EXHIBIT
10.2


 


CREDIT AGREEMENT


Dated as of July 31, 2006


Among


SCHWEITZER-MAUDUIT INTERNATIONAL, INC.


as Borrower and Guarantor,


SCHWEITZER-MAUDUIT FRANCE S.A.R.L.


And


SCHWEITZER-MAUDUIT ENTREPRISE S.A.S.


as Borrowers,


THE BANKS NAMED IN THIS CREDIT AGREEMENT


as Banks,


and


SOCIÉTÉ GÉNÉRALE


as Agent






SOCIÉTÉ GÉNÉRALE CORPORATE & INVESTMENT BANKING, 

NATEXIS BANQUES POPULAIRES AND SUNTRUST BANK,


as Mandated Lead
Arrangers


and


SOCIÉTÉ GÉNÉRALE CORPORATE & INVESTMENT BANKING,


as Sole Bookrunner


 



   
 














 


TABLE OF CONTENTS


 


	
  Page

  
	
  ARTICLE I

  DEFINITIONS AND ACCOUNTING TERMS

  
	
   

  	
   

  
	
  Section 1.01.

  	
   

  	
  Certain Defined Terms

  	
  1

  
	
  Section 1.02.

  	
   

  	
  Computation of Time Periods

  	
  17

  
	
  Section 1.03.

  	
   

  	
  Accounting Terms; Changes in GAAP

  	
  18

  
	
  Section 1.04.

  	
   

  	
  Classes and Types of Advances

  	
  18

  
	
  Section 1.05.

  	
   

  	
  Miscellaneous

  	
  18

  
	
  Section 1.06.

  	
   

  	
  Currency Equivalents

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  THE ADVANCES

  
	
   

  
	
  Section 2.01.

  	
   

  	
  The Advances

  	
  19

  
	
  Section 2.02.

  	
   

  	
  Method of Borrowing

  	
  19

  
	
  Section 2.03.

  	
   

  	
  Fees

  	
  23

  
	
  Section 2.04.

  	
   

  	
  Reduction of the Commitments

  	
  24

  
	
  Section 2.05.

  	
   

  	
  Repayment

  	
  25

  
	
  Section 2.06.

  	
   

  	
  Interest

  	
  25

  
	
  Section 2.07.

  	
   

  	
  Prepayments

  	
  26

  
	
  Section 2.08.

  	
   

  	
  Funding Losses

  	
  29

  
	
  Section 2.09.

  	
   

  	
  Increased Costs

  	
  29

  
	
  Section 2.10.

  	
   

  	
  Payments and Computations

  	
  31

  
	
  Section 2.11.

  	
   

  	
  Taxes

  	
  31

  
	
  Section 2.12.

  	
   

  	
  Sharing of Payments, Etc.; Pro Rata Treatment

  	
  34

  
	
  Section 2.13.

  	
   

  	
  Bank Replacement

  	
  35

  
	
  Section 2.14.

  	
   

  	
  Extension of Maturity Date

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  CONDITIONS OF LENDING

  
	
   

  	
   

  
	
  Section 3.01.

  	
   

  	
  Conditions Precedent to Initial Advances

  	
  37

  
	
  Section 3.02.

  	
   

  	
  Conditions Precedent to Advances to SME

  	
  38

  
	
  Section 3.03.

  	
   

  	
  Conditions Precedent to Each Borrowing

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  REPRESENTATIONS AND WARRANTIES

  
	
   

  	
   

  
	
  Section 4.01.

  	
   

  	
  Corporate Existence; Subsidiaries

  	
  40

  
	
  Section 4.02.

  	
   

  	
  Corporate Power

  	
  40

  
	
  Section 4.03.

  	
   

  	
  Authorization and Approvals

  	
  40

  
	
  Section 4.04.

  	
   

  	
  Enforceable Obligations

  	
  40

  
	
  Section 4.05.

  	
   

  	
  Financial Statements

  	
  40

  
	
  Section 4.06.

  	
   

  	
  True and Complete Disclosure

  	
  42

  
	
  Section 4.07.

  	
   

  	
  Litigation

  	
  42

  




 i
 






 



TABLE OF CONTENTS


(continued)


 


	
  Page

  	 

	
   

  	 

	
  Section 4.08.

  	
   

  	
  Use of Proceeds

  	
  43

  
	
  Section 4.09.

  	
   

  	
  Investment Company Act

  	
  43

  
	
  Section 4.10.

  	
   

  	
  Taxes

  	
  43

  
	
  Section 4.11.

  	
   

  	
  Pension Plans

  	
  43

  
	
  Section 4.12.

  	
   

  	
  Condition of Property; Casualties

  	
  43

  
	
  Section 4.13.

  	
   

  	
  Insurance

  	
  44

  
	
  Section 4.14.

  	
   

  	
  No Burdensome Restrictions; No Defaults

  	
  44

  
	
  Section 4.15.

  	
   

  	
  Supply Agreement

  	
  44

  
	
  Section 4.16.

  	
   

  	
  Environmental Condition

  	
  44

  
	
  Section 4.17.

  	
   

  	
  Liens and Encumbrances

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  AFFIRMATIVE COVENANTS

  
	
   

  	
   

  
	
  Section 5.01.

  	
   

  	
  Compliance with Laws, Etc

  	
  45

  
	
  Section 5.02.

  	
   

  	
  Maintenance of Insurance

  	
  45

  
	
  Section 5.03.

  	
   

  	
  Preservation of Corporate Existence, Etc

  	
  46

  
	
  Section 5.04.

  	
   

  	
  Payment of Taxes, Etc

  	
  46

  
	
  Section 5.05.

  	
   

  	
  Reporting Requirements

  	
  46

  
	
  Section 5.06.

  	
   

  	
  Maintenance of Property

  	
  49

  
	
  Section 5.07.

  	
   

  	
  Inspection

  	
  49

  
	
  Section 5.08.

  	
   

  	
  Use of Proceeds

  	
  49

  
	
  Section 5.09.

  	
   

  	
  Status of Obligations

  	
  49

  
	
  Section 5.10.

  	
   

  	
  Nature of Business

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  NEGATIVE COVENANTS

  
	
   

  	
   

  
	
  Section 6.01.

  	
   

  	
  Liens, Etc

  	
  49

  
	
  Section 6.02.

  	
   

  	
  Merger or Consolidation; Asset Sales

  	
  51

  
	
  Section 6.03.

  	
   

  	
  Investments

  	
  51

  
	
  Section 6.04.

  	
   

  	
  Transactions With Affiliates

  	
  52

  
	
  Section 6.05.

  	
   

  	
  Compliance with ERISA

  	
  52

  
	
  Section 6.06.

  	
   

  	
  Net Debt to Equity Ratio

  	
  52

  
	
  Section 6.07.

  	
   

  	
  Net Debt to Adjusted EBITDA Ratio

  	
  52

  
	
  Section 6.08.

  	
   

  	
  Debt

  	
  52

  
	
  Section 6.09.

  	
   

  	
  Special Provisions for Material Subsidiaries of SARL
  and SME

  	
  53

  
	
  Section 6.10.

  	
   

  	
  Stock Purchases

  	
  53

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  REMEDIES

  	
   

  
	
   

  	
   

  
	
  Section 7.01.

  	
   

  	
  Events of Default

  	
  54

  
	
  Section 7.02.

  	
   

  	
  Optional Acceleration of Maturity

  	
  56

  
					




 ii
 






 



TABLE OF CONTENTS


(continued)


 


	
  Page

  
	
   

  
	
  Section 7.03.

  	
   

  	
  Automatic Acceleration of Maturity

  	
  56

  
	
  Section 7.04.

  	
   

  	
  Non-exclusivity of Remedies

  	
  56

  
	
  Section 7.05.

  	
   

  	
  Right of Set-off

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  THE GUARANTY

  
	
   

  	
   

  
	
  Section 8.01.

  	
   

  	
  Guaranty

  	
  57

  
	
  Section 8.02.

  	
   

  	
  Guaranty Absolute

  	
  57

  
	
  Section 8.03.

  	
   

  	
  Waiver

  	
  58

  
	
  Section 8.04.

  	
   

  	
  Subrogation

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  THE AGENT

  
	
   

  	
   

  
	
  Section 9.01.

  	
   

  	
  Authorization and Action

  	
  58

  
	
  Section 9.02.

  	
   

  	
  Agent’s Reliance, Etc

  	
  59

  
	
  Section 9.03.

  	
   

  	
  The Agent and Its Affiliates

  	
  59

  
	
  Section 9.04.

  	
   

  	
  Bank Credit Decision

  	
  59

  
	
  Section 9.05.

  	
   

  	
  Indemnification

  	
  59

  
	
  Section 9.06.

  	
   

  	
  Successor Agent

  	
  60

  
	
  Section 9.07.

  	
   

  	
  “Know Your Customer” Checks

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  MISCELLANEOUS

  
	
   

  	
   

  
	
  Section 10.01.

  	
   

  	
  Amendments, Etc

  	
  61

  
	
  Section 10.02.

  	
   

  	
  Notices, Etc

  	
  62

  
	
  Section 10.03.

  	
   

  	
  No Waiver; Remedies

  	
  63

  
	
  Section 10.04.

  	
   

  	
  Costs and Expenses

  	
  63

  
	
  Section 10.05.

  	
   

  	
  Binding Effect

  	
  63

  
	
  Section 10.06.

  	
   

  	
  Bank Assignments and Participations

  	
  63

  
	
  Section 10.07.

  	
   

  	
  Indemnification

  	
  66

  
	
  Section 10.08.

  	
   

  	
  Execution in Counterparts

  	
  66

  
	
  Section 10.09.

  	
   

  	
  Survival of Representations, etc

  	
  66

  
	
  Section 10.10.

  	
   

  	
  Severability

  	
  66

  
	
  Section 10.11.

  	
   

  	
  Usury Not Intended

  	
  66

  
	
  Section 10.12.

  	
   

  	
  Global Effective Rate

  	
  67

  
	
  Section 10.13.

  	
   

  	
  Judgment Currency

  	
  67

  
	
  Section 10.14.

  	
   

  	
  Governing Law; Consent to Jurisdiction

  	
  67

  
	
  Section 10.15.

  	
   

  	
  Confidentiality

  	
  68

  
						



 



 iii
 






 



 


TABLE OF
CONTENTS


	
  EXHIBITS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  —

  	
  Form of Assignment and Acceptance

  
	
  Exhibit B-1

  	
  —

  	
  Form of Tranche A Note

  
	
  Exhibit B-2

  	
  —

  	
  Form of Tranche B Note

  
	
  Exhibit C

  	
  —

  	
  Form of Notice of Borrowing

  
	
  Exhibit D

  	
  —

  	
  Form of Notice of Continuation

  
	
  Exhibit E

  	
  —

  	
  Form of Compliance Certificate

  
	
  Exhibit F-1

  	
  —

  	
  Form of Company’s General Counsel Opinion

  
	
  Exhibit F-2

  	
  —

  	
  Form of SARL’s and SME’s Outside Counsel Opinion

  
	
  Exhibit F-3

  	
  —

  	
  Form of Agent’s Counsel Opinion

  
	
  Exhibit G

  	
  —

  	
  Form of Confidentiality Agreement

  
	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1

  	
  —

  	
  Notice Information for Banks

  
	
  Schedule 4.07

  	
  —

  	
  Litigation

  
	
  Schedule 4.16

  	
  —

  	
  Environmental

  
	
  Schedule 6.01

  	
  —

  	
  Existing Liens

  



 



 iv
















 


CREDIT AGREEMENT


This Credit Agreement dated as of July 31, 2006 is
among (a) Schweitzer-Mauduit International, Inc., a Delaware corporation (“Company”);
(b) Schweitzer-Mauduit France S.A.R.L., a French corporation (“SARL”); (c)
Schweitzer-Mauduit Entreprise S.A.S., a French corporation (“SME”), (d) the
Banks (as defined below); and (e) Société Générale, a French banking
corporation, as Agent for the Banks (each as defined below).


The Company, SARL, SME, the Banks, and the Agent agree
as follows:


 


DEFINITIONS AND ACCOUNTING TERMS


Section .01.            Certain Defined Terms.  As used in this Agreement, the terms defined
above shall have the meanings set forth therein and the following terms shall
have the following meanings (unless otherwise indicated, such meanings to be
equally applicable to both the singular and plural forms of the terms defined):


“Additional Cost Rate” means (a) for any Bank
lending from an Applicable Lending Office in a Participating Member State the
percentage notified by that Bank to the Agent as the cost of complying with the
minimum reserve requirements of the European Central Bank, or (b) for any Bank
lending from an Applicable Lending Office in the United Kingdom will be
calculated by the Agent as follows:




	
  A x 0.01

  	
    per cent. per annum

  
	
  300   

  	
   

  






 


Where:


“A” is the rate of charge payable by such Bank to the
Financial Services Authority pursuant to the Fees Regulations (but, for this
purpose, ignoring any minimum fee required pursuant to the Fees Regulations)
and expressed in pounds per £1,000,000 of the Fee Base of such Bank.


“Adjusted EBITDA” means, for any period,
(a) Adjusted Net Income for such period plus (b) to the extent
deducted in determining net income, minority interest in earnings of
subsidiaries, interest expenses, income taxes, and depreciation and
amortization less (c) amortization of the deferred revenue, not
including any increase in deferred revenues for such period, all as defined in
the consolidated Financial Statements of the Company in accordance with
GAAP.  For the avoidance of doubt, when
calculated as of the end of any fiscal quarter of the Company, Adjusted EBITDA
will be calculated for the four-fiscal quarter period then ending.


“Adjusted Net Income” means, for any period,
the Company’s consolidated net income for such period after taxes, as
determined in accordance with GAAP, excluding, however, extraordinary or
one-time items, including (a) any net gain or loss during such period arising 









 



from the sale, exchange,
or other disposition of capital assets (such term to include all fixed assets
and all securities) other than in the ordinary course of business and (b) any
write-up or write-down of assets.


“Adjusted U.S. Base Rate” means, for any day,
the fluctuating rate per annum of interest equal to the greater of (a) the
U.S. Base Rate in effect on such day and (b) the Federal Funds Rate in
effect on such day plus 1⁄4 %.


“Advance” means a Tranche A Advance or a
Tranche B Advance, as the case may be.


“Affected Bank” has the meanings set forth in
Section 2.02(c)(iii) and 2.07(e), as applicable.


