Exhibit
4.4


 


EXECUTION
COPY


 


$151,000,000


 


PIH ACQUISITION
CO.


 


10 3/4% SENIOR
SUBORDINATED NOTES DUE 2013


 


PURCHASE AGREEMENT


 


September 16, 2005


 


CREDIT
SUISSE FIRST BOSTON LLC

JEFFERIES & COMPANY, INC.,

   c/o Credit Suisse First Boston LLC

     Eleven Madison Avenue 

       New York, New York 10010-3629


 


Dear Sirs:


 


1.                           Introductory. PIH Acquisition Co., a Delaware corporation (“PIH”), proposes, subject to the terms and
conditions stated herein, to issue and sell to the several initial purchasers
named in Schedule A hereto (the “Purchasers”)
U.S.$151,000,000 principal amount of their 10 3/4% Senior Subordinated Notes
Due 2013 (the “Offered Securities”)
to be issued under an indenture to be dated as of the Closing Date (as defined
below) (the “Indenture”) among the
Company, the Guarantors (as defined below) and Wells Fargo Bank, National
Association, as Trustee in a private transaction pursuant to Section 4(2) of
the United States Securities Act of 1933, as amended (the “Securities Act”).


 


As
part of the transactions described under the heading “The Transactions” in the
Offering Document (as defined below), PIH, an affiliate of Genstar Capital
Partners (“Genstar”) and the other
equity investors (collectively with Genstar, the “Investors”), pursuant to that certain Agreement and Plan of
Merger, dated July 16, 2005 (the “Merger
Agreement”), by and among Panolam Holdings II Co., PIH, Panolam
Industries Holdings, Inc. (“Holdings”)
and TC Group, L.L.C., will merge (the “Acquisition”)
with and into Holdings. Through a series of mergers (collectively, the “Mergers”), Holdings will ultimately be
merged with and into Panolam Industries International, Inc. (the “Company”) and the Company and its
subsidiaries will become direct or indirect wholly owned subsidiaries of Holdings.
Upon consummation of the Acquisition and the Mergers, the Company, by operation
of law, will assume all of PIH’s obligations under this Agreement, and the
Company will be the issuer of the Offered Securities.


 


The
Offered Securities will be, on the Closing Date (as defined below), guaranteed
(the “Guarantees”) on a senior
subordinated basis by each of the subsidiaries listed on Schedule B hereto
(collectively, the “Guarantors”).


 


The
holders of the Offered Securities will be entitled to the benefits of a
Registration Rights Agreement to be dated as of the Closing Date among the
Company, the Guarantors and the Purchasers (the “Registration Rights Agreement”), pursuant to which the Company
and the Guarantors agree to file a registration statement with the Securities
and Exchange Commission (the “Commission”)
registering the exchange and/or resale of the Offered Securities under the
Securities Act.


 


This
Agreement (including the counterparts to be executed concurrently with the
consummation of the Acquisition and the Mergers by the Company and the
Guarantors), the Indenture, the Offered Securities, the Guarantees, the
Exchange Securities (as defined in the Registration Rights Agreement), the
Guarantees of the Exchange Securities and the Registration Rights Agreement are
referred to in this Agreement collectively as the


 

















 


“Operative Documents.” Those material agreements and
instruments relating to the Transactions (including, but not limited to, the
Merger Agreement, the agreements governing the Mergers, the New Credit Facility
(as defined in the Offering Document) and all agreements pursuant to which the
Equity Contribution (as defined in the Offering Document) is effected are
referred to in this Agreement collectively as the “Transaction Agreements.” The Operative Documents and the
Transaction Agreements are referred to in this Agreement collectively as the “Transaction Documents.”


 


References
in this Agreement to the “Issuer”
means, prior to the Acquisition and the Merger, PIH and, thereafter, the Company.


 


2.                           Representations and
Warranties of the Issuer and the Guarantors. Each of the Issuer and Guarantors, jointly and severally, represents and
warrants to, and agrees with, the several Purchasers that:


 


(a)                      A preliminary confidential offering circular
and a confidential offering circular relating to the Offered Securities to be
offered by the Purchasers have been prepared by the Issuer. Such preliminary
confidential offering circular (the “Preliminary
Offering Circular”) and confidential offering circular (the “Offering Circular”), as supplemented as of
the date of this Agreement, are hereinafter collectively referred to as the “Offering Document.” As of the date thereof,
the Preliminary Offering Circular did not include, and on the date of this
Agreement, the Offering Document does not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The preceding sentence does not apply to statements in or
omissions from the Offering Document based upon written information furnished
to the Company by the Purchasers through Credit Suisse First Boston LLC (“CSFB”) specifically for use therein, it
being understood and agreed that the only such information is that described as
such in Section 7(b) hereof.


 


(b)                     Each of PIH and the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the State of Delaware, with corporate power and authority to own its properties
and conduct its business as described in the Offering Document; and each of PIH
and the Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification, except
where failure to be so qualified or in good standing would not individually or
in the aggregate have a material adverse effect on the condition (financial or
other), business, properties or results of operations of each of PIH and the
Company and their subsidiaries taken as a whole (“Material Adverse Effect”).


 


(c)                      The entities listed on Schedule C hereto are
the only subsidiaries, direct or indirect, of the Company.


 


(d)                     Each subsidiary of the Company has been duly
incorporated and is an existing corporation in good standing under the laws of
the jurisdiction of its incorporation, with corporate power and authority to
own its properties and conduct its business as described in the Offering
Document; and each subsidiary of the Company is duly qualified to do business
as a foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing
would not individually or in the aggregate have a Material Adverse Effect; all
of the issued and outstanding capital stock of each subsidiary of the Company
has been duly authorized and validly issued and is fully paid and
nonassessable; the capital stock of each subsidiary owned by the Company,
directly or through subsidiaries, is owned free from liens, encumbrances and
defects except liens, encumbrances or defects to be in place on the Closing
Date in connection with the New Credit Facility.


 


(e)                      PIH has been formed by the Investors or their
affiliates in connection with the Acquisition. As of the date of this
Agreement, PIH is a wholly owned subsidiary of Panolam Holdings II Co. and, as
part of the Transactions, PIH ultimately will be merged with and into the


 


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Company, with the Company as the surviving company. As
of the date of this Agreement, PIH holds no material assets and has no material
liabilities or other obligations, and for the period from the date of this
Agreement to the Closing Date, PIH will hold no material assets and will have
no material liabilities or other obligations, other than the Offered Securities
issued on the Closing Date and the other Transaction Documents to which it is
or will become a party. From the date of this Agreement to the Closing Date,
PIH will not be engaged in any significant business activities other than as
issuer of the Offered Securities and those incidental to closing the
Transactions.


