PANOLAM INDUSTRIES
INTERNATIONAL, INC.


THIRD AMENDMENT TO CREDIT
AGREEMENT AND LIMITED WAIVER


 


This THIRD
AMENDMENT  TO CREDIT AGREEMENT AND
LIMITED WAIVER (this “Amendment”) is
dated as of March 30, 2007 and entered into by and among Panolam Industries International,
Inc., a Delaware corporation, as successor by merger to PIH Acquisition Co. (“Company”), Panolam Holdings II Co., a Delaware corporation (“Holdings”), Credit Suisse, Cayman Islands Branch, as
administrative agent for Lenders (“Administrative
Agent”), and, solely for purposes
of Section 5 hereof, the Credit Support Parties (as defined in Section 5
hereof) listed on the signature pages hereof, and is made with reference to
that certain Credit Agreement dated as of September 30, 2005 by and among Company,
Holdings, Lenders, Jefferies & Company, Inc., as syndication agent for
Lenders and Administrative Agent, as amended by that certain First Amendment to
Credit Agreement and Waiver dated February 27, 2006, as further amended by that
certain Second Amendment to Credit Agreement dated March 1, 2006  (as so amended, the “Credit
Agreement”).  Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.


RECITALS


WHEREAS Company and Requisite Lenders desire to amend the
Credit Agreement as follows;


NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:


Section 1.                                                                  AMENDMENTS
TO THE CREDIT AGREEMENT


A.            Subsection 6.1(iii) of the Credit
Agreement is hereby amended by deleting such subsection in its entirety and substituting
the following therefor:


                “(iii)        Year-End
Financials:  (a) (I) as soon as
available and in any event within 120 days after the end of Fiscal Year 2005,
within 180 days after the end of Fiscal Year 2006 and within 90 days after the
end of each other 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 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 the
deliveries under this clause (I) shall not be required if the deliveries in
clause (II) are made within 90 days after the end of the relevant Fiscal Year, and
(II) as soon as available and in any event within 180 days after the end of
Fiscal Year 2006


 


 

















 


and 120 days after the
end of each other Fiscal Year thereafter, or such earlier date as may be required
by the Securities Exchange Commission or any other Government Authority, 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 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, and (b) as soon
as available and in any event within 180 days after the end of Fiscal Year 2006
and 120 days after the end of each other Fiscal Year thereafter, or such
earlier date as may be required by the Securities Exchange Commission or any other
Government Authority, in the case of such audited consolidated financial
statements, 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 prior years (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;”.


B.            Subsection 6.1(iv) of the Credit
Agreement is hereby amended by deleting the reference to clause “(iii)” in the
first phrase thereof and substituting a reference to clause “(iii)(a)(II)”
therefor.


C.            Subsection
6.1(vi) of the Credit Agreement is hereby amended by deleting the reference to
clause “(iii)” in the first phrase thereof and substituting a reference to
clause “(iii)(a)(II)” therefor.


Section 2.                                          LIMITED WAIVER


The undersigned Lenders, constituting Requisite
Lenders under the Credit Agreement, hereby waive the delivery of (a) quarterly
consolidated financial statements of the Company and its Subsidiaries for the
first Fiscal Quarter of Fiscal Year 2007 pursuant to subsection 6.1(ii) of the
Credit Agreement within 45 days after the end of such Fiscal Quarter, and the
certificates and documents required to be delivered in connection therewith
pursuant to subsection 6.1(iv) of the Credit Agreement, and (b) annual
consolidated financial statements of the Company and its Subsidiaries for
Fiscal Year 2006 pursuant to subsection 6.1(iii) of the Credit Agreement within
90 days after the end of such Fiscal Year, and the certificates and documents,
including auditor’s reports, required to be delivered in connection therewith
pursuant to subsections 6.1(iv) and 6.1(vi) of the Credit Agreement; provided
that Company shall deliver all such quarterly and annual consolidated financial
statements referred to in this paragraph and the related certificates and other
documents otherwise


 


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required to have been delivered pursuant to
subsections 6.1(ii), 6.1(iii), 6.1(iv) and 6.1(vi) of the Credit Agreement, as
applicable, no later than June 30, 2007.