“Affiliate” means, as to any Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person or any
Subsidiary of such Person.  The term “control”
(including the terms “controlled by” or “under common control with”) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of a Control Percentage, by contract or otherwise.


“Agent” means Société Générale in its capacity
as an agent pursuant to Article IX and any successor agent pursuant to
Section 9.06.


“Agreement” means this Credit Agreement dated
as of July 31, 2006 among the Company, SARL, SME, the Banks, and the Agent, as
it may be amended or supplemented from time-to-time.


“Applicable Accounting Rules” means, in respect
of a particular Person, the body of generally accepted accounting principles
which are applicable to the preparation and presentation of such Person’s
financial statements.


“Applicable Lending Office” means, with respect
to each Bank, such Bank’s U.S. Lending Office in the case of a U.S. Base Rate
Advance, such Bank’s Eurodollar Lending Office in the case of a Eurodollar Rate
Advance, and such Bank’s Eurocurrency Lending Office in the case of a
Eurocurrency Rate Advance or EONIA Rate Advance.


“Applicable Mandatory Cost” of any Bank for the
Interest Period for any Fixed Rate Advance, an addition to the Eurodollar Rate
or Eurocurrency Rate to compensate such Bank for the cost of compliance with
(a) the requirements of the Bank of England and/or the Financial Services
Authority (or, in either case, any other Governmental Authority which replaces
all or any of its functions) or (b) the requirements of the European Central
Bank, each in an amount equal to the Additional Cost Rate.  On the first day of each Interest Period (or
as soon as possible thereafter) the Agent shall calculate, the Additional Cost
Rate for each Bank.  The Applicable
Mandatory Cost will be calculated by the Agent as a weighted average of the
Banks’ Additional Cost Rates (weighted in proportion to the percentage
participation of each Bank in the relevant Borrowing) and will be expressed as
a percentage rate per annum.



 2
 






 



“Applicable Margin” means, at any time with
respect to any Fixed Rate Advance, the following percentages determined as a
function of the Net Debt to Adjusted EBITDA Ratio as of the end of the immediately
preceding fiscal quarter:




	
  Net Debt to Adjusted EBITDA Ratio

  	
   

  	
  Applicable Margin (per annum)

  
	
   

  	
   

  	
   

  
	
  < 1.5

  	
   

  	
  0.35%

  
	
   

  	
   

  	
   

  
	
  >
  1.5 and < 2.0

  	
   

  	
  0.45%

  
	
   

  	
   

  	
   

  
	
  >
  2.0 and < 2.5

  	
   

  	
  0.60%

  
	
   

  	
   

  	
   

  
	
  >
  2.5

  	
   

  	
  0.75%

  








For purposes of calculating the Applicable Margin, the Net Debt to Adjusted
EBITDA Ratio shall be determined from the consolidated financial statements of
the Company and its Subsidiaries most recently delivered pursuant to
Section 5.05 and certified to the Agent and the Banks in the Compliance
Certificate required to be delivered by the Company in connection with such
financial statements pursuant to Section 5.05(e).  If, at any time, an Event of Default has
occurred and is continuing or the Company fails to deliver such financial
statements and Compliance Certificate within the times specified in
Section 5.05, the Applicable Margin shall be 0.75% per annum until such
Event of Default has been cured or waived in accordance with the terms of this
Agreement or the Company delivers such financial statements and Compliance
Certificate (or certified calculation, as applicable) to the Agent and the
Banks, respectively.  Notwithstanding the
foregoing, from the date hereof through but excluding the date of delivery to
the Agent of the financial statements and certificates required by Sections
5.05, respectively, for the period ended June 30, 2006, the Applicable Margin
shall be deemed to be 0.45% per annum.


“Assignment and Acceptance” means an assignment
and acceptance entered into by a Bank and an Eligible Assignee, and executed by
the Agent and the Company, in substantially the form of the attached
Exhibit A.


“Banks” means the lenders listed on the
signature pages of this Agreement and each Eligible Assignee that shall become
a party to this Agreement pursuant to Section 10.06.


“Borrower” means (a) with respect to all
Advances, the Company, and (b) with respect to the Tranche B Advances, SARL and
SME, and “Borrowers” shall refer to all such Persons collectively.  Notwithstanding anything to the contrary
herein, all of the references herein to “Borrower” (including, without
limitation, those references in Section 3.03 and Articles IV, V, VI and VII)
shall not include SME until SME has satisfied the conditions precedent set
forth in Section 3.02.


“Borrowing” means a Tranche A Borrowing or a
Tranche B Borrowing.



 3
 






 



“Business Day” means, (a) with respect to U.S.
Base Rate Advances, a day of the year on which banks are not required or
authorized to close in Atlanta, Georgia or New York, New York, and (b) with
respect to Eurodollar Rate Advances, a day of the year on which banks are not
required or authorized to close in Atlanta, Georgia, New York, New York, or
London, England, and (c) with respect to Eurocurrency Rate Advances and EONIA
Rate Advances, a day of the year on which banks are not required or authorized
to close in Paris, France and which is also a TARGET Day.


“Capital Leases” means, as applied to any
Person, any lease of any Property by such Person as lessee which would, in accordance
with Applicable Accounting Rules, be required to be classified and accounted
for as a capital lease on the balance sheet of such Person.


“CERCLA” means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, and all rules
and regulations and requirements thereunder in each case as now or hereafter in
effect.


“Change of Control” means


(a)           the
acquisition by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934) of a Control
Percentage with respect to the Company; 
or


(b)           during
any period of 12 consecutive months, a majority of the members of the board of
directors or other equivalent governing body of the Company cease to be
composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent
governing body or (iii) whose election or nomination to that board or other
equivalent governing body was approved by individuals referred to in clauses
(i) and (ii) above constituting at the time of such election or nomination at
least a majority of that board or equivalent governing body (excluding, in the
case of both clause (ii) and clause (iii), any individual whose initial
nomination for, or assumption of office as, a member of that board or
equivalent governing body occurs as a result of an actual or threatened
solicitation of proxies or consents for the election or removal of one or more
directors by any person or group other than a solicitation for the election of
one or more directors by or on behalf of the board of directors).


“Class” has the meaning set forth in
Section 1.04.


“Closing Date” means the date on which all
conditions precedent set forth in Section 3.01 hereof have been satisfied or
waived by the party entitled to performance thereof.


“Code” means the Internal Revenue Code of 1986,
as amended, and any successor statute.



 4
 






 



“Commitment Fee Rate” means, at any time with
respect to the commitment fees payable pursuant to Sections 2.03(a) and (b),
the following percentages determined as a function of the Net Debt to Adjusted
EBITDA Ratio as of the end of the immediately preceding fiscal quarter:




	
  Net
  Debt to Adjusted EBITDA Ratio

  	
   

  	
  Commitment Fee Rate

  
	
   

  	
   

  	
   

  
	
  < 2.0

  	
   

  	
  30% of the then
  applicable Applicable Margin

  
	
   

  	
   

  	
   

  
	
  >
  2.0

  	
   

  	
  35% of the then
  applicable Applicable Margin

  






 


For purposes of
calculating the Commitment Fee Rate, the Net Debt to Adjusted EBITDA Ratio
shall be determined from the consolidated financial statements of the Company
and its Subsidiaries most recently delivered pursuant to Section 5.05 and
certified to the Agent and the Banks in the Compliance Certificate required to
be delivered by the Company in connection with such financial statements
pursuant to Section 5.05(e).


“Commitments” means, as to any Bank, its
Tranche A Commitment and its Tranche B Commitment.


“Compliance Certificate” means a Compliance
Certificate signed by a Responsible Officer of the Company in substantially the
form of the attached Exhibit E.


“Control Percentage” means, with respect to any
Person, the percentage of the outstanding capital stock of such Person having
ordinary voting power which gives the direct or indirect holder of such stock
the power to elect a majority of the Board of Directors of such Person.


“Controlled Group” means all members of a
controlled group of corporations and all trades (whether or not incorporated)
under common control which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.


“Continue”, “Continuation”, and “Continued”
each refers to a continuation of Advances for an additional Interest Period
upon the expiration of the Interest Period then in effect for such Advances.


“Convert”, “Conversion”, and “Converted”
each refers to a conversion of Advances of one Type into Advances of another
Type as may be required or permitted from time to time under the terms of
Sections 2.02(c) and 2.07(e) of this Agreement.


“Credit Documents” means this Agreement, the
Notes, and each other agreement, instrument or document executed by the
Borrowers, any of their Subsidiaries or any of their officers at any time in
connection with this Agreement.


“Currency” means Dollars or Euros, as
applicable.


“Debt” for any Person, means without
duplication:



 5
 






 



(a)           indebtedness of such Person for
borrowed money;


(b)           obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments;


(c)           obligations
of such Person to pay the deferred purchase price of property or services
(other than trade accounts payable);


(d)           obligations of such Person as lessee
under Capital Leases;


(e)           all reimbursement obligations of such
Person arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments;


(f)            obligations of such Person under
direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) of such Person to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (a) through (e) above;


(g)           all obligations of such Person under
any Interest Hedge Agreement or Financial Contract (excluding foreign exchange
transactions not entered into for speculative purposes); and


(h)           indebtedness or obligations of others
of the kinds referred to in clauses (a) through (g) secured by any
Lien on or in respect of any Property of such Person.


“Default” means (a) an Event of Default or
(b) any event or condition which with notice or lapse of time or both
would, unless cured or waived, become an Event of Default.


“Dollar Equivalent” means (a) with respect
to any amount denominated in Dollars, such amount, and (b) with respect to
any amount denominated in Euros, the equivalent amount thereof in Dollars as
determined by the Agent by reference to the Spot Rate (determined in respect of
the most recent Revaluation Date), for the spot purchase in the foreign
exchange market of such amount of Dollars with such other currency.


“Dollars” and “$” means lawful money of
the United States of America.


“Eligible Assignee” means (a) a commercial
bank organized under the laws of the United States, or any State thereof, and
having primary capital (Tier I) of not less than $500,000,000 and approved
by the Agent and the Company, which approval will not be unreasonably withheld,
(b) a commercial bank organized under the laws of any other country which is
a member of the Organization for Economic Cooperation and Development and
having primary capital (or its equivalent) of not less than $500,000,000 (or
its Dollar Equivalent) and approved by the Agent and the Company, which
approval by the Agent and the Company will not be unreasonably withheld, or (c)
any other Person that has been approved by the Company in its sole discretion
and the Agent, which approval by the Agent will not be unreasonably
withheld.  Without limiting any other
basis upon which the Company may reasonably withhold its consent to a proposed
assignee, the Company’s consent shall not be deemed to have been unreasonably
withheld if such assignment would be reasonably likely to result in (i) any
Borrower becoming 



 6
 






 



liable for any payment pursuant
to Sections 2.09, 2.11(a) or 2.11(c) or (ii) such assignee asserting any rights
under Sections 2.02(c)(iii) or 2.07(e).


“Environment” or “Environmental” shall
have the meanings set forth in 43 U.S.C. §  9601(8) (1988).


“Environmental Claim” means any third party
(including governmental agencies and employees) action, lawsuit, claim,
regulatory action or proceeding, order, decree, consent agreement or notice of
potential or actual responsibility or violation which seeks to impose liability
under any Environmental Law.


“Environmental Law” means, as to a particular
Borrower or its Subsidiaries, all Legal Requirements applicable to such
Borrower or its Subsidiaries arising from, relating to, or in connection with
the Environment, including without limitation CERCLA, relating to
(a) pollution, contamination, injury, destruction, loss, protection,
cleanup, reclamation or restoration of the air, surface water, groundwater,
land surface or subsurface strata, or other natural resources; (b) solid,
gaseous or liquid waste generation, treatment, processing, recycling,
reclamation, cleanup, storage, disposal or transportation; (c) exposure to
pollutants, contaminants, hazardous, medical, infectious, or toxic substances,
materials or wastes; or (d) the manufacture, processing, handling,
transportation, distribution in commerce, use, storage or disposal of
hazardous, medical, infectious, or toxic substances, materials or wastes.


“Environmental Permit” means any permit,
license, order, approval or other authorization under Environmental Law.


“EONIA Rate” means, for each EONIA Rate Advance
comprising part of the same Borrowing, the interest rate per annum set forth on
Telerate Page 247 (or any replacement page on such service) as the Euro
Overnight Index Average at or about 7:00 a.m. (Brussels time) on the next
Business Day after the date of determination.


“EONIA Rate Advance” means an Advance which
bears interest based on the EONIA Rate.


“Equity” means, for any period (a) Total
Stockholders’ Equity (as defined in the Financial Statements of the Company) plus
(b) Minority Interests (as defined in the Financial Statements of the Company).


“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended from time-to-time.


“Euro” and/or “€” denote the lawful currency
of Participating Member States.


“Eurocurrency Lending Office” means, with
respect to any Bank, the office of such Bank specified as its “Eurocurrency
Lending Office” opposite its name on Schedule 1 (or, if no such office is
specified, its U.S. Lending Office) or such other office of such Bank as such
Bank may from time-to-time specify to the Borrowers and the Agent.



 7
 






 



“Eurocurrency Liabilities” has the meaning
assigned to that term in Regulation D of the Federal Reserve Board (or any
successor), as in effect from time-to-time.


“Eurocurrency Rate” means, for the Interest
Period for each Eurocurrency Rate Advance comprising part of the same
Borrowing, the interest rate per annum set forth on Telerate Page 248 as the
Euro Interbank Offered Rate at or about 11:00 a.m. (Brussels time) two Business
Days before the first day of such Interest Period and for a period equal to
such Interest Period; provided that, if no such quotation appears on
Telerate Page 248, the Eurocurrency Rate shall be an interest rate per annum
(rounded upward to the nearest whole multiple of 1/16 of 1% per annum) equal to
the average rate per annum at which deposits in Euros are offered by the
Eurocurrency Reference Banks to prime banks in the European interbank market at
11:00 a.m. (Brussels time) two Business Days before the first day of such
Interest Period in an amount substantially equal to Société Générale’s
Eurocurrency Rate Advance comprising part of such Borrowing and for a period
equal to such Interest Period.


“Eurocurrency Rate Advance” means an Advance
which bears interest based on the Eurocurrency Rate.


“Eurocurrency
Reference Banks” means Société Générale, Natexis Banques Populaires, and
LCL.