 


(f)                        The Indenture has been duly authorized by PIH,
and immediately upon consummation of the Acquisition and the Mergers, will be
duly authorized by the Company and the Guarantors; the Offered Securities have
been duly authorized by PIH, and immediately upon consummation of the
Acquisition and the Mergers, will be duly authorized by the Company and the
Guarantors and when the Offered Securities are delivered and paid for pursuant
to this Agreement on the Closing Date (as defined below), the Indenture will
have been duly executed and delivered, such Offered Securities will have been
duly executed, authenticated, issued and delivered and will conform to the
description thereof contained in the Offering Document and the Indenture and
such Offered Securities will constitute valid and legally binding obligations
of PIH, and immediately upon consummation of the Mergers, the Company and the
Guarantors, as applicable, enforceable in accordance with their terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’
rights and to general equity principles. On the Closing Date, the Indenture
will conform in all material respects as to legal matters to the description
thereof in the Offering Circular.


 


(g)                     On the Closing Date, the Indenture will
conform in all material respects to the requirements of the Trust Indenture Act
of 1939, as amended (the “Trust Indenture Act”),
and the rules and regulations of the Commission applicable to an indenture that
is qualified thereunder.


 


(h)                     The Exchange Securities will have been duly
authorized by PIH, and immediately upon consummation of the Merger, will be
duly authorized by the Company and the Guarantors; and when the Exchange
Securities are issued, executed and authenticated in accordance with the terms
of the Registered Exchange Offer (as defined in the Registration Rights
Agreement) and the Indenture, the Exchange Securities will be entitled to the
benefits of the Indenture and will be the valid and legally binding obligations
of the Company and the Guarantors, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.


 


(i)                         Immediately upon consummation of the
Acquisition and the Mergers, the Guarantees of the Offered Securities of each
Guarantor will be duly authorized by such Guarantor. The Guarantee by each
Guarantor of the Offered Securities, when issued will have been duly executed
and delivered by such Guarantor and will conform to the description thereof
contained in the Offering Circular. When the Guarantees are executed and
delivered in accordance with the terms of the Indenture and when the Offered
Securities have been issued, authenticated in accordance with the terms of the
Indenture, the Guarantee of each Guarantor with respect to the Offered
Securities will be the valid and legally binding obligation of such Guarantor,
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.


 


(j)                         Immediately upon consummation of the
Acquisition and the Mergers, the Guarantee to be endorsed on the Exchange
Securities by each Guarantor will be duly authorized by such Guarantor; and
when issued, will have been duly executed and delivered by each such Guarantor
and will conform in all material respects to the description thereof contained
in the Offering Circular. When the Exchange Securities have been issued, executed
and authenticated in accordance with the terms of the Registered Exchange Offer
and the Indenture, the Guarantees of


 


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each Guarantor with respect thereto will constitute
valid and legally binding obligations of such Guarantor, enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.


 


(k)                      No consent,
approval, authorization, or order of, or filing with, any governmental agency
or body or any court is required for the consummation of the transactions
contemplated by this Agreement and the Registration Rights Agreement in
connection with the issuance and sale of the Offered Securities and the
Exchange Securities (as defined in the Registration Rights Agreement) or the
issuance of the Guarantees or the guarantees related to the Exchange Securities
by the Guarantors, the Company or PIH, as applicable, or the other transactions
contemplated by the Transaction Documents, except (i) such as may be required
under the blue sky or securities laws of any jurisdiction in which the
Securities or the Exchange Securities are offered and sold and (ii) for the
order of the Commission declaring the Exchange Offer Registration Statement or
the Shelf Registration Statement (each as defined in the Registration Rights
Agreement) effective.


 


(l)                         The
execution, delivery and performance by each of PIH, the Company and the
Guarantors (each to the extent a party thereto) of the Transaction Documents
and compliance with the terms and provisions thereof and the consummation of
the transactions contemplated thereby (including the issue and sale of the
Offered Securities) will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under (i) any statute, rule,
regulation or order of any governmental agency or body or any court, domestic
or foreign, having jurisdiction over PIH, the Company or the Guarantors or any
of their properties, (ii) any agreement or instrument to which PIH, the Company
or the Guarantors is a party or by which PIH, the Company or the Guarantors is
bound or to which any of the properties of PIH, the Company or the Guarantors
is subject or (iii) the charter or by-laws of PIH, the Company or the
Guarantors, except, in the case of clause (i)
and (ii), such breaches, violations or defaults that would not
individually or in the aggregate have a Material Adverse Effect, and each of
PIH, the Company and the Guarantors has full corporate power and authority to
authorize, issue and sell the Offered Securities as contemplated by this
Agreement and the Exchange Securities and provide their respective Guarantees
as contemplated by this Agreement and the Registration Rights Agreement.


 


(m)                   Except as
described in the Offering Circular, there are no contracts, agreements or
understandings between the Company or any Guarantor and any person granting
such person the right to require the Company or any Guarantor to file a
registration statement under the Securities Act with respect to any securities
of the Company or any Guarantor or to require the Company or any Guarantor to
include such securities with the Offered Securities and Guarantees registered
pursuant to any Registration Statement other than as contemplated by the
Registration Rights Agreement.


 


(n)                     This
Agreement has been duly authorized, executed and delivered by PIH and,
immediately upon consummation of the Acquisition and the Mergers, will be duly
authorized, executed and delivered by the Company and the Guarantors.


 


(o)                     The
Registration Rights Agreement has been duly authorized by PIH and, immediately
upon the consummation of the Acquisition and the Mergers, will have been duly
executed and delivered by the Company and each of the Guarantors. When the
Registration Rights Agreement has been duly executed and delivered, the
Registration Rights Agreement will constitute a valid and legally binding obligation
of PIH and, immediately upon consummation of the Acquisition and Mergers, the
Company and each of the Guarantors, enforceable against PIH in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors’ rights and to general equity principles. On the
Closing Date, the Registration Rights Agreement will conform in all material
respects as to legal matters to the description thereof in the Offering
Circular.


 


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(p)                     Each
Transaction Agreement has been, or as of the Closing Date will have been, duly
authorized, executed and delivered by PIH, the Company, the Guarantors and
their respective subsidiaries (each to the extent a party thereto). Each
Transaction Agreement conforms or will conform in all material respects to the
descriptions thereof contained in the Offering Circular, and, assuming the due
authorization, execution and delivery thereof by the other parties thereto each
Transaction Agreement constitutes or will constitute a valid and legally
binding obligation of each of PIH, the Company, the Guarantors and their
respective subsidiaries (each to the extent a party thereto), enforceable
against such party in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles.


