Exhibit 10.6


 


HOLDINGS GUARANTY


 


This HOLDINGS GUARANTY is entered into as of
September 30, 2005 by the undersigned (the “Guarantor”),
in favor of and for the benefit of CREDIT
SUISSE, Cayman Islands Branch, as agent for and representative of
the financial institutions party to the Credit Agreement referred to below (“Lenders”) and any Swap Counterparties (as
hereinafter defined) (in such capacity herein called “Guarantied Party”), and any other Beneficiaries (as
hereinafter defined).


 


RECITALS.


 


A.     Panolam Industries International, Inc., a Delaware corporation,
as successor by merger to PIH Acquisition Co. (“Company”), has entered into that certain Credit Agreement
dated as of September 30, 2005 by and among Company, Guarantor, Lenders and
Guarantied Party, as Administrative Agent (said Credit Agreement, as it may
hereafter be amended, amended and restated, supplemented or otherwise modified
from time to time, being the “Credit
Agreement”; capitalized terms defined therein and not otherwise
defined herein being used herein as therein defined).


 


B.     Company may from time to time enter, or may from time to time
have entered, into one or more Hedge Agreements with one or more Persons that
are Lenders or Affiliates of Lenders at the time such Hedge Agreements are entered
into (in such capacity, collectively, “Swap
Counterparties”) (such Hedge Agreements, collectively, the “Lender Swap Agreements”) in accordance
with the terms of the Credit Agreement, and it is desired that the obligations
of Company under the Lender Swap Agreements, including without limitation the
obligation of Company to make payments thereunder in the event of early
termination thereof, together with all Obligations of Company, be guarantied
hereunder.


 


C.     Guarantied Party, Lenders and each Swap Counterparty for which
Guarantied Party has received the notice required by Section 16 hereof are
sometimes referred to herein as “Beneficiaries”.


 


D.     Company is a wholly owned Subsidiary of Guarantor and thus the
Guarantied Obligations (as hereinafter defined) are being incurred for and will
inure to the benefit of Guarantor (which benefits are hereby acknowledged).


 


E.      It is a condition precedent to the making of the initial Loans
under the Credit Agreement that Company’s Obligations be guarantied by Guarantor.


 


F.      Guarantor is willing irrevocably and unconditionally to
guaranty such Obligations of Company.


 


1.      Guaranty. (a) In order to induce Lenders to extend
credit to Company pursuant to the Credit Agreement and the entry by Swap
Counterparties into the Lender Swap Agreements, Guarantor irrevocably and
unconditionally guaranties, as primary obligor and not merely as surety, the
due and punctual payment in full of all Guarantied Obligations (as hereinafter
defined) when the same shall become due, whether at stated maturity, by
acceleration, demand or otherwise (including amounts that would become due but
for the


 


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operation of the automatic
stay under Section 362(a) of the Bankruptcy Code). The term “Guarantied Obligations” is used herein in
its most comprehensive sense and includes any and all Obligations of Company
and all obligations of Company under Lender Swap Agreements, now or hereafter
made, incurred or created, whether absolute or contingent, liquidated or
unliquidated, whether due or not due, and however arising under or in
connection with the Credit Agreement, the Lender Swap Agreements and the other
Loan Documents.


 


Any interest on any portion
of the Guarantied Obligations that accrues after the commencement of any
proceeding, voluntary or involuntary, involving the bankruptcy, insolvency,
receivership, reorganization, liquidation or arrangement of Company (or, if
interest on any portion of the Guarantied Obligations ceases to accrue by
operation of law by reason of the commencement of said proceeding, such
interest as would have accrued on such portion of the Guarantied Obligations if
said proceeding had not been commenced) shall be included in the Guarantied
Obligations because it is the intention of Guarantor and Guarantied Party that
the Guarantied Obligations should be determined without regard to any rule of
law or order that may relieve Company of any portion of such Guarantied
Obligations.