“Eurodollar Lending Office” means, with respect
to any Bank, the office of such Bank specified as its “Eurodollar Lending
Office” opposite its name on Schedule 1 (or, if no such office is
specified, its U.S. Lending Office) or such other office of such Bank as such
Bank may from time-to-time specify to the Borrowers and the Agent.


“Eurodollar Rate” means, for the Interest
Period for each Eurodollar Rate Advance comprising part of the same Borrowing,
the interest rate per annum set forth on Telerate Page 3750 as the London
Interbank Offered Rate at or about 11:00 a.m. (London time) two Business Days
before the first day of such Interest Period and for a period equal to such
Interest Period; provided that, if no such quotation appears on Telerate
Page 3750, the Eurodollar Rate shall be an interest rate per annum (rounded
upward to the nearest whole multiple of 1/16 of 1% per annum) equal to the
average rate per annum at which deposits in Dollars are offered by the
Eurodollar Reference Banks to prime banks in the London interbank market at
11:00 a.m. (London time) two Business Days before the first day of such
Interest Period in an amount substantially equal to Société Générale’s
Eurodollar Rate Advance comprising part of such Borrowing and for a period
equal to such Interest Period.


“Eurodollar Rate Advance” means an Advance
which bears interest based on the Eurodollar Rate.


“Eurodollar Reference Banks” means Société
Générale, Natexis Banques Populaires, and SunTrust.


“Events of Default” has the meaning set forth
in Section 7.01.


“Existing Credit Agreement” means the Agreement
dated as of January 31, 2002 among the Company, SARL, the banks named therein
and Société Générale, as Agent, as amended.



 8
 






 



“Federal Funds Rate” means, for any period, a
fluctuating interest rate per annum equal for each day during such period to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for any such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by it.


“Federal Reserve Board” means the Board of
Governors of the Federal Reserve System or any of its successors.


“Fees Regulations” means the Banking
Supervision (Fees) Regulations 1999 or such other law or regulation as may be
in force from time to time in respect of the payment of fees for banking
supervision.


“Fee Base” has the meaning given to it in, and
will be calculated in accordance with, the Fees Regulations.


“Financial Contract” of a Person means (a) any
exchange-traded or over-the-counter futures, forward, swap or option contract
or other financial instrument with similar characteristics, or (b) any Rate
Management Transaction.


“Financial Statements” means (a) the audited
consolidated balance sheet of the Company as at December 31, 2005 and the
related audited consolidated statements of income, changes in stockholders’
equity and cash flows of the Company and (b) the audited or unaudited, as
applicable, combined or consolidated, as applicable, balance sheets and income,
changes in owners’ equity and cash flow statements of each of the other
entities referred to in Section 4.05, each dated as of December 31, 2005.


“Fixed Rate Advance” means any Eurodollar Rate
Advance or Eurocurrency Rate Advance.


“Fixed Rate Reserve Percentage” of any Bank for
the Interest Period for any Fixed Rate Advance means the reserve percentage
applicable during such Interest Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those days in
such Interest Period during which any such percentage shall be so applicable)
under regulations issued from time-to-time by the Federal Reserve Board for
determining the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such Bank
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities having a term equal to such Interest Period.


“Fund,” “Trust Fund,” or “Superfund”
means the Hazardous Substance Response Trust Fund, established pursuant to 42
U.S.C. § 9631 (1988) and the Post-closure Liability Trust Fund, established
pursuant to 42 U.S.C. § 9641 (1988), which statutory provisions have been
amended or repealed by the Superfunds Amendments and Reauthorization Act of
1986, and the “Fund,” “Trust Fund,” or “Superfund” that are now maintained
pursuant to § 9507 of the Code.



 9
 






 



“GAAP” means United States generally accepted
accounting principles as in effect from time-to-time, applied on a basis
consistent with the requirements of Section 1.03.


“Governmental Authority” means, as to any
Person in connection with any subject, any foreign, national, state or
provincial governmental authority, or any political subdivision of any state
thereof, or any agency, department, commission, board, authority or instrumentality,
bureau or court, in each case having jurisdiction over such Person or such
Person’s Property in connection with such subject.


“Governmental Proceedings” means any action or
proceedings by or before any Governmental Authority, including, without
limitation, the promulgation, enactment or entry of any Legal Requirement.


“Guaranteed Obligations” means all Advances and
other amounts payable by SARL and SME to the Agent or the Banks under the
Credit Documents.


“Hazardous Substance” means the substances
identified as such pursuant to CERCLA and those regulated under any other
Environmental Law, including without limitation pollutants, contaminants,
petroleum, petroleum products, radionuclides, radioactive materials, and
medical and infectious waste.


“Hazardous Waste” means the substances
regulated as such pursuant to any Environmental Law.


“Interest Hedge Agreement” means an interest
hedge, rate swap, or cap, or similar arrangement between a Borrower and a
financial institution providing for the exchange of nominal interest
obligations or the cap of the interest rate on the Advances made under this
Agreement.


“Interest Period” means, for each Fixed Rate
Advance comprising part of the same Borrowing, the period commencing on the
date of such Advance and ending on the last day of the period selected by a
Borrower pursuant to the provisions below and Section 2.02 and, thereafter,
each subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by such
Borrower pursuant to the provisions below and Section 2.02.  The duration of each such Interest Period
shall be one, two, three, or six months, in each case as the applicable
Borrower may, upon notice received by the Agent at the Applicable Lending
Office on the day and at the time required by Section 2.02 (and copies of which
shall in any event be sent simultaneously to the Agent’s U.S. Lending Office),
select; provided, however, that:


(a)           Interest
Periods commencing on the same date for Advances by each Bank comprising part
of the same Borrowing shall be of the same duration;


(b)           whenever
the last day of any Interest Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be extended to occur
on the next succeeding Business Day, provided that if such extension
would cause the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the next
preceding Business Day;


 



 10














 


 


(c)           any Interest Period which begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month in which it
would have ended if there were a numerically corresponding day in such calendar
month; and


(d)           no Borrower may select any Interest
Period for any Advance which ends after the Maturity Date.


“Interim Financial
Statements” means (a) the unaudited consolidated balance sheet of the
Company as at March 31, 2006 and the related unaudited consolidated statements
of income, changes in stockholders’ equity and cash flows of the Company and
(b) the unaudited, combined or consolidated, as applicable, balance sheets and
income, changes in owners’ equity and cash flow statements of each of the other
entities referred to in Section 4.05, each dated as of March 31, 2006.


“Legal Requirement”
means, as to any Person, any law, statute, ordinance, decree, requirement,
order, judgment, rule, regulation (or official interpretation of any of the
foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority which is applicable to such Person.


“Lien” means any
mortgage, lien, pledge, assignment, charge, deed of trust, security interest,
hypothecation, preference, deposit arrangement or encumbrance (or any other
arrangement having the practical effect of the foregoing) to secure or provide
for the payment of any obligation of any Person, whether arising by contract,
operation of law or otherwise (including, without limitation, the interest of a
vendor or lessor under any conditional sale agreement, Capital Lease or other
title retention agreement).


“Liquid
Investments” means:


(a)           direct obligations of, or obligations
the principal of and interest on which are unconditionally guaranteed by (i)
the government of Brazil, with respect to investments of amounts arising from
or used in the conduct of such Person’s business in Brazil, (ii) the United
States, (iii) the Republic of France, (iv) the Kingdom of Spain, (v) the
Republic of Indonesia, with respect to investments of amounts arising from or
used in the conduct of such Person’s business in Indonesia, or (vi) the
Republic of The Philippines, with respect to investments of amounts arising
from or used in the conduct of such Person’s business in the Philippines;


(b)           (i) negotiable or nonnegotiable
certificates of deposit, time deposits, or other similar banking arrangements
maturing within 180 days from the date of acquisition thereof (“bank debt
securities”), issued by (A) any Bank that is a commercial bank or commercial
financial institution or (B) any other bank or trust company which has a
combined capital surplus and undivided profit of not less than $500,000,000 or
the Dollar Equivalent thereof, if at the time of deposit or purchase, such bank
debt securities are rated not less than “A” (or the then equivalent) by the
rating service of 



 11
 






 



Standard & Poor’s
Ratings Group or of Moody’s Investors Service, and (ii) commercial paper issued
by (A) any Bank that is a commercial bank or commercial financial institution
or (B) any other Person if at the time of purchase such commercial paper is
rated not less than “A-2” (or the then equivalent) by the rating service of
Standard & Poor’s Ratings Group or not less than “P-2” (or the then
equivalent) by the rating service of Moody’s Investors Service, or upon the
discontinuance of both of such services, such other nationally recognized
rating service or services, as the case may be, as shall be selected by the
Borrower with the consent of the Majority Banks;


(c)           repurchase agreements relating to
investments described in clauses (a) and (b) above with a market value at least
equal to the consideration paid in connection therewith, with any Person who
regularly engages in the business of entering into repurchase agreements and
has a combined capital surplus and undivided profit of not less than
$500,000,000 or the Dollar Equivalent thereof, if at the time of entering into
such agreement the debt securities of such Person are rated not less than “A”
(or the then equivalent) by the rating service of Standard & Poor’s Ratings
Group or of Moody’s Investors Service;


(d)           such other instruments (within the
meaning of Article 9 of the Uniform Commercial Code as adopted in the State of
New York) or money market
funds as the Borrower may request and the Agent may approve in writing,
which approval will not be unreasonably withheld; and


(e)           with respect to investments of
amounts arising from or used in the conduct of such Person’s business in
Brazil, Indonesia and the Philippines, bank debt securities issued by the
following banks:  Banco ABN AMRO Real
S.A., Banco do Brasil S.A., Banco Itau S.A., Banco Safra S.A., HSBC Bank Brasil
S.A. Banco Multiplo, Standard Chartered Bank, Pan Indonesia Bank, Bank of the
Philippine Islands or Equitable PCI Bank; provided that (i) such bank receives
a long-term foreign currency senior debt rating from either Standard & Poor’s
Ratings Group or Moody’s Investors Service and such rating is equal to or
higher than B- (or the then equivalent) (provided that (A) if the ratings
established or deemed to have been established by Standard & Poor’s Ratings
Group and Moody’s Investors Service for such bank shall differ, the lower of
the two ratings shall apply and (B) if neither Standard & Poor’s Ratings
Group nor Moody’s Investors Service shall have in effect a long-term foreign
currency senior debt rating for such bank, then Moody’s Investor Services’
long-term foreign currency deposit rating, if any, shall be substituted
therefor); (ii) the aggregate of such investments may not exceed $10,000,000
(or the Dollar Equivalent thereof); provided that the aggregate of such
investments may not exceed $5,000,000 (or the Dollar Equivalent thereof) in
either Indonesia or the Philippines; and (iii) such investments may be
terminated without premium or penalty within three Business Days.


“Majority Banks”
means, at any time, Banks holding at least 66-2/3% of the Dollar Equivalent of
the then aggregate unpaid principal amount of the Notes held by the Banks at
such time, or, if no such principal amount is then outstanding, Banks having at
least 66-2/3% of the aggregate amount of Dollar Equivalents of the Commitments
at such time.


“Majority Tranche A
Banks” means, at any time, Banks having Tranche A Commitments holding at
least 66-2/3% of the then aggregate unpaid principal amount of the Tranche A
Notes held by such Banks at such time, or, if no such principal amount is then
outstanding, Banks having at least 66-2/3% of the aggregate amount of the
Tranche A Commitments at such time.



 12
 






 



“Majority Tranche B
Banks” means, at any time, Banks having Tranche B Commitments holding at
least 66-2/3% of the then aggregate unpaid principal amount of the Tranche B
Notes held by such Banks at such time, or, if no such principal amount is then
outstanding, Banks having at least 66-2/3% of the aggregate amount of the
Tranche B Commitments at such time.


“Mandated Lead
Arrangers” means each of Société Générale, Natexis Banques Populaires and
SunTrust Bank.


“Material Adverse
Change” shall mean (a) a material adverse change in the business, financial
condition, or results of operations of the Company and its Subsidiaries, taken
as a whole, since the date of the Financial Statements, or (b) a material
adverse effect on any Borrower’s ability to perform its obligations under this
Agreement, any Note or any other Credit Document.


“Material Subsidiaries”
means any consolidated Subsidiary of any Borrower, which Subsidiary holds or
constitutes 5% or more of the consolidated assets of the Company.


“Maturity Date”
means the earlier of (a) the later of (i) the fifth anniversary of the Closing
Date and (ii) if maturity is extended pursuant to Section 2.14, such extended
maturity date as determined pursuant to such Section and (b) the earlier
termination in whole of the Commitments pursuant to Section 2.04 or Article
VII.


“Maximum Rate”
means the maximum nonusurious interest rate under applicable law (determined
under such laws after giving effect to any items which are required by such
laws to be construed as interest in making such determination, including
without limitation if required by such laws, certain fees and other costs).


“Multiemployer Plan”
means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which
any Borrower or any member of the Controlled Group is making or accruing an
obligation to make contributions.


“Net Debt” means,
for any period, the Company’s consolidated (a) current portion of long term
Debt plus (b) other short term Debt plus (c) long term Debt less
(d) cash and cash equivalents (all as defined in the Financial Statements of
the Company), each as determined in accordance with GAAP; provided, however
that clause (e) of the definition of “Debt” and those agreements or contracts
under clause (g) of the definition of “Debt” which qualify as effective hedges
as defined in Financial Accounting Standards No. 133, as amended, shall be
excluded for purposes of determining Net Debt.


“Net Debt to Adjusted
EBITDA Ratio” means, at any time, the ratio of the Company’s (a) Net Debt
as of the end of any fiscal quarter to (b) Adjusted EBITDA as of the end of any
fiscal quarter for the four-fiscal quarter period then ending.


“Net Debt to Equity
Ratio” means, at any time, the ratio of the Company’s (a) Net Debt to (b)
Equity at such time.


“Net Income”
means, for any period, the Company’s consolidated net income for such period
after taxes, as determined in accordance with GAAP.



 13
 






 



“Note” means a
Tranche A Note or a Tranche B Note.


“Notice of Borrowing”
means a notice of borrowing in the form of the attached Exhibit C signed by a
Responsible Officer of the applicable Borrower.


“Notice of
Continuation” means a notice of continuation in the form of the attached
Exhibit D signed by a Responsible Officer of the applicable Borrower.


“Obligations”
means all Advances and other amounts payable by the Borrowers to the Agent or
the Banks under the Credit Documents, including without limitation, the Company’s
obligations under Article VIII.