 


(q)                     Except as
disclosed in the Offering Circular, PIH, the Company and the Company’s
subsidiaries have good and marketable title to all real properties and good
title to all other properties and assets owned by them, in each case free from
liens, encumbrances and defects that would materially affect the value thereof
or materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Offering Document, PIH, the Company and the Company’s
subsidiaries hold any leased real or personal property under valid and
enforceable leases with no exceptions that would materially interfere with the
use made or to be made thereof by them.


 


(r)                        PIH, the
Company and the Company’s subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by them and have not received
any notice of proceedings relating to the revocation or modification of any
such certificate, authority or permit that, if determined adversely to PIH, the
Company and the Company’s subsidiaries, would individually or in the aggregate
have a Material Adverse Effect.


 


(s)                      No labor
dispute with the employees of PIH, the Company or any of the Company’s
subsidiaries exists or, to the knowledge of PIH or the Company, is imminent
that would be reasonably likely to have a Material Adverse Effect.


 


(t)                        PIH, the
Company and the Company’s subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, “intellectual
property  rights”)
necessary to conduct the business now operated by them, or presently employed
by them, and have not received any written notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to PIH, the Company or any of the
Company’s subsidiaries, would individually or in the aggregate have a Material
Adverse Effect.


 


(u)                     Except as
disclosed in the Offering Circular, none of PIH, the Company or any of the
Company’s subsidiaries is in violation of any statute, any rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively, “environmental laws”), owns or operates any
real property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to any
environmental laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and none of
PIH, the Company or any of the Company’s subsidiaries is aware of any pending
investigation that would lead to such a claim.


 


(v)                     Except as
disclosed in the Offering Circular, there are no pending actions, suits or
proceedings against or affecting PIH, the Company or any of the Company’s
subsidiaries or any of their respective properties that if determined adversely
to PIH, the Company or any of the Company’s Subsidiaries, would individually or
in the aggregate have a Material Adverse Effect,


 


5

















 


or would materially and adversely affect the ability
of PIH, the Company or any of the Company’s subsidiaries to perform its
obligations under the Indenture, this Agreement or the Registration Rights
Agreement, and to the Company’s knowledge, no such actions, suits or
proceedings are threatened.


 


(w)                   The financial
statements included in the Offering Circular present fairly the financial
position of Holdings and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis except as disclosed in the Offering Circular; and the assumptions used in
preparing the pro forma financial statements included in the Offering Circular
provide a reasonable basis for presenting the significant effects directly
attributable to the Transactions or events described therein and the related
pro forma adjustments give appropriate effect to those assumptions, and the pro
forma columns therein reflect the proper application of those adjustments to
the corresponding historical financial statement amounts, and except as
disclosed in the Offering Circular in “Risk Factors—Risks Relating to Our
Business—The unaudited pro forma financial data contained in this offering
circular have been prepared without giving effect to the requirement that we
allocate the purchase price to be paid in the Acquisition to our assets and
liabilities based on their fair value, and are subject to further review and
modification.” and “Unaudited Pro Forma Consolidated Financial Data”, the Pro
Forma Financial Information complies as to form in all material respects with
the applicable accounting requirements of rule 11-02 of Regulation S-X, and the
pro forma adjustments have been properly applied to the historical amounts in
the compilation of the Pro Forma Financial Information.


 


(x)                       Except as
disclosed in the Offering Circular, since the date of the latest audited
financial statements included in the Offering Circular there has been no
material adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries taken
as a whole, and, except as disclosed in or contemplated by the Offering
Circular, there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.


 


(y)                     None of PIH,
the Company or the Guarantors is an open-end investment company, unit
investment trust or face-amount certificate company that is or is required to
be registered under Section 8 of the United States Investment Company Act of
1940 (the “Investment Company Act”);
and none of PIH, the Company or the Guarantors is and, after giving effect to
the offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Offering Circular, will be an “investment
company” as defined in the Investment Company Act.


 


(z)                       The
statistical and market-related data in the Offering Circular are based on or
are derived from sources that PIH, the Company and the Guarantors believe are
reliable and accurate.


 


(aa)                No securities of
the same class (within the meaning of Rule 144A(d)(3) under the Securities Act)
as the Offered Securities are listed on any national securities exchange
registered under Section 6 of the United States Securities Exchange Act of 1934
(the “Exchange Act”) or quoted in
a U.S. automated inter-dealer quotation system.


 


(bb)              Assuming the
accuracy of the Purchasers’ representations and undertakings set forth in
Section 4 hereof, the offer and sale of the Offered Securities in the manner
contemplated by this Agreement will be exempt from the registration
requirements of the Securities Act by reason of Section 4(2) thereof and
Regulation S under the Securities Act (“Regulation
S”) thereunder; and it is not necessary to qualify an indenture in
respect of the Offered Securities under the Trust Indenture Act.


 


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(cc)                None of PIH, the
Company, any Guarantor or any of their respective affiliates, nor to their
knowledge, any person acting on its or their behalf (other than the Purchasers,
as to whom no representation is made) (i) has, within the six-month period
prior to the date hereof, offered or sold in the United States or to any U.S.
person (as such terms are defined in Regulation S) the Offered Securities or
any security of the same class or series as the Offered Securities or (ii) has
offered or will offer or sell the Offered Securities (A) in the United States
by means of any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act or (B) with respect to any such
securities sold in reliance on Rule 903 of Regulation S, by means of any
directed selling efforts within the meaning of Rule 902(c) of Regulation S.
PIH, the Company, the Guarantors and their respective affiliates and any person
acting on its or their behalf (other than the Purchasers, as to whom no
representation is made) have complied and will comply with the offering
restrictions requirement of Regulation S. The Company has not entered and will
not enter into any contractual arrangement with respect to the distribution of
the Offered Securities except for this Agreement and the Registration Rights
Agreement.


 


(dd)              None of PIH, the
Company or any of the Company’s subsidiaries nor any agent thereof acting on
the behalf of them (other than the Purchasers, as to whom no representation is
made) has taken, and none of them will take, any action that might cause this
Agreement or the issuance or sale of the Offered Securities to violate
Regulation T, Regulation U or Regulation X of the Board of Governors of the
Federal Reserve System.