 


Notwithstanding that all or
any portion of the Guarantied Obligations is paid by Company, the obligations
of Guarantor hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, in the event that all or any part of such
payment(s) is rescinded or recovered directly or indirectly from Guarantied
Party or any other Beneficiary as a preference, fraudulent transfer or
otherwise, and any such payments that are so rescinded or recovered shall
constitute Guarantied Obligations.


 


Subject to the other
provisions of this Section 1, upon the failure of Company to pay any of the
Guarantied Obligations when and as the same shall become due, Guarantor will
upon demand pay, or cause to be paid, in cash, to Guarantied Party for the
ratable benefit of Beneficiaries, an amount equal to the aggregate of the
unpaid Guarantied Obligations.


 


(b)    Guarantor under this Guaranty, and each guarantor under other
guaranties, if any, relating to the Credit Agreement (the “Related Guaranties”) that contain a
contribution provision similar to that set forth in this Section l(b), together
desire to allocate among themselves (collectively, the “Contributing Guarantors”), in a fair and
equitable manner, their obligations arising under this Guaranty and the Related
Guaranties. Accordingly, in the event any payment or distribution is made on
any date by Guarantor under this Guaranty or a guarantor under a Related
Guaranty, Guarantor or such other guarantor shall be entitled to a contribution
from each of the other Contributing Guarantors in the maximum amount permitted
by law so as to maximize the aggregate amount of the Guarantied Obligations
paid to Beneficiaries.


 


2.      Guaranty Absolute; Continuing Guaranty. The obligations of Guarantor hereunder are
irrevocable, absolute, independent and unconditional and shall not be affected
by any circumstance which constitutes a legal or equitable discharge of a
guarantor or surety other than payment in full of the Guarantied Obligations.
In furtherance of the foregoing and without limiting the generality thereof,
Guarantor agrees that: (a) this Guaranty is a guaranty of payment when due and
not of collectibility; (b) Guarantied Party may enforce this Guaranty upon the
occurrence and during the continuance of an Event of Default under the Credit
Agreement or the occurrence of an early termination date or similar event under
any Lender


 


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Swap Agreement
notwithstanding the existence of any dispute between Company and any
Beneficiary with respect to the existence of such event; (c) the obligations of
Guarantor hereunder are independent of the Guarantied Obligations and the
obligations of any other guarantor of the Guarantied Obligations and a separate
action or actions may be brought and prosecuted against Guarantor whether or not
any action is brought against Company or any of such other guarantors and
whether or not Company is joined in any such action or actions; and (d)
Guarantor’s payment of a portion, but not all, of the Guarantied Obligations
shall in no way limit, affect, modify or abridge Guarantor’s liability for any
portion of the Guarantied Obligations that has not been paid. This Guaranty is
a continuing guaranty and shall be binding upon Guarantor and its successors
and assigns, and shall remain in full force and effect until the latest of (a)
the payment in full of the Guaranteed Obligations (other than Unasserted
Obligations and any obligations or liabilities of whatever nature under any
Lender Swap Agreement), (b) September 30, 2012 and (c) the latest date of expiration
or termination of, or the date that other provision for cash collateral or
other support therefor in a manner reasonably satisfactory to the Issuing
Lender has been provided with respect to, all Letters of Credit. Guarantor
irrevocably waives any right to revoke this Guaranty as to future transactions
giving rise to any Guarantied Obligations.