“Participating Member
State” means any member state of the European Communities that adopts or
has adopted the euro as its lawful currency in accordance with legislation of
the European Union relating to Economic and Monetary Union.


“PBGC” means the
Pension Benefit Guaranty Corporation or any entity succeeding to any or all of
its functions under ERISA.


“Permitted Liens”
means the Liens permitted to exist pursuant to Section 6.01.


“Person” means an
individual, partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof or any trustee,
receiver, custodian or similar official.


“Philip Morris”
means Altria Group, Incorporated, a Virginia corporation.


“Plan” means an
employee benefit plan (other than a Multiemployer Plan) sponsored by the
Company or any member of the Controlled Group and covered by Title IV of ERISA
or subject to the minimum funding standards under Section 412 of the Code.


“Property” of any
Person means any property or assets (whether real, personal, or mixed, tangible
or intangible) of such Person.


“Pro Rata Share”
means, at any time with respect to any Bank, either (a) if the Commitments have
not been canceled, the ratio (expressed as a percentage) of the Dollar
Equivalent of such Bank’s uncancelled Commitments at such time to the Dollar
Equivalent of the aggregate uncancelled Commitments at such time, (b) if the
Commitments have been terminated but no Advances are outstanding, the ratio
(expressed as a percentage) of the Dollar Equivalent of such Bank’s Commitment
immediately prior to such termination to the Dollar Equivalent of the aggregate
amount of the Commitments immediately prior to such termination or (c) if the
aggregate Commitments have been terminated and there are outstanding Advances,
the ratio (expressed as a percentage) of the Dollar Equivalent of such Bank’s
aggregate outstanding Advances at such time to the Dollar Equivalent of the
aggregate outstanding Advances of all the Banks at such time.



 14
 






 



“Rate Management
Transactions” means any transaction (including an agreement with respect
thereto) which is a rate swap, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of these transactions) or any combination thereof, whether linked to one or
more interest rates, foreign currencies, commodity prices, equity prices or
other financial measures.


“Register” has the
meaning set forth in paragraph (c) of Section 10.06.


“Regulations T, U, X
and D” means Regulations T, U, X, and D of the Federal Reserve Board, as
the same is from time-to-time in effect, and all official rulings and
interpretations thereunder or thereof.


“Release” shall
have the meaning set forth in CERCLA or under any other Environmental Law.


“Reportable Event”
means any of the events set forth in Section 4043(b) of ERISA.


“Response” shall
have the meaning set forth in CERCLA or under any other Environmental Law.


“Responsible Officer”
means, of any Person, the Chief Executive Officer, President, Chief Financial
Officer, any Executive or Senior Vice President, Secretary (or the French
equivalent of any of the foregoing) of such Person or any other member of
senior management of such Person.


“Revaluation Date”
means (a) the last Business Day of each fiscal quarter and (b) such additional
dates as the Agent shall determine or the Majority Lenders shall require.


“SEC” means the
Securities and Exchange Commission, and any successor entity.


“Spot Rate” for a
currency means the rate determined by the Agent to be the rate of exchange
quoted by Société Générale, New York Branch at 10:00 a.m. (New York City
time) on the date of determination.


“Subsidiary” of a
Person means any corporation, association, partnership or other business entity
of which 50% or more of the outstanding shares of capital stock (or other
equivalent interests) having by the terms thereof ordinary voting power under
ordinary circumstances to elect a majority of the board of directors or Persons
performing similar functions (or, if there are no such directors or Persons,
having general voting power) of such entity (irrespective of whether at the
time capital stock (or other equivalent interests) of any other class or
classes of such entity shall or might have voting power upon the occurrence of
any contingency) is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person.



 15
 






 



“Supply Agreement”
means (a) the Second Amended and Restated Agreement for Fine Paper Supply dated
as of July 1, 2000 between Philip Morris and the Company, and (b) the Amended
and Restated Addendum to Fine Papers Supply Agreement dated as of July 1, 2000,
as such Agreements may be further amended or modified from time-to-time.


“Tangible Net Worth”
means, as of any date for the Company on a consolidated basis, the sum of (a)
the par value (or value stated on the books of the Company) of the capital
stock of all classes of the Company, plus (b) the additional paid-in
capital of the Company, plus (c) the amount of the surplus and retained
earnings, whether capital or earned, of the Company, all determined on a
consolidated basis in accordance with GAAP, excluding, however, (i) the value
of any redeemable preferred stock or similar capital stock of the Company, and
(ii) accumulated other comprehensive income, minus (d) the absolute
value of treasury stocks, minus (e) the sum of the value indicated on
the Company’s balance sheet of the following items: patents, trademarks,
copyrights, deferred charges (excluding deferred taxes), deferred credits (excluding
deferred revenues), and other intangible assets.


“TARGET” means
Trans-European Automated Real-time Gross settlement Express Transfer system.


“TARGET Day” means
a day on which payments in Euros are settled in the TARGET system.


“Tax Group” has
the meaning set forth in Section 4.10.


“Termination Event”
means (a) the occurrence of a Reportable Event with respect to a Plan, as
described in Section 4043 of ERISA and the regulations issued thereunder (other
than a Reportable Event not subject to the provision for 30-day notice to the
PBGC under such regulations), (b) the withdrawal of any Borrower or any of its
Affiliates from a Plan during a plan year in which it was a “substantial
employer” as defined in Section 4001(a)(2) of ERISA, (c) the giving of a notice
of intent to terminate a Plan under Section 4041(c) of ERISA, (d) the
institution of proceedings to terminate a Plan by the PBGC, or (e) any other
event or condition which constitutes grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan.


“Tranche A Advance”
means any advance by a Bank to a Borrower as part of a Tranche A Borrowing and
refers to a U.S. Base Rate Advance or a Eurodollar Rate Advance.


“Tranche A Borrowing”
means a borrowing consisting of simultaneous Tranche A Advances of the same
Type and to the same Borrower made by each Bank pursuant to Section 2.01(a).


“Tranche A Commitment”
means, for each Bank, the amount in Dollars set opposite such Bank’s name on
the signature pages hereof as its Tranche A Commitment or, if such Bank has
entered into any Assignment and Acceptance after the date hereof, set forth for
such Bank as its Tranche A Commitment in the Register maintained by the Agent
pursuant to Section 10.06(c).  The
aggregate amount of the Tranche A Commitments on the Closing Date is
$95,000,000.



 16
 






 



“Tranche A Note”
means the promissory note of the Company payable to the order of any Bank, in
substantially the form of the attached Exhibit B-1, evidencing indebtedness of
such Borrower to such Bank resulting from Tranche A Advances owing to such Bank
from such Borrower.


“Tranche A Share”
means, at any time with respect to any Bank with a Tranche A Commitment, the
ratio (expressed as a percentage) of such Bank’s Tranche A Commitment at such
time to the aggregate Tranche A Commitments at such time.


“Tranche B Advance”
means any advance by a Bank to a Borrower as part of a Tranche B Borrowing and
refers to an EONIA Rate Advance or a Eurocurrency Rate Advance.


“Tranche B Borrowing”
means a borrowing consisting of simultaneous Tranche B Advances of the same
Type and to the same Borrower made by each Bank pursuant to Section 2.01(b).


“Tranche B Commitment”
means, for each Bank, the amount in Euros set opposite such Bank’s name on the
signature pages hereof as its Tranche B Commitment or, if such Bank has entered
into any Assignment and Acceptance after the date hereof, set forth for such
Bank as its Tranche B Commitment in the Register maintained by the Agent
pursuant to Section 10.06(c).  The
aggregate amount of the Tranche B Commitments on the Closing Date is €80,000,000.


“Tranche B Note”
means the promissory note of a Borrower payable to the order of any Bank, in
substantially the form of the attached Exhibit B-2, evidencing indebtedness of
such Borrower to such Bank resulting from Tranche B Advances owing to such Bank
from such Borrower.


“Tranche B Share”
means, at any time with respect to any Bank with a Tranche B Commitment, the
ratio (expressed as a percentage) of such Bank’s Tranche B Commitment at such
time to the aggregate Tranche B Commitments at such time.


“Type” has the
meaning set forth in Section 1.04.


“U.S. Base Rate”
means a fluctuating interest rate per annum as shall be in effect from
time-to-time equal to the rate of interest publicly announced by Société
Générale, New York Branch as its prime rate, whether or not the applicable
Borrower has notice thereof.


“U.S. Base Rate
Advance” means an Advance which bears interest as provided in Section
2.06(a).


“U.S. Lending Office”
means, with respect to any Bank, the office of such Bank specified as its “U.S.
Lending Office” opposite its name on Schedule 1 or such other office of such
Bank as such Bank may from time-to-time specify to the Borrowers and the Agent.


Section .02.            Computation of Time Periods.  In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word “from”
means “from and including” and the words “to” and “until” each means “to but
excluding”.



 17
 






 



Section .03.            Accounting
Terms; Changes in GAAP.


(a)           Except as otherwise expressly
provided herein, all accounting terms used herein shall be interpreted, and all
financial statements and certificates and reports as to financial matters
required to be delivered to the Banks hereunder shall (unless otherwise
disclosed to the Banks in writing at the time of delivery thereof in the manner
described in subsection (b) below) be prepared, in accordance with GAAP applied
on a basis consistent with those used in the preparation of the latest
financial statements furnished to the Banks hereunder (which prior to the
delivery of the first financial statements under Section 5.05 hereof, shall
mean the Financial Statements).  All
calculations made for the purposes of determining compliance with this
Agreement shall (except as otherwise expressly provided herein) be made by
application of GAAP applied on a basis consistent with those used in the
preparation of the annual or quarterly financial statements furnished to the
Banks pursuant to Section 5.05 hereof most recently delivered prior to or
concurrently with such calculations (or, prior to the delivery of the first
financial statements under Section 5.05 hereof, used in the preparation of the
Financial Statements) unless (i) either (A) the Company shall have objected to
determining such compliance on such basis at the time of delivery of such
financial statements or (B) the Majority Banks shall so object in writing
within 30 days after the delivery of such financial statements and (ii) the Company
and the Majority Banks have not agreed upon amendments to the financial
covenants contained herein to reflect any change in such basis, in which event
such calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection shall
not have been made (which, if objection is made in respect of the first
financial statements delivered under Section 5.05 hereof, shall mean the
Financial Statements).


(b)           The Company shall deliver to the
Banks at the same time as the delivery of any annual or quarterly financial
statement under Section 5.05 hereof (i) a description in reasonable detail of
any material variation between the application of accounting principles
employed in the preparation of such statement and the application of accounting
principles employed in the preparation of the most recent preceding annual or
quarterly financial statements as to which no objection has been made in
accordance with the last sentence of clause (a) of this Section 1.03 and (ii)
reasonable estimates of the difference between such statements arising as a
consequence thereof.


Section .04.            Classes and Types of Advances.  Advances are distinguished by “Class” and “Type”.  The “Class” of an Advance refers to the
determination of whether such Advance is a Tranche A Advance or a Tranche B
Advance, each of which constitutes a Class. 
The “Type” of an Advance refers to the determination whether such
Advance is a Eurodollar Rate Advance, a Eurocurrency Rate Advance, a U.S. Base
Rate Advance, or a EONIA Rate Advance, each of which constitutes a Type.


Section .05.            Miscellaneous.  Article, Section, Schedule and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to this
Agreement, unless otherwise specified.


Section .06.            Currency Equivalents.  The Agent shall determine the Spot Rates as
of each Revaluation Date to be used for calculating Dollar Equivalent amounts
of Tranche B 



 18
 






 



Advances.  Such Spot Rates shall become effective as of
such Revaluation Date and shall be the Spot Rates employed in converting any
amounts between the applicable currencies until the next Revaluation Date to
occur.  Except for purposes of financial
statements delivered by any Person hereunder or calculating financial covenants
hereunder or except as otherwise provided herein, the applicable amount of any
currency (other than Dollars) for purposes of the Credit Documents shall be
such Dollar Equivalent amount as so determined by the Agent.






THE ADVANCES


Section .01.            The Advances.


(a)           Tranche A Advances.  Each Bank with a Tranche A Commitment
severally agrees, on the terms and conditions set forth in this Agreement, to
make Tranche A Advances in Dollars to the Company from time-to-time on any
Business Day during the period from the date of this Agreement until the
Maturity Date in an aggregate principal amount not to exceed at any time
outstanding such Bank’s Tranche A Commitment; provided that the sum of
the aggregate outstanding principal amounts of all Tranche A Advances made by
each Bank shall not exceed such Bank’s Tranche A Commitment and the sum of the
aggregate outstanding principal amounts of all Tranche A Advances made by all
Banks with a Tranche A Commitment shall not exceed $95,000,000.  Each Tranche A Borrowing shall be in an
aggregate amount not less than $3,000,000 and in integral multiples of
$1,000,000 in excess thereof and shall consist of Tranche A Advances of the
same Type made on the same day to the Company by the Banks ratably according to
their respective Tranche A Commitments. 
Within the limits of each Bank’s Tranche A Commitment, the Company may
from time-to-time borrow, prepay pursuant to Section 2.07 and reborrow under
this Section 2.01(a).


(b)           Tranche B Advances.  Each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make Tranche B Advances in Euros to
each Borrower from time-to-time on any Business Day during the period from the
date of this Agreement until the Maturity Date in an aggregate principal amount
not to exceed at any time outstanding such Bank’s Tranche B Commitment; provided
that the sum of the aggregate outstanding principal amounts of all Tranche
B Advances made by each Bank (whether to the Company, SARL or SME) shall not
exceed such Bank’s Tranche B Commitment and the sum of the aggregate
outstanding principal amounts of all Tranche B Advances made by all Banks with
a Tranche B Commitment shall not exceed €80,000,000.  Each Tranche B Borrowing shall be in an
aggregate amount not less than €3,000,000 and in integral multiples of €1,000,000
in excess thereof and shall consist of Tranche B Advances of the same Type made
on the same day to the same Borrower by the Banks ratably according to their
respective Tranche B Commitments.  Within
the limits of each Bank’s Tranche B Commitment, the Borrowers may from
time-to-time borrow, prepay pursuant to Section 2.07 and reborrow under this
Section 2.01(b).


Section .02.            Method of Borrowing.