 


(ee)                No “nationally
recognized statistical rating organization” as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act (i) has imposed (or has
informed the Company or any Guarantor that it is considering imposing) any
condition (financial or otherwise) on the Company’s or any Guarantor’s
retaining any rating assigned to the Company or any Guarantor, any securities
of the Company or any Guarantor or (ii) has indicated to the Company or any
Guarantor that it is considering (a) the downgrading, suspension, or withdrawal
of, or any review for a possible change that does not indicate the direction of
the possible change in, any rating so assigned or (b) any change in the outlook
for any rating of the Company, any Guarantor or any securities of the Company
or any Guarantor.


 


(ff)                    No form of
general solicitation or general advertising (as defined in Regulation D under
the Securities Act) was used by PIH, the Company, the Guarantors or any of
their respective representatives (other than the Purchasers, as to whom PIH,
the Company and the Guarantors make no representation) in connection with the
offer and sale of the Offered Securities contemplated hereby, including, but
not limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio,
or any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. No securities of the same class as the
Offered Securities have been issued and sold by the Company within the
six-month period immediately prior to the date hereof.


 


(gg)              None of PIH, the
Company, the Guarantors nor any of their respective affiliates or any person
acting on its or their behalf (other than the Purchasers, as to whom the
Company and the Guarantors make no representation) has engaged or will engage
in any directed selling efforts within the meaning of Regulation S with respect
to the Offered Securities or the Guarantees.


 


(hh)              Assuming the
accuracy of the Purchasers’ representations and undertakings set forth in
Section 4 hereof, the Offered Securities offered and sold in reliance on
Regulation S have been and will be offered and sold only in offshore transactions.


 


(ii)                      The sale of
the Offered Securities pursuant to Regulation S is not part of a plan or scheme
to evade the registration provisions of the Securities Act.


 


(jj)                      No
registration under the Securities Act of the Offered Securities or the Guarantees
is required for the sale of the Offered Securities and the Guarantees to the
Purchasers as contemplated hereby or for the Exempt Resales assuming the
accuracy of the Purchasers’


 


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representations set forth in Section 4 hereof, and it
is not necessary to qualify an indenture in respect of the Offered Securities
under the Trust Indenture Act.


 


(kk)                None of PIH, the
Company or any of the Company’s subsidiaries is in violation of its respective
charter or by-laws or in default in the performance of any obligation,
agreement, covenant or condition contained in any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which such party or any of
its subsidiaries is a party or by which such party or any of its subsidiaries
or their respective property is bound, except for such violations or defaults
as would not individually or in the aggregate have a Material Adverse Effect.


 


3.                           Purchase, Sale and Delivery of Offered Securities.
On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, the Issuer
agrees to sell to the Purchasers, and the Purchasers agree, severally and not
jointly, to purchase from the Issuer, at a purchase price of 96.717% of the
principal amount thereof plus accrued interest from September 30, 2005 to the
Closing Date the principal amounts of Offered Securities set forth opposite the
names of the several Purchasers in Schedule A hereto.


 


The Issuer will deliver
against payment of the purchase price the Offered Securities to be offered and
sold by the Purchasers in reliance on Regulation S in the form of one or more
permanent global Securities in registered form (the “Regulation S Global Securities”) that will be deposited with
the Trustee as custodian for The Depository Trust Company (“DTC”) and registered in the name of Cede
& Co., as nominee for DTC. The Issuer will deliver against payment of the
purchase price the Offered Securities to be offered and sold by the Purchasers
in reliance on Rule 144A (“Rule 144A”)
under the Securities Act in the form of one or more permanent global securities
in definitive form (the “144A Securities”),
and together with the Regulation S Global Securities, the “Restricted Global Securities”) deposited
with the Trustee as custodian for DTC and registered in the name of Cede &
Co., as nominee for DTC. The Regulation S Global Securities and the 144A
Securities shall be assigned separate CUSIP numbers. Interests in any Global
Securities will be held only in book-entry form through DTC, as the case may
be, except in the limited circumstances described in the Offering Circular.


 


Payment for the Offered
Securities shall be made by the Purchasers in Federal (same day) funds by wire
transfer to an account at a bank acceptable to CSFB drawn to the order of the
Issuer at the office of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New
York, New York 10153 at 10:00 A.M. (New York time), on September 30, 2005 or at
such other time not later than seven full business days thereafter as CSFB and
the Issuer determine, such time being herein referred to as the “Closing Date”, against delivery to the
Trustee as custodian for DTC of the Global Securities representing all of the
Global Securities. The Global Securities will be made available for checking at
the above office of Weil, Gotshal & Manges LLP at least 24 hours prior to
the Closing Date.


 


4.                           Representations by Purchasers; Resale by Purchasers.


 


(a)                      Each
Purchaser severally represents and warrants to the Issuer that it is an “accredited
investor” within the meaning of Regulation D under the Securities Act.


 


(b)                     Each
Purchaser severally acknowledges that the Offered Securities have not been
registered under the Securities Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S or pursuant to an exemption from the registration
requirements of the Securities Act. Each Purchaser severally represents and
agrees that it has offered and sold the Offered Securities and will offer and
sell the Offered Securities (i) as part of its distribution at any time and
(ii) otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only to those it reasonably believes to be “qualified
institutional buyers” (as defined in Rule 144A) and in accordance with Rule
144A or in accordance with Rule 903 under the Securities Act. Accordingly,
neither such Purchaser nor its affiliates, nor any persons acting on its or
their behalf, have engaged or will engage in any directed selling efforts with
respect to the Offered Securities, and such Purchaser, its affiliates and all
persons acting on its or their behalf have complied and will comply with the
offering restrictions requirement of Regulation S. Each Purchaser severally
agrees that, at or prior to confirmation of sale of the Offered Securities,
other than a sale pursuant


 


8

















 


to Rule 144A, such Purchaser will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases the Offered Securities from it during the
restricted period a confirmation or notice to substantially the following
effect:


 


“The Securities covered hereby have not been
registered under the U.S. Securities Act of 1933 (the “Securities Act”) and may
not be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the date of the commencement of the
offering and the closing date, except in either case in accordance with
Regulation S (or Rule 144A if available) under the Securities Act. Terms used
above have the meanings given to them by Regulation S.”


 


Terms used in this subsection (b) have the meanings
given to them by Regulation S.


 


(c)                      Each
Purchaser severally agrees that it and each of its affiliates has not entered
and will not enter into any contractual arrangement with respect to the
distribution of the Offered Securities except for this Agreement and any such
arrangements with the other Purchasers or affiliates of the other Purchasers or
with the prior written consent of the Company.


