subsection 7.6B, and (3) such Indebtedness does not amortize and matures
no earlier than 180 days after the later of the Revolving Loan Commitment
Termination Date and the final maturity date of any Term Loans;


 


(xv)                            Subordinated
Indebtedness in an aggregate amount not to exceed $7,500,000, which
subordination shall be on terms reasonably satisfactory to the Administrative
Agent, provided that the Net Securities Proceeds of such Indebtedness
are utilized within 120 days of the incurrence thereof to finance a Permitted
Acquisition; provided that (1) the terms thereof are reasonably
satisfactory to the Administrative Agent, (2) no Event of Default shall
exist or result therefrom, (3) Company shall be in Pro Forma Compliance
with the covenants set forth in subsection 7.6A after giving effect to the
issuance of such Indebtedness, and any Permitted Refinancing thereof, (4) such
Indebtedness does not amortize and matures no earlier than 180 days after the
later of the Revolving Loan Commitment Termination Date and the final maturity
date of any Term Loans and (5) until payment in full in cash of all of the
Loans and other Obligations, such Indebtedness does not bear any interest payable
in cash;


 


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(xvi)                         Subordinated
Indebtedness, which subordination shall be on terms reasonably satisfactory to
the Administrative Agent, provided that the Net Securities Proceeds of
such Indebtedness are utilized to make a voluntary prepayment of Term Loans; provided,
(1) the terms thereof are reasonably satisfactory to the Administrative
Agent, (2) no Event of Default shall exist or result therefrom, and (3) such
Indebtedness does not amortize and matures no earlier than 180 days after the
later of the Revolving Loan Commitment Termination Date and the final maturity
date of any Term Loans;


 


(xvii)                      Indebtedness of
Canadian Subsidiaries in an aggregate principal amount not to exceed $7,500,000
(or the Canadian dollar equivalent thereof) at any time outstanding, which
Indebtedness may be secured only by the assets of such Canadian Subsidiaries; provided
that (i) no Event of Default shall have occurred or be continuing or shall
result therefrom, (ii) such Indebtedness shall not be guaranteed by
Company or any Subsidiary Guarantor, (iii) Company shall make a mandatory
prepayment of the Term Loans pursuant to subsection 2.4B(iii)(d) in an
amount equal to the Net Securities Proceeds of such Indebtedness, and (iv) such
Indebtedness shall not reasonably be expected to have a Material Adverse Effect
on Company or any of its Subsidiaries;


 


(xviii)                   Indebtedness
pursuant to the Pioneer Plastics Maine Guaranty;


 


(xix)                           Other
Indebtedness in an aggregate principal amount not to exceed $5,000,000 at any
time outstanding; and


 


(xx)                              all premiums
(if any), interest (including post-petition interest), fees, expenses, charges
and additional or contingent interest on obligations described in clauses (i) through
(xix).


 


7.2                                 Liens and Related Matters.


 


A.                                   Prohibition
on Liens.  Company
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume or permit to exist any Lien on or with
respect to any property or asset of any kind, whether now owned or hereafter
acquired, except:


 


(i)                                     Liens for
Taxes, assessments or governmental charges or claims the payment of which is
not, at the time, required by subsection 6.3;


 


(ii)                                  statutory Liens
of landlords, Liens of collecting banks under the UCC on items in the course of
collection, statutory Liens and other Liens arising as a matter of law
(including rights of set-off of banks, statutory Liens of carriers,
warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens
imposed by law), in each case incurred in the ordinary course of business (a) for
amounts not overdue by more than 30 days or if more than 30 days overdue that
are being contested in good faith by appropriate proceedings, so long as (1) such
adequate reserves with respect thereto are maintained in accordance with GAAP,
and (2) in the case of a Lien with respect to any portion of the
Collateral, such contest proceedings operate to stay the sale of any portion of
the Collateral on account of such Lien or (b) with respect to which the
failure to make payment could not reasonably be expected to have a Material
Adverse Effect;


 


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(iii)                               pledges or
deposits made in the ordinary course of business in connection with (a) workers’
compensation, unemployment insurance and other types of social security, (b) to
secure the performance of statutory obligations, bids, leases, government
contracts, trade contracts, and other similar obligations (exclusive of
obligations for the payment of borrowed money), (c) securing insurance
premiums or reimbursement obligations or liabilities under insurance policies, (d) surety,
stay, customs and appeal bonds, performance bonds, performance and completion
guarantee and other obligations of a similar nature, and (e) obligations
in respect of Letters of Credit or bank guarantees that have been posted to
support payment of the items in clauses (a), (b), (c) and (d) of this
subsection 7.2A(iii);


 


(iv)                              any attachment
or judgment Lien not constituting an Event of Default under subsection 8.8;


 


(v)                                 (a) licenses,
sublicenses, leases or subleases granted to other Persons not interfering in
any material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries or (b) the rights reserved or vested in any Person
by the terms of any lease, license, franchise, grant or permit held by Company
or any of its Subsidiaries or by a statutory provision, to terminate any such
lease, license, franchise, grant or permit, or to require annual or periodic
payments as a condition to the continuance thereof;


 


(vi)                              easements,
rights-of-way, restrictions, encroachments, and other minor defects or
irregularities in title, in each case which do not interfere in any material
adverse respect with the ordinary conduct of the business of Company or any of
its Subsidiaries;


 


(vii)                           any (a) interest
or title of a lessor or sublessor under any lease not prohibited by this
Agreement, (b) Lien or restriction that the interest or title of such
lessor or sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any Lien or restriction
referred to in the preceding clause (b), so long as the holder of such Lien or
restriction agrees to recognize the rights of such lessee or sublessee under
such lease;


 


(viii)                        Liens arising
from filing UCC financing statements relating solely to leases not prohibited
by this Agreement;


 


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


 


(x)                                   any zoning or
similar law or right reserved to or vested in any Government Authority to
control or regulate the use of any real property;


 


(xi)                                Liens securing
obligations (other than obligations representing Indebtedness for borrowed
money) under operating, reciprocal easement or similar agreements entered into
in the ordinary course of business of Company and its Subsidiaries;


 


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(xii)                             with respect to
acquisitions of assets not prohibited by this Agreement, Liens on such asset
existing at the time of its acquisition, or Liens to secure the payment of all
or any part of the purchase price of such asset upon its acquisition by Company
or a Subsidiary or to secure any Indebtedness permitted hereby incurred at the
time of or within 270 days after the acquisition, construction or improvement
of such asset, which Indebtedness is incurred for the purpose of financing all
or any part of the purchase price or cost thereof; provided, however,
that the Lien shall apply only to the asset so acquired and proceeds and
products thereof, and after-acquired property subjected to a Lien pursuant to
terms existing at the time of such acquisition; provided  further
that individual financings provided by one Person or its Affiliate may be
cross-collateralized to other financings provided by such Person or its
Affiliate, and any modifications, replacements, renewals or extensions thereof;
provided that (a) the Lien does not extend to any additional
property other than (1) after-acquired property that is affixed or
incorporated into the property covered by such Lien or financed by Indebtedness
permitted under subsection 7.1, (2) proceeds and products thereof, and (3) property
serving as collateral for a financing which is cross-collateralized to the
financing secured by such Lien provided by the same Person or its Affiliate,
and (b) the modification, replacement, renewal, extension or refinancing
of the obligations secured or benefited by such Liens (if such obligations
constitute Indebtedness) is permitted by subsection 7.1 or subsection 7.4;


 


(xiii)                          Liens assumed
in connection with a Permitted Acquisition and Liens on assets of a Person that
becomes a direct or indirect Subsidiary of Company after the date of this
Agreement in a Permitted Acquisition, provided, however, that
such Liens exist at the time such Person becomes a Subsidiary and are not
created in anticipation of such acquisition and any modifications, replacements,
renewals or extensions thereof; provided that (a) the Lien does not
extend to any additional property other than (1) after-acquired property
that is affixed or incorporated into the property covered by such Lien or
financed by Indebtedness permitted under subsection 7.1, (2) proceeds and
products thereof, and (3) property serving as collateral for a financing
which is cross-collateralized to the financing secured by such Lien provided by
the same Person or its Affiliate, and (b) the modification, replacement,
renewal, extension or refinancing of the obligations secured or benefited by
such Liens (if such obligations constitute Indebtedness) is permitted by
subsection 7.1 or subsection 7.4;


 


(xiv)                         Liens described
in Schedule 7.2 annexed hereto and any modifications, replacements,
renewals or extension thereof; provided that (a) the Lien does not
extend to any additional property other than (1) after-acquired property
that is affixed or incorporated into the property covered by such Lien or
financed by Indebtedness permitted under subsection 7.1, (2) proceeds and
products thereof, and (3) property serving as collateral for a financing
which is cross-collateralized to the financing secured by such Lien provided by
the same Person or its Affiliate, and (b) the modification, replacement,
renewal, extension or refinancing of the obligations secured or benefited by
such Liens (if such obligations constitute Indebtedness) is permitted by
subsection 7.1 or subsection 7.4;


 


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(xv)                            Liens (a)(1) on
advances of Cash or Cash Equivalents in favor of the seller of any property to
be acquired in an Investment permitted pursuant to subsection 7.3 to be applied
against the purchase price for such Investment and (2) consisting of an
agreement to dispose of any property in a disposition of assets permitted under
subsection 7.7, in each case under this clause (a), solely to the extent such
Investment or disposition, as the case may be, would have been permitted on the
date of the creation of such Lien and (b) on earnest money deposits of
Cash or Cash Equivalents made by Company or any of the Subsidiaries in
connection with any letter of intent or purchase agreement permitted hereunder;


 


(xvi)                         Liens on
property of any Foreign Subsidiary securing Indebtedness of such Foreign
Subsidiary permitted under subsection 7.1;


 


(xvii)                      Liens in favor
of Company or any of its Domestic Subsidiaries securing Indebtedness of a
Foreign Subsidiary permitted under subsection 7.1(iv) or 7.1(xix);


 


(xviii)                   Liens arising
out of conditional sale, title retention, consignment or similar arrangements
for sale of goods entered into by Company or any of the Subsidiaries in the
ordinary course of business and not prohibited by this Agreement;


 


(xix)                           Liens that are contractual
rights of set-off (a) relating to the establishment of depository
relations with banks not given in connection with the issuance of Indebtedness
(other than as described in clause (v) of the definition thereof), (b) relating
to pooled deposit or sweep accounts of Company or any Subsidiary to permit
satisfaction of overdraft or similar obligations incurred in the ordinary
course of business of Company and its Subsidiaries or (c) relating to
purchase orders and other agreements entered into with customers of Company or
any Subsidiary in the ordinary course of business;


 


(xx)                              Liens
encumbering reasonable customary initial deposits and margin deposits and
similar Liens attaching to commodity trading accounts or other brokerage
accounts incurred in the ordinary course of business and not for speculative
purposes;


 


(xxi)                           Liens pursuant
to the Loan Documents;


 


(xxii)                        Other Liens
securing Indebtedness in an aggregate amount not to exceed $2,500,000 at any
time outstanding; and


 


(xxiii)                     Liens created
pursuant to the Second Lien Credit Documents.


 


Notwithstanding the
foregoing, except for the Loan Documents and the Second Lien Credit Documents,
Company and its Domestic Subsidiaries shall not enter into, or suffer to exist,
any agreement which grants “control” as contemplated by the UCC except with
respect to restricted accounts established for the purposes of granting Liens
otherwise permitted hereby.


 


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B.                                     No
Further Negative Pledges. 
Neither Company nor any of its Subsidiaries shall enter into any
agreement prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired, to secure
Indebtedness under this Agreement, other than (i) the Second Lien Credit
Agreement or any agreement prohibiting only the creation of Liens securing
Subordinated Indebtedness, (ii) any agreement evidencing Indebtedness
secured by Liens permitted by subsection 7.2A, as to the assets securing such
Indebtedness, (iii) any agreement evidencing an asset sale, as to the
assets being sold, (iv) (a) any agreements which exist on the date
hereof and (to the extent not otherwise permitted by this subsection 7.2B are
listed on Schedule 7.2 hereto) and (b) to the extent agreements permitted
by clause (a) are set forth in an agreement evidencing Indebtedness, are
set forth in any agreement evidencing any permitted modification, replacement,
refinancing, refunding, renewal or extension thereof so long as such
modification, replacement, refinancing, refunding, renewal or extension does
not expand the scope of the restrictions; (v) any agreement binding on a
Subsidiary at the time such Subsidiary first becomes a Subsidiary of Company,
so long as such agreement was not entered into in contemplation of such Person
becoming a Subsidiary of Company; (vi) any agreement representing
Indebtedness of a Subsidiary which is not a Loan Party which is permitted by
subsection 7.1; (vii) customary provisions in Joint Venture agreements and
other similar agreements applicable to Joint Ventures permitted under
subsection 7.3 and applicable solely to such Joint Venture; (viii) negative
pledges and restrictions on Liens in favor of any holder of Indebtedness
permitted under subsection 7.1 but solely to the extent any negative pledge
relates to the property financed by or the subject of such Indebtedness or that
expressly permits Liens for the benefit of Administrative Agent and the Lenders
with respect to the credit facilities established hereunder and the Obligations
under the Loan Documents on a senior basis without the requirement that such
holders of such Indebtedness be secured by such Liens on an equal and ratable,
or junior, basis; (ix) customary restrictions in leases, subleases,
licenses or asset sale agreements otherwise permitted hereby so long as such
restrictions relate to the assets subject thereto; (x) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest; or (xi) customary provisions restricting assignment or
transfer of any agreement entered into in the ordinary course of business.


 


C.                                     No
Restrictions on Subsidiary Distributions to Company or Other Subsidiaries.  Company will not, and will not permit any of
its Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary to (i) pay dividends or make any other distributions on
any of such Subsidiary’s Capital Stock owned by Company or any other Subsidiary
of Company, (ii) repay or prepay any Indebtedness owed by such Subsidiary
to Company or any other Domestic Subsidiary of Company, (iii) make loans
or advances to Company or any other Domestic Subsidiary of Company, or (iv) transfer
any of its property or assets to Company or any other Domestic Subsidiary of
Company, except (a) as provided in this Agreement and the Second Lien
Credit Agreement, (b) as may be provided in an agreement with respect to a
sale of such assets or such Subsidiary, (c) as provided in any agreement
evidencing Indebtedness secured by Liens permitted by subsection 7.2A, as to
the assets securing such Indebtedness, and (d) as provided in (1) (a) any
agreements which exist on the date hereof and (to the extent not otherwise permitted
by this subsection 7.2C are listed on Schedule 7.2 hereto) and (b) to
the extent agreements permitted by clause (a) are set forth in an
agreement evidencing Indebtedness, are set forth in any agreement evidencing
any permitted modification, replacement, refinancing,


 


97

















 


refunding, renewal or extension thereof so
long as such modification, replacement, refinancing, refunding, renewal or
extension does not expand the scope of the restrictions; (2) any agreement
binding on a Subsidiary at the time such Subsidiary first becomes a Subsidiary
of Company, so long as such agreement was not entered into in contemplation of
such Person becoming a Subsidiary of Company; (3) any agreement
representing Indebtedness of a Subsidiary which is not a Loan Party which is
permitted by subsection 7.1; (4) customary provisions in Joint Venture
agreements and other similar agreements applicable to Joint Ventures permitted
under subsection 7.3 and applicable solely to such Joint Venture; (5) negative
pledges and restrictions on Liens in favor of any holder of Indebtedness
permitted under subsection 7.1 but solely to the extent any negative pledge
relates to the property financed by or the subject of such Indebtedness or that
expressly permits Liens for the benefit of Administrative Agent and the Lenders
with respect to the credit facilities established hereunder and the Obligations
under the Loan Documents on a senior basis without the requirement that such
holders of such Indebtedness be secured by such Liens on an equal and ratable,
or junior, basis; (6) customary restrictions in leases, subleases,
licenses or asset sale agreements otherwise permitted hereby so long as such
restrictions relate to the assets subject thereto; (7) customary
provisions restricting subletting or assignment of any lease governing a
leasehold interest; or (8) customary provisions restricting assignment or
transfer of any agreement entered into in the ordinary course of business.