(a)           Notice.  Each Borrowing shall be made pursuant to a
Notice of Borrowing, given not later than (i) 10:00 a.m. (New York time) at
least three Business Days before the date of a 



 19
 






 



requested Tranche A Borrowing consisting of Eurodollar
Advances, (ii) 10:00 a.m. (Paris, France time) at least three Business Days
before the date of a requested Tranche B Borrowing, or (iii) 10:00 a.m. (New
York time) on the day preceding the day of a requested Tranche A Borrowing
consisting of U.S. Base Rate Advances, by the applicable Borrower to the Agent’s
Applicable Lending Office.  The Agent shall
give to each Bank prompt notice on the day of receipt of a timely Notice of
Borrowing of such requested Borrowing by telecopier or telex.  Each Notice of a Borrowing shall be by
telecopier, telex or telephone, confirmed promptly the same day in writing specifying
(A) the requested date of such Borrowing (which shall be a Business Day), (B)
the requested Type and Class of Advances comprising such Borrowing, (C) the
requested aggregate amount of such Borrowing, (D) the applicable Borrower, and
(E) with respect to any Borrowing consisting of Fixed Rate Advances, the
requested Interest Period therefor.  The
Agent shall promptly notify each Bank of the applicable interest rate under
Sections 2.06(b) or 2.06(c), as applicable. 
Each Bank shall (I) in the case of all Borrowings which are comprised of
Tranche A Advances before 12:00 p.m. (New York time) on the date of such
Borrowing, and (II) in the case of all Borrowings which are comprised of
Tranche B Advances, before 12:00 p.m. (Paris, France time) on the date of such
Borrowing, make available through its Applicable Lending Office to the Agent at
the Agent’s Applicable Lending Office, or such other location as the Agent may
specify by notice to the Banks, in same day funds, such Bank’s Tranche A Share
or Tranche B Share of such Borrowing. 
After the Agent’s receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Agent will promptly make
such funds available to the applicable Borrower at such account as the
applicable Borrower shall specify in writing to Agent.


(b)           Continuations; Repayment of U.S.
Base Rate Advances.  In order to
elect to Continue a Fixed Rate Advance under this Section, the Borrower
desiring a Continuation shall deliver an irrevocable Notice of Continuation to
the Agent at the Agent’s office no later than (i) 10:00 a.m. (New York time) at
least three Business Days in advance of such requested Continuation date in the
case of a Continuation of a Tranche A Advance consisting of Eurodollar
Advances, or (ii) 10:00 a.m. (Paris, France time) at least three Business Days
in advance of such requested Continuation date in the case of a Continuation of
a Tranche B Advance.  Each such Notice of
Continuation shall be in writing or by telex, telecopier or telephone,
confirmed promptly the same day in writing specifying (A) the requested
Continuation date (which shall be a Business Day), (B) the amount, Type, and
Class of the Advance to be Continued, and (C) the requested Interest Period.  Promptly after receipt of a Notice of
Continuation under this paragraph, the Agent shall provide each Bank with a
copy thereof and notify each Bank of the applicable interest rate under
Sections 2.06(b) or 2.06(c), as applicable. 
Notwithstanding anything in this Agreement to the contrary,
Continuations of Advances may only be made at the end of the applicable
Interest Period for such Advances.  The
applicable Borrower shall pay in full each Borrowing consisting of U.S. Base
Rate Advances made pursuant to Section 2.02(a)(iii) above (but excluding
Borrowings or Advances Converted to bear interest at the U.S. Base Rate
pursuant to Section 2.02(c) or 2.07(e)) on or before the 10th day following the date of such Borrowing.


(c)           Certain Limitations.  Notwithstanding anything in paragraphs (a)
and (b) above:


(i)            at no time shall there be more than
five Interest Periods for each Tranche applicable to outstanding Fixed Rate
Advances;



 20
 






 



(ii)           except as otherwise specifically
provided in Sections 2.02(c) and 2.07(e) herein, each Borrowing shall be comprised
entirely of Fixed Rate Advances;


(iii)          (A) if any Bank shall, at least two
Business Days before the date of any requested Borrowing, notify the Agent that
the introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or that any central bank or other Governmental
Authority asserts that it is unlawful, for such Bank or any of its Applicable
Lending Offices to perform its obligations under this Agreement to make Fixed
Rate Advances of a certain Type, or to fund or maintain Fixed Rate Advances of
a certain Type (each such Bank an “Affected Bank”), the obligation of the
Affected Bank to make or maintain Fixed Rate Advances of the Type affected for
such Borrowing or for any subsequent Borrowing shall be suspended until the
Affected Bank shall notify the Agent that the circumstances causing such
suspension no longer exist, and the Advance of the Affected Bank comprising
such Borrowing shall be in the case of a Eurodollar Rate Advance, a U.S. Base
Rate Advance and in the case of a Eurocurrency Rate Advance, a EONIA Rate
Advance, (B) each Bank that becomes an Affected Bank agrees to use commercially
reasonable efforts (consistent with its internal policies and legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such designation would avoid the effect of this paragraph and
would not, in the reasonable judgment of the Affected Bank, be otherwise
economically disadvantageous to the Affected Bank; and (C) if such condition
shall continue for such Bank for 30 days, the Affected Bank may be replaced in
accordance with the procedures in Section 2.13; provided that, if the Affected
Bank is not replaced within 60 days after such initial 30-day period, the right
of the Borrowers to select the affected Type of Fixed Rate Advances for any
subsequent Borrowing and the obligation of the Banks to make or maintain the
affected Type of Fixed Rate Advances shall be suspended until (I) the Affected
Bank shall notify the Agent that the circumstances causing such suspension no
longer exist or (II) the Affected Bank is replaced pursuant to Section 2.13;


(iv)          if the Agent is unable to determine
the Eurodollar Rate for Eurodollar Rate Advances comprising any requested
Borrowing, the right of the Company to select Eurodollar Rate Advances for such
Borrowing or for any subsequent Borrowing and the obligation of the Banks to
make such Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Company and the Banks that the circumstances causing such suspension
no longer exist, and each Advance comprising such Borrowing shall be a U.S.
Base Rate Advance until receipt of such notification, whereupon the Company may
again select Eurodollar Rate Advances for Borrowings;


(v)           if the Agent is unable to determine
the Eurocurrency Rate for Eurocurrency Rate Advances comprising any requested
Borrowing, the right of the Borrowers to select Eurocurrency Rate Advances for
such Borrowing or for any subsequent Borrowing and the obligation of the Banks
to make such Eurocurrency Rate Advances shall be suspended until the Agent
shall notify the Borrowers and the Banks that the circumstances causing such
suspension no longer exist, and each Advance comprising such Borrowing shall be
an Advance which bears interest at a rate determined by the Agent to reflect
the cost to each Bank of funding in Euros for the applicable Interest Period
plus the Applicable Margin plus the Additional Cost Rate;



 21
 






 



(vi)          (A) if the Majority Tranche A Banks
shall in the case of all Borrowings which are comprised of Tranche A Advances
consisting of Eurodollar Advances, before 12:00 p.m. (New York time) at least
two Business Days before the date of any requested Borrowing, or (B) if the
Majority Tranche B Banks shall in the case of all Borrowings which are
comprised of Tranche B Advances, before 12:00 p.m. (Paris, France time) at
least two Business Days before the date of any requested Borrowing, notify the
Agent that the Eurodollar Rate or Eurocurrency Rate, as the case may be, for
Fixed Rate Advances comprising such Borrowing will not adequately reflect the
cost to such Banks of making or funding their respective Fixed Rate Advances
for such Borrowing, the right of the Borrowers to select Eurodollar Rate
Advances or Eurocurrency Rate Advances, as the case may be, for such Borrowing
or for any subsequent Borrowing and the obligation of the Banks to make
Eurodollar Rate Advances or Eurocurrency Rate Advances, as the case may be,
shall be suspended until the Agent shall notify the Borrowers and the Banks
that the circumstances causing such suspension no longer exist, and each
Advance comprising such Borrowing shall be a U.S. Base Rate Advance or an
Advance which bears interest at a rate determined by the Agent to reflect the
cost to each Bank of funding in Euros for the applicable Interest Period plus
the Applicable Margin plus the Additional Cost Rate, respectively; and


(vii)         if any Borrower shall fail to select
the duration or Continuation of any Interest Period for any Fixed Rate Advances
in accordance with the provisions contained in the definition of “Interest
Period” in Section 1.01 and paragraphs (a) and (b) above, the Agent will
forthwith so notify such Borrower and the Banks and such Advances will be made
available to such Borrower on the date of such Borrowing of the class and type
designated for a one month Interest Period.


Notwithstanding
the foregoing, if either U.S. Base Rate Advances or EONIA Rate Advances are not
available because of circumstances substantially similar to those set forth in
subsections (iii), (iv), (v) or (vi) with respect to Fixed Rate Advances, then
the Borrowers shall either (y) Convert the then outstanding principal amount of
the affected Advances to bear interest at a rate determined by the Agent from time
to time to reflect the cost to each Bank of funding such Advances in Dollars or
Euros, as applicable, and pay all interest accrued on the amount so Converted
or (z) repay in full the then outstanding principal amount of the affected
Advances, together with accrued interest thereon.  Except as otherwise provided in (y) above,
the right of the Borrowers to select such affected Advances for such Borrowing
or for any subsequent Borrowing and the obligation of the Banks to make such
Advances shall be suspended until the Agent shall notify the Borrowers and the
Banks that the circumstances causing such suspension no longer exist.


(d)           Notices Irrevocable.  Each Notice of Borrowing and Notice of
Continuation shall be irrevocable and binding on the Borrower delivering such
notice.  Each Borrower shall indemnify
each Bank against any loss, out-of-pocket cost or expense actually incurred by
such Bank as a result of any failure to fulfill on or before the date specified
in such Notice of Borrowing or such Notice of Continuation for such Borrowing
the applicable conditions set forth in Article III, including, without
limitation, any loss, cost or expense actually incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Bank to
fund the 



 22
 






 



Advance to be made by
such Bank as part of such Borrowing when such Advance, as a result of such
failure, is not made on such date.


(e)           Agent Reliance.  Unless the Agent shall have received notice
from a Bank before the date of any Borrowing that such Bank will not make
available to the Agent such Bank’s Tranche A Share of any Tranche A Borrowing,
or Tranche B Share of any Tranche B Borrowing, the Agent may assume that such
Bank has made its Tranche A Share or Tranche B Share, as the case may be, of
such Borrowing available to the Agent on the date of such Borrowing in
accordance with paragraph (a) of this Section 2.02 and the Agent may, in
reliance upon such assumption, make available to the applicable Borrower on
such date a corresponding amount.  If and
to the extent that such Bank shall not have so made its Tranche A Share or
Tranche B Share, as the case may be, of such Borrowing available to the Agent,
such Bank and the applicable Borrower severally agree to immediately repay to
the Agent on demand such corresponding amount, together with interest on such
amount, for each day from the date such amount is made available to the
applicable Borrower until the date such amount is repaid to the Agent, at (i)
in the case of the Borrower, the interest rate applicable on such day to
Advances comprising such Borrowing and (ii) in the case of such Bank (A) for
all Borrowings which are comprised of Tranche A Advances, the Federal Funds
Rate for such day, and (II) for all Borrowings which are comprised of Tranche B
Advances, the EONIA Rate for such day. 
If such Bank shall repay to the Agent such corresponding amount and
interest as provided above, such corresponding amount so repaid shall
constitute such Bank’s Advance as part of such Borrowing for purposes of this
Agreement even though not made on the same day as the other Advances comprising
such Borrowing.


(f)            Bank Obligations Several.  The failure of any Bank to make the Advance
to be made by it as part of any Borrowing shall not relieve any other Bank of
its obligation, if any, to make its Advance on the date of such Borrowing.  No Bank shall be responsible for the failure
of any other Bank to make the Advance to be made by such other Bank on the date
of any Borrowing.


(g)           Notes.  The indebtedness of the Company to each Bank
resulting from Tranche A Advances owing to such Bank shall be evidenced by the
Tranche A Note of the Company payable to the order of such Bank.  The indebtedness of each Borrower to each
Bank resulting from the Tranche B Advances of such Borrower owing to such Bank
shall be evidenced by the Tranche B Note of each Borrower payable to the order
of such Bank.


Section .03.            Fees.


(a)           Tranche A Commitment Fees.  The Company agrees to pay to the Agent for
the account of each Bank having a Tranche A Commitment a commitment fee payable
in Dollars on the average daily amount by which such Bank’s Tranche A
Commitment exceeds such Bank’s outstanding Tranche A Advances from the Closing
Date until the Maturity Date at the Commitment Fee Rate.  The fees payable pursuant to this clause (a)
are due quarterly in arrears on the last Business Day of each March, June,
September and December commencing September 29, 2006 and on the Maturity Date.



 23
 






 



(b)           Tranche B Commitment Fees.  SARL agrees to pay to the Agent for the
account of each Bank having a Tranche B Commitment a commitment fee payable in
Euros on the average daily amount by which such Bank’s Tranche B Commitment
exceeds such Bank’s outstanding Tranche B Advances from the Closing Date until
the Maturity Date at the Commitment Fee Rate. 
The fees payable pursuant to this clause (b) are due quarterly in
arrears on the last Business Day of each March, June, September and December
commencing September 29, 2006 and on the Maturity Date.


(c)           Utilization Fee.


(i)            Tranche A.  The Company agrees to pay to the Agent for
the account of each Bank having a Tranche A Commitment a utilization fee
payable in Dollars computed at the rate of 0.025% per annum on the average
daily amount of the aggregate amount of such Bank’s outstanding Tranche A
Advances for each day during the period from the Closing Date until the
Maturity Date on which (A) the sum of the aggregate outstanding Tranche A
Advances and the Dollar Equivalent of the aggregate outstanding Tranche B
Advances exceeds (B) 50% of the sum of the aggregate Tranche A Commitments and
the Dollar Equivalent of the aggregate outstanding Tranche B Commitments.


(ii)           Tranche B.  Each of the Borrowers agrees to pay to the
Agent for the account of each Bank having a Tranche B Commitment a utilization
fee payable in Euros computed at the rate of 0.025% per annum on the average
daily amount of the aggregate amount of such Bank’s outstanding Tranche B
Advances made to such Borrower for each day during the period from the Closing
Date until the Maturity Date on which (A) the sum of the aggregate outstanding
Tranche A Advances and the Dollar Equivalent of the aggregate outstanding
Tranche B Advances exceeds (B) 50% of the sum of the aggregate Tranche A
Commitments and the Dollar Equivalent of the aggregate outstanding Tranche B
Commitments.