 


(d)                     Each
Purchaser severally agrees that it and each of its affiliates will not offer or
sell the Offered Securities in the United States by means of any form of
general solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act, including, but not limited to (i) any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio or (ii) any seminar or
meeting whose attendees have been invited by any general solicitation or
general advertising. Each Purchaser severally agrees, with respect to resales
made in reliance on Rule 144A of any of the Offered Securities, to deliver
either with the confirmation of such resale or otherwise prior to settlement of
such resale a notice to the effect that the resale of such Offered Securities
has been made in reliance upon the exemption from the registration requirements
of the Securities Act provided by Rule 144A.


 


(e)                      Each of the
Purchasers severally represents and agrees that (i) it has not offered or sold
and prior to the expiry of a period of six months from the Closing Date, will
not offer or sell any Offered Securities to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes
of their businesses or otherwise in circumstances which have not resulted and
will not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995; (ii) it has only
communicated or caused to be communicated and will only communicate or cause to
be communicated any invitation or inducement to engage in investment activity
(within the meaning of section 21 of the Financial Services and Markets Act
2000 (the “FSMA”)) received by it in connection with the issue or sale of any
Offered Securities in circumstances in which section 21(1) of the FSMA does not
apply to the Company and any Guarantor; and (iii) it has complied and will
comply with all applicable provisions of the FSMA with respect to anything done
by it in relation to the Offered Securities in, from or otherwise involving the
United Kingdom.


 


5.                           Certain Agreements of the Issuer and the Guarantors.
Each of the Issuer and the Guarantors, jointly and severally, agrees with the
several Purchasers that:


 


(a)                      The Issuer
will advise CSFB promptly of any proposal to amend or supplement the Offering
Document and will not effect such amendment or supplementation without CSFB’s
consent, such consent not to be unreasonably withheld or delayed. If, at any
time prior to the completion of the resale of the Offered Securities by the
Purchasers any event occurs as a result of which the Offering Document as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the


 


9

















 


statements therein, in the light of the circumstances
under which they were made, not misleading, the Company promptly will notify
CSFB of such event and promptly will prepare, at its own expense, an amendment
or supplement which will correct such statement or omission. Neither CSFB’s
consent to, nor the Purchasers’ delivery to offerees or investors of, any such
amendment or supplement shall constitute a waiver of any of the conditions set
forth in Section 6.


 


(b)                     The Issuer
will furnish to CSFB copies of any Preliminary Offering Circular, the Offering
Circular and all amendments and supplements to such documents, in each case as
soon as available and in such quantities as CSFB requests and the Issuer will
furnish to CSFB on the date hereof three copies of the Offering Document signed
by a duly authorized officer of the Issuer, one of which will include the
independent accountants’ reports therein manually signed by such independent
accountants. At any time when the Issuer is not subject to Section 13 or 15(d)
of the Exchange Act, the Issuer will promptly furnish or cause to be furnished
upon request of CSFB, the other Purchasers or holders and prospective
purchasers of the Offered Securities copies of the information required to be
delivered to holders and prospective purchasers of the Offered Securities
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor
provision thereto) in order to permit compliance with Rule 144A in connection
with resales by such holders of the Offered Securities. The Issuer will pay the
expenses of printing and distributing to the Purchasers all such documents.


 


(c)                      The Issuer
will arrange for the qualification of the Offered Securities for sale and the
determination of their eligibility for investment under the laws of such
jurisdictions in the United States and Canada as CSFB designates and will
continue such qualifications in effect so long as required for the resale of
the Offered Securities by the Purchasers, provided that the Issuer will not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any such state or province.


 


(d)                     To the extent
not publicly available on the Commission’s website, during the period of five
years hereafter, the Issuer will furnish, upon request, to CSFB and each of the
other Purchasers, as soon as practicable after the end of each fiscal year, a
copy of their annual reports to stockholders for such year.


 


(e)                      During the
period of two years after the Closing Date, the Issuer will, upon request,
furnish to CSFB, each of the other Purchasers and any holder of Offered
Securities a copy of the restrictions on transfer applicable to the Offered
Securities.


 


(f)                        During the
period of two years after the Closing Date, the Issuer will not, and will not
permit any of its affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Offered Securities that have been reacquired by it unless
such Offered Securities are sold in a transaction registered under the
Securities Act.


 


(g)                     During the
period of two years after the Closing Date, the Issuer will not be or become,
an open-end investment company, unit investment trust or face-amount
certificate company that is or is required to be registered under Section 8 of
the Investment Company Act.


 


(h)                     The Issuer
and the Guarantors will, jointly and severally, pay all expenses incidental to
the performance of their obligations under the Operative Documents, including
(i) the fees and expenses of the Trustee and its professional advisors; (ii)
all expenses in connection with the execution, issue, authentication, packaging
and initial delivery of the Offered Securities and, as applicable, the Exchange
Securities, the preparation and printing of this Agreement, the Registration
Rights Agreement, the Offered Securities, the Offering Document and amendments
and supplements thereto, and any other document relating to the issuance,
offer, sale and delivery of the Offered Securities and as applicable the
Exchange Securities; (iii) the cost of qualifying the Offered Securities for
trading in The PortalSM Market and any expenses incidental thereto; (iv) the
cost of any advertising approved by the Company in connection with the issue of
the Offered Securities; (v) for any expenses (including reasonable fees and
disbursements of counsel) incurred


 


10

















 


in connection with qualification of the Offered
Securities or the Exchange Securities for sale under the laws of such
jurisdictions in the United States and Canada as CSFB designates and the
printing of memoranda relating thereto; (vi) for any fees charged by investment
rating agencies for the rating of the Offered Securities or the Exchange
Securities and (vii) for expenses incurred in distributing Preliminary Offering
Circulars and the Offering Circular (including any amendments and supplements
thereto) to the Purchasers. The Issuer and the Company will also pay or
reimburse the Purchasers (to the extent incurred by them) for all travel
expenses of the Issuer’s and Company’s officers and employees and any other
expenses of the Issuer and the Company in connection with attending or hosting
meetings with prospective purchasers of the Offered Securities from the
Purchasers; provided, however the Purchasers shall pay 50% of the cost relating
to a chartered aircraft to be used by the Purchasers and the Issuers in
connection with meetings with prospective purchasers.