Without limiting the generality of the provisions of
subsection 10.6 of the Credit Agreement, the waiver set forth herein shall be
limited precisely as written and relates solely to noncompliance by Company
with the provisions of subsections 6.1(ii), 6.1(iii), 6.1(iv) and 6.1(vi) of
the Credit Agreement with respect to the timing of delivery of financial
statements for Fiscal Year 2006 and the first Fiscal Quarter of Fiscal Year
2007 in the manner and to the extent described above, and nothing in this
Limited Waiver shall be deemed to (a) constitute a waiver of compliance by
Company with respect to (i) any such subsection of the Credit Agreement in
any other instance or (ii) any other term, provision or condition of the
Credit Agreement or any other instrument or agreement referred to therein or
(b) prejudice any right or remedy that Administrative Agent or any Lender
may now have (except to the extent such right or remedy was based upon existing
defaults that will not exist after giving effect to this Limited Waiver) or may
have in the future under or in connection with the Credit Agreement or any
other instrument or agreement referred to therein.  Except as expressly set forth in this Limited
Waiver, the terms, provisions and conditions of the Credit Agreement and the
other Loan Documents shall remain in full force and effect and in all other
respects are hereby ratified and confirmed.


Section 3.                                          CONDITIONS TO EFFECTIVENESS


This Amendment
shall become effective only upon the satisfaction of all of the following
conditions precedent (the date of satisfaction of such conditions being
referred to herein as the “Third Amendment Effective
Date”):


A.    On or before the Third Amendment Effective Date,
Company shall deliver to Administrative Agent copies of this Amendment,
executed by Company and each Credit Support Party.


B.    On or before the Third Amendment Effective Date,
Administrative Agent and Requisite Lenders shall have executed copies of this
Amendment.


C.    On or before the Third Amendment Effective Date,
Company shall have paid to Administrative Agent or its counsel, as applicable, all
costs, fees and expenses of the type described in subsection 10.2 of the Credit
Agreement incurred by Administrative Agent or its counsel with respect to this
Amendment and the documents and transactions contemplated hereby.


Section 4.                                          COMPANY’S AND HOLDINGS’
REPRESENTATIONS AND WARRANTIES


In order to induce Requisite Lenders to enter into
this Amendment and to amend the Credit Agreement in the manner provided herein,
Company and Holdings represent and warrant to each Lender executing this
Amendment the following:


A.    Corporate Power and Authority. 
Company and Holdings have all requisite corporate power and authority to
enter into this Amendment and to carry out the


 


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transactions contemplated
by, and perform their obligations under, the Credit Agreement as amended by
this Amendment (the “Amended Agreement”).


B.    Authorization of Agreements. 
The execution and delivery of this Amendment and the performance of the
Amended Agreement have been duly authorized by all necessary corporate action
on the part of Company and Holdings.


C.    No Conflict.  The execution
and delivery by Company and Holdings of this Amendment do not and will not (i)
violate any provision of any law or any governmental rule or regulation
applicable to Company or any other Loan Party, the Organizational Documents of
Company or any other Loan Party or any order, judgment or decree of any court or
other agency of government binding on Company or any other Loan Party, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of Company or any
other Loan Party, (iii) result in or require the creation or imposition of
any Lien upon any of the properties or assets of Company or any other Loan
Party (other than Liens created under any of the Loan Documents in favor of
Administrative Agent on behalf of Lenders), or (iv) require any approval
of stockholders or any approval or consent of any Person under any Contractual
Obligation of Company or any other Loan Party, except for such approvals or
consents which will be obtained on or before the Third Amendment Effective 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
have a Material Adverse Effect.


D.    Governmental Consents. 
The execution and delivery by Company and Holdings and the performance
by Company and Holdings of the Amended Agreement do not and will not require
any Governmental Authorization, except to the extent the failure to obtain such
authorization could not reasonably be expected to have a Material Adverse
Effect.


E.     Binding Obligation. 
This Amendment has been duly executed and delivered by Company and
Holdings and this Amendment and the Amended Agreement are the legally valid and
binding obligations of Company and Holdings, enforceable against Company and
Holdings in accordance with their 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.


F.     Incorporation of Representations and
Warranties From Credit Agreement.  The
representations and warranties contained in Section 5 of the Credit Agreement
are and will be true, correct and complete in all material respects on and as
of the Third Amendment Effective Date to the same extent as though made on and
as of each such date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.