(iii)          The fees payable pursuant to this
clause (c) are due quarterly in arrears on the last Business Day of each March,
June, September and December commencing September 29, 2006 and on the Maturity Date.


(d)           Arrangement and Participation Fees.  The Company agrees to pay to the Agent the
arrangement and participation fees referenced in the Mandate Letter dated June
9, 2006 from the Mandated Lead Arrangers to the Borrowers.  Such fees shall be fully earned and due upon
execution of this Agreement, but shall not be payable until the Closing
Date.  Any fee referred to in the Mandate
Letter and required to be paid under this clause (d) shall be paid exclusive of
any value added tax or any other tax which might be chargeable in connection
with that fee.  If any value added tax or
other tax is so chargeable with respect to such fee, it shall be paid by the
relevant Borrower at the same time that it pays the relevant fee.


Section .04.            Reduction of the Commitments.  The Borrowers shall have the right, upon at
least fifteen Business Days’ irrevocable written notice to the Agent, to
terminate in whole or reduce ratably in part the unused portion of either the
Tranche A Commitments or the Tranche B Commitments without penalty or payment
of any  premium; provided that
each partial reduction 



 24
 






 



of the Commitments shall
be in the minimum aggregate amount of €3,000,000 or an integral multiple of €1,000,000
in excess thereof or $3,000,000 or an integral multiple of $1,000,000 in excess
thereof, as the case may be.  Any
reduction or termination of the Commitments pursuant to this Section 2.04 shall
be permanent, with no obligation of the Banks to reinstate such Commitments and
the commitment fees provided for in Section 2.03 shall thereafter be computed
on the basis of the Commitments, as so reduced.


Section .05.            Repayment.  The Borrowers obligated thereon shall repay
the outstanding principal amount of the Advances on the Maturity Date.


Section .06.            Interest.  Each of the Borrowers shall pay interest on
the unpaid principal amount of each Advance made by each Bank to such Borrower
from the date of such Advance until such principal amount shall be paid in
full, at the following rates per annum and in the Currency in which such
Advance is made:


(a)           U.S. Base Rate Advances.  If such Advance is a U.S. Base Rate Advance,
a rate per annum equal at all times to the lesser of (i) the Adjusted U.S. Base
Rate in effect from time-to-time and (ii) the Maximum Rate, payable in arrears
on the last Business Day of each calendar quarter and on the date such U.S.
Base Rate Advance shall be paid in full, provided that any amount of
principal which is not paid within five Business Days of when due (whether at
stated maturity, by acceleration or otherwise) shall bear interest from the
date on which such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to the lesser of (i) the
Adjusted U.S. Base Rate in effect from time-to-time plus 2% and (ii) the
Maximum Rate.


(b)           Eurodollar Rate Advances.  If such Advance is a Eurodollar Rate Advance,
a rate per annum equal at all times during the Interest Period for such Advance
to the lesser of (i) the Eurodollar Rate for such Interest Period plus the Applicable
Margin and (ii) the Maximum Rate, payable on the last day of such Interest
Period, and, in the case of six-month Interest Periods, on the day which occurs
during such Interest Period three months from the first day of such Interest
Period; provided that any amount of principal which is not paid within
five Business Days of when due (whether at stated maturity, by acceleration or
otherwise) shall bear interest from the date on which such amount is due until
such amount is paid in full, payable on demand, at a rate per annum equal at
all times to the lesser of (i) the greater of (A) the Adjusted U.S. Base Rate
in effect from time-to-time plus 2% and (B) the rate required to be paid
on such Advance immediately prior to the date on which such amount became due plus
2% and (ii) the Maximum Rate.


(c)           Eurocurrency Rate Advances.  If such Advance is a Eurocurrency Rate
Advance, a rate per annum equal at all times during the Interest Period for
such Advance to the lesser of (i) the Eurocurrency Rate for such Interest
Period plus the Applicable Margin and (ii) the Maximum Rate, payable on the
last day of such Interest Period, and, in the case of six-month Interest
Periods, on the day which occurs during such Interest Period three months from
the first day of such Interest Period; provided that any amount of
principal which is not paid within five Business Days of when due (whether at
stated maturity, by acceleration or otherwise) shall bear interest from the
date on which such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to the lesser of (i) the greater
of (A) the EONIA



 25
 






 



Rate in effect from
time-to-time plus 2% and (B) the rate required to be paid on such
Advance immediately prior to the date on which such amount became due plus
2% and (ii) the Maximum Rate.


(d)           EONIA Rate Advances.  If such Advance is a EONIA Rate Advance, a
rate per annum equal at all times to the lesser of (i) the EONIA Rate in effect
from time-to-time and (ii) the Maximum Rate, payable in arrears on the last
Business Day of each calendar quarter and on the date such EONIA Rate Advance
shall be paid in full, provided that any amount of principal which is
not paid within five Business Days of when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to the lesser of (i) the EONIA Rate in effect
from time-to-time plus 2% and (ii) the Maximum Rate.


(e)           Usury Recapture.  In the event the rate of interest chargeable
under this Agreement or the Notes at any time (calculated after giving affect
to all items charged which constitute “interest” under applicable laws,
including fees and margin amounts, if applicable) is greater than the Maximum
Rate, the unpaid principal amount of the Notes shall bear interest at the
Maximum Rate until the total amount of interest paid or accrued on the Notes
equals the amount of interest which would have been paid or accrued on the
Notes if the stated rates of interest set forth in this Agreement had at all
times been in effect.


In the event, upon
payment in full of the Notes, the total amount of interest paid or accrued
under the terms of this Agreement and the Notes is less than the total amount
of interest which would have been paid or accrued if the rates of interest set
forth in this Agreement had, at all times, been in effect, then the Borrowers
shall, to the extent permitted by applicable law, pay the Agent for the account
of the Banks an amount equal to the difference between (i) the lesser of (A)
the amount of interest which would have been charged on the Notes if the
Maximum Rate had, at all times, been in effect and (B) the amount of interest which
would have accrued on the Notes if the rates of interest set forth in this
Agreement had at all times been in effect and (ii) the amount of interest
actually paid under this Agreement on the Notes.


In the event the Banks
ever receive, collect or apply as interest any sum in excess of the Maximum
Rate, such excess amount shall, to the extent permitted by law, be applied to
the reduction of the principal balance of the Notes, and if no such principal
is then outstanding, such excess or part thereof remaining shall be paid to the
Borrowers.


Section .07.            Prepayments.


(a)           Right to Prepay.  The Borrowers shall have no right to prepay
any principal amount of any Advance except as provided in this Section 2.07.


(b)           Optional.  Any Borrower may elect to prepay any of the
Advances owing by it to the Banks, after giving prior written notice of such
election by (i) in the case of Tranche A Advances, before 12:00 p.m. (New York
time), and (ii) in the case of Tranche B Advances, before 12:00 p.m. (Paris,
France time), fifteen Business Days before such prepayment date to the Agent
stating the proposed date and aggregate principal amount of such
prepayment.  If any such notice is given,
the Borrower giving such notice shall prepay such Advances comprising part of 



 26
 






 



the same Borrowing in
whole or ratably in part in an aggregate principal amount equal to the amount
specified in such notice, together with accrued interest to the date of such
prepayment on the principal amount prepaid and amounts, if any, required to be
paid pursuant to Section 2.08 as a result of such prepayment being made on such
date; provided, however, that each partial prepayment shall be in an
aggregate principal amount not less than (i) in the case of Tranche A
Advances,  $3,000,000 and (ii) in the
case of Tranche B Advances, €3,000,000.


(c)           Mandatory.


(i)            On the date of any reduction of the
Commitments pursuant to Section 2.04, the applicable Borrower agrees to make a
prepayment in respect of the outstanding amount of the applicable Advances to
the extent, if any, that the aggregate unpaid principal amount of all such
Advances exceeds the applicable aggregate Commitment, as so reduced.


(ii)           Each prepayment pursuant to this
Section 2.07(c) shall be accompanied by accrued interest on the amount prepaid
to the date of such prepayment and amounts, if any, required to be paid
pursuant to Section 2.08 as a result of such prepayment being made on such
date.


(d)           Illegality.  If any Bank shall notify the Agent and the
Borrowers that the introduction of or any change in or in the interpretation of
any law or regulation makes it unlawful, or that any central bank or other
Governmental Authority asserts that it is unlawful for such Bank, its
Eurodollar Lending Office or its Eurocurrency Lending Office to perform its
obligations under this Agreement to make or maintain a Type of Fixed Rate
Advances of such Bank then outstanding hereunder (each such Bank being an “Affected
Bank”), (i) the Borrowers shall, (A) in the case of all Borrowings which are
comprised of Tranche A Advances, no later than 12:00 p.m. (New York time), and
(B) in the case of all Borrowings which are comprised of Tranche B Advances, no
later than 12:00 p.m. (Paris, France time), (I) if not prohibited by law or
regulation to maintain such Type of Fixed Rate Advances for the duration of the
Interest Period, on the last day of the Interest Period for each outstanding
Fixed Rate Advance or (II) if prohibited by law or regulation to maintain such
Type of Fixed Rate Advances for the duration of the Interest Period, on the
second Business Day following its receipt of such notice, Convert the Fixed
Rate Advances of that Type of the Affected Bank to either (1) in the case of
Eurodollar Rate Advances, a single U.S. Base Rate Advance or (2) in the case of
Eurocurrency Rate Advances, a single EONIA Rate Advance, each in an amount
equal to the aggregate principal amount of the affected Fixed Rate Advances of
such Borrowers, and (ii) the obligation of the Affected Bank to make or
maintain the affected Type of Fixed Rate Advances shall be suspended until the
Affected Bank shall notify the Agent that the circumstances causing such
suspension no longer exist.  Each Bank
which becomes an Affected Bank agrees to use commercially reasonable efforts
(consistent with its internal policies and subject to legal and regulatory restrictions)
to designate a different Applicable Lending Office if the making of such
designation would avoid the effect of this paragraph and would not, in the
reasonable judgment of such Bank, be otherwise economically disadvantageous to
such Bank.  If the condition requiring
the Conversion under this paragraph shall continue for the Affected Bank for 30
days, the Affected Bank may be replaced in accordance with the procedures in
Section 2.13; provided that, if the Affected Bank is not replaced within 60 days
after such initial 30-day period, (A) all


 



 27














 


 


Fixed Rate Advances of
the affected Type shall be Converted in accordance with the procedures
described above, and (B) the right of the Borrowers to select the affected Type
of Fixed Rate Advances for any subsequent Borrowing and the obligation of the
Banks to make or maintain the affected Type of Fixed Rate Advances shall be
suspended until (I) the Affected Bank shall notify the Agent that the
circumstances causing such suspension no longer exist or (II) the Affected Bank
is replaced pursuant to Section 2.13. 
Notwithstanding the foregoing, if either U.S. Base Rate Advances or
EONIA Rate Advances are not available because of the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or that any central bank or other Governmental Authority asserts that it is
unlawful for such Bank and its Applicable Lending Office to perform its
obligations under this Agreement to make or maintain such Advances, then the
Borrowers shall repay in full the then outstanding principal amount of the
affected Advances, together with accrued interest thereon, and the right of the
Borrowers to select such affected Advances for such Borrowing or for any
subsequent Borrowing and the obligation of the Banks to make such Advances
shall be suspended until the Agent shall notify the Borrowers and the Banks
that the circumstances causing such suspension no longer exist.


(e)           Change of Control.  Upon receipt of the notice required by
Section 5.05(l), then during the following 30-day period (the “Interim Period”)
the Agent shall (on behalf of and in consultation with all of the Banks)
negotiate with the Company in good faith to amend this Agreement in light of
such Change of Control.  During the
Interim Period and the Termination Notice Period (as defined below), the right
of the Borrowers to request Advances and the obligation of the Banks to make
additional Advances shall be suspended and the Borrowers may only elect to
Continue Fixed Rate Advances for Interest Periods of one month or less.  At the end of the Interim Period, any terms
and conditions agreed in writing by all of the Banks and the Borrowers shall
take effect in accordance with their terms. 
If the Banks and the Borrowers are unable to reach agreement during the
Interim Period, then each Bank may, by notice to the Agent (a “Termination
Notice”), cancel its Commitments hereunder (such Bank being a “Terminating Bank”).  Within 14 days after the end of the Interim
Period (the “Termination Notice Period”), each Bank shall advise the Agent whether
or not such Bank is a Terminating Bank; provided, however, the failure of any
Bank to give such notice within such period of time shall be deemed to
constitute an election to continue its Commitments hereunder. The Borrowers
obligated thereon shall repay the outstanding principal amount of Advances
owing to each Terminating Bank 30 days after the end of the Termination Notice
Period (the “Change of Control Prepayment Date”).  The Borrower shall have the right on or
before the Change of Control Prepayment Date to replace each Terminating Bank
with, and add as “Banks” under this Agreement in place thereof, one or more
Eligible Assignees (each, an “Additional Bank”) as provided in Section 10.06,
each of which Additional Banks shall have entered into an Assignment and
Acceptance pursuant to which such Additional Bank shall undertake a Commitment
(and, if any such Additional Bank is already a Bank, its Commitment shall be in
addition to such Bank’s Commitment hereunder on such date).  Each prepayment pursuant to this Section
2.07(e) shall be accompanied by accrued interest on the amount prepaid to the
date of such prepayment and, only if such Terminating Bank is terminating its
Commitment under this Agreement due to applicable government regulations,
amounts, if any, required to be paid pursuant to Section 2.08 as a result of
such prepayment being made on such date.


(f)            Ratable Payments; Effect of
Notice.  Except as otherwise provided
in clause (e) of this Section, each payment of any Advance pursuant to this Section
2.07 or any other provision 



 28
 






 



of this Agreement shall
be made in a manner such that all Advances comprising part of the same
Borrowing are paid in whole or ratably in part. 
All notices given pursuant to this Section 2.07 shall be irrevocable and
binding upon the Borrowers.


Section .08.            Funding Losses.  If any payment of principal of any Fixed Rate
Advance is made other than on the last day of the Interest Period for such
Advance as a result of any payment pursuant to Section 2.07 (subject to the limitations
set forth therein) or the acceleration of the maturity of the Notes pursuant to
Article VII, such Borrower shall, within 10 days of any written demand sent by
any Bank to such Borrower through the Agent, pay to the Agent for the account
of such Bank any amounts (without duplication of any other amounts payable in
respect of breakage costs) required to compensate such Bank for any additional
losses, out-of-pocket costs or expenses which it may actually incur as a result
of such payment or nonpayment, including, without limitation, any loss, cost or
expense actually incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by any Bank to fund or maintain such Advance
(but excluding loss of profits).