 


(i)                         In connection with the offering, until CSFB
shall have notified the Issuer and the other Purchasers of the completion of
the resale of the Offered Securities, neither the Issuer nor any of their
affiliates has or will, either alone or with one or more other persons, bid for
or purchase for any account in which it or any of its affiliates has a
beneficial interest any Offered Securities or attempt to induce any person to
purchase any Offered Securities; and neither it nor any of its affiliates will
make bids or purchases for the purpose of creating actual, or apparent, active
trading in, or of raising the price of, the Offered Securities.


 


(j)                         For a period of 180 days after the date of the
initial offering of the Offered Securities by the Purchasers, neither the
Issuer nor any Guarantor will offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Commission a
registration statement under the Securities Act (other than as contemplated by
the Registration Rights Agreement and as provided for in the Offering Document)
relating to, any United States dollar-denominated debt securities issued or
guaranteed by the Issuer or any Guarantor and having a maturity of more than
one year from the date of issue (other than the Exchange Securities or
Guarantees thereof), or publicly disclose the intention to make any such offer,
sale, pledge, disposition or filing, without the prior written consent of CSFB.
Neither the Issuer nor any Guarantor will at any time offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any securities
under circumstances where such offer, sale, pledge, contract or disposition
would cause the exemption afforded by Section 4(2) of the Securities Act or the
safe harbor of Regulation S thereunder to cease to be applicable to the offer
and sale of the Offered Securities.


 


(k)                      The Issuer will use the net proceeds from the
sale of the Offered Securities in the manner described in the Offering Document
under the caption “Use of Proceeds.”


 


6.                           Conditions of the
Obligations of the Purchasers. The
obligations of the several Purchasers to purchase and pay for the
Offered Securities will be subject to the accuracy of the representations and
warranties on the part of the Issuer and the Guarantors herein, to the accuracy
of the statements of officers of the Issuer and any Guarantor made pursuant to
the provisions hereof, to the performance by the Issuer and each Guarantor of
their obligations hereunder and to the following additional conditions
precedent:


 


(a)                      The
Purchasers shall have received a letter, dated the date of this Agreement, of
Deloitte & Touche LLP, in form and substance satisfactory to the
Purchasers, concerning certain financial information for the fiscal year 2004
with respect to Holdings set forth in the Offering Document.


 


(b)                     The
Purchasers shall have received a letter, dated the date of this Agreement, of
Ernst & Young LLP, in form and substance satisfactory to the Purchasers,
concerning certain financial information for the fiscal years 2000, 2001, 2002
and 2003 with respect to Holdings set forth in the Offering Document.


 


11

















 


(c)                      Subsequent
to the execution and delivery of this Agreement, there shall not have occurred
(i) any change, or any development or event involving a prospective change, in
the condition (financial or other), business, properties or results of operations
of the Company and its subsidiaries taken as one enterprise that, in the
judgment of a majority in interest of the Purchasers, including CSFB, is
material and adverse and makes it impractical or inadvisable to proceed with
completion of the offering or the sale of and payment for the Offered
Securities; (ii) any downgrading in the rating of any debt securities of the
Company or the Guarantors by any “nationally recognized statistical rating
organization” (as defined for purposes of Rule 436(g) under the Securities
Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities of the Company or the
Guarantors (other than an announcement with positive implications of a possible
upgrading, and no implication of a possible downgrading, of such rating) or any
announcement that the Company or the Guarantors have been placed on negative
outlook; (iii) any change in U.S. or international financial, political or
economic conditions or currency exchange rates or exchange controls as would,
in the judgment of a majority in interest of the Purchasers, including CSFB, be
likely to prejudice materially the success of the proposed issue, sale or
distribution of the Offered Securities, whether in the primary market or in
respect of dealings in the secondary market; (iv) any material suspension or
material limitation of trading in securities generally on the New York Stock
Exchange or any setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of the Company or the Guarantors on any
exchange or in the over-the-counter market; (v) any banking moratorium declared
by U.S. Federal or New York authorities; (vi) any major disruption of
settlements of securities or clearance services in the United States or (vii)
any attack on, outbreak or escalation of hostilities or act of terrorism
involving the United States, any declaration of war by Congress or any other
national or international calamity or emergency if, in the judgment of a
majority in interest of the Purchasers, including CSFB, the effect of any such
attack, outbreak, escalation, act, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the offering or sale
of and payment for the Offered Securities.


 


(d)                     The
Purchasers shall have received an opinion dated the Closing Date, of Weil,
Gotshal & Manges LLP counsel for the Company in the form set forth on
Exhibit A hereto.


 


(e)                      The
Purchasers shall have received an opinion, dated the Closing Date, of Jeffrey
Muller, Vice President, Human Resources and General Counsel for the Company, in
the form set forth on Exhibit B hereto.


 


(f)                        The
Purchasers shall have received from O’Melveny &
Myers LLP, counsel for the Purchasers, such opinion or opinions,
dated the Closing Date, with respect to the incorporation of PIH, the Company
and the Guarantors, with respect to the validity of the Offered Securities, the
Guarantee, the Offering Document, the exemption from registration for the offer
and sale of the Offered Securities by the Issuer to the several Purchasers and
the resales by the several Purchasers as contemplated hereby and other related
matters as CSFB may require, and the Issuer and Guarantors shall have furnished
to such counsel such documents as they request for the purpose of enabling them
to pass upon such matters.


 


(g)                     The
Purchasers shall have received a certificate, dated the Closing Date, of the
President or any Vice President and a principal financial or accounting officer
of the Company in which such officers, to the best of their knowledge after
reasonable investigation, shall state that the representations and warranties
of the Company in this Agreement, insofar as they relate to the Company, are
true and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to the Closing Date, and that, subsequent to the date of the most
recent financial statements in the Offering Document there has been no material
adverse change, nor any development or event involving a prospective material
adverse change, in the condition (financial or other), business, properties or
results of operations of the Company and its subsidiaries taken as a whole
except as set forth in the Offering Document or as described in such
certificate.


 


12

















 


(h)                     The
Purchasers shall have received a certificate, dated the Closing Date, of the President or any Vice President and a principal
financial or accounting officer of PIH in which such officers, to the
best of their knowledge after reasonable investigation, shall state that the
representations and warranties of PIH in this Agreement are true and correct,
that the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied
hereunder at or prior to the Closing Date.