 


7.3                               Investments;
Acquisitions.


 


Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person except:


 


(i)                                     Investments in
Cash and Cash Equivalents;


 


(ii)                                  Investments (a) by
any Loan Party in any other Loan Party, (b) by any Subsidiary that is not
a Loan Party in any Loan Party or in any other Subsidiary that is also not a
Loan Party or (c) on or after January 1, 2010, by any Loan Party in
any Subsidiary that is not a Loan Party in an aggregate amount not to exceed
$5,000,000 at any time outstanding;


 


(iii)                               loans or
advances to officers, directors, members of management, and employees of
Holdings, Company or any of its Subsidiaries (a) for relocation and
analogous ordinary business purposes, or (b) in connection with such
Person’s purchase of Capital Stock of Holdings or its direct or indirect parent
(or after the occurrence of a Qualifying IPO, of the Qualifying IPO Issuer) in
an aggregate amount not to exceed $1,000,000 at any time outstanding;


 


(iv)                              Investments
consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course
of business, and Investments received in satisfaction or partial satisfaction
thereof from account debtors and other credits to suppliers in the ordinary
course of business;


 


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(v)                                 Investments
consisting of Indebtedness, Liens, Contingent Obligations, Restricted Junior
Payments, fundamental changes and dispositions of assets permitted by
subsections 7.1, 7.2, 7.4, 7.5 and 7.7, respectively;


 


(vi)                              Investments in
Hedge Agreements entered into in the ordinary course of business for the
purpose of hedging against any Loan Party’s risk related to fluctuations in
interest rates, currency values or commodity prices and not for speculative
purposes;


 


(vii)                           Investments in
the ordinary course of business consisting of (a) endorsements for
collection or deposit or (b) customary trade arrangements with customers;


 


(viii)                        loans and
advances to Holdings in lieu of, and not in excess of the amount of (after
giving effect to any other loans, advances or Restricted Junior Payments in
respect thereof), Restricted Junior Payments permitted to be made to Holdings
in accordance with subsection 7.5;


 


(ix)                                advances of
payroll payments to employees in the ordinary course of business;


 


(x)                                   Investments to
the extent the consideration paid therefor consists solely of Capital Stock of
Holdings or made with the Net Securities Proceeds of the sale of Capital Stock
of Holdings to the extent not required to prepay any Loans pursuant to
subsection 2.4B(iii)(c);


 


(xi)                                Investments
consisting of promissory notes issued to any Loan Party by future, present or
former officers, directors, employees, members of management, or consultants of
Holdings or any of its Subsidiaries or their respective estates, heirs, family
members, spouses or former spouses to finance the purchase or redemption of
Capital Stock of Holdings or its direct or indirect parent (or, after the
occurrence of a Qualifying IPO, of the Qualifying IPO Issuer), to the extent
the applicable Restricted Junior Payment is permitted by subsection 7.5;


 


(xii)                             [Reserved];


 


(xiii)                          Consolidated
Capital Expenditures permitted by subsection 7.8;


 


(xiv)                         Investments
owned on the Restatement Date and described in Schedule 7.3 annexed
hereto and any modification, replacement, refinancing, refunding, renewal or
extension thereof; provided that the amount of the original Investment
is not increased except by the terms of such Investment or as otherwise
permitted by this subsection 7.3;


 


(xv)                            on or after January 1,
2010, acquisition of assets (including Capital Stock and including Capital
Stock of Subsidiaries formed in connection with any such acquisition) having a
fair market value not in excess of $15,000,000 in the aggregate; provided
that (a) no Potential Event of Default or Event of Default shall have
occurred


 


99

















 


and
be continuing at the time such acquisition occurs or after giving effect
thereto, (b) Company shall, and shall cause its Subsidiaries to, comply
with the requirements of subsections 6.8 and 6.9 with respect to such
acquisition if it results in a Person becoming a Subsidiary, (c) Company shall
have demonstrated that, after giving effect to such acquisition and any
Indebtedness to be incurred in connection therewith, it shall be in Pro Forma
Compliance with the financial covenants set forth in subsection 7.6, (d) after
giving effect to such acquisition, Company shall be in compliance with the
terms of subsection 7.11, (e) as a result of such acquisition, Company
shall not assume or become liable for Contingent Obligations that could
reasonably be expected to have a Material Adverse Effect, and (f) no more
than $7,500,000 of the aggregate purchase price of assets permitted to be
acquired under this subsection 7.3(xv) shall be financed with cash of Company
and its Subsidiaries;


 


(xvi)                         on or after January 1,
2010, Company and its Domestic Subsidiaries may make and own other Investments
in an aggregate amount not to exceed at any time $5,000,000, which other
Investments may include Permitted Acquisitions;


 


(xvii)                      receipt and
possession of promissory notes and other non-cash consideration received in
connection with any Asset Sale permitted by subsection 7.7; and


 


(xviii)                   acquisition of
Securities in connection with the satisfaction or enforcement of Indebtedness
or claims due or owing to Company or any of its Subsidiaries or as security for
any such Indebtedness or claim.


 


7.4                                 Contingent Obligations.


 


Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:


 


(i)                                     Contingent
Obligations under Hedge Agreements entered into in the ordinary course of
business for the purpose of hedging against any Loan Party’s risk related to
fluctuations in interest rates, currency values or commodity prices and not for
speculative purposes;


 


(ii)                                  Contingent
Obligations in respect of customary indemnification and purchase price
adjustment obligations incurred in connection with Asset Sales or other sales
of assets and Permitted Acquisitions;


 


(iii)                               Contingent
Obligations under guarantees in the ordinary course of business;


 


(iv)                              Contingent
Obligations in respect of any Indebtedness of Company or any of its
Subsidiaries permitted by subsection 7.1;


 


(v)                                 Contingent
Obligations described in Schedule 7.4 annexed hereto and any Permitted
Refinancing thereof;


 


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(vi)                              Contingent
Obligations arising under the subordinated guaranties of the Second Lien Notes
and Subordinated Indebtedness permitted under subsection 7.1;


 


(vii)                           Contingent
Obligations consisting of take or pay obligations contained in supply
agreements, in each case incurred in the ordinary course of business;


 


(viii)                        obligations in
respect of performance, stay, customs, appeal and surety bonds and performance
and completion guarantees provided by Company or its Subsidiaries;


 


(ix)                                Contingent
Obligations constituting reimbursement obligations with respect to letters of
credit issued in the ordinary course in respect of workers’ compensation,
unemployment insurance and other types of social security, to secure the
performance of statutory obligations, bids, leases, government contracts, trade
contracts and other similar obligations, securing insurance premiums or
reimbursement obligations or liabilities under insurance policies, surety,
stay, customs and appeal bonds, performance bonds, performance and completion
guarantees and other obligations of a similar nature; provided that upon
the drawing of such letters of credit or the incurrence of such Indebtedness,
such obligations are reimbursed within 30 days following such drawing or
incurrence;


 


(x)                                   Contingent
Obligations constituting Indebtedness permitted by subsection 7.1;


 


(xi)                                Guarantees by
Company or its Subsidiaries of leases or of other obligations of Loan Parties
that do not constitute Indebtedness, in each case entered into in the ordinary
course of business; and


 


(xii)                             Company and its
Domestic Subsidiaries may become and remain liable with respect to other
Contingent Obligations; provided that the maximum aggregate liability,
contingent or otherwise, of Company and its Subsidiaries in respect of all such
Contingent Obligations, when added to the aggregate principal amount of
Indebtedness permitted under subsection 7.1(xix), shall at no time exceed
$5,000,000.


 


7.5                               Restricted
Junior Payments.


 


Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; provided that:


 


(i)                                     Company may
make scheduled payments of interest in respect of the Second Lien Notes in
accordance with the terms of the Second Lien Credit Agreement and Intercreditor
Agreement (but only to the extent required by the Second Lien Credit
Agreement), and subject to the subordination provisions contained in the
Intercreditor Agreement;


 


(ii)                                  Company may
make regularly scheduled payments of interest in respect of any Subordinated
Indebtedness (other than Indebtedness incurred pursuant to


 


101

















 


the
Second Lien Credit Agreement) in accordance with the terms of, and only to the
extent required by, and subject to the subordination provisions contained in,
the indenture or other agreement pursuant to which such Subordinated
Indebtedness was issued;


 


(iii)                               [Reserved];


 


(iv)                              Company may
convert any Subordinated Indebtedness (including Indebtedness pursuant to the
Second Lien Credit Agreement) to Capital Stock of Company, Holdings or any
direct or indirect parent;


 


(v)                                 Company may
make Restricted Junior Payments to Holdings (a) so long as no Event of
Default or Potential Event of Default shall have occurred and be continuing or
shall be caused thereby, in an aggregate amount not to exceed $1,000,000 in any
Fiscal Year, to the extent necessary to permit Holdings to pay overhead and
general administrative costs and expenses (including, without limitation,
customary salary, bonus and other benefits payable to directors, officers and
employees of Holdings), (b) so long as no Event of Default or Potential
Event of Default shall have occurred and be continuing or shall be caused
thereby, in an aggregate amount not to exceed $2,000,000 in any Fiscal Year, to
the extent necessary to permit Holdings to repurchase shares of Capital Stock
(or options or warrants to acquire Capital Stock) from any future, present or
former director, officer, member of management, employee or consultant of
Holdings or any of its Subsidiaries (or the estate, heirs, family members,
spouse or former spouse of any of the foregoing); provided that the
aggregate unused amounts in any Fiscal Year may be carried over to the next
succeeding Fiscal Year so long as the total aggregate amount permitted in any
Fiscal Year, after giving effect to such carryover, does not exceed $4,000,000;
(c) to the extent necessary to permit Holdings to discharge the
consolidated tax liabilities of Holdings and each Subsidiary that files on a
consolidated return basis with Holdings, in each case so long as Holdings
applies the amount of any such Restricted Junior Payment for such purpose (or
to make a Restricted Junior Payment to its direct or indirect parent to enable
it to make such payment so long as the amount is applied for such purpose);  provided, that (A) the amount of such
Restricted Junior Payment shall not exceed the aggregate amount that Holdings
and each Subsidiary that files on a consolidated return basis with Holdings
would be required to pay in respect of federal, state and local taxes were
Holdings and each such Subsidiary to pay such taxes as stand-alone taxpayers, (B) all
Restricted Junior Payments made to Holdings pursuant to this subsection (v)(c) must
be used by Holdings for the purposes specified herein within 45 days of
the receipt thereof, and (C) Holdings and each Subsidiary shall promptly
provide any information requested by the Administrative Agent reasonably
necessary for the Administrative Agent to verify the accuracy and timeliness of
any Restricted Junior Payments made pursuant to this subsection (v)(c), (d) to
the extent permitted pursuant to subsection 7.9(ii), (e) the proceeds of
which shall be used by Holdings to pay customary indemnification claims made by
directors, officers, members of management, employees or consultants of
Holdings attributable to the ownership or operations of Company and its
Subsidiaries; (f) the proceeds of which shall be used by Holdings to pay franchise
or similar taxes and other similar out-of-pocket fees and expenses required to
maintain Holdings’ corporate existence (or to make a Restricted Junior Payment
to its direct or indirect parent to enable


 


102

















 


it
to make such payment so long as the amount is applied for such purpose); (g) to
finance any Investment permitted to be made pursuant to subsection 7.3; provided
that (A) such Restricted Junior Payment shall be made substantially
concurrently with the closing of such Investment and (B) Holdings shall,
immediately following the closing thereof, cause (1) all property acquired
(whether assets or Capital Stock) to be contributed to Company or another Loan
Party or (2) the merger (to the extent permitted in subsection 7.7) of the
Person formed or acquired into Company or one or more other Loan Party in order
to consummate such Investment; (h) the proceeds of which shall be used by
Holdings to pay fees and expenses related to any unsuccessful equity or debt
offering permitted by this Agreement; and (i) the proceeds of which shall
be used to (or to make Restricted Junior Payments to Holdings’ direct or
indirect parent to enable it to) make cash payments in lieu of issuing
fractional shares in connection with the exercise of warrants, options or other
securities convertible into or exchangeable for Capital Stock of Holdings (or
such parent) or its Subsidiaries;


 


(vi)                              each Subsidiary
may make Restricted Junior Payments to Company and to any other Loan Party
(and, in the case of a Restricted Junior Payment by a non-wholly owned
Subsidiary that is not a Loan Party, to (a) Company or another Subsidiary
and (b) each other owner of Capital Stock of such non-wholly owned
Subsidiary based on their relative ownership interests);


 


(vii)                           to the extent
constituting Restricted Junior Payments, Company and its Subsidiaries may enter
into transactions expressly permitted by subsection 7.7 or 7.9;


 


(viii)                        Company or its
Subsidiaries may make repurchases of Capital Stock deemed to occur upon
exercise of stock options or warrants if such Capital Stock represents a
portion of the exercise price of such options or warrants or payments of Taxes
made by Company or its Subsidiaries in respect of options or warrants exercised
or vested in connection therewith;


 


(ix)                                from and after
a Qualifying IPO of Company, Company may make the Restricted Junior Payments
permitted to be made by Holdings under this subsection 7.5; and


 


(x)                                   Company and its
Subsidiaries may declare and make dividend payments or other distributions
payable solely in the Capital Stock of such Person.