G.    Absence of Default. 
No event has occurred and is continuing or will result from the
consummation of the transactions contemplated by this Amendment that


 


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would constitute an Event
of Default or a Potential Event of Default, except as shall be waived hereby.


Section 5.                                          ACKNOWLEDGEMENT AND CONSENT


Holdings, each Guarantor (as defined in the
Guaranties) and each Grantor (as defined in the Security Agreement) (such
Guarantors and Grantors together with Holdings, the “Credit
Support Parties”) each hereby acknowledges and agrees that the
Guaranties and Collateral Documents (each, a “Credit
Support Document”) to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. 
Each Credit Support Party represents and warrants that all representations
and warranties contained in the Amended Agreement and the Credit Support
Documents to which it is a party or otherwise bound are true, correct and
complete in all material respects on and as of the Third Amendment Effective
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 they were true, correct and complete in all material
respects on and as of such earlier date.


Each Credit Support Party acknowledges and agrees that
(i) notwithstanding the conditions to effectiveness set forth in this
Amendment, such Credit Support Party is not required by the terms of the Credit
Agreement or any other Loan Document to consent to the amendments to the Credit
Agreement effected pursuant to this Amendment and (ii) nothing in the
Credit Agreement, this Amendment or any other Loan Document shall be deemed to
require the consent of such Credit Support Party to any future amendments to
the Credit Agreement.


Section 6.                                          MISCELLANEOUS


A.    Reference
to and Effect on the Credit Agreement and the Other Loan Documents.


(i)            On and after the Third Amendment
Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”,
“hereof”, “herein” or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”,
“thereof” or words of like import referring to the Credit Agreement shall mean
and be a reference to the Credit Agreement, as amended hereby as of such date.


(ii)           Except as specifically amended by
this Amendment, the Credit Agreement and the other Loan Documents shall remain
in full force and effect and are hereby ratified and confirmed.


(iii)          The execution, delivery and
performance of this Amendment shall not, except as expressly provided herein,
constitute a waiver of any provision of, or operate as a waiver of any right,
power or remedy of Administrative Agent or any Lender under, the Credit
Agreement or any of the other Loan Documents.


 


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B.    Fees and Expenses. 
Company acknowledges that all costs, fees and expenses as described in
subsection 10.2 of the Credit Agreement incurred by Administrative Agent and
its counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of Company.


C.    Headings. 
Section and subsection headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose or be given any substantive effect.


D.    Applicable Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES 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 THAT
WOULD REQUIRE APPLICATION OF ANOTHER LAW.


E.     Counterparts; Effectiveness. 
This Amendment 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.  This Amendment (other than (i)
the provisions of Sections 1 and 2 hereof, the effectiveness of which is
governed by Section 3 hereof, and (ii) the provisions of Section 5 hereof,
which shall become effective upon execution of a counterpart hereof by each of
the Credit Support Parties) shall become effective upon the execution of a
counterpart hereof by Company, Holdings and the Requisite Lenders.


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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.


	
   

  	
  PANOLAM INDUSTRIES INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Vincent S. Miceli

  
	
   

  	
  Name:

  	
  Vincent S. Miceli

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PANOLAM HOLDINGS II CO.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vincent S. Miceli

  
	
   

  	
  By:

  	
  Vincent S. Miceli

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  For purposes of Section
  5 only, as a Credit Support Party:

  
	
   

  	
   

  	
   

  
	
   

  	
  PANOLAM INDUSTRIES, INC.

  
	
   

  	
  PIONEER
  PLASTICS CORPORATION

  
	
   

  	
  NEVAMAR
  HOLDING CORP.

  
	
   

  	
  NEVAMAR
  HOLDCO, LLC

  
	
   

  	
  NEVAMAR
  COMPANY, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vincent S. Miceli

  
	
   

  	
  Name:

  	
  Vincent S. Miceli

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  



 


 


 

















 


	
   

  	
  CREDIT SUISSE, Cayman Islands Branch, 

  as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bill O’Daly

  
	
   

  	
  Name:

  	
  Bill O’Daly 

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mikhail Faybusovich

  
	
   

  	
  Name:

  	
  Mikhail Faybusovich 

  
	
   

  	
  Title:

  	
  Associate

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


 


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