Section .09.            Increased Costs.


(a)           Fixed Rate Advances.  If, due to either (i) the introduction of or
any change in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to any Bank of agreeing to make or making, funding or
maintaining Eurodollar Rate Advances or Eurocurrency Rate Advances (including,
without limitation, (A) additional interest to compensate such Bank for reserve
costs actually incurred by such Bank associated with Eurocurrency Liabilities,
such additional interest to be calculated by subtracting (1) the Eurodollar
Rate or Eurocurrency Rate, as applicable, for the relevant Advance from (2) the
rate obtained by dividing such applicable interest rate for such Advance
(excluding the Applicable Margin) by a percentage equal to one minus the
applicable Fixed Rate Reserve Percentage of such Bank for such Interest Period
and (B) any Applicable Mandatory Costs), then the applicable Borrowers shall
from time-to-time, upon demand by such Bank (with a copy of such demand to the
Agent), immediately pay to the Agent for the account of such Bank additional
amounts (without duplication of other amounts payable in respect of increased
costs) sufficient to compensate such Bank for such increased cost; provided,
however, that, before making any such demand, each Bank agrees to use
commercially reasonable efforts (consistent with its internal policy and
subject to legal and regulatory restrictions) to designate a different
Applicable Lending Office if the making of such a designation would avoid the
need for, or reduce the amount of, such increased cost and would not, in the
reasonable judgment of such Bank, be otherwise economically disadvantageous to
such Bank (except that no Bank shall be required to redesignate its Applicable
Lending Office to avoid the incurrence of increased costs associated with
additional interest required to be paid by the Borrowers to any Bank in
connection with reserve costs attributable to Eurocurrency Liabilities).  A certificate shall be submitted to the
Borrowers and the Agent by such Bank (a) indicating the amount of such
increased cost and detailing the calculation of such cost, (b) stating that
such Bank is generally charging such amounts to other customers similarly
situated with the Borrowers, and (c) that all such costs are being charged
within 90 days of the date the Bank learned of such costs, such certificate to be
conclusive and binding for all purposes, absent manifest error.



 29
 






 



(b)           Capital Adequacy.  If any Bank determines in good faith that
compliance with any generally applicable law or regulation or any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law) implemented or effective after the date of this
Agreement increases or would increase the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such Bank
and that the amount of such capital is increased by or based upon the existence
of such Bank’s commitment to lend and other commitments of this type, then,
upon 30 days prior written notice by such Bank (with a copy of any such demand
to the Agent), the Borrowers shall immediately pay to the Agent for the account
of such Bank as the case may be, from time-to-time as specified by such Bank,
additional amounts (without duplication of any other amounts payable in respect
of increased costs) sufficient to compensate such Bank, in light of such
circumstances, with respect to such Bank, to the extent that such Bank
reasonably determines such increase in capital to be allocable to the existence
of such Bank’s commitment to lend under this Agreement.  A certificate shall be submitted to the
Borrowers and the Agent by such Bank (a) indicating the amount of such capital
adequacy costs and detailing the calculation of such costs, (b) stating that
such Bank is generally charging such amounts to other customers similarly
situated with the Borrowers, and (c) certifying that all such costs are being
charged within 90 days of the date the Bank learned of such costs, such
certificate to be conclusive and binding for all purposes, absent manifest
error.


(c)           Special Provisions Regarding
Applicable Mandatory Costs.  Each
Bank shall supply any information required by the Agent for the purpose of
calculating its Additional Cost Rate.  In
particular, but without limitation, each Bank shall supply the following
information in writing on or prior to the date on which it becomes a Bank: (a)
its jurisdiction of incorporation and the jurisdiction of its Applicable
Lending Offices; and (b) any other information that the Agent may reasonably
require for such purpose.  Each Bank
shall promptly notify the Agent in writing of any change to the information
provided by it pursuant to this paragraph. 
The percentages or rates of charge of each Bank for the purpose of
determining “A” in the definition of “Additional Cost Rate” shall be determined
by the Agent based upon the information supplied to it pursuant hereto and on
the assumption that, unless a Bank notifies the Agent to the contrary, each
Bank’s obligations in relation to the Fees Regulations are the same as those of
a typical bank from its jurisdiction of incorporation with an Applicable
Lending Office in the same jurisdiction as its Applicable Lending Office.  The Agent shall have no liability to any
person if such determination results in an Additional Cost Rate which over or
under compensates any Bank and shall be entitled to assume that the information
provided by any Bank pursuant hereto is true and correct in all respects.  The Agent shall distribute the additional
amounts received as a result of the Applicable Mandatory Cost to the Banks on
the basis of the Additional Cost Rate for each Bank based on the information
provided by each Bank pursuant hereto. 
Any determination by the Agent pursuant to this Agreement in relation to
a formula, the Applicable Mandatory Cost, an Additional Cost Rate or any amount
payable to a Bank shall, in the absence of manifest error, be conclusive and
binding.  The Agent may from time to
time, after consultation with the Borrower and the Banks, determine and notify
to all parties hereto any amendments which are required to be made to this
Agreement in order to comply with  any
change in law, regulation or any requirements from time to time imposed by the
Bank of England, the Financial Services Authority or the European Central Bank
(or, in any case, any other Governmental Authority which replaces all or any of
its functions) and any such determination shall, in the absence of manifest
error, be conclusive and binding on all parties.



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Section .10.            Payments and Computations.


(a)           Payment Procedures.  (i) The Company shall make each payment under
this Agreement and under its Notes not later than 12:00 p.m. (New York time) on
the day when due in Dollars with respect to Tranche A Advances, and (ii) the
Borrowers shall make each payment under this Agreement and their respective
Notes not later than 12:00 p.m. (Paris, France time) on the day when due in
Euros with respect to Tranche B Advances, and in each case to the Agent at the
location referred to in the Notes (or such other location as the Agent shall
designate in writing to the Borrowers) in same day funds.  The Agent will promptly thereafter, and in
any event prior to the close of business on the day any timely payment is made,
cause to be distributed like funds relating to the payment of principal,
interest or fees ratably (other than amounts payable solely to the Agent, or a
specific Bank pursuant to Section 2.03(d), 2.08, 2.09, or 2.11, but after
taking into account payments effected pursuant to Section 10.04) (i) before the
acceleration of the Advances pursuant to Section 7.02 or 7.03, (A) in the case
of payments in respect of Tranche A Advances and Tranche B Advances, in
accordance with each Bank’s Tranche A Share and Tranche B Share, as applicable
and (ii) after the acceleration of the Advances pursuant to Section 7.02 or
7.03, in accordance with each Bank’s Pro Rata Share to the Banks for the
account of their respective Applicable Lending Offices, and like funds relating
to the payment of any other amount payable to any Bank to such Bank for the
account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement.


(b)           Computations.  All computations of interest based on the
U.S. Base Rate or the EONIA Rate shall be made by the Agent on the basis of a
year of 365 or 366 days, as the case may be, and all computations of interest
based on the Eurodollar Rate, the Eurocurrency Rate, the Federal Funds Rate,
and of fees shall be made by the Agent, on the basis of a year of 360 days, in
each case for the actual number of days (including the first day, but excluding
the last day) occurring in the period for which such interest or fees are
payable.  Each determination by the Agent
of an interest rate shall be conclusive and binding for all purposes, absent
manifest error.


(c)           Non-Business Day Payments.  Whenever any payment shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be.


(d)           Agent Reliance.  Unless the Agent shall have received written
notice from a Borrower prior to the date on which any payment is due to the
Banks that such Borrower will not make such payment in full, the Agent may
assume that such Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such date an amount equal to the amount then due to
such Bank.  If and to the extent such
Borrower shall not have so made such payment in full to the Agent, each Bank
shall repay to the Agent forthwith on demand such amount distributed to such
Bank, together with interest, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate for such day.


Section .11.            Taxes.



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(a)           No Deduction for Certain Taxes.  Any and all payments by the Borrowers shall
be made, in accordance with Section 2.10, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings and all liabilities with respect thereto, excluding (i)
in the case of each Bank and the Agent, taxes imposed on its income, and
franchise taxes imposed on it by the United States or any political subdivision
thereof, the jurisdiction under the laws of which such Bank or the Agent (as
the case may be) is organized or any political subdivision of the jurisdiction
and (ii) in the case of each Bank, taxes imposed by the jurisdiction of such
Bank’s Applicable Lending Office or any political subdivision of such
jurisdiction (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as “Taxes”).  If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable to any Bank or the
Agent, (A) the sum payable shall be increased as may be necessary so that,
after making all required deductions, such Bank or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made; provided, however, that if such Borrower’s
obligation to deduct or withhold Taxes is caused solely by such Bank’s or the
Agent’s failure to provide the forms described in paragraph (e) of this Section
2.11 and such Bank or the Agent could have provided such forms, no such
increase shall be required; (B) such Borrower shall make such deductions; and
(C) such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.


(b)           Other Taxes.  In addition, the Borrowers agree to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the Notes, or the other Credit Documents (hereinafter referred to as
“Other Taxes”).


(c)           Indemnification.  Each of the Borrowers indemnifies each Bank
and the Agent for the full amount of Taxes or Other Taxes paid by such Bank or
the Agent (as the case may be) and any liability (including interest and
expenses) arising therefrom or with respect thereto, in either case,
attributable to such Borrower.  Each
payment required to be made by the Borrowers in respect of this indemnification
shall be made to the Agent for the benefit of any party claiming such
indemnification within 30 days from the date the Borrowers receive written
demand detailing the calculation of such amounts therefor from the Agent on
behalf of itself as Agent or any such Bank. 
If any Bank or the Agent receives a refund or credit in respect of any
taxes paid by any Borrower under this paragraph (c), such Bank or the Agent, as
the case may be, shall promptly pay to such Borrower such Borrower’s share of
such refund or credit.


(d)           Evidence of Tax Payments.  Each of the Borrowers will pay prior to
delinquency all Taxes payable in respect of any payment.  Upon the request of the applicable Bank, the
Borrower making such payment will furnish to the Agent, at its address referred
to in Section 10.02, the original or a certified copy of a receipt
evidencing payment of such Taxes.


(e)           Foreign Bank Withholding Exemption.


(i)            Each Bank having a Tranche A
Commitment that is not incorporated under the laws of the United States of
America or a state thereof agrees that it will deliver to the Borrowers and the
Agent on the date of this Agreement or upon, and as a condition



 32
 






 



to, the
effectiveness of any Assignment and Acceptance (i) two duly completed copies of
United States Internal Revenue Service Form W-8ECI, W-8BEN, W-8EXP or W-8IMY or
successor applicable form, as the case may be, certifying in each case that
such Bank is entitled to receive payments under this Agreement and the Notes
payable to it, without deduction or withholding of any United States federal
income taxes, (ii) if applicable, an Internal Revenue Service Form W-8ECI, W-8BEN,
W-8EXP or W-9 or successor applicable form, as the case may be, to establish an
exemption from United States backup withholding tax, and (iii) any other
governmental forms which are necessary or required under an applicable tax
treaty or otherwise by law to reduce or eliminate any withholding tax, which
have been reasonably requested by the Borrower. 
Each Bank which delivers to the Borrowers and the Agent a Form W-8ECI,
W-8BEN, W-8EXP, W-8IMY or W-9 pursuant to the next preceding sentence further
undertakes to deliver to the Borrowers and the Agent two further copies of Form
W-8ECI, W-8BEN, W-8EXP, W-8IMY or W-9, or successor applicable forms, or other
manner of certification, as the case may be, on or before the date that any
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrowers and the Agent, and such extensions or renewals thereof as may
reasonably be requested by the Borrowers and the Agent certifying in the case
of a Form W-8ECI, W-8BEN, W-8EXP, or W-8IMY that such Bank is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes.  If
an event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any delivery required by the preceding
sentence would otherwise be required which renders all such forms inapplicable
or which would prevent any Bank from duly completing and delivering any such
form with respect to it and such Bank advises the Borrowers and the Agent that
it is not capable of receiving payments without any deduction or withholding of
United States federal income tax, and in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding tax, such Bank
shall not be required to deliver such forms. 
The Borrowers may withhold tax at the rate and in the manner required by
the laws of the United States with respect to payments made to a Bank failing
to timely provide the requisite Internal Revenue Service forms.


(ii)           Each Bank having a Tranche B
Commitment that is not incorporated under the laws of the Republic of France or
any province thereof agrees that it will deliver to the Borrowers and the Agent
on the date of this Agreement or upon, and as a condition to, the effectiveness
of any Assignment and Acceptance such governmental forms which may be
necessary, appropriate or required under the applicable tax treaty or otherwise
by law to reduce or eliminate any withholding tax imposed by the Republic of
France or any political subdivision thereof (“French Withholding Taxes”).  Each Bank which delivers to the Borrowers and
the Agent any such governmental form pursuant to the next preceding sentence
further undertakes to deliver to the Borrowers and the Agent two (2) further
copies of said governmental forms or successor forms, or other manner of
certification as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrowers and
the Agent, and such extensions or renewals thereof as may be reasonably
requested by the Borrowers or the Agent certifying that such Bank is entitled
to receive payments under this agreement 



 33
 






 



without deduction
or withholding of any French Withholding Taxes. 
If an event (including, without limitation, any change in treaty, law,
or regulation) has occurred prior to the date on which any delivery is required
by the preceding sentence and would otherwise be required which render any such
forms inapplicable or which would prevent any Bank from duly completing and
delivering any such form with respect to it and such Bank advises the Borrowers
and the Agent that it is not capable of receiving payments without any
deduction or withholding of French Withholding Taxes, such Bank shall not be
required to deliver such forms.  The
Borrowers may withhold tax at the rate and in the matter required by the laws
of the Republic of France with respect to payments made to a Bank failing to
timely provide the requisite governmental forms.  The Borrowers agree to use reasonable efforts
to notify any Bank upon any such Borrower becoming aware of any change in the
laws of the Republic of France or any tax treaty which would cause such Bank to
not be capable of receiving payments of interest without French Withholding
Taxes.