 


7.6                               Financial
Covenants.


 


A.                                   Minimum
Interest Coverage Ratio. 
Company shall not permit the ratio of (i) Consolidated EBITDA to (ii) Consolidated
Cash Interest Expense for any four-Fiscal Quarter period ending as of each date
set forth below, to be less than the correlative ratio indicated as of such
date:


 


103

















 


	
  Period
  Ending

  	
   

  	
  Minimum Interest

  Coverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2010

  	
   

  	
  1.42:1.00

  	
   

  
	
  September 30, 2010

  	
   

  	
  1.42:1.00

  	
   

  
	
  December 31, 2010

  	
   

  	
  1.50:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2011

  	
   

  	
  1.50:1.00

  	
   

  
	
  June 30, 2011

  	
   

  	
  1.74:1.00

  	
   

  
	
  September 30, 2011

  	
   

  	
  1.89:1.00

  	
   

  
	
  December 31, 2011

  	
   

  	
  2.00:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2012

  	
   

  	
  2.00:1.00

  	
   

  
	
  June 30, 2012

  	
   

  	
  2.00:1.00

  	
   

  
	
  September 30, 2012

  	
   

  	
  2.00:1.00

  	
   

  
	
  December 31, 2012

  	
   

  	
  2.00:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2013

  	
   

  	
  2.00:1.00

  	
   

  
	
  June 30, 2013

  	
   

  	
  2.00:1.00

  	
   

  
	
  September 30, 2013

  	
   

  	
  2.00:1.00

  	
   

  
	
  December 31, 2013

  	
   

  	
  2.00:1.00

  	
   

  



 


B.                                     Maximum
Leverage Ratio.  Company
shall not permit the Consolidated Senior Leverage Ratio as of the dates set
forth below to exceed the correlative ratio indicated as of such date:


 


	
  Date
  of Determination

  	
   

  	
  Maximum Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2010

  	
   

  	
  7.17:1.00

  	
   

  
	
  September 30, 2010

  	
   

  	
  7.17:1.00

  	
   

  
	
  December 31, 2010

  	
   

  	
  6.69:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2011

  	
   

  	
  6.69:1.00

  	
   

  
	
  June 30, 2011

  	
   

  	
  5.96:1.00

  	
   

  
	
  September 30, 2011

  	
   

  	
  5.32:1.00

  	
   

  
	
  December 31, 2011

  	
   

  	
  4.79:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2012

  	
   

  	
  4.79:1.00

  	
   

  
	
  June 30, 2012

  	
   

  	
  4.24:1.00

  	
   

  
	
  September 30, 2012

  	
   

  	
  3.71:1.00

  	
   

  
	
  December 31, 2012

  	
   

  	
  3.26:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2013

  	
   

  	
  3.26:1.00

  	
   

  
	
  June 30, 2013

  	
   

  	
  2.82:1.00

  	
   

  
	
  September 30, 2013

  	
   

  	
  2.40:1.00

  	
   

  
	
  December 31, 2013

  	
   

  	
  1.97:1.00

  	
   

  



 


104

















 


7.7                               Restriction
on Fundamental Changes; Asset Sales; Issuance of Capital Stock.


 


A.                                   Fundamental  Changes.  Company
shall not, and shall not permit any of its Subsidiaries to, enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve
itself (or suffer any liquidation or dissolution), except:


 


(i)                                     any Subsidiary
may merge or consolidate with or liquidate into (a) Company (including a
merger, the purpose of which is to reorganize Company into a new jurisdiction);
provided that Company shall be the continuing or surviving Person, or
the continuing or surviving Person shall expressly assume the obligations of
Company under the Loan Documents in a manner reasonably acceptable to
Administrative Agent, or (b) any one or more other Subsidiaries; provided
that when any such Subsidiary that is a Loan Party is merging with another
Subsidiary, (1) a Loan Party shall be the continuing or surviving Person
or (2) to the extent constituting an Investment, such Investment must be
an Investment permitted by subsection 7.3;


 


(ii)                                  so long as no
Event of Default exists or would result therefrom, Company or any Subsidiary
may merge with any other Person in order to effect an Investment permitted
pursuant to subsection 7.3; provided that (a) if the continuing or
surviving Person is a Subsidiary, such Subsidiary shall have complied with the
requirements of subsections 6.8 and 6.9, (b) to the extent constituting an
Investment, such Investment must be permitted under subsection 7.3 and (c) if
Company is a party thereto, Company shall be the continuing or surviving Person
or the continuing or surviving Person shall expressly assume the obligations of
Company under the Loan Documents in a manner reasonably acceptable to
Administrative Agent;


 


(iii)                               any Subsidiary
of Company may consummate a merger, dissolution, liquidation, consolidation or winding
up, the purpose of which is to effect an Asset Sale permitted pursuant to
subsection 7.7B;


 


(iv)                              Company may
merge with one of its Subsidiaries for the purpose of effecting an Investment
permitted pursuant to subsection 7.3; provided that Company shall be the
continuing or surviving Person or the continuing or surviving Person shall
expressly assume the obligations of Company under the Loan Documents in a
manner reasonably acceptable to Administrative Agent;


 


(v)                                 any Subsidiary
of Company may liquidate, wind up or dissolve; provided that Company
determines in good faith that such liquidation, winding up or dissolution is in
the best interests of Company and is not materially disadvantageous to the
Lenders; provided, further, that Company shall deliver a written
notice to Administrative Agent five (5) Business Days prior to the
intended liquidation, winding up or dissolution of such Subsidiary notifying
Administrative Agent of the same, together with an Officer’s Certificate
certifying that such liquidation, winding up or dissolution is in the best
interests of Company and is not materially disadvantageous to the Lenders; and


 


105

















 


(vi)                              Panolam
Holdings II Co. may merge with and into Company.


 


B.                                     Asset  Sales.  Company shall
not, and shall not permit any of its Subsidiaries to, make any Asset Sale,
except:


 


(i)                                     sales of
inventory in the ordinary course of business;


 


(ii)                                  sales or other
dispositions of Cash and Cash Equivalents;


 


(iii)                               sales,
assignments, transfers or dispositions of accounts in the ordinary course of
business for purposes of collection;


 


(iv)                              sales of assets
to the extent that the aggregate value of such assets sold in any single
transaction or related series of transactions is equal to $1,000,000 or less; provided
that (a) the consideration received for such assets is in an amount at
least equal to the fair market value thereof and (b) the aggregate value
of all assets sold pursuant to this subsection 7.7B(iv) shall not exceed
$5,000,000;


 


(v)                                 dispositions of
obsolete, worn out or surplus property or property no longer useful in the
business of Company and its Subsidiaries in the ordinary course of business;


 


(vi)                              Asset Sales
having a fair market value not in excess of $5,000,000 in any Fiscal Year; provided
that (a) the consideration received for such assets shall be in an amount
at least equal to the fair market value thereof; (b) at least 80% of the
consideration received shall be Cash or Cash Equivalents; (c) no Potential
Event of Default or Event of Default shall have occurred or be continuing after
giving effect thereto; and (d) the proceeds of such Asset Sales shall be
applied as required by subsection 2.4B(iii)(a); provided, further,
that if any such Asset Sale involves the issuance of Capital Stock, such Asset
Sale shall comply with subsection 7.7C;


 


(vii)                           in order to
resolve disputes that occur in the ordinary course of business, Company and its
Subsidiaries may discount or otherwise compromise for less than the face value
thereof, notes or accounts receivable;


 


(viii)                        Company or a
Subsidiary may sell or dispose of shares of Capital Stock of any of its
Subsidiaries in order to qualify members of the Governing Body of the
Subsidiary if required by applicable law;


 


(ix)                                [Reserved];


 


(x)                                   any Foreign
Subsidiary may from time to time sell U.S. Dollar-denominated accounts
receivable to Company or a Domestic Subsidiary so long as (1) such
accounts receivable are, in the good faith judgment of the management of
Company, collectable in accordance with their terms and sold for a purchase
price not exceeding the face amount thereof (without giving effect to any write
down or write off thereof) and (2) the aggregate uncollected face amount
of such accounts receivable


 


106

















 


purchased
by Company or a Subsidiary Guarantor does not exceed $6,000,000 at any time
outstanding;


 


(xi)                                Assets Sales of
tangible property to the extent that (i) such property is exchanged for
credit against the purchase price of similar replacement property or (ii) the
proceeds of such Assets Sale are promptly applied to the purchase price of such
replacement property;


 


(xii)                             Asset Sales by
Company or any Subsidiary to Company or any Subsidiary (including (1) any
Asset Sale effected pursuant to a merger, consolidation, liquidation or
dissolution and (2) sales of all or substantially all of such transferor’s
assets (upon voluntary liquidation or otherwise)); provided that if the
transferor of such property is a Loan Party (a) the transferee thereof
must either be a Loan Party or (b) to the extent such transaction
constitutes an Investment, such transaction is permitted under subsection 7.3;


 


(xiii)                          Asset Sales by
Company or its Subsidiaries of property pursuant to sale-leaseback transactions;
provided that (a) the fair market value of all property so disposed
of shall not exceed $5,000,000 from and after the Restatement Date and (b) the
purchase price for such property shall be paid to Company or its Subsidiaries
for not less than 75% cash consideration;


 


(xiv)                         leases,
subleases, licenses or sublicenses of property in the ordinary course of
business and which do not materially interfere with the business of Company and
its Subsidiaries;


 


(xv)                            transfers of
property subject to any casualty or condemnation or eminent domain (or deed in
lieu thereof) upon receipt of the Net Insurance/Condemnation Proceeds of such
event;


 


(xvi)                         Asset Sales in
the ordinary course of business consisting of the abandonment of intellectual
property rights which, in the reasonable good faith determination of Company,
are not material to the conduct of the business of Company and its
Subsidiaries;


 


(xvii)                      Asset Sales of
Investments in Joint Ventures to the extent required by, or made pursuant to
buy/sell arrangements between the joint venture parties set forth in, joint
venture arrangements and similar binding arrangements;


 


(xviii)                   [Reserved];


 


(xix)                           voluntary
terminations of Hedge Agreements; and


 


(xx)                              Asset Sales to
the extent constituting an Investment permitted by subsection 7.3, a
fundamental change permitted by subsection 7.7A (so long as any Asset Sale
pursuant to a liquidation permitted pursuant to subsection 7.7A shall be done
on a pro rata basis among the equity holders of the applicable Subsidiary), a
Restricted Junior Payment permitted by subsection 7.5 or a Lien permitted by
subsection 7.2.


 


107

















 


C.                                     Issuances
of Capital Stock.  Other than
a Permitted Cure Issuance, no issuance (including, without limitation, any issuance
in connection with the conversion of any Loan) of the Capital Stock of any Loan
Party shall be consummated during the two-week period immediately preceding the
last day of each Fiscal Quarter. Sales of Capital Stock permitted by subsection
7.7B shall not be restricted by this subsection 7.7C, but nothing in this
subsection 7.7C shall permit any Asset Sale involving the sale of Capital Stock
not otherwise permitted hereunder.


 


7.8                               Consolidated
Capital Expenditures.


 


Company shall not, and shall not permit its
Subsidiaries to, make or incur Consolidated Capital Expenditures, for any
four-Fiscal Quarter period ending as of each date set forth, in an aggregate
amount in excess of the corresponding amount (the “Maximum
Consolidated Capital Expenditures Amount”) set forth below opposite
such date:


 


	
  Period
  Ending

  	
   

  	
  Maximum Consolidated

  Capital Expenditures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  4,675,000

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  4,813,000

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  4,950,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  5,088,000

  	
   

  



 


	
  Period
  Ending

  	
   

  	
  Maximum Consolidated

  Capital Expenditures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  5,225,000

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  5,363,000

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  5,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  5,638,000

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  5,775,000

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  5,913,000

  	
   

  
	
  December 31, 2012

  	
   

  	
  $

  	
  6,050,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2013

  	
   

  	
  $

  	
  6,188,000

  	
   

  
	
  June 30, 2013

  	
   

  	
  $

  	
  6,325,000

  	
   

  
	
  September 30, 2013

  	
   

  	
  $

  	
  6,463,000

  	
   

  
	
  December 31, 2013

  	
   

  	
  $

  	
  6,600,000

  	
   

  



 


; provided that any Consolidated Capital Expenditures
constituting a Permitted Acquisition shall not be included in the foregoing
limitations.


 


7.9                               Transactions
with Shareholders and Affiliates.


 


Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or


 


108

















 


exchange of any property or
the rendering of any service) with any Affiliate of Company, on terms that are
less favorable to Company or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not an Affiliate; provided
that the foregoing restriction shall not apply to:


 


(i)                                     any transaction
between Holdings and any of its Subsidiaries not prohibited by this Agreement;


 


(ii)                                  reimbursement
of reasonable out-of-pocket costs and expenses of members of the Governing
Bodies of Holdings and its Subsidiaries (or after a Qualifying IPO of Company,
of Company), and reasonable and customary fees paid to such members who are not
employed by Company, any other Loan Party, any Equity Holder, any Affiliate of
any Equity Holder or any Permitted Successor of any Equity Holder (or an
immediate family member of an employer of any of the foregoing);


 


(iii)                               [Reserved];


 


(iv)                              [Reserved];


 


(v)                                 equity
issuances to Affiliates otherwise permitted under this Agreement;


 


(vi)                              employment and
severance arrangements between Company and any of its Subsidiaries and their
officers and employees in the ordinary course of business;


 


(vii)                           payments by
Company and its Subsidiaries pursuant to tax sharing agreements, if any, solely
among Holdings and its Domestic Subsidiaries on customary terms;


 


(viii)                        transactions
pursuant to permitted agreements in existence on the Restatement Date and set
forth on Schedule 7.9 or any amendment thereto to the extent such an
amendment is not adverse to the Lenders in any material respect;


 


(ix)                                Restricted
Junior Payments permitted under subsection 7.5; and


 


(x)                                   indemnification
payments to officers or directors of Holdings and its Subsidiaries.


 


7.10                        Conduct
of Business By Holdings.


 


Prior to a Qualifying IPO of Company, Holdings shall
not (i) engage in any business other than in connection with or incidental
to (a) purchasing and owning the Capital Stock of Company, (b) issuing
and selling its Capital Stock or options or warrants in respect thereof, (c) entering
into and performing its obligations under and in accordance with the Loan
Documents and Second Lien Credit Documents to which it is a party and (d) other
activities contemplated by this subsection 7.10 or (ii) own any assets
other than (a) the Capital Stock of Company, (b) Cash and Cash
Equivalents for the purpose of paying general operating expenses


 


109

















 


of Holdings and (c) pursuant
to a purchase or acquisition of all or substantially all of the property and
assets or business or a division of a Person, or all of the Capital Stock in a
Person, provided that immediately upon such purchase or acquisition the
same is contributed to Company or (iii) have any
Indebtedness or other liability other than its obligations under the Holdings
Guaranty and Second Lien Guaranty (as defined in the Second Lien Credit
Agreement) or other unsecured Indebtedness of Holdings which (x) does not
require any cash payment until the earlier of the Revolving Loan Commitment
Termination Date and the final maturity date of any Term Loans and (y) does
not mature earlier than 180 days after the later of the Revolving Loan
Commitment Termination Date and the final maturity date of any Term Loans, and (z) is
otherwise on terms reasonably satisfactory to the Administrative Agent, provided
that the amount thereof, when taken together with Indebtedness incurred or
maintained pursuant to subsection 7.1(xv), does not exceed the maximum principal
amount of Indebtedness permitted under subsection 7.1(xv), and provided  further
that the proceeds thereof are contributed to Company as common equity.