 


3.      Actions by Beneficiaries. Any Beneficiary may from time to time,
without notice or demand and without affecting the validity or enforceability
of this Guaranty or giving rise to any limitation, impairment or discharge of
Guarantor’s liability hereunder, (a) renew, extend, accelerate or otherwise
change the time, place, manner or terms of payment of the Guarantied
Obligations, (b) settle, compromise, release or discharge, or accept or refuse
any offer of performance with respect to, or substitutions for, the Guarantied
Obligations or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other obligations, (c) request and accept other
guaranties of the Guarantied Obligations and take and hold security for the
payment of the Guarantied Obligations, (d) release, exchange, compromise,
subordinate or modify, with or without consideration, any security for payment
of the Guarantied Obligations, any other guaranties of the Guarantied
Obligations, or any other obligation of any Person with respect to the
Guarantied Obligations, (e) enforce and apply any security now or hereafter
held by or for the benefit of any Beneficiary in respect of this Guaranty or
the Guarantied Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that Guarantied Party or the other
Beneficiaries, or any of them, may have against any such security, as
Guarantied Party in its discretion may determine consistent with the Credit
Agreement, the Lender Swap Agreements and any applicable security agreement,
including foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable, and (f) exercise any other rights available to Guarantied Party or
the other Beneficiaries, or any of them, under the Loan Documents or the Lender
Swap Agreements.


 


4.      No Discharge. This Guaranty and the obligations of
Guarantor hereunder shall be valid and enforceable and shall not be subject to
any limitation, impairment or discharge for any reason (other than payment in
full of the Guarantied Obligations), including without limitation the occurrence
of any of the following, whether or not Guarantor shall have had notice of any
of them; (a) any failure to assert or enforce or agreement not to assert or
enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or demand or any right,
power or remedy with respect to the


 


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Guarantied Obligations or
any agreement relating thereto, or with respect to any other guaranty of or
security for the payment of the Guarantied Obligations, (b) any waiver or
modification of, or any consent to departure from, any of the terms or
provisions of the Credit Agreement, any of the other Loan Documents, the Lender
Swap Agreements or any agreement or instrument executed pursuant thereto, or of
any other guaranty or security for the Guarantied Obligations, (c) the
Guarantied Obligations, of any agreement relating thereto, at any time being
found to be illegal, invalid or unenforceable in any respect, (d) the
application of payments received from any source to the payment of indebtedness
other than the Guarantied Obligations, even though Guarantied Party or the
other Beneficiaries, or any of them, might have elected to apply such payment
to any part or all of the Guarantied Obligations, (e) any failure to perfect or
continue perfection of a security interest in any collateral which secures any
of the Guarantied Obligations, (f) any defenses, set-offs or counterclaims
which Company may assert against Guarantied Party or any Beneficiary in respect
of the Guarantied Obligations, including but not limited to failure of
consideration, breach of warranty, payment, statute of frauds, statute of
limitations, accord and satisfaction and usury, and (g) any other act or thing
or omission, or delay to do any other act or thing, which may or might in any
manner or to any extent vary the risk of Guarantor as an obligor in respect of
the Guarantied Obligations.


 


5.      Waivers. Guarantor waives, for the benefit of
Beneficiaries: (a) any right to require Guarantied Party or the other
Beneficiaries, as a condition of payment or performance by Guarantor, to (i)
proceed against Company, any other guarantor of the Guarantied Obligations or
any other Person, (ii) proceed against or exhaust any security held from
Company, any other guarantor of the Guarantied Obligations or any other Person,
(iii) proceed against or have resort to any balance of any deposit account or
credit on the books of any Beneficiary in favor of Company or any other Person,
or (iv) pursue any other remedy in the power of any Beneficiary; (b) any
defense arising by reason of the incapacity, lack of authority or any
disability or other defense of Company including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Guarantied Obligations or any agreement or instrument relating thereto
or by reason of the cessation of the liability of Company from any cause other
than payment in full of the Guarantied Obligations; (c) any defense based upon
Guarantied Party’s or any other Beneficiary’s errors or omissions in the
administration of the Guarantied Obligations, except behavior that amounts to
bad faith or willful misconduct; (d) promptness, diligence and any requirement
that any Beneficiary protect, secure, perfect or insure any Lien or any
property subject thereto; (e) notices, demands, presentments, protests, notices
of protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty, notices of default under the Credit
Agreement, notices of default or early termination under any Lender Swap
Agreement or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Guarantied Obligations or any
agreement related thereto, notices of any extension of credit to Company and
notices of any of the matters referred to in Sections 3 and 4 and any right to
consent to any thereof; and (f) to the fullest extent permitted by law, any
defenses or benefits that may be derived from or afforded by law which limit
the liability of or exonerate guarantors or sureties, or which may conflict
with the terms of this Guaranty.