 


(i)                         The Issuer and the Guarantors shall deliver to the
Purchasers, among other documents and certificates as the Purchasers
shall reasonably request, Secretary’s Certificates, dated the Closing Date,
reasonably satisfactory to the Purchasers that shall include the following documents with respect to the Company and each of
the Guarantors: (a) certificates of incorporation, (b) by-laws, (c)
resolutions of the Board of Directors of each entity, (d) certificates of good standing from the jurisdiction of
incorporation or organization of each such entity and (e) certificates
of good standing and/or qualifications to do business as a foreign corporation
in such jurisdictions as the Purchasers’
reasonably request.


 


(j)                         The Purchasers shall have received a letter, dated
the Closing Date, of Deloitte & Touche LLP which meets the
requirements of subsection (a) of this Section, except that the specified date
referred to in such subsection will be a date not more than three days prior to
the Closing Date for the purposes of this subsection.


 


(k)                      On or prior to the Closing Date, the Issuer and
the Guarantors shall have executed the Registration Rights Agreement and
the Purchasers shall have received a copy thereof;
the Issuer, the Guarantors and the Trustee shall have entered into the
Indenture and the Purchasers shall have received copies, conformed as
executed, thereof.


 


(l)                         The Company and the Guarantors shall have executed
counterparts of this Agreement and the Purchasers shall have received
copies, conformed as executed, thereof.


 


(m)                   On or prior to
the Closing Date, the Issuer shall have provided to the Purchasers and counsel
to the Purchasers true and correct executed copies of all Transaction Documents
executed and delivered on or prior to such date (including but not limited to
all legal opinions delivered in connection
therewith).


 


(n)                     On the Closing Date, the Acquisition, the Mergers
and the related transactions (including
borrowings under the New Credit Facility and the Equity Contribution) shall
have been consummated as described
in the Offering Document.


 


(o)                     The New
Credit Facility (as defined in the Offering Document), which contains terms similar in all material respects to those
described in the Offering Document, shall have become effective in
accordance with its terms and there shall exist at and as of the Closing Date (after giving effect to the Transactions
contemplated by this Agreement and the application of the proceeds
received by the Issuers from the sale of the Offered Securities) no condition
that would constitute an Event of Default
(as defined in the Credit Agreement) under the Credit Agreement.


 


PIH, the Company and the Guarantors will furnish the Purchasers with
such conformed copies of such opinions, certificates, letters and documents as
the Purchasers reasonably request. CSFB may in its sole discretion waive on
behalf of the Purchasers compliance with any conditions to the obligations of
the Purchasers hereunder.


 


                       7.                          Indemnification and
Contribution. (a) The
Issuer and Guarantors will, jointly and severally, indemnify and hold harmless
each Purchaser, its partners, members, affiliates, directors and officers and
each person, if any, who controls such Purchaser within the meaning of Section
15 of the Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which such Purchaser may become subject, under the Securities
Act or the Exchange Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact


 


13

















 


contained in the Offering Document, or any amendment or supplement
thereto, or any related preliminary confidential offering circular or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, including any
losses, claims, damages or liabilities arising out of or based upon the Company’s
failure to perform its obligations under Section 5(a) of this Agreement, and
will reimburse each Purchaser for any legal or other expenses reasonably
incurred by such Purchaser in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company and the Guarantors will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
in or omission or alleged omission from any of such documents in reliance upon
and in conformity with written information furnished to the Company by any of
the Purchasers specifically for use therein, it being understood and agreed
that the only such information consists of the information described as such in
subsection (b) below; provided, further, however, that the foregoing indemnity
agreement with respect to losses, claims, damages or liabilities shall not
inure to the benefit of any Purchaser, its officers, partners, members or
directors (or any person controlling any Purchaser within the meaning of
Section 15 of the Securities Act) with respect to any losses, claims, damages
or liabilities arising out of or based upon (x) any untrue statement or alleged
untrue statement of any material fact in the Preliminary Offering Circular or
(y) the omission or alleged omission to state in the Preliminary Offering
Circular a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, if: (1)
the Company furnished sufficient copies to the Purchasers of the Offering
Circular on a timely basis to permit delivery of the Offering Circular to all
persons purchasing Offered Securities from the Purchasers in the initial resale
of such Offered Securities (such persons, the “Initial
Resale Purchasers”) at or prior to the written confirmation of the
sale of the Offered Securities to such person; (2) the Initial Resale Purchaser
asserting such losses, claims, damages or liabilities purchased Offered
Securities in the initial resale from the Purchasers and a copy of the Offering
Circular was not sent or given by or on behalf of such Purchaser to such
Initial Resale Purchaser; and (3) the Offering Circular would have cured the
defect giving rise to such losses, claims, damages or liabilities.


 


(b)                     Each Purchaser will severally and not jointly
indemnify and hold harmless the Company, the Guarantors and their respective
directors and officers and each person, if any, who controls the Company or the
Guarantors within the meaning of Section 15 of the Securities Act (“Controlling Persons”), against any losses,
claims, damages or liabilities to which the Company, any of the Guarantors or
their respective directors, offices or Controlling
Persons may become subject, under the Securities Act or the Exchange Act or
otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Offering
Document, or any amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such
Purchasers through CSFB specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by
the Company or the Guarantors in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Purchaser consists of the following information in the Offering Document furnished on behalf of each
Purchaser: the sixth, ninth and tenth paragraphs, the first sentence of the
third paragraph and the fourth sentence of the eighth paragraph, in each case
under the caption “Plan of Distribution”; provided,
however, that the Purchasers shall not be liable for any losses, claims,
damages or liabilities arising out of or based upon the Company’s or any
Guarantor’s failure to perform its obligations under Section 5(a) of this Agreement.


 


                       (c)                     Promptly
after receipt by an indemnified party under this Section of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under subsection (a) or
(b) above, notify the indemnifying party of the commencement thereof; but the
failure to notify the indemnifying party shall not relieve it from any
liability that it may have under subsection (a) or (b) above except to the
extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; provided that the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party otherwise than under subsection (a) or (b)
above.  In case any such action is brought
against any indemnified party and the indemnified party notifies the


 


14

















 


indemnifying party of the commencement thereof, the indemnifying party
will be entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, which consent shall not be unreasonably
withheld, effect any settlement of any pending or threatened action in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party unless such
settlement includes (i) an unconditional release of such indemnified party from
all liability on any claims that are the subject matter of such action and (ii)
does not include a statement as to or an admission of fault, culpability or
failure to act by or on behalf of any indemnified party.


 


(d)                     If the indemnification provided for in this
Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then
each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand and the
Purchasers on the other from the offering of the Offered Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Guarantors on the one hand and the Purchasers on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Purchasers on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Guarantors bear to
the total discounts and commissions received
by the Purchasers from the Company or the
Guarantors under this Agreement. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the Purchasers
and the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Purchaser shall be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Securities sold by such Purchaser exceeds the amount of any damages
which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. The Purchasers’ obligations in this
subsection (d) to contribute are several in proportion to their respective
purchase obligations and not joint.