 


7.11                        Conduct
of Business by Company.


 


From and after the Restatement Date, Company shall
not, and shall not permit any of its Subsidiaries to, engage in any material
business other than the businesses engaged in by Company and its Subsidiaries
on the Restatement Date and similar, related or ancillary businesses.


 


7.12                        Amendments
to Organizational Documents; Amendments of Documents Relating to Subordinated
Indebtedness; Designation of Senior Indebtedness.


 


A.                                   Amendments
to Organizational Documents.  Holdings shall not agree to any material
amendment to, or otherwise change any material terms of, its Organizational
Documents, in a manner materially adverse to Holdings or any of its
Subsidiaries or to Lenders without the prior written consent of Administrative
Agent and Requisite Lenders.


 


B.                                     Amendments
of Documents Relating to Subordinated Indebtedness.  Company shall not, and shall not permit any of
its Subsidiaries to, amend or otherwise change the terms of (i) the Second
Lien Credit Documents in any manner inconsistent with the terms of the
Intercreditor Agreement or (ii) any Subordinated Indebtedness if the
effect of such amendment or change is to increase the interest rate on such
Subordinated Indebtedness, accelerate any dates upon which payments of
principal or interest are due thereon, change any event of default in a manner
materially adverse to Company or Lenders, change the redemption, mandatory
prepayment or defeasance provisions thereof in a manner materially adverse to
Company or Lenders, change the subordination provisions thereof (or of any
guaranty thereof), or change any collateral therefor (other than to release
such collateral), or if the effect of such amendment or change, together with
all other amendments or changes made, is to increase materially the obligations
of the obligor thereunder or to confer any material additional rights on the
holders of such Subordinated Indebtedness (or a trustee or other representative
on their behalf) which would be materially adverse to Company or Lenders.


 


7.13                        Fiscal
Year.


 


Company shall not change its Fiscal Year-end from December 31.


 


110
















 


Section 8.                                          EVENTS OF
DEFAULT


 


If any of the following conditions or events (“Events of Default”) shall occur:


 


8.1                               Failure
to Make Payments When Due.


 


Failure by Company to pay (i) any installment
of principal of any Loan when due, whether at stated maturity, by acceleration,
by mandatory prepayment or otherwise; (ii) within five Business Days after
the date due any amount payable to an Issuing Lender in reimbursement of any
drawing under a Letter of Credit; or (iii) any interest on any Loan, any
fee or any other amount due under this Agreement within five Business Days
after the date due; or


 


8.2                               Default
in Other Agreements.


 


(i)                                     Failure of
Holdings, Company or any of its Subsidiaries to pay when due any principal of
or interest on or any other amount payable in respect of one or more items of
Indebtedness (other than Indebtedness referred to in subsection 8.1) or
Contingent Obligations in an individual principal amount of $5,000,000 or more
or with an aggregate principal amount of $5,000,000 or more, in each case
beyond the end of any grace period provided therefor; or


 


(ii)                                  breach or
default by Holdings, Company or any of its Subsidiaries with respect to any
other material term of (a) one or more items of Indebtedness or Contingent
Obligations in the individual or aggregate principal amounts referred to in
clause (i) above or (b) any loan agreement, mortgage, indenture or
other agreement relating to such item(s) of Indebtedness or Contingent
Obligation(s), if the effect of such breach or default is to cause, or to
permit the holder or holders of that Indebtedness or Contingent Obligation(s) (or
a trustee on behalf of such holder or holders) to cause, that Indebtedness or
Contingent Obligation(s) to become or be declared due and payable prior to
its stated maturity or the stated maturity of any underlying obligation, as the
case may be (after the giving or receiving of notice, lapse of time, both, or
otherwise); provided that this subsection 8.2(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, if such
sale or transfer is permitted hereunder and under the documents providing for
such Indebtedness and such Indebtedness is paid in full upon the consummation
of such sale; or


 


8.3                               Breach
of Certain Covenants.


 


Failure of Company to perform or comply with any
term or condition contained in subsection 2.5 or Section 7 of this
Agreement; provided, however, that Company shall have the right
to cure an Event of Default under the financial covenants set forth in
subsection 7.6 by applying as an addition to Consolidated EBITDA, the Net
Securities Proceeds of any issuance of Capital Stock of Holdings to the
Permitted Holders, their Affiliates and any other Person making a co-investment
with the Permitted Holders and/or their Affiliates, solely to the extent that
such Net Securities Proceeds (A) are actually received by Holdings no
later than fifteen (15) Business Days after Company delivers a written notice
to Administrative Agent of its intent to cure such Event of Default, such
notice to be delivered with the Compliance Certificate required pursuant


 


111

















 


to subsection 6.1F(ii) with
respect to the relevant Fiscal Quarter, (B) do not exceed the aggregate
amount necessary to cure such Event of Default under subsection 7.6 for any
applicable period (each, a “Permitted Cure Issuance”),
it being understood that this proviso may not be relied on for purposes of
calculating any financial ratios other than as applicable to subsection 7.6,
and (C) are applied as a mandatory prepayment of the Loans in accordance
with subsection 2.4(B)(iii)(c)(2); provided that (1) no more than
two Permitted Cure Issuances may be made in any four consecutive Fiscal Quarter
period, (2) no more than three Permitted Cure Issuances may be made during
the period beginning on the Restatement Date until the Obligations are paid in
full, and (3) the aggregate amount of Net Securities Proceeds applied as
additions to Consolidated EBITDA pursuant to all Permitted Cure Issuances shall
not exceed $15,000,000; provided, further that to the extent the
receipt of any Net Securities Proceeds of any Permitted Cure Issuance is an
effective addition to Consolidated EBITDA as contemplated by, and in accordance
with, the foregoing and, as a result thereof, any Event of Default of the
covenants set forth in subsection 7.6 shall have been cured for any applicable
period, such cure shall be deemed to be effective as of the last day of such
applicable period and such addition to Consolidated EBITDA shall apply to any
period of four consecutive Fiscal Quarters that includes the Fiscal Quarter in
respect of which such addition was made; or


 


8.4                               Breach
of Warranty.


 


Any representation, warranty, certification or other
statement of fact made by Company or any of its Subsidiaries in any Loan
Document or in any certificate at any time delivered by Company or any of its
Subsidiaries in writing pursuant hereto or thereto or in connection herewith or
therewith shall be false in any material respect on the date as of which made;
or


 


8.5                               Other
Defaults Under Loan Documents.


 


Any Loan Party shall default in the performance of
or compliance with any covenant or agreement contained in this Agreement or any
of the other Loan Documents, other than any such term referred to in any other
subsection of this Section 8, and such default shall not have been
remedied or waived within 30 days after the receipt by Company and such Loan
Party of notice from Administrative Agent or any Lender of such default; or


 


8.6                               Involuntary
Bankruptcy; Appointment of Receiver, etc.


 


(i)                                     A court having
jurisdiction in the premises shall enter a decree or order for relief in
respect of Holdings, Company or any of its Subsidiaries in an involuntary case
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, which decree or order is not
controverted within 30 days or remains unstayed or undischarged for a period of
60 days; or any other similar relief shall be granted under any applicable
federal or state law; or


 


(ii)                                  an involuntary
case shall be commenced against Holdings, Company or any of its Subsidiaries
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or there shall have occurred the
involuntary appointment of an interim receiver, trustee or other


 


112

















 


custodian
of Holdings, Company or any of its Subsidiaries for all or a substantial part
of its property; or a warrant of attachment, execution or similar process shall
have been issued against any substantial part of the property of Holdings,
Company or any of its Subsidiaries, and any such event described in this clause
(ii) shall continue for 60 days unless dismissed, bonded or discharged; or


 


8.7                               Voluntary
Bankruptcy; Appointment of Receiver, etc.


 


(i)                                     Holdings,
Company or any of its Subsidiaries shall commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; or Holdings, Company or any of its
Subsidiaries shall make a general assignment for the benefit of creditors; or


 


(ii)                                  Holdings,
Company or any of its Subsidiaries shall be unable, or shall fail generally, or
shall admit in writing its inability, to pay its debts as such debts become
due; or the Governing Body of Holdings, Company or any of its Subsidiaries (or
any committee thereof) shall adopt any resolution of the actions referred to in
clause (i) above or this clause (ii); or


 


8.8                               Judgments
and Attachments.


 


Any money judgment, writ or warrant of attachment or
similar process involving (i) in any individual case an amount in excess
of $5,000,000 or (ii) in the aggregate at any time an amount in excess of
$5,000,000, in either case to the extent not adequately covered by insurance as
to which a solvent insurance company has been notified of such judgment and has
not denied coverage, shall be entered or filed against Company or any of its
Subsidiaries or any of their respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of 60 days; or


 


8.9                               Dissolution.


 


Any order, judgment or decree shall be entered
against Holdings, Company or any of its material Subsidiaries decreeing the
dissolution or split up of Holdings, Company or that material Subsidiary and
such order shall remain undischarged or unstayed for a period in excess of 60
days; or


 


8.10                        Employee
Benefit Plans.


 


There shall occur one or more ERISA Events that
individually or in the aggregate result in or could reasonably be expected to
result in a Material Adverse Effect; or


 


8.11                        Change
in Control.


 


A Change in Control shall have occurred; or


 


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8.12                        Invalidity
of Loan Documents; Failure of Security; Repudiation of Obligations.


 


At any time after the execution and delivery
thereof, (i) any Loan Document or any material provision thereof, for any
reason other than as expressly permitted hereunder or thereunder or the
satisfaction in full of all Obligations, shall cease to be in full force and
effect (other than in accordance with its terms) or shall be declared to be
null and void, (ii) Administrative Agent shall not have or shall cease to
have a valid and perfected First Priority Lien in any Collateral purported to
be covered by the Collateral Documents having a fair market value, individually
or in the aggregate, exceeding $1,000,000, in each case for any reason other
than the failure of Administrative Agent or any Lender to take any action
within its control, or (iii) any Loan Party shall contest the validity or
enforceability of any Loan Document or any provision thereof in writing or deny
in writing that it has any further liability, other than as a result of
repayment in full of the Obligations, under any Loan Document or any provision
thereof to which it is a party;


 


THEN (i) upon the occurrence of any Event of
Default described in subsection 8.6 or 8.7, each of (a) the unpaid
principal amount of and accrued interest on the Loans, (b) an amount equal
to the maximum amount that may at any time be drawn under all Letters of Credit
then outstanding (whether or not any beneficiary under any such Letter of
Credit shall have presented, or shall be entitled at such time to present, the
drafts or other documents or certificates required to draw under such Letter of
Credit), and (c) all other Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by Company,
and the obligation of each Lender to make any Loan, the obligation of Administrative
Agent to issue any Letter of Credit and the right of any Lender to issue any
Letter of Credit hereunder shall thereupon terminate, and (ii) upon the
occurrence and during the continuation of any other Event of Default,
Administrative Agent shall, upon the written request or with the written
consent of Requisite Lenders, by written notice to Company, declare all or any
portion of the amounts described in clauses (a) through (c) above to
be, and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Administrative
Agent to issue any Letter of Credit and the right of any Lender to issue any
Letter of Credit hereunder shall thereupon terminate; provided that the
foregoing shall not affect in any way the obligations of Revolving Lenders
under subsection 3.3C(i); provided  further that from the date of
delivery of a written notice to Administrative Agent of the intent to cure an
Event of Default with a Permitted Cure Issuance in accordance with subsection
8.3 above until the date that is 15 Business Days thereafter, neither
Administrative Agent nor the Lenders shall exercise any such remedies with
respect to any Event of Default under subsection 8.3 addressed in such notice.


 


Any amounts described in clause (b) above, when
received by Administrative Agent, shall be held by Administrative Agent
pursuant to the terms of the Security Agreement and shall be applied as therein
provided.


 


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Section 9.                                          ADMINISTRATIVE
AGENT


 


9.1                               Appointment.


 


A.                                   Appointment
of Administrative Agent. 
Credit Suisse is hereby appointed Administrative Agent hereunder and
under the other Loan Documents.  Each
Lender (including any Lender in its capacity as a Swap Counterparty) hereby
authorizes Administrative Agent to act as its agent in accordance with the
terms of this Agreement and the other Loan Documents.  Credit Suisse agrees to act upon the express
conditions contained in this Agreement and the other Loan Documents, as
applicable.  The provisions of this Section 9
are solely for the benefit of Administrative Agent and Lenders and no Loan
Party shall have rights as a third party beneficiary of any of the provisions
thereof (other than subsection 9.5 and subsection 9.6).  In performing its functions and duties under
this Agreement, Administrative Agent (other than as provided in subsection
2.1F) shall act solely as an agent of Lenders and does not assume and shall not
be deemed to have assumed any obligation towards or relationship of agency or
trust with or for Company or any other Loan Party.


 


B.                                     Appointment
of Supplemental Collateral Agents.  It is the purpose of this Agreement and the
other Loan Documents that there shall be no violation of any law of any jurisdiction
denying or restricting the right of banking corporations or associations to
transact business as agent or trustee in such jurisdiction.  It is recognized that in case of litigation
under this Agreement or any of the other Loan Documents, and in particular in
case of the enforcement of any of the Loan Documents, or in case Administrative
Agent deems that by reason of any present or future law of any jurisdiction it
may not exercise any of the rights, powers or remedies granted herein or in any
of the other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that Administrative
Agent appoint an additional individual or institution as a separate trustee,
co-trustee, collateral agent or collateral co-agent (any such additional
individual or institution being referred to herein individually as a “Supplemental Collateral Agent” and collectively as “Supplemental Collateral Agents”).


 


In the event that Administrative Agent appoints a
Supplemental Collateral Agent with respect to any Collateral, (i) each and
every right, power, privilege or duty expressed or intended by this Agreement
or any of the other Loan Documents to be exercised by or vested in or conveyed
to Administrative Agent with respect to such Collateral shall be exercisable by
and vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable
by either Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer
to Administrative Agent shall inure to the benefit of such Supplemental
Collateral Agent and all references therein to Administrative Agent shall be
deemed to be references to Administrative Agent and/or such Supplemental
Collateral Agent, as the context may require.


 


Should any instrument in writing from Company or any
other Loan Party be required by any Supplemental Collateral Agent so appointed
by Administrative Agent for more fully and certainly vesting in and confirming
to him or it such rights, powers, privileges and duties, Company shall, or
shall cause such Loan Party to, execute, acknowledge and deliver any and all
such instruments promptly upon request by Administrative Agent.  In case any


 


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Supplemental Collateral
Agent, or a successor thereto, shall die, become incapable of acting, resign or
be removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be
exercised by Administrative Agent until the appointment of a new Supplemental
Collateral Agent.


 


C.                                     Control.  Each Lender and Administrative Agent hereby
appoint each other Lender as agent for the purpose of perfecting Administrative
Agent’s security interest in assets that, in accordance with the UCC, can be
perfected by possession or control.