 


6.      Guarantor’s Rights of Subrogation,
Contribution, Etc.; Subordination of Other Obligations. Until the Guarantied Obligations (other than
Unasserted Obligations) shall have been paid in full and the Commitments shall
have terminated and all


 


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Letters of Credit shall have
expired, been cancelled or other provisions for cash collateral or other
support therefor in a manner reasonably satisfactory to the Issuing Lender has
been provided, Guarantor shall withhold exercise of (a) any claim, right or
remedy, direct or indirect, that Guarantor now has or may hereafter have
against Company or any of its assets in connection with this Guaranty or the
performance by Guarantor of its obligations hereunder, in each case whether
such claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise and including without limitation (i) any right of
subrogation, reimbursement or indemnification that Guarantor now has or may
hereafter have against Company, (ii) any right to enforce, or to participate
in, any claim, right or remedy that any Beneficiary now has or may hereafter
have against Company, and (iii) any benefit of, and any right to participate
in, any collateral or security now or hereafter held by any Beneficiary and (b)
any right of contribution Guarantor now has or may hereafter have against any
other guarantor of any of the Guarantied Obligations. Guarantor further agrees
that, to the extent the agreement to withhold the exercise of its rights of
subrogation, reimbursement, indemnification and contribution as set forth
herein is found by a court of competent jurisdiction to be void or voidable for
any reason, any rights of subrogation, reimbursement or indemnification
Guarantor may have against Company or against any collateral or security, and
any rights of contribution Guarantor may have against any such other guarantor,
shall be junior and subordinate to any rights Guarantied Party or the other
Beneficiaries may have against Company, to all right, title and interest
Guarantied Party or the other Beneficiaries may have in any such collateral or
security, and to any right Guarantied Party or the other Beneficiaries may have
against such other guarantor.


 


Any indebtedness of Company
now or hereafter held by Guarantor is subordinated in right of payment to the
Guarantied Obligations, and any such indebtedness of Company to Guarantor
collected or received by Guarantor after an Event of Default has occurred and
is continuing, and any amount paid to Guarantor on account of any subrogation,
reimbursement, indemnification or contribution rights referred to in the
preceding paragraph when all Guarantied Obligations have not been paid in full,
shall be held in trust for Guarantied Party on behalf of Beneficiaries, and
shall forthwith be paid over to Guarantied Party for the benefit of
Beneficiaries to be credited and applied against the Guarantied Obligations.


 


7.      Expenses. Guarantor agrees to pay, or cause to be
paid, on demand, and to save Guarantied Party and the other Beneficiaries
harmless against liability for, (i) any and all costs and expenses (including
fees, costs of settlement and disbursements of counsel and allocated costs of
internal counsel) incurred or expended by Guarantied Party or any other
Beneficiary in connection with the enforcement of or preservation of any rights
under this Guaranty and (ii) any and all costs and expenses (including those
arising from rights of indemnification) required to be paid by Guarantor under
the provisions of any other Loan Document.


 


8.      Financial Condition of Company. No Beneficiary shall have any obligation,
and Guarantor waives any duty on the part of any Beneficiary, to disclose or
discuss with Guarantor its assessment, or Guarantor’s assessment, of the
financial condition of Company or any matter or fact relating to the business,
operations or condition of Company. Guarantor has adequate means to obtain
information from Company on a continuing basis concerning the financial
condition of Company and its ability to perform its obligations under the Loan
Documents and the Lender Swap Agreements, and Guarantor assumes the
responsibility for


 


5

















 


being and keeping informed
of the financial condition of Company and of all circumstances bearing upon the
risk of nonpayment of the Guarantied Obligations.