 


(e)          The obligations of the Company and the Guarantors
under this Section shall be in addition to any liability which the Company and the Guarantors may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Purchaser within the meaning of the Securities
Act or the Exchange Act; and the obligations of the Purchasers under this
Section shall be in addition to any liability which the respective Purchasers
may otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls the Company or any Guarantor within the
meaning of the Securities Act or the Exchange Act.


 


8.                           Default of Purchasers. If any Purchaser or Purchasers default in their
obligations to purchase Offered
Securities hereunder and the aggregate principal amount of the Offered
Securities that such defaulting
Purchaser or Purchasers agreed but failed to purchase does not exceed 10% of
the total principal amount of the
Offered Securities, CSFB may make arrangements satisfactory to the Company for
the purchase of such Offered
Securities by other persons, including any of the Purchasers, but if no such
arrangements are made by the Closing
Date, the non-defaulting Purchasers shall be obligated severally, in proportion
to their respective commitments
hereunder, to purchase the Offered Securities that such defaulting Purchasers
agreed but failed to purchase. If any
Purchaser or Purchasers so default and the aggregate principal amount of the
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total principal amount of the Offered Securities and arrangements satisfactory to CSFB and the Company for the
purchase of such Offered Securities by


 


15

















 


other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Purchaser or the Company, except as provided in Section 9. As
used in this Agreement, the term “Purchaser” includes any person substituted
for a Purchaser under this Section. Nothing herein will relieve a defaulting
Purchaser from liability for its default.


 


9.                           Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or any Guarantor or their respective officers and of
the several Purchasers set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation, or statement
as to the results thereof, made by or on behalf of any Purchaser, the Company,
the Guarantors or any of their respective representatives, officers or
directors or any controlling person, and will survive delivery of and payment
for the Offered Securities. If this Agreement is terminated pursuant to Section
8 or if for any reason the purchase of the Offered Securities by the Purchasers
is not consummated, the Company and the Guarantors shall remain responsible for
the expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company, Guarantors and the Purchasers pursuant to Section 7
shall remain in effect. If the purchase of the Offered Securities by the
Purchasers is not consummated for any reason other than solely because of the
termination of this Agreement pursuant to Section 8 or the occurrence of any
event specified in clauses (iii), (iv), (vi), (vii) and (viii) of Section 6(c),
the Company and Guarantors, will, jointly and severally, reimburse the
Purchasers for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities.


 


10.                     Notices. All communications hereunder will
be in writing and, if sent to the Purchasers will be mailed, delivered or telegraphed
and confirmed to the Purchasers c/o  Credit
Suisse First Boston LLC, Eleven Madison Avenue, New York, New York 10010-3629,
Attention: Transactions Advisory Group, or, if sent to the Company or the
Guarantors, will be mailed, delivered or telegraphed and confirmed to it at
Panolam Industries International, Inc., 20 Progress Drive, Shelton,
Connecticut, 06484, Attention: General Counsel; provided, however,
that any notice to a Purchaser pursuant to Section 7 will be mailed,
delivered or telegraphed and confirmed to such Purchaser.


 


11.                     Successors. This Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective
successors and the controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder, except that holders of
Offered Securities shall be entitled to enforce the agreements for their
benefit contained in the second and third sentences of Section 5(b) hereof
against the Company and the Guarantors as if such holders were parties hereto.


 


12.                     Representation of Purchasers. CSFB will
act for the several Purchasers in connection with this purchase, and any action
under this Agreement taken by CSFB will be binding upon all the Purchasers.


 


13.                     Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
Agreement.


 


14.                     Absence of Fiduciary Relationship. The
Issuer and Guarantors, jointly and severally, acknowledge and agree that:


 


(a)                      the
Representatives have been retained solely to act as initial purchasers in
connection with the sale of Company’s securities and that no fiduciary,
advisory or agency relationship between Company or any Guarantor and the
Representatives have been created in respect of any of the transactions
contemplated by this Agreement, irrespective of whether the Representatives
have advised or are advising Company on other matters;


 


(b)                     the price of
the securities set forth in this Agreement was established by Company following
discussions and arms-length negotiations with the Representatives and the
Company is capable of evaluating and understanding and understands and accepts
the terms, risks and conditions of the transactions contemplated by this
Agreement;


 


16

















 


(c)                      they have
been advised that the Representatives and their affiliates are engaged in a
broad range of transactions which may involve interests that differ from those of
Company and that the Representatives have no obligation to disclose such
interests and transactions to Company by virtue of any fiduciary, advisory or
agency relationship; and


 


(d)                     they waive,
to the fullest extent permitted by law, any claims they may have against the
Representatives for breach of fiduciary duty or alleged breach of fiduciary
duty and agree that the Representatives shall have no liability (whether direct
or indirect) to Company or any Guarantor in respect of such a fiduciary duty
claim or to any person asserting a fiduciary duty claim on behalf of or in
right of Company, including stockholders, employees or creditors of Company.


 


15.                     Applicable Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York without regard to principles of conflicts of laws.


 


16.                     The Company
and the Guarantors hereby submit to the non-exclusive jurisdiction of, the
Federal and state courts in the Borough of Manhattan in the City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.


 


If the foregoing is in
accordance with the Purchasers’ understanding of our agreement, kindly sign and
return to the Company one of the counterparts hereof, whereupon it will become
a binding agreement among the Company, the Guarantors and the several
Purchasers in accordance with its terms.


 


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  Very truly yours,

  
	
   

  	
  

  PIH ACQUISITION CO.

  
	
  



  	
   

  	
  by: 

  	
  

  /s/ Darren J. Gold

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Darren J. Gold

  Title: President 

  



 

















 


The foregoing Purchase Agreement is hereby confirmed
and accepted as of the date first above
written.


 


	
  CREDIT SUISSE FIRST BOSTON LLC

  	
   

  	
   

  	
   

  
	
  

  by: 

  	
  /s/ Ted Iantuono

  	
   

  	
   

  	
   

  	
  



  
	
   

  	
  Name: Ted Iantuono

  Title: Managing Director

  	
   

  	
   

  	
   

  
						



 


 


	
  JEFFERIES & COMPANY,
  INC.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  by: 

  	
  /s/ M. Brent Stevens

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: M. Brent Stevens

  Title: Executive Vice President