 


9.2                               Powers
and Duties; General Immunity.


 


A.                                   Powers;
Duties Specified.


 


(i)                                     Each Lender
irrevocably authorizes Administrative Agent to take such action on such Lender’s
behalf and to exercise such powers, rights and remedies hereunder and under the
other Loan Documents as are specifically delegated or granted to Administrative
Agent by the terms hereof and thereof, together with such powers, rights and
remedies as are reasonably incidental thereto. 
Administrative Agent shall have only those duties and responsibilities
that are expressly specified in this Agreement and the other Loan
Documents.  Administrative Agent may
exercise such powers, rights and remedies and perform such duties by or through
its agents or employees.  Administrative
Agent shall not have, by reason of this Agreement or any of the other Loan
Documents, a fiduciary relationship in respect of any Lender or Company; and
nothing in this Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon
Administrative Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.


 


(ii)                                  Each Lender
hereunder (a) acknowledges that it has received a copy of the
Intercreditor Agreement, (b) agrees that it will be bound by and will take
no actions contrary to the provisions of the Intercreditor Agreement and (c) authorizes
and instructs the Administrative Agent to enter into the Intercreditor
Agreement as Collateral Agent and on behalf of such Lender.


 


B.                                     No
Responsibility for Certain Matters.  Administrative Agent shall not be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any
other documents furnished or made by Administrative Agent to Lenders or by or
on behalf of Company to Administrative Agent or any Lender in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Administrative Agent be required
to ascertain or inquire as to the performance or observance of any of the
terms, conditions, provisions, covenants or agreements contained in any of the
Loan Documents or as to the use of the proceeds of the Loans or the use of the
Letters of Credit or as to the existence or possible existence of any Event of
Default or Potential Event of Default.


 


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Unless and until Administrative Agent has
received written notice of an Event of Default or a Potential Event of Default
from Holdings or Company, or of an alleged Event of Default or Potential Event
of Default from any Lender, Administrative Agent shall not be deemed to have
knowledge of any Event of Default, Potential Event of Default or alleged Event
of Default.   Except as expressly set
forth in the Loan Documents, Administrative Agent shall not have any duty to disclose,
nor shall it be liable for the failure to disclose, any information related to
Holdings, Company or any of their Subsidiaries that is communicated to or
obtained by the Administrative Agent or any of its Affiliates in any capacity.
Anything contained in this Agreement to the contrary notwithstanding,
Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Loans or the Letter of Credit Usage or the component
amounts thereof.


 


C.                                     Exculpatory
Provisions.  Neither
Administrative Agent nor any of its Related Parties shall be liable to Lenders
for any action taken or omitted by Administrative Agent under or in connection
with any of the Loan Documents except to the extent caused by Administrative
Agent’s gross negligence or willful misconduct. 
Administrative Agent shall be entitled to refrain from any act or the
taking of any action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents or from the exercise of
any power, discretion or authority vested in it hereunder or thereunder unless
and until Administrative Agent shall have received instructions in respect
thereof from Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 10.6) and, upon receipt of such
instructions from Requisite Lenders (or such other Lenders, as the case may
be), Administrative Agent shall be entitled to act or (where so instructed)
refrain from acting, or to exercise such power, discretion or authority, in
accordance with such instructions; provided that Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose Administrative Agent to liability or that is contrary
to any Loan Document or applicable law.  Without
prejudice to the generality of the foregoing, (i) Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
communication (including any electronic message, Internet or intranet website
posting or other distribution), notice, request, certificate, consent,
statement, instrument or document believed by it to be genuine and correct and
to have been signed or sent by the proper Person or Persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for Company and its Subsidiaries), accountants,
experts and other professional advisors selected by it (and shall not be liable
for any action taken or not taken by it in accordance with the advice of any
such counsel, accountants experts or other professional advisors), and shall be
further entitled to rely upon any statement made to it orally or by telephone
and believed by it to have been made by the proper Person, and shall not incur
any liability for relying thereon; and (ii) no Lender shall have any right
of action whatsoever against Administrative Agent as a result of Administrative
Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 10.6).


 


D.                                    Administrative
Agent Entitled to Act as Lender.  The agency hereby created shall in no way
impair or affect any of the rights and powers of, or impose any duties or
obligations upon, Administrative Agent in its individual capacity as a Lender
hereunder.  With respect to its
participation in the Loans and the Letters of Credit, Administrative Agent
shall


 


117

















 


have the same rights and powers hereunder as
any other Lender and may exercise the same as though it were not performing the
duties and functions delegated to it hereunder, and the term “Lender” or “Lenders”
or any similar term shall, unless the context clearly otherwise indicates,
include Administrative Agent in its individual capacity.  Administrative Agent and its Affiliates may
accept deposits from, lend money to, acquire equity interests in and generally
engage in any kind of commercial banking, investment banking, trust, financial
advisory or other business with Company or any of its Affiliates as if it were
not performing the duties specified herein, and may accept fees and other
consideration from Company for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.


 


9.3                               Independent
Investigation by Lenders; No Responsibility For Appraisal of Creditworthiness.


 


Each Lender agrees that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries.
Administrative Agent shall not have any duty or responsibility, either
initially or on a continuing basis, to make any such investigation or any such
appraisal on behalf of Lenders or to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter, and
Administrative Agent shall not have any responsibility with respect to the accuracy
of or the completeness of any information provided to Lenders.


 


9.4                               Right
to Indemnity.


 


A.                                   To the extent determined by the Administrative Agent to be required by any
applicable law, the Administrative Agent may withhold from any interest, fee or
other payment to any Lender (including with respect to any Participant of such
Lender) an amount equivalent to any applicable withholding tax.  If the Internal Revenue Service or any other
Government Authority asserts a claim that the Administrative Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
because the appropriate form was not delivered or was not properly executed or
because such Lender failed to notify the Administrative Agent of a change in
circumstance which rendered the exemption from, or reduction of, withholding
tax ineffective or for any other reason, such Lender shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including any penalties and interest
and together with all expenses (including legal expenses, allocated internal
costs and out-of-pocket expenses) incurred.


 


B.                                     Except as set
forth in subsection 9.4A, each Lender, in proportion to its Pro Rata Share,
severally agrees to indemnify Administrative Agent and its Related Parties to
the extent that any such Person shall not have been reimbursed by Company, for
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including reasonable counsel fees
and disbursements and fees and disbursements of any financial advisor engaged
by Administrative Agent) or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by or asserted against Administrative Agent
or such other Person in exercising the powers, rights and remedies of
Administrative Agent or


 


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performing duties of Administrative Agent
hereunder or under the other Loan Documents or otherwise in its capacity as
Administrative Agent in any way relating to or arising out of this Agreement or
the other Loan Documents; provided that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of Administrative
Agent resulting solely from Administrative Agent’s gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction.  If any indemnity furnished
to Administrative Agent or any other such Person for any purpose shall, in the
opinion of Administrative Agent, be insufficient or become impaired,
Administrative Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.


 


9.5                               Resignation
of Administrative Agent; Successor Administrative Agent.


 


Administrative Agent may resign at any time by
giving 30 days’ prior written notice thereof to Lenders and Company.  Upon any such notice of resignation by
Administrative Agent, Requisite Lenders shall have the right, upon five
Business Days’ notice to Company, to appoint a successor Administrative Agent,
subject, except during the existence of an Event of Default under subsection
8.1, 8.6 or 8.7, to the consent of Company (which consent shall not be
unreasonably withheld).  If no such
successor shall have been so appointed by Requisite Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, the retiring Administrative Agent may,
on behalf of Lenders, after consulting with Company, appoint a successor
Administrative Agent.  If Administrative
Agent shall notify Lenders and Company that no Person has accepted such
appointment as successor Administrative Agent, such resignation shall
nonetheless become effective in accordance with Administrative Agent’s notice
and (i) the retiring Administrative Agent shall be discharged from its
duties and obligations under the Loan Documents, except that any Collateral
held by Administrative Agent will continue to be held by it until a Person
shall have accepted the appointment of successor Administrative Agent, and (ii) all
payments, communications and determinations provided to be made by, to or
through Administrative Agent shall instead be made by, to or through each
Lender directly, until such time as Requisite Lenders appoint a successor
Administrative Agent in accordance with this subsection 9.5.  Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, that
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Administrative
Agent and the retiring Administrative Agent shall be discharged from its duties
and obligations under this Agreement (if not already discharged as set forth
above).  After any retiring
Administrative Agent’s resignation hereunder, the provisions of this Section 9
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.


 


9.6                               Collateral
Documents and Guaranties.


 


Each Lender (which term shall include, for purposes
of this subsection 9.6, any Swap Counterparty) hereby further authorizes
Administrative Agent, on behalf of and for the benefit of Lenders, to enter
into each Collateral Document as secured party and to be the agent for and
representative of Lenders under each Guaranty, and each Lender agrees to be
bound by the terms of each Collateral Document and the Guaranties; provided
that Administrative Agent shall not (i) enter into or consent to any
material amendment, modification, termination or waiver


 


119

















 


of any provision contained
in any Collateral Document or the Guaranties or (ii) release any
Collateral (except as otherwise expressly permitted or required pursuant to the
terms of this Agreement or the applicable Collateral Document), in each case
without the prior consent of the Lenders required pursuant to subsection 10.6; provided
further, however, that, without further written consent or
authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of
Collateral that is the subject of a sale or other disposition of assets
permitted by this Agreement or to which the Lenders required pursuant to
subsection 10.6 have otherwise consented, (b) release any Subsidiary
Guarantor from the Subsidiary Guaranty if all of the Capital Stock of such
Subsidiary Guarantor is sold to any Person (other than a Domestic Subsidiary of
Company) pursuant to a sale or other disposition permitted hereunder or to
which the Lenders required pursuant to subsection 10.6 have otherwise consented
or (c) subordinate the Liens of Administrative Agent, on behalf of
Lenders, to any Liens permitted by clauses (i)-(xvi), (xviii)-(xx) and (xxii)
of subsection 7.2A; provided that, in the case of a sale of such item of
Collateral or stock referred to in clauses (a) or (b) above, the
requirements of subsection 10.13 are satisfied. 
Anything contained in any of the Loan Documents to the contrary
notwithstanding, Company, Administrative Agent and each Lender hereby agree
that (1) no Lender shall have any right individually to realize upon any
of the Collateral under any Collateral Document or to enforce any Guaranty, it
being understood and agreed that all powers, rights and remedies under the
Collateral Documents and the Guaranties may be exercised solely by
Administrative Agent for the benefit of Lenders in accordance with the terms
thereof, and (2) in the event of a foreclosure by Administrative Agent on
any of the Collateral pursuant to a public or private sale, Administrative
Agent or any Lender may be the purchaser of any or all of such Collateral at
any such sale and Administrative Agent, as agent for and representative of
Lenders (but not any Lender or Lenders in its or their respective individual
capacities unless Requisite Lenders shall otherwise agree in writing) shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply any of the Obligations as a credit on account of the
purchase price for any Collateral payable by Administrative Agent at such sale.


 


9.7                               Duties
of Other Agents.


 


To the extent that any Lender is identified in this
Agreement as a co-agent or syndication agent, such Lender shall not have any
right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such.  Without limiting the foregoing, none of such
Lenders shall have or be deemed to have a fiduciary relationship with any
Lender.


 


9.8                               Administrative
Agent May File Proofs of Claim.


 


In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to Holdings, Company or any
of the Subsidiaries of Holdings or Company, Administrative Agent (irrespective
of whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether
Administrative Agent shall have made any demand on Company) shall be entitled
and empowered, by intervention in such proceeding or otherwise


 


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(i)                                     to file and
prove a claim for the whole amount of principal and interest owing and unpaid
in respect of the Loans and any other Obligations that are owing and unpaid and
to file such other papers or documents as may be necessary or advisable in
order to have the claims of Lenders and Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of
Lenders and Administrative Agent and their agents and counsel and all other
amounts due Lenders and Administrative Agent under subsections 2.3 and 10.2)
allowed in such judicial proceeding, and


 


(ii)                                  to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same;


 


and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any
such judicial proceeding is hereby authorized by each Lender to make such
payments to Administrative Agent and, in the event that Administrative Agent
shall consent to the making of such payments directly to Lenders, to pay to
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of Administrative Agent and its agents and counsel,
and any other amounts due Administrative Agent under subsections 2.3 and 10.2.


 


Nothing herein contained shall be deemed to
authorize Administrative Agent to authorize or consent to or accept or adopt on
behalf of any Lender any plan of reorganization, arrangement, adjustment or
composition affecting the Obligations or the rights of any Lenders or to
authorize Administrative Agent to vote in respect of the claim of any Lender in
any such proceeding.


 


Section 10.                                   MISCELLANEOUS


 


10.1                        Successors
and Permitted Assigns; Assignments and Participations in Loans and Letters of
Credit.


 


A.                                   General.  This Agreement shall be binding upon the
parties hereto and their respective successors and permitted assigns and shall
inure to the benefit of the parties hereto and the successors and permitted
assigns of Lenders (it being understood that Lenders’ rights of assignment are
subject to the further provisions of this subsection 10.1).  Neither Company’s rights or obligations
hereunder nor any interest therein may be assigned or delegated by Company
without the prior written consent of all Lenders (and any attempted assignment
or transfer by Company without such consent shall be null and void).  No sale, assignment or transfer or
participation of any Letter of Credit or any participation therein may be made
separately from a sale, assignment, transfer or participation of a
corresponding interest in the Revolving Loan Commitment and the Revolving Loans
of the Revolving Lender effecting such sale, assignment, transfer or
participation.  Nothing in this
Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the
Indemnitees) any legal or equitable right, remedy or claim under or by reason
of this Agreement.


 


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B.                                     Assignments.


 


(i)                                     Amounts and
Terms of Assignments.  Any Lender
may assign to one or more Eligible Assignees all or any portion of its rights
and obligations under this Agreement; provided that (a), except (1) in
the case of an assignment of the entire remaining amount of the assigning
Lender’s rights and obligations under this Agreement or (2) in the case of
an assignment to a Lender or an Affiliate of a Lender or an Approved Fund of a
Lender, the aggregate amount of the Revolving Loan Exposure or Term Loan
Exposure, as the case may be, of the assigning Lender and the assignee subject
to each such assignment shall not be less than $5,000,000 or an integral
multiple thereof, in the case of any assignment of a Revolving Loan, or
$1,000,000 or an integral multiple thereof, in the case of any assignment of a
Term Loan, provided that simultaneous assignments to two or more related
Funds shall be treated as one assignment for purposes of determining whether
such minimum assignment requirements are met, (b) each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender’s rights and obligations under this Agreement with respect to the Loans
or Commitments assigned, and any assignment of all or any portion of a
Revolving Loan Commitment, Revolving Loan or Letter of Credit participation
shall be made only as an assignment of the same proportionate part of the
assigning Lender’s Revolving Loan Commitment, Revolving Loans and Letter of
Credit participations, (c) the parties to each assignment shall (A) electronically
execute and deliver to Administrative Agent an Assignment Agreement via an
electronic settlement system acceptable to Administrative Agent or (B) manually
execute and deliver to Administrative Agent an Assignment Agreement, together
with a processing and recordation fee of $3,500 (which fee Company shall not be
obligated to pay except as required hereunder, and provided that only one
such fee shall be payable in connection with simultaneous assignments to or by
related Funds), and the Eligible Assignee, if it shall not already be a party
to this Agreement, shall deliver to Administrative Agent information reasonably
requested by Administrative Agent, including an administrative questionnaire
and such forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under such
Assignment Agreement may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iv) and with respect to information requested
under the Patriot Act, and (d) (1) Administrative Agent, (2) with
respect to assignments of Revolving Loans and Revolving Loan Commitments, any
Issuing Lender and (3), if no Event of Default has occurred and is continuing
under subsection 8.1, 8.6 or 8.7, Company, shall have consented thereto (which
consents shall not be unreasonably withheld or delayed); provided that
no consent of Company shall be required with respect to any assignment to a
Lender, any Affiliate of a Lender or any Approved Fund.