 


9.      Representations and Warranties. Guarantor makes, for the benefit of
Beneficiaries, each of the representations and warranties made in the Credit
Agreement by Company as to Guarantor, its assets, financial condition,
operations, organization, legal status, business and the Loan Documents to
which it is a party.


 


10.   Covenants. Guarantor agrees that, until the Guarantied
Obligations (other than Unasserted Obligations) shall have been paid in full,
all Letters of Credit shall have been cancelled or expired or other provisions
for cash collateral or other support therefor in a manner reasonably
satisfactory to the Issuing Lender have been provided and the termination of
any outstanding Commitments, Guarantor will, unless Requisite Lenders shall otherwise
consent in writing, perform or observe, and cause each of its Subsidiaries to
perform or observe, all of the terms, covenants and agreements that the Loan
Documents state that Guarantor is to perform or observe or that Company has
agreed to cause its Subsidiaries to perform or observe.


 


11.   Set Off. In addition to any other rights any
Beneficiary may have under law or in equity, upon the occurrence and during the
continuation of any Event of Default, each Beneficiary after obtaining prior
written consent of Guarantied Party is authorized at any time or from time to
time, without notice (any such notice being expressly waived), to set off and
to appropriate and to apply any and all deposits (general or special, including
but not limited to indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness of such Beneficiary owing to
Guarantor and any other property of Guarantor held by a Beneficiary to or for
the credit or the account of Guarantor against and on account of the Guarantied
Obligations and liabilities of Guarantor to any Beneficiary under this
Guaranty.


 


12.   Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Guaranty, and no consent to any departure by
Guarantor therefrom, shall in any event be effective without the written
concurrence of Guarantied Party and, in the case of any such amendment or
modification, Guarantor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.             .


 


13.   Miscellaneous. It is not necessary for Beneficiaries to
inquire into the capacity or powers of Guarantor or Company or the officers,
directors or any agents acting or purporting to act on behalf of any of them.


 


The rights, powers and
remedies given to Beneficiaries by this Guaranty are cumulative and shall be in
addition to and independent of all rights, powers and remedies given to
Beneficiaries by virtue of any statute or rule of law or in any of the Loan
Documents or the Lender Swap Agreements or any agreement between Guarantor and
one or more Beneficiaries or between Company and one or more Beneficiaries. Any
forbearance or failure to exercise, and any delay by any Beneficiary in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.


 


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In case any provision in or
obligation under this Guaranty 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.


 


THIS
GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTOR, GUARANTIED PARTY AND THE
OTHER BENEFICIARIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.


 


This Guaranty shall inure to
the benefit of Beneficiaries and their respective successors and permitted
assigns.


 


ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST GUARANTOR, GUARANTIED PARTY AND/OR ANY OTHER BENEFICIARIES
ARISING OUT OF OR RELATING TO THIS GUARANTY MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS GUARANTY EACH OF GUARANTOR, AND GUARANTIED PARTY
ACCEPTS FOR ITSELF AND THE OTHER BENEFICIARIES AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
GUARANTY. Each of the parties hereto on behalf of itself and the other Beneficiaries,
as applicable, 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, to it at its address set forth below its signature hereto, such
service being acknowledged to be sufficient for personal jurisdiction in any
action against it related to any such proceeding in any such court and to be
otherwise effective and binding service in every respect; Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right to bring proceedings in the courts of any other jurisdiction.


 


GUARANTOR
AND, BY ITS ACCEPTANCE OF THE BENEFITS HEREOF, GUARANTIED PARTY EACH AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS GUARANTY. 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
WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. GUARANTOR AND, BY ITS ACCEPTANCE OF THE
BENEFITS HEREOF, GUARANTIED PARTY EACH (I) ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT FOR GUARANTOR AND GUARANTIED PARTY TO ENTER INTO A BUSINESS


 


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RELATIONSHIP,
THAT GUARANTOR AND GUARANTIED PARTY HAVE ALREADY RELIED ON THIS WAIVER IN
ENTERING INTO THIS GUARANTY OR ACCEPTING THE BENEFITS THEREOF, AS THE CASE MAY
BE, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS, AND (II) FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL AND THAT EACH 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 SECTION
13 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS
GUARANTY. In the
event of litigation, this Guaranty may be filed as a written consent to a trial
by the court.