 


Upon acceptance and recording by Administrative Agent pursuant to
clause (ii) below, from and after the effective date specified in such
Assignment Agreement, (x) the assignee thereunder shall be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment Agreement, shall have the rights and obligations
of a Lender hereunder and shall be deemed to have made all of the agreements of
a Lender contained in the Loan Documents arising out of or otherwise related to
such rights and obligations and (y) the assigning Lender thereunder shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment Agreement, relinquish its rights (other than any
rights which survive the


 


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termination of this Agreement under subsection 10.8B) and be released
from its obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender’s rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto; provided that, anything contained in any of the Loan Documents
to the contrary notwithstanding, if such Lender is an Issuing Lender such
Lender shall continue to have all rights and obligations of an Issuing Lender
until the cancellation or expiration of any Letters of Credit issued by it and
the reimbursement of any amounts drawn thereunder).  The assigning Lender shall, upon the
effectiveness of such assignment or as promptly thereafter as practicable,
surrender its Notes, if any, to Administrative Agent for cancellation, and
thereupon new Notes shall, if so requested by the assignee and/or the assigning
Lender in accordance with subsection 2.1G, be issued to the assignee and/or to
the assigning Lender, substantially in the form of Exhibit IV or Exhibit V
annexed hereto, as the case may be, with appropriate insertions, to reflect the
amounts of the new Commitments and/or outstanding Revolving Loans and/or
outstanding Term Loans, as the case may be, of the assignee and/or the
assigning Lender.  Other than as provided
in subsection 10.5, any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this subsection
10.1B 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 subsection
10.1C.


 


(ii)                                  Acceptance by
Administrative Agent; Recordation in Register.  Upon its receipt of an Assignment Agreement
executed by an assigning Lender and an assignee representing that it is an
Eligible Assignee, together with the processing and recordation fee referred to
in subsection 10.1B(i) and any forms, certificates or other evidence with
respect to United States federal income tax withholding matters that such
assignee may be required to deliver to Administrative Agent pursuant to
subsection 2.7B(iv), Administrative Agent shall, if Administrative Agent and
Company have consented to the assignment evidenced thereby (in each case to the
extent such consent is required pursuant to subsection 10.1B(i)), (a) accept
such Assignment Agreement by executing a counterpart thereof as provided
therein (which acceptance shall evidence any required consent of Administrative
Agent to such assignment) and (b) record the information contained therein
in the Register.  Administrative Agent
shall maintain a copy of each Assignment Agreement delivered to and accepted by
it as provided in this subsection 10.1B(ii). 
No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this clause (ii).


 


(iii)                               Special Purpose
Funding Vehicles. 
Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Lender”) may grant to a
special purpose funding vehicle (a “SPC”),
identified as such in writing from time to time by the Granting Lender to
Administrative Agent and Company, the option to provide to Company all or any
part of any Loan that such Granting Lender would otherwise be obligated to make
to Company pursuant to this Agreement; provided that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan, and (ii) if
an SPC elects not to exercise such option or otherwise fails to provide all or
any part of such Loan, the Granting Lender shall be obligated to make such Loan
pursuant to the terms hereof.  The making
of a Loan by an SPC hereunder shall utilize the Commitment of the


 


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Granting
Lender to the same extent, and as if, such Loan were made by such Granting
Lender.  Each party hereto hereby agrees
that (i) neither the grant to any SPC nor the exercise by any SPC of
such option shall increase the costs or expenses or otherwise increase or
change the obligations of Company or any Subsidiary under this Agreement; (ii) no SPC shall be
liable for any indemnity or similar payment obligation under this Agreement
(all liability for which shall remain with the Granting Lender); and (iii) the
Granting Lender shall for all purposes, including the approval of any
amendment, waiver or other modification of any provision of any Loan Document,
remain the Lender of record hereunder.  In furtherance
of the foregoing, each party hereto hereby agrees (which agreement shall
survive the termination of this Agreement) that, prior to the date that is one
year and one day after the payment in full of all outstanding commercial paper
or other senior indebtedness of any SPC, it will not institute against, or join
any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any state thereof. 
In addition, notwithstanding anything to the contrary contained in this
subsection 10.1B(iii), any SPC may (i) without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender (with notice to, but without the prior written consent of, Company and
Administrative Agent) or to any financial institutions (with prior written
consent of Company and Administrative Agent) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancement to such
SPC.


 


(iv)                              In the event
that any Revolving Lender shall become a Defaulting Lender or S&P, Moody’s
and Thompson’s BankWatch (or InsuranceWatch Ratings Service, in the case of
Lenders that are insurance companies (or Best’s Insurance Reports, if such
insurance company is not rated by Insurance Watch Ratings Service)) shall,
after the date that any Lender becomes a Revolving Lender, downgrade the long
term certificate deposit ratings of such Lender, and the resulting ratings
shall be below BBB-, Baa3 and C (or BB, in the case of a Lender that is an
insurance company (or B, in the case of an insurance company not rated by
InsuranceWatch Ratings Service)) (or, with respect to any Revolving Lender that
is not rated by any such ratings service or provider, any Issuing Lender shall
have reasonably determined that there has occurred a material adverse change in
the financial condition of any such Lender, or a material impairment of the
ability of any such Lender to perform its obligations hereunder, as compared to
such condition or ability as of the date that any such Lender became a
Revolving Lender) then such Issuing Lender shall have the right, but not the
obligation, at its own expense, upon notice to such Lender and the
Administrative Agent, to replace such Lender with an assignee (in accordance
with and subject to the restrictions contained in subsection 10.1B(i) above),
and such Lender hereby agrees to transfer and assign without recourse (in accordance
with and subject to the restrictions contained in subsection 10.1B(i) above)
all its interests, rights and obligations in respect of its Revolving Loan
Commitment to such assignee; provided, however, that (i) no
such assignment shall conflict with any law, rule and regulation or order
of any Government Authority, (ii) such Issuing Lender or such assignee, as
the case may be, shall pay to such Lender in immediately available funds on the
date of such assignment the principal of


 


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and
interest accrued to the date of payment on the Loans made by such Lender
hereunder and all other amounts accrued for such Lender’s account or owed to it
hereunder and (iii) Company shall pay to such assigning Lender all amounts
under subsection 2.6D and/or 2.7 (if applicable).


 


C.                                     Participations.  Any Lender may, without the consent of, or
notice to, Company or Administrative Agent, sell participations to one or more
Persons (other than a natural Person or Company or any of its Affiliates) in
all or a portion of such Lender’s rights and/or obligations under this
Agreement; provided that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) Company, Administrative Agent 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.  Notwithstanding the foregoing, any Lender may
sell participations to any Equity Holder or any Permitted Successor of any
Equity Holder; provided that (a) each of the selling Lender and
purchasing Equity Holder (or Permitted Successor of such Equity Holder) shall
deliver to Administrative Agent prior written notice of such participation sale
and (b) such Participant shall deliver to Administrative Agent information
reasonably requested by the Administrative Agent about such Participant (akin
to the information required to be delivered pursuant to subsection
10.1B(i)(c)).  Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and the
other Loan Documents and to approve any amendment, modification or waiver of
any provision of this Agreement and the other Loan Documents; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver directly affecting (A) the
extension of (1) the scheduled final maturity date of any Loan allocated
to such participation or (2) the regularly scheduled maturity of any
portion of the principal amount of or interest on any Loan allocated to such
participation or (B) a reduction of the principal amount of or the rate of
interest payable on any Loan allocated to such participation.  Subject to the further provisions of this
subsection 10.1C, Company agrees that each Participant shall be entitled to the
benefits of subsections 2.6D and 2.7 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to subsection 10.1B.  To the extent permitted by law, each
Participant also shall be entitled to the benefits of subsection 10.4 as though
it were a Lender, provided such Participant agrees to be subject to
subsection 10.5 as though it were a Lender. 
A Participant shall not be entitled to receive any greater payment under
subsections 2.6D and 2.7 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 Company’s prior
written consent.  No Participant shall be
entitled to the benefits of subsection 2.7 unless Company is notified of the
participation sold to such Participant and such Participant specifically agrees
(and references the obligations of Company under subsection 2.7), for the
benefit of Company, to comply with subsection 2.7B(iv) as though it were a
Lender.  In the event that a Lender sells
a participation, Lender shall maintain, acting solely for this purpose as a
non-fiduciary agent of the Administrative Agent and Company, a register on which
it enters the name of all participants in the Registered Loan held by such
Lender and the principal amount thereof (and stated interest thereon) (as to
each Lender, the “Participant Register”).  Each Registered Loan (and the registered
note, if any, evidencing the same) may be participated in whole or in part only
by registration of such participation on the Participant Register (and each
registered note shall expressly so provide). 
Any participation of


 


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such Registered Loan (and the registered
note, if any, evidencing the same) may be effected only by the registration of
such participation on the Participant Register. 
The Participant Register shall be available for inspection by Company
and the Administrative Agent at any reasonable time and from time to time upon
reasonable prior notice.


 


D.                                    Pledges
and Assignments.  Any Lender
may, without the consent of the Administrative Agent or Company, at any time
pledge or assign a security interest in all or any portion of its Loans, and
the other Obligations owed to such Lender, to secure obligations of such
Lender, including without limitation any pledge or assignment to secure
obligations to any Federal Reserve Bank; provided that (i) no Lender shall be relieved of any of its
obligations hereunder as a result of any such assignment or pledge and (ii) in
no event shall any assignee or pledgee be considered to be a “Lender” or be
entitled to require the assigning Lender to take or omit to take any action
hereunder.


 


E.                                      Information.  Each Lender may furnish any information
concerning Holdings and its Subsidiaries in the possession of that Lender from
time to time to permitted assignees and participants (including prospective
assignees and participants), subject to subsection 10.18.


 


F.                                      Agreements
of Lenders.  Each Lender
listed on the signature pages hereof hereby agrees, and each Lender that
becomes a party hereto pursuant to an Assignment Agreement shall be deemed to
agree, (i) that it is an Eligible Assignee; (ii) that it has experience
and expertise in the making of or purchasing loans such as the Loans; and (iii) that
it will make or purchase its Loans for its own account in the ordinary course
of business and without a view to distribution of such Loans within the meaning
of the Securities Act or the Exchange Act or other federal securities laws (it
being understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control).  Each
Lender that becomes a party hereto pursuant to an Assignment Agreement shall
also be deemed to represent that such Assignment Agreement constitutes a legal,
valid and binding obligation of such Lender, enforceable against such Lender in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership, moratorium or
other similar laws affecting creditors’ rights generally and by general
principles of equity.


 


10.2                        Expenses.


 


Company agrees to pay Administrative Agent promptly (i) all
reasonable out-of-pocket costs and expenses of Administrative Agent for the
negotiation, preparation, syndication, execution and administration of the Loan
Documents and any consents, amendments, waivers or other modifications thereto,
including all reasonable out-of-pocket fees, expenses and disbursements of
counsel to Administrative Agent in connection therewith; (ii) all
reasonable out-of-pocket costs and expenses of perfecting Liens in favor of Administrative
Agent on behalf of Lenders pursuant to any Collateral Document, including
filing and recording fees, expenses and taxes, stamp or documentary taxes,
search fees, title insurance premiums, and reasonable fees, expenses and
disbursements of outside counsel to Administrative Agent; (iii) all
reasonable out-of-pocket costs and expenses incurred by Administrative Agent in
connection with the custody or preservation of any of the Collateral; and (iv) all
reasonable out-of-pocket costs and


 


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expenses, including
reasonable out-of-pocket attorneys’ fees and fees, costs and expenses of
accountants, advisors and consultants, incurred by Administrative Agent
relating to efforts to (a) evaluate or assess any Loan Party, its business
or financial condition and (b) protect, evaluate, assess or dispose of any
of the Collateral.  Company agrees to pay
Administrative Agent or Lender promptly all reasonable out-of-pocket costs and
expenses, including reasonable attorneys’ fees of one counsel to Administrative
Agent and the Lenders (except that in the case of a bona fide conflict of
interest the attorney’s fees of one additional counsel shall be included, so
that counsel may be retained for the benefit of the Administrative Agent on the
one hand and the Lenders on the other hand), fees, costs and expenses of
accountants, advisors and consultants and costs of settlement, incurred by
Administrative Agent and Lenders in enforcing any Obligations of or in
collecting any payments due from any Loan Party hereunder or under the other
Loan Documents (including in connection with the sale of, collection from, or
other realization upon any of the Collateral or the enforcement of the Loan
Documents) after the occurrence of an Event of Default or pursuant to any
insolvency or bankruptcy proceedings.


 


10.3                        Indemnity.


 


In addition to the payment of expenses pursuant to
subsection 10.2, whether or not the transactions contemplated hereby shall be
consummated, Company agrees to defend (subject to Indemnitees’ selection of
counsel), indemnify, pay and hold harmless Administrative Agent and Lenders
(including Issuing Lenders), and each Related Party of the foregoing, together
with the successors and permitted assigns of Administrative Agent and Lenders
(collectively called the “Indemnitees”),
from and against any and all Indemnified Liabilities (as hereinafter defined); provided
that Company shall not have any obligation to any Indemnitee hereunder with
respect to any Indemnified Liabilities to the extent such Indemnified
Liabilities arise solely from (i) the gross negligence or willful
misconduct or material breach of the Loan Documents of such Indemnitee as
determined by a final judgment of a court of competent jurisdiction or (ii) any
claim, litigation, investigation or proceeding that does not involve an act,
omission or material breach by Company or any of its Affiliates of the Loan
Documents and that is brought by an Indemnitee against another Indemnitee
unless brought by a Lender against Administrative Agent in its capacity as
such.