 


14.   Counterparts. This Guaranty and each amendment waiver and
consent with respect hereto may be executed in any number of counterparts and
by the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original for all purposes; but
all such counterparts together shall constitute but one and the same
instrument.


 


15.   Guarantied Party as Agent.


 


(a)    Guarantied Party has been appointed to act as Guarantied Party
hereunder by Lenders. Guarantied Party shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action, solely in
accordance with this Guaranty and the Credit Agreement; provided that
Guarantied Party shall exercise, or refrain from exercising, any remedies under
or with respect to this Guaranty in accordance with the instructions of
Requisite Lenders.


 


(b)    Guarantied Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to subsection 9.5 of the Credit Agreement
shall also constitute notice of resignation as Guarantied Party under this
Guaranty; and appointment of a successor Administrative Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Guarantied Party under this Guaranty. Upon the acceptance of any
appointment as Administrative Agent under subsection 9.5 of the Credit
Agreement 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 Guarantied Party under this Guaranty, and
the retiring Guarantied Party under this Guaranty shall promptly (i) transfer
to such successor Guarantied Party all sums held hereunder, together with all
records and other documents necessary or appropriate in connection with the
performance of the duties of the successor Guarantied Party under this
Guaranty, and (ii) take such other actions as may be necessary or appropriate
in connection with the assignment to such successor Guarantied Party of the
rights created hereunder, whereupon such retiring Guarantied Party shall be
discharged from its duties and obligations under this Guaranty. After any
retiring Guarantied Party’s


 


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resignation hereunder as
Guarantied Party, the provisions of this Guaranty shall inure to its benefits
as to any actions taken or omitted to be taken by it under this Guaranty while
it was Guarantied Party hereunder.


 


16.   Notice of Lender Swap Agreements. Guarantied Party shall not be deemed to have
any duty whatsoever with respect to any Swap Counterparty until it shall have
received written notice in form and substance satisfactory to Guarantied Party
from Company, Guarantor or the Swap Counterparty as to the existence and terms
of the applicable Lender Swap Agreement.


 


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IN WITNESS WHEREOF,
Guarantor and Guarantied Party have caused this Guaranty to be duly executed
and delivered by their respective officers thereinto duly authorized as of the date
first written above.


 


	
   

  	
   

  	
  PANOLAM HOLDINGS II CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Darren J. Gold

  
	
   

  	
   

  	
   

  	
  Name: Darren J. Gold

  
	
   

  	
   

  	
   

  	
  Title: President and Treasurer

  



 


	
   

  	
   

  	
  Address:

  	
  20 Progress Drive

  	
   

  
	
   

  	
   

  	
   

  	
  Shelton, Connecticut 06484

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Facsimile:

  	
   

  	
   

  
							



 

















 


	
   

  	
  CREDIT SUISSE, Cayman Islands Branch, 

  
	
   

  	
  as Administrative Agent and 

  
	
   

  	
  as Guarantied Party

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William O’Daly

  
	
   

  	
   

  	
  Name: 

  	
  William O’Daly

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  Director

  	
   

  
							



 


 


	
   

  	
  By:

  	
  /s/ Rianka Mohan

  
	
   

  	
   

  	
  Name: 

  	
  Rianka Mohan

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  Associate

  	
   

  
	
   

  
	
   

  	
  Address: 

  	
  OMA-2 

  Eleven Madison Avenue 

  New York, New York 10010 

  Attention: Agency Department Manager 

  Facsimile: (212) 325-8304