 


As used herein, “Indemnified
Liabilities” means, collectively, any and all liabilities,
obligations, losses, damages (including natural resource damages), penalties,
actions, judgments, suits, claims (including Environmental Claims), costs
(including the costs of any investigation, study, sampling, testing, abatement,
cleanup, removal, remediation or other response action necessary to remove,
remediate, clean up or abate any Hazardous Materials Activity), expenses and
disbursements of any kind or nature whatsoever (including the reasonable
out-of-pocket fees and disbursements of counsel (including costs of one special
or local counsel for Indemnitees in each appropriate jurisdiction), provided,
however, that all Indemnitees use a single outside counsel of each type,
except that in the case of a bona fide conflict of interest, the costs of one
additional counsel shall be included, so that counsel may be retained for the
benefit of the Administrative Agent on the one hand and the Lenders on the
other hand) in connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or not any such
Indemnitee shall be designated as a party or a potential party thereto, and any
fees or expenses incurred by Indemnitees in enforcing this indemnity, whether
based on any federal, state or foreign laws, statutes, rules or
regulations


 


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(including securities and
commercial laws, statutes, rules or regulations and Environmental Laws),
on common law or equitable cause or on contract or otherwise, that may be
imposed on, incurred by, or asserted against any such Indemnitee, in any manner
relating to or arising out of (i) this Agreement, the other Loan Documents
or the transactions contemplated hereby or thereby (including Lenders’
agreement to make the Loans hereunder or the use or intended use of the
proceeds thereof or the issuance of Letters of Credit hereunder or the use or
intended use of any thereof, or any enforcement of any of the Loan Documents
(including any sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Guaranties)), (ii) the statements
contained in the commitment letter delivered by any Lender to Company with
respect thereto, or (iii) any Environmental Claim or any Hazardous
Materials Activity relating to or arising from, directly or indirectly, any
past or present activity, operation, land ownership, or practice of Company or
any of its Subsidiaries.


 


To the extent that the undertakings to defend,
indemnify, pay and hold harmless set forth in this subsection 10.3 may be
unenforceable in whole or in part because they are violative of any law or
public policy, Company shall contribute the maximum portion that it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of
them.


 


10.4                        Set-Off.


 


In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuation of any Event of Default after obtaining
the prior written consent of Administrative Agent each of Lenders and their
Affiliates is hereby authorized by Company at any time or from time to time,
without notice to Company or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, time or demand, provisional or final, including
Indebtedness evidenced by certificates of deposit, whether matured or
unmatured, but not including any and all Trust Funds and Trust Fund Accounts)
and any other Indebtedness at any time held or owing by that Lender or any
Affiliate of that Lender to or for the credit or the account of Company and
each other Loan Party against and on account of the Obligations of Company or
any other Loan Party to that Lender (or any Affiliate of that Lender) or to any
other Lender (or any Affiliate of any other Lender) under this Agreement, the
Letters of Credit and participations therein and the other Loan Documents,
including all claims of any nature or description arising out of or connected
with this Agreement, the Letters of Credit and participations therein or any
other Loan Document, irrespective of whether or not (i) that Lender shall
have made any demand hereunder or (ii) the principal of or the interest on
the Loans or any amounts in respect of the Letters of Credit or any other
amounts due hereunder shall have become due and payable pursuant to Section 8
and although said obligations and liabilities, or any of them, may be
contingent or unmatured.


 


10.5                        Ratable
Sharing.


 


Lenders hereby agree among themselves that if any of
them shall, whether by voluntary or mandatory payment (other than a payment or
prepayment of Loans made and applied in accordance with the terms of this
Agreement), by realization upon security, through the exercise of any right of
set-off or banker’s lien, by counterclaim or cross action or by the


 


128

















 


enforcement of any right
under the Loan Documents or otherwise, or as adequate protection of a deposit
treated as cash collateral under the Bankruptcy Code, receive payment or
reduction of a proportion of the aggregate amount of principal, interest,
amounts payable in respect of Letters of Credit, fees and other amounts then
due and owing to that Lender hereunder or under the other Loan Documents
(collectively, the “Aggregate Amounts Due”
to such Lender) that is greater than the proportion received by any other
Lender in respect of the Aggregate Amounts Due to such other Lender, then the
Lender receiving such proportionately greater payment shall, unless such proportionately
greater payment is required by the terms of this Agreement, (i) notify
Administrative Agent and each other Lender of the receipt of such payment and (ii) apply
a portion of such payment to purchase assignments (which it shall be deemed to
have purchased from each seller of an assignment simultaneously upon the
receipt by such seller of its portion of such payment) of the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided that (A) if all or part of such proportionately
greater payment received by such purchasing Lender is thereafter recovered from
such Lender upon the bankruptcy or reorganization of Company or otherwise,
those purchases shall be rescinded and the purchase prices paid for such
assignments shall be returned to such purchasing Lender ratably to the extent
of such recovery, but without interest and (B) the foregoing provisions
shall not apply to (1) any payment made by Company pursuant to and in
accordance with the express terms of this Agreement or (2) any payment
obtained by a Lender as consideration for the assignment (other than an
assignment pursuant to this subsection 10.5) of or the sale of a participation
in any of its Obligations to any Eligible Assignee or Participant pursuant to
subsection 10.1C.  Company expressly
consents to the foregoing arrangement and agrees that any purchaser of an
assignment so purchased may exercise any and all rights of a Lender as to such
assignment as fully as if that Lender had complied with the provisions of
subsection 10.1B with respect to such assignment.  In order to further evidence such assignment
(and without prejudice to the effectiveness of the assignment provisions set
forth above), each purchasing Lender and each selling Lender agree to enter
into an Assignment Agreement at the request of a selling Lender or a purchasing
Lender, as the case may be, in form and substance reasonably satisfactory to
each such Lender.


 


10.6                        Amendments
and Waivers.


 


No amendment, modification, termination or waiver of
any provision of this Agreement or of the Notes, and no consent to any
departure by Company therefrom, shall in any event be effective without the
written concurrence of Requisite Lenders; provided that no such
amendment, modification, termination, waiver or consent shall, without the
consent of:


 


(i)                                     each Lender
with Obligations directly affected (whose consent shall be sufficient for any
such amendment, modification, termination or waiver without the consent of
Requisite Lenders) (1) reduce or forgive the principal amount of any Loan,
(2) postpone the scheduled final maturity date of any Loan, or postpone
the date or reduce the amount of any scheduled payment (but not prepayment) of
principal of any Loan, (3) postpone the date on which any interest or any
fees are payable, (4) decrease the interest rate borne by any Loan (other
than any waiver of any increase in the interest rate applicable to any of the
Loans pursuant to subsection 2.2E) or the amount of any fees payable hereunder
(other than any waiver of any increase in the fees applicable to Letters of
Credit pursuant to subsection 3.2 following an Event of Default) excluding any
change


 


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in
the manner in which any financial ratio used in determining any interest rate
or fee is calculated that would result in a reduction of any such rate or fee),
or (5) extend the Revolving Loan Commitment Termination Date;


 


(ii)                                  each Lender, (1) change
in any manner the definition of “Pro Rata Share” or the definition of “Requisite
Lenders” (except for any changes resulting solely from an increase in the
aggregate amount of the Commitments approved by Requisite Lenders), (2) change
the provisions of subsection 2.4C(iii) to provide that Lenders will not
share pro rata in payments of their respective interests, or (3) change in
any manner or waive the provisions contained in subsection 10.5 or this
subsection 10.6;


 


(iii)                               Lenders having
or holding 95% or more of the Loan Exposure (provided that, in accordance with
subsection 2.9, the Loan Exposure of any Defaulting Lender shall not be
included and such Defaulting Lender shall not be deemed a “Lender” for purposes
of calculating such percentage), (1) release any Lien granted in favor of
Administrative Agent with respect to all or substantially all of the
Collateral, (2) release Holdings from its obligations under the Holdings
Guaranty or (3) release all or substantially all of the Subsidiary
Guarantors from their obligations under the Subsidiary Guaranty, in each case
other than in accordance with the terms of the Loan Documents.


 


In addition, no amendment, modification, termination
or waiver of any provision (i) of any Note shall be effective without the
written concurrence of the Lender which is the holder of that Note, (ii) of
Section 3 shall be effective without the written concurrence of
Administrative Agent and, with respect to the rights or duties of an Issuing
Lender, reduction in the amount or postponement of the due date of any amount
payable in respect of any Letter of Credit, extension of the expiration date of
any Letter of Credit beyond the Revolving Loan Commitment Termination Date, or
the purchase of participations in Letters of Credit, without the written
concurrence of each Issuing Lender that has issued an outstanding Letter of
Credit or has not been reimbursed for a payment under a Letter of Credit, (iii) of
Section 9 shall be effective without the written concurrence of
Administrative Agent, (iv) that increases the amount of a Commitment of a
Lender shall be effective without the consent of such Lender (it being
understood that a waiver of a condition precedent in Section 4, any Event
of Default or Potential Event of Default, any mandatory prepayment of the Loans
or any mandatory reduction of the Commitments shall not be deemed to increase
the Commitment of any Lender) and (v) of the Intercreditor Agreement shall
be effective (subject to the last paragraph of this Section 10.6) without
the written concurrence of the Requisite Lenders.


 


Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender.  Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was
given.  No notice to or demand on Company
in any case shall entitle Company to any other or further notice or demand in
similar or other circumstances.  Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, on Company.


 


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Administrative Agent and Company may amend any Loan
Document to correct administrative errors or omissions, or to effect
administrative changes that are not adverse to any Lender.  Notwithstanding anything to the contrary
contained herein, such amendment shall become effective without any further
consent of any other party to such Loan Document.


 


10.7                        Notices;
Effectiveness of Signatures.


 


A.            Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given shall be in
writing and may be personally served, or sent by telefacsimile or United States
mail or courier service and shall be deemed to have been given when delivered
in person or by courier service, upon receipt of telefacsimile in complete and legible
form, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided that notices to
Administrative Agent and any Issuing Lender under Sections 2 and 3 shall not be
effective until received.  For the
purposes hereof, the address of each party hereto shall be as set forth under
such party’s name on the signature pages hereof or (i) as to Company
and Administrative Agent, such other address as shall be designated by such
Person in a written notice delivered to the other parties hereto and (ii) as
to each other party, such other address as shall be designated by such party in
a written notice delivered to Administrative Agent and Company.  As agreed to among Holdings, Company, the
Administrative Agent and the applicable Lender from time to time, notices and
other communications may also be delivered by e-mail to the e-mail addresses of
a representative of the applicable Person provided from time to time by such
Person.


 


B.            Company hereby agrees, unless directed otherwise by the
Administrative Agent or unless the electronic mail address referred to below
has not been provided by the Administrative Agent to Company, that it will, or
will cause its Subsidiaries to, provide to the Administrative Agent all
information, documents and other materials that it is obligated to furnish to
the Administrative Agent pursuant to the Loan Documents or to the Lenders under
Article 6, including all notices, requests, financial statements,
financial and other reports, certificates and other information materials, but
excluding any such communication that (i) is or relates to a Notice of
Borrowing, a Notice of Conversion/Continuation or a notice requesting the
issuance, amendment or extension of a Letter of Credit pursuant to Section 3,
(ii) relates to the payment of any principal or other amount due under
this Agreement prior to the scheduled date therefor, (iii) provides notice
of any Potential Event of Default or Event of Default under this Agreement or
any other Loan Document or (iv) is required to be delivered to satisfy any
condition precedent to the effectiveness of this Agreement and/or any borrowing
of Loans or other extension of credit hereunder (all such non-excluded
communications being referred to herein collectively as “Communications”),
by transmitting the Communications in an electronic/soft medium that is
properly identified in a format reasonably acceptable to the Administrative
Agent to an electronic mail address as directed by the Administrative Agent.  In addition, Company agrees, and agrees to
cause its Subsidiaries, to continue to provide the Communications to the
Administrative Agent or the Lenders, as the case may be, in the manner
specified in the Loan Documents but only to the extent requested by the
Administrative Agent.


 


C.            Company hereby acknowledges that (i) the
Administrative Agent will make available to the Lenders the information
provided by or on behalf of Company hereunder (collectively, the “Borrower Materials”)
by posting the Borrower Materials on Intralinks or


 


131

















 


another similar electronic system (the “Platform”) and (ii) certain
of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to
receive material non-public information with respect to Company or its
securities) (each, a “Public Lender”). Company hereby agrees that (a) all
Borrower Materials that are to be made available to Public Lenders shall be
clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that
the word “PUBLIC” shall appear prominently on the first page thereof; (b) by
marking Borrower Materials “PUBLIC,” Company shall be deemed to have authorized
the Administrative Agent and the Lenders to treat such Borrower Materials as not
containing any material non-public information with respect to Company or its
securities for purposes of United States federal and state securities laws; (c) all
Borrower Materials marked “PUBLIC” are permitted to be made available through a
portion of the Platform designated as appropriate for Public Lenders and (d) the
Administrative Agent shall be entitled to treat any Borrower Materials that are
not marked “PUBLIC” as being suitable only for posting on a portion of the
Platform not designated as appropriate for Public Lenders.  Notwithstanding the foregoing, the following
Borrower Materials shall be marked “PUBLIC”, unless Company notifies the
Administrative Agent promptly that any such document contains material
non-public information: (1) the Loan Documents and (2) notification
of changes in the terms of the Loans.


 


D.            THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”.  NEITHER THE ADMINISTRATIVE AGENT NOR ANY OF
ITS RELATED PARTIES WARRANTS THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS
OR THE ADEQUACY OF THE PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR
ERRORS OR OMISSIONS IN THE COMMUNICATIONS. 
NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT
OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS IS MADE BY
THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH THE
COMMUNICATIONS OR THE PLATFORM.  IN NO
EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES HAVE ANY
LIABILITY TO ANY LOAN PARTY, ANY LENDER OR ANY OTHER PERSON FOR DAMAGES OF ANY
KIND, WHETHER OR NOT BASED ON STRICT LIABILITY AND INCLUDING DIRECT OR
INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES
(WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF ANY LOAN PARTY’S OR THE
ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET,
EXCEPT TO THE EXTENT THE LIABILITY OF ANY SUCH PERSON IS FOUND IN A FINAL
RULING BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM
SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.


 


E.             The Administrative Agent agrees that the receipt of the
Communications by the Administrative Agent at its e-mail address set forth on
its signature page hereto shall constitute effective delivery of the
Communications to the Administrative Agent for purposes of the Loan
Documents.  Each Lender agrees that
receipt of notice to it (as provided in the next sentence) specifying that the
Communications have been posted to the Platform shall constitute effective
delivery of the Communications to such Lender for purposes of the Loan
Documents.  Each Lender agrees to notify
the Administrative Agent in writing (including by electronic


 


132

















 


communication) from time to time of such
Lender’s e-mail address to which the foregoing notice may be sent by electronic
transmission and that the foregoing notice may be sent to such e-mail address.


 


F.             Loan Documents and notices under the Loan Documents may
be transmitted and/or signed by telefacsimile and by signatures delivered in ‘PDF’
format by electronic mail.  The
effectiveness of any such documents and signatures shall, subject to applicable
law, have the same force and effect as an original copy with manual signatures
and shall be binding on all Loan Parties, Administrative Agent and
Lenders.  Administrative Agent may also
require that any such documents and signature be confirmed by a manually-signed
copy thereof; provided, however, that the failure to request or
deliver any such manually-signed copy shall not affect the effectiveness of any
facsimile document or signature.


 


10.8                        Survival
of Representations, Warranties and Agreements.


 


A.            All representations, warranties and agreements made
herein shall survive the execution and delivery of this Agreement and the
making of the Loans and the issuance of the Letters of Credit hereunder.


 


B.            Notwithstanding anything in this Agreement or implied by
law to the contrary, the agreements of Company set forth in subsections 2.6D,
2.7, 10.2, 10.3, 10.16 and 10.17 and the agreements of Lenders set forth in
subsections 9.2C, 9.4, 10.5, 10.16B and 10.17 shall survive the payment of the
Loans, the cancellation or expiration of, or other provision for cash
collateral or other support therefor in a manner reasonably satisfactory to the
Issuing Lender, the Letters of Credit and the reimbursement of any amounts
drawn thereunder, and the termination of this Agreement.


 


10.9                        Failure
or Indulgence Not Waiver; Remedies Cumulative.


 


No failure or delay on the part of Administrative
Agent or any Lender in the exercise of any power, right or privilege hereunder
or under any other Loan Document shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other power, right or
privilege.  All rights and remedies
existing under this Agreement and the other Loan Documents are cumulative to,
and not exclusive of, any rights or remedies otherwise available.


 


10.10                 Marshalling;
Payments Set Aside.


 


Neither Administrative Agent nor any Lender shall be
under any obligation to marshal any assets in favor of Company or any other
party or against or in payment of any or all of the Obligations.  To the extent that Company makes a payment or
payments to Administrative Agent or Lenders (or to Administrative Agent for the
benefit of Lenders), or Administrative Agent or Lenders enforce any security
interests or exercise their rights of setoff, and such payment or payments or
the proceeds of such enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the


 


133

















 


obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such enforcement or
setoff had not occurred.


 


10.11                 Severability.


 


In case any provision in or obligation under this
Agreement or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.  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.


 


10.12                 Obligations
Several; Independent Nature of Lenders’ Rights; Damage Waiver.


 


The obligations of Lenders hereunder are several and
no Lender shall be responsible for the obligations or Commitments of any other
Lender hereunder.  Nothing contained
herein or in any other Loan Document, and no action taken by Lenders pursuant
hereto or thereto, shall be deemed to constitute Lenders, or Lenders and
Company, as a partnership, an association, a Joint Venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt, and, subject to subsection 9.6, each Lender
shall be entitled to protect and enforce its rights arising out of this
Agreement and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.


 


To the extent permitted by law, each of the parties
hereto shall not assert, and hereby waives, any claim against any party hereto,
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 (including, without limitation,
subsection 2.1E hereof), any other Loan Document, any transaction contemplated
by the Loan Documents, any Loan or the use of proceeds thereof.  No Indemnitee shall be liable for any damages
arising from the use by unintended recipients of any information or other
materials distributed by it through telecommunications, electronic or other
information transmission systems in connection with the Loan Documents or the
transactions contemplated thereby.


 


10.13                 Release
of Security Interest or Guaranty.


 


Upon the proposed sale or other disposition of any
Collateral to any Person (other than a Domestic Subsidiary of Company) that is
permitted by this Agreement or to which Requisite Lenders have otherwise
consented (or such greater number of Lenders as required under subsection
10.6), or the sale or other disposition of all of the Capital Stock of a
Subsidiary Guarantor to any Person (other than Company or a Domestic Subsidiary
of Company) that is permitted by this Agreement or to which Requisite Lenders
have otherwise consented (or such greater number of Lenders as required under
subsection 10.6), for which a Loan Party desires to obtain a security interest
release or a release of the Subsidiary Guaranty from Administrative


 


134

















 


Agent, such Loan Party shall
deliver an Officer’s Certificate (i) stating that the Collateral or the
Capital Stock subject to such disposition is being sold or otherwise disposed
of in compliance with the terms hereof and (ii) specifying the Collateral
or Capital Stock being sold or otherwise disposed of in the proposed
transaction.  Upon the receipt of such
Officer’s Certificate, Administrative Agent shall, at such Loan Party’s
expense, so long as Administrative Agent (a) has no reason to believe that
the facts stated in such Officer’s Certificate are not true and correct and
(b), if the sale or other disposition of such item of Collateral or Capital
Stock constitutes an Asset Sale pursuant to subsection 7.7B(vi), (xiii) or
(xvii), shall have received evidence satisfactory to it that arrangements
satisfactory to it have been made for delivery of the Net Asset Sale Proceeds
if and as required by subsection 2.4, execute and deliver such releases of its
security interest in such Collateral or such Subsidiary Guaranty, as may be
reasonably requested by such Loan Party.


 


10.14                 Applicable
Law.


 


THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN LETTERS OF
CREDIT AND EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN ANY SUCH LOAN DOCUMENT)
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW.  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.


 


10.15                 Construction
of Agreement; Nature of Relationship.


 


Each of the parties hereto acknowledges that (i) it
has been represented by counsel in the negotiation and documentation of the
terms of this Agreement, (ii) it has had full and fair opportunity to
review and revise the terms of this Agreement, (iii) this Agreement has
been drafted jointly by all of the parties hereto, and (iv) neither
Administrative Agent nor any Lender or other Agent has any fiduciary
relationship with or fiduciary duty to Company arising out of or in connection
with this Agreement or any of the other Loan Documents, and the relationship
between Administrative Agent and Lenders, on one hand, and Company, on the
other hand, in connection herewith or therewith is solely that of debtor and
creditor.  Accordingly, each of the
parties hereto acknowledges and agrees that the terms of this Agreement shall
not be construed against or in favor of another party.


 


135

















 


10.16                 Consent
to Jurisdiction and Service of Process.


 


A.            EACH OF THE LOAN PARTIES
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY NEW YORK STATE COURT
OR FEDERAL COURT OF THE UNITED STATES 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.  EACH OF THE
PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, 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, SUCH FEDERAL COURT AND 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, any Issuing
Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against any Loan Party
or its properties in the courts of any jurisdiction.


 


B.            EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES:


 


(i)            WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;


 


(ii)           AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH
COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION 10.7;


 


(iii)          AGREES THAT SERVICE AS PROVIDED IN CLAUSE (ii) ABOVE IS SUFFICIENT
TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT; AND


 


(iv)          AGREES THAT
THE PROVISIONS OF THIS SUBSECTION 10.16 RELATING TO JURISDICTION AND VENUE
SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW
YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR OTHERWISE.


 


10.17                 Waiver
of Jury Trial.


 


EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR


 


136
















 


CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.  EACH PARTY HERETO ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED
FUTURE DEALINGS.  EACH PARTY HERETO
FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. 
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SUBSECTION 10.17 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE
HEREUNDER.  IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.


 


10.18                 Confidentiality.


 


Each Lender shall hold all non-public information
obtained pursuant to the requirements of this Agreement in accordance with such
Lender’s customary procedures for handling confidential information of this
nature, it being understood and agreed by Company that in any event a Lender
may make disclosures (a) to its and its Affiliates’ directors, officers,
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) in connection with the transactions contemplated
hereby, (b) to the extent requested by any Government Authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement in
connection with the transactions contemplated hereby, (e) in connection with
the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or the enforcement of rights hereunder, (f) subject
to an agreement containing provisions substantially the same as those of this
subsection 10.18, to any pledgee under subsection 10.1D, or Eligible Assignee
of or participant in, or any prospective Eligible Assignee of or Participant
in, any of its rights or obligations under this Agreement, (g) with the
written consent of Company, (h) to the extent such information becomes
publicly available prior to delivery by Company other than as a result of a
breach of this subsection 10.18 or (i) to the National Association of
Insurance


 


137

















 


Commissioners or any other
similar organization or any nationally recognized rating agency that requires
access to information about a Lender’s or its Affiliates’ investment portfolio
in connection with ratings issued with respect to such Lender or its Affiliates
and that no written or oral communications from counsel to Administrative Agent
and no information that is or is designated as privileged or as attorney work
product may be disclosed to any Person unless such Person is a Lender or a
Participant hereunder; provided that, unless specifically prohibited by
applicable law or court order, each Lender shall notify Company of any request
by any Government Authority or representative thereof (other than any such
request in connection with any examination of the financial condition of such
Lender by such Government Authority) for disclosure of any such non-public
information prior to disclosure of such information.  In addition, Administrative Agent and Lenders
may disclose the existence of this Agreement and information about this
Agreement to market data collectors, similar service providers to the lending
industry, and service providers to Administrative Agent and Lenders, and
Administrative Agent or any of its Affiliates may place customary “tombstone”
advertisements relating hereto in publications (including publications
circulated in electronic form) of its choice at its own expense.


 


Notwithstanding anything herein to the contrary,
information required to be treated as confidential by reason of the foregoing
shall not include, and Administrative Agent and each Lender may disclose to any
and all Persons, without limitation of any kind, any information with respect
to United States federal income tax treatment and United States federal income
tax structure of the transactions contemplated hereby and all materials of any
kind (including opinions or other tax analyses) that are provided to
Administrative Agent or such Lender relating to such tax treatment and tax
structure.


 


10.19                 Counterparts;
Effectiveness.


 


This Agreement and any amendments, waivers, consents
or supplements hereto or in connection herewith may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are
physically attached to the same document. 
Delivery by telecopier or electronic mail of an executed counterpart of
a signature page to this Agreement and each other Loan Document shall be
effective as delivery of an original executed counterpart of such
document.  This Agreement shall become
effective upon the execution of a counterpart hereof by each of the parties
hereto.


 


10.20                 USA
Patriot Act.


 


Each Lender and Administrative Agent hereby notifies
Company that pursuant to the requirements of the Patriot Act, it is required to
obtain, verify and record information that identifies Loan Parties, which
information includes the name and address of each Loan Party and other
information that will allow such Lender and Administrative Agent to identify
such Loan Party in accordance with the Patriot Act.


 


138

















 


10.21                 Entire
Agreement; No Third Party Beneficiaries.


 


This Agreement 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.


 


[Remainder
of page intentionally left blank]


 


139

















 


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


 


	
  COMPANY:

  	
   

  
	
   

  	
   

  
	
   

  	
  PANOLAM INDUSTRIES INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  ROBERT J. MULLER, JR.

  
	
   

  	
  Name:

  	
  Robert
  J. Muller, Jr.

  
	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice
  Address:

  
	
   

  	
   

  
	
   

  	
   

  	
  20
  Progress Drive

  
	
   

  	
   

  	
  Shelton,
  Connecticut 06484

  
	
   

  	
   

  
	
   

  	
  With
  a copy (which shall not constitute notice) to:

  
	
   

  	
   

  
	
   

  	
   

  	
  Panolam
  Industries International, Inc.

  
	
   

  	
   

  	
  20
  Progress Drive

  
	
   

  	
   

  	
  Shelton,
  Connecticut 06484

  
	
   

  	
   

  	
  Attention:
  Jeffrey Muller

  
	
   

  	
   

  	
  Facsimile:
  (203) 225-0051

  
	
   

  	
   

  
	
   

  	
  With
  a copy (which shall not constitute notice) to:

  
	
   

  	
   

  
	
   

  	
   

  	
  Weil,
  Gotshal & Manges LLP

  
	
   

  	
   

  	
  200
  Crescent Court, Suite 300

  
	
   

  	
   

  	
  Dallas,
  Texas 75201-6950

  
	
   

  	
   

  	
  Attention:
  Angela L. Fontana

  
	
   

  	
   

  	
  Facsimile: (214) 746-7777

  
				



 


Signature Page to Amended and Restated Credit Agreement


 

















 


	
  HOLDINGS:

  	
   

  
	
   

  	
   

  
	
   

  	
  PANOLAM HOLDINGS CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  ROBERT J. MULLER, JR.

  
	
   

  	
  Name:

  	
  Robert
  J. Muller, Jr.

  
	
   

  	
  Title:

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  20
  Progress Drive

  
	
   

  	
   

  	
  Shelton,
  Connecticut 06484

  
	
   

  	
   

  
	
   

  	
  With
  a copy (which shall not constitute notice) to:

  
	
   

  	
   

  
	
   

  	
   

  	
  Panolam
  Industries International, Inc.

  
	
   

  	
   

  	
  20
  Progress Drive

  
	
   

  	
   

  	
  Shelton,
  Connecticut 06484

  
	
   

  	
   

  	
  Attention:
  Jeffrey Muller

  
	
   

  	
   

  	
  Facsimile:
  (203) 225-0051

  
	
   

  	
   

  
	
   

  	
  With
  a copy (which shall not constitute notice) to:

  
	
   

  	
   

  
	
   

  	
   

  	
  Weil,
  Gotshal & Manges LLP

  
	
   

  	
   

  	
  200
  Crescent Court, Suite 300

  
	
   

  	
   

  	
  Dallas,
  Texas 75201-6950

  
	
   

  	
   

  	
  Attention:
  Angela L. Fontana

  
	
   

  	
   

  	
  Facsimile:
  (214) 746-7777

  
				



 


Signature
Page to Amended and Restated Credit Agreement


 

















 


	
  LENDERS:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT SUISSE AG, Cayman
  Islands Branch, individually and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  DIDIER SIFFER

  
	
   

  	
   

  	
  Name:
  Didier Siffer

  
	
   

  	
   

  	
  Title:
  Managing Director

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  BRYAN J. MATTHEWS

  
	
   

  	
   

  	
  Name:
  Bryan J. Matthews

  
	
   

  	
   

  	
  Title:
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice

  	
  Address:

  
	
   

  	
   

  	
  OMA-2

  
	
   

  	
   

  	
  One
  Madison Avenue

  
	
   

  	
   

  	
  New
  York, New York 10010

  
	
   

  	
   

  	
  Attention:
  Agency Department Manager

  
	
   

  	
   

  	
  Facsimile:
  (212) 322-2291

  
	
   

  	
   

  
	
   

  	
         With
  a copy (which shall not constitute notice) to:

  
	
   

  	
   

  	
  Sidley
  Austin LLP

  
	
   

  	
   

  	
  555
  West Fifth Street, 40th floor

  
	
   

  	
   

  	
  Los
  Angeles, CA 90013

  
	
   

  	
   

  	
  Attention:
  Jennifer C. Hagle

  
	
   

  	
   

  	
  Facsimile:
  (213) 896-6600

  
	
   

  	
   

  	
   

  
	
   

  	
  Payment
  Instructions:

  
	
   

  	
   

  	
  Bank
  of New York

  
	
   

  	
   

  	
  ABA
  021000018

  
	
   

  	
   

  	
  A/C
  Name: CS Agency Cayman Account

  
	
   

  	
   

  	
  A/C
  Number: 8900492627

  
	
   

  	
   

  	
  Reference: Panolam

  
				



 


Signature
Page to Amended and Restated Credit Agreement