(f)            Repayment under Certain
Circumstances.  If any Borrower is
required by any law or regulation to make any deduction or withholding from any
sum payable by it under this Agreement and is prevented by law from fulfilling
the related gross-up obligation, upon written notice to the relevant Borrower
from the Agent (which shall give such notice if, and only if, so requested by
any Bank) the relevant Advances shall be repaid within 180 days of the date
such notice is received by the relevant Borrower together with accrued interest
and any amounts owing under Section 2.08.


Section .12.            Sharing of Payments, Etc.; Pro
Rata Treatment.


(a)           If any Bank shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off
or otherwise) on account of the Advances made by it in excess of its Pro Rata
Share, Tranche A Share or Tranche B Share, as applicable, of payments on
account of the Advances obtained by all the Banks, such Bank shall notify the
Agent and forthwith purchase from the other Banks such participations in the
Advances made or held by them as shall be necessary to cause such purchasing
Bank to share the excess payment ratably in accordance with the requirements of
this Agreement with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Bank, such purchase from each Bank shall be rescinded and such Bank shall repay
to the purchasing Bank the purchase price to the extent of such Bank’s ratable
share (according to the proportion of (a) the amount of the participation sold
by such Bank to the purchasing Bank as a result of such excess payment to (b)
the total amount of such excess payment) of such recovery, together with an
amount equal to such Bank’s ratable share (according to the proportion of (a)
the amount of such Bank’s required repayment to the purchasing Bank to (b) the
total amount of all such required repayments to the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered.  Each
Borrower agrees that any Bank so purchasing a participation from another Bank
pursuant to this Section 2.12 may, to the fullest extent permitted by law,
unless and until rescinded as provided above, exercise all its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Bank were the direct creditor of such Borrower in the amount
of such participation.



 34
 






 



(b)           Notwithstanding any other provision
of this Agreement, it is the intent of the Banks that after the acceleration of
the Advances pursuant to Section 7.02 or 7.03, each of the Banks shall share
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off or otherwise) on account of the Advances on a pro rata basis as
provided in paragraph (a) above.  Accordingly, if the recovery in respect of one
Class of Advances is insufficient to repay such Obligations on a pro rata basis
with the other Class of Advances, the Agent shall, to the extent it deems
necessary, allocate and reallocate any payment on account of the Advances to
ensure that each Bank receives its Pro Rata Share of any payment on account of
the Advances.  If, after giving effect to
the allocations described in the preceding sentence any Bank shall have received
less than its Pro Rata Share of the aggregate payments with respect to the
Advances, each Bank that received more than its Pro Rata Share of the aggregate
payments on account of the Advances agrees to deliver to the Agent, for
reallocation to the Banks that received less than their Pro Rata Share, the
excess of the aggregate amount received by such Bank over the amount that would
have been such Bank’s Pro Rata Share of the aggregate payments on account of
the Advances.


Section .13.            Bank Replacement.  The Borrowers shall be permitted to replace
with an Eligible Assignee any Bank which (a) makes an assertion of the type
described in Section 2.02(c)(iii) or requests reimbursement for amounts owing
pursuant to Section 2.09 (either for its own account or for the account of any
of its participants), (b) is affected in the manner described in Section
2.07(e), (c) requires any Borrower to pay Taxes in respect of such Bank or (d)
fails to make any Advance requested by it if the Majority Tranche A Banks or
the Majority Tranche B Banks, as applicable, have made the Advances requested
of them pursuant to the same Notice of Borrowing; provided that (i) such
replacement does not conflict with any Legal Requirement, (ii) no Default or
Event of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Bank being replaced
shall not have eliminated the continued need for repayment of amounts owing
pursuant to Section 2.02(c)(iii); and (iv) the Company shall repay (or cause to
be repaid) or the Eligible Assignee shall pay to the Bank being replaced, the
amount of the Obligations owing to such Bank on the date of replacement
(including any amounts owing under Section 2.02(c)(iii)).


Section .14.            Extension of Maturity Date.


(a)           Requests for Extension.


(i)            At any time not earlier than 90 days
and not later than 45 days prior to the first anniversary of the Closing Date,
the Company may, by notice to the Agent (who shall promptly notify the Banks
thereof), request that each Bank extend such Bank’s Maturity Date then in
effect hereunder (the “Existing Maturity Date”) for an additional 365
days from the Existing Maturity Date (the “First Extension Request”).


(ii)           Notwithstanding clause (i) above, at
any time not earlier than 90 days and not later than 45 days prior to the
second anniversary of the Closing Date, the Company may, by notice to the Agent
(who shall promptly notify the Banks thereof), request that each Bank extend
such Bank’s Maturity Date then in effect hereunder (the “Existing Maturity
Date”) (A) for each Extending Bank (as defined below), an additional 365
days from the Existing Maturity Date or (B) for each Non-Extending Bank or if
the Company 



 35
 






 



has not made the
First Extension Request, for all Banks, (1) an additional 365 days from the
Existing Maturity Date or (2) an additional 730 days  from the Existing Maturity Date (the “Second
Extension Request”).


(iii)          The date on which the Agent provides
to the Banks the notice referenced above is hereinafter referred to as the “Notice
Date.”


(iv)          The procedure set forth below shall
apply to each of the First Extension Request and the Second Extension Request.


(b)           Elections to Extend.  Each Bank, acting in its sole and individual
discretion, shall, by notice to the Agent given not later than 30 days after
the Notice Date, advise the Agent whether or not such Bank agrees to such
extension (each Bank that determines not to so extend its Maturity Date (a “Non-Extending
Bank”) and each Bank that determines to extend its Maturity Date (an “Extending
Bank”)) shall notify the Agent of such fact promptly after such
determination and any Bank that does not so advise the Agent on or before the
date that is 30 days after the Notice Date shall be deemed to be a
Non-Extending Bank.  The election of any
Bank to agree to such extension shall not obligate any other Bank to so agree.


(c)           Extension of Maturity Date.  Effective as of the Existing Maturity Date,
the Maturity Date of each Extending Bank shall be extended to the date falling
365 days or 730 days, as applicable, after the Existing Maturity Date (except
that, if such date is not a Business Day, such Maturity Date as so extended
shall be the next preceding Business Day).


(d)           Conditions to Effectiveness of
Extensions.  Notwithstanding the
foregoing, the extension of the Maturity Date pursuant to this Section shall
not be effective with respect to any Bank unless:


(i)            no Default or Event of Default shall
have occurred and be continuing on the date of such extension and after giving
effect thereto;


(ii)           the representations and warranties
contained in this Agreement are true and correct on and as of the date of such
extension and after giving effect thereto, as though made on and as of such
date (or, if any such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date);


(iii)          on the Maturity Date of each
Non-Extending Bank, the applicable Borrower shall repay any Advances
outstanding on such date to each such Non-Extending Bank (and pay all accrued
interest and any additional amounts required pursuant to this Agreement,
including pursuant to Section 2.08) and the Commitments of such Non-Extending
Bank shall be terminated; and


(iv)          the Company can, at its election,
withdraw the request for extension if less than 100% of the Banks do not elect
to extend at any given time, on or before the then applicable anniversary of
the Closing Date.


(e)           Conflicting Provisions.  This Section shall supersede any provisions
in Section 2.10 or 10.01 to the contrary.










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CONDITIONS
OF LENDING


Section .01.            Conditions Precedent to Initial
Advances.  The obligation of each
Bank to make its initial Advances to each of the Company and SARL as part of
the initial Borrowings is subject to the conditions precedent that:


(a)           Documentation.  On or before the day on which the initial
Borrowing is made, the Agent and the Banks shall have received the following,
each dated on or before such day, duly executed by all the parties thereto
(except SME), in form and substance satisfactory to the Agent and the Banks:


(i)            this Agreement and the other Credit
Documents and all attached Exhibits and Schedules and the Notes payable to the
order of the Banks, respectively;


(ii)           certificates from the appropriate
Governmental Authority certifying as to the good standing, existence and
authority of the Company in all jurisdictions where the Company is organized or
does business;


(iii)          certificates from a Responsible
Officer of the Company and SARL stating that (A) all representations and
warranties of such Borrower set forth in this Agreement are true and correct in
all material respects; (B) no Default has occurred and is continuing; and
(C) the conditions in this Section 3.01 have been met;


(iv)          copies, certified as of the date of
this Agreement by a Responsible Officer of the appropriate Person of
(A) the resolutions of the Board of Directors of the Company approving
this Agreement, the Notes, and the other Credit Documents, (B) the
articles or certificate (as applicable) of incorporation and bylaws of the Company,
(C) the extrait K-bis and the statuts for SARL and any other documents authorizing the
transactions contemplated by the Credit Documents, and (D) all other documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to this Agreement, the Notes, and the other Credit Documents;


(v)           certificates of a Responsible Officer
of the Company and SARL  certifying the
names and true signatures of officers of such Borrower authorized to sign this
Agreement, the Notes, Notices of Borrowing and the other Credit Documents;


(vi)          a favorable opinion of John W. Rumely,
General Counsel to the Company, substantially in the form of the attached
Exhibit F-1;


(vii)         a favorable opinion of UGGC &
Associés, counsel to SARL, substantially in the form of the attached Exhibit
F-2;


(viii)        a favorable opinion of Bracewell &
Giuliani LLP, counsel to the Agent, substantially in the form of the attached
Exhibit F-3; and



 37
 






 



(ix)           such other documents, governmental
certificates, agreements, or lien searches as the Agent and the Banks may
reasonably request.


(b)           Payment of Fees.  On the Closing Date, the Borrowers shall have
paid the fees required to be paid to the Agent and the Banks and all costs and
expenses which have been invoiced and are payable pursuant to Section 10.04.


(c)           Delivery of Financial Statements.  The Agent and the Banks shall have received
true and correct copies of (i) the Financial Statements, (ii) the Interim
Financial Statements, (iii) the other financial statements referred to in
Section 4.05 and (iv) the Consolidated annual business and financial plan,
including without limitation, financial projections, of the Company and its
Subsidiaries for fiscal years 2006, 2007, and 2008, all in reasonable detail.


(d)           No Default.  No Default or Event of Default shall have
occurred and be continuing or would result from such Advance or from the
application of the proceeds therefrom.


(e)           Representations and Warranties.  The representations and warranties contained
in Article IV hereof and in each other Credit Document shall be true and
correct in all material respects on and as of the Closing Date before and after
giving effect to the initial Advances and to the application of the proceeds
from such Advances as though made on and as of such date.


(f)            No Material Adverse Change.  No event or events which, individually or in
the aggregate, has had or is reasonably likely to cause a Material Adverse
Change shall have occurred.


(g)           Termination of Existing Credit
Agreement.  The Agent and the Banks
shall have received sufficient evidence indicating that contemporaneously with
the making of the initial Advances, the obligations of the Borrowers under the
Existing Credit Agreement will be repaid with the proceeds of such Advances and
thereafter all obligations of the Borrowers and the lenders under the Existing
Credit Agreement shall be terminated (including, without limitation, any
obligations of any Subsidiary of the Borrower in respect of guaranties,
security agreements executed in connection with such Existing Credit Agreement
but excluding any obligations which expressly survive the repayment of the
amounts owing under the Existing Credit Agreement).


Section .02.            Conditions Precedent to Advances
to SME.  The obligation of each Bank
with a Tranche B Commitment to make its initial Advances as part of the initial
Borrowing to SME is subject to the conditions precedent that:


(a)           Documentation.  On or before the day on which the initial
Borrowing by SME is made, the Agent and the Banks shall have received the following,
each dated on or before such day, duly executed by SME, in form and substance
satisfactory to the Agent and the Banks:


(i)            this Agreement and the other Credit
Documents and the Notes payable to the order of such Banks;


(ii)           certificates from a Responsible
Officer of SME stating that (A) all representations and warranties of such
Borrower set forth in this Agreement are true and 



 38
 






 



correct in all
material respects; (B) no Default has occurred and is continuing; and
(C) the conditions in this Section 3.02 have been met;


(iii)          copies, certified as of the date of
SME’s accession to this Agreement by a Responsible Officer of the appropriate
Person of (A) the extrait K-bis
and the statuts for SME and any other documents
authorizing the transactions contemplated by the Credit Documents, and (B) all
other documents evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement, the Notes, and the other
Credit Documents;


(iv)          certificates of a Responsible Officer
of SME certifying the names and true signatures of officers of SME authorized
to sign this Agreement, the Notes, Notices of Borrowing and the other Credit
Documents;


(v)           a favorable opinion of UGGC &
Associés, counsel to SME, substantially in the form of the attached Exhibit
F-2;


(vi)          a favorable opinion of Bracewell &
Giuliani LLP, counsel to the Agent, substantially in the form of the attached
Exhibit F-3;


(vii)         a true and correct copy of the
unaudited balance sheet and income, changes in owners’ equity and cash flow
statements of SME; and


(viii)        such other documents, governmental
certificates, agreements, lien searches as the Agent and the Banks may
reasonably request.


Section .03.            Conditions Precedent to Each
Borrowing.  The obligation of each
Bank to make an Advance on the occasion of each Borrowing (including the
initial Borrowing) shall be subject to the further conditions precedent that on
the date of such Borrowing, the following statements shall be true (and each of
the giving of the applicable Notice of Borrowing or Notice of Continuation and
the acceptance by the Borrowers of the proceeds of such Advance shall
constitute a representation and warranty by the Borrowers that on the date of
such Advance such statements are true):


(a)           the representations and warranties
contained in Article IV (except for the representations and warranties set
forth in clauses (a) through (f) of Section 4.05, Section 4.07, and Section
4.15, which representations and warranties shall only apply to the initial
Advance and the representation and warranty contained in Section 4.05(g) which
shall apply to all Advances except for Advances which are made as part of a
Continuation of any existing Advance) and in each other Credit Document are
correct in all material respects on and as of the date of such Advance before
and after giving effect to such Advance and to the application of the proceeds
from such Advance as though made on and as of such date; and


(b)           no Default or Event of Default has
occurred and is continuing or would result from such Advance or from the
application of the proceeds therefrom.










 39
 






 



REPRESENTATIONS
AND WARRANTIES


The Borrowers represent
and warrant, as of the Closing Date and as of each other date as expressly
provided herein or in any other Loan Document, as follows:


Section .01.            Corporate Existence; Subsidiaries.  Each of the Borrowers is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and in good standing and qualified to do
business in each jurisdiction where its ownership or lease of property or
conduct of its business requires such qualification and where a failure to be
qualified could reasonably be expected to cause a Material Adverse Change.


Section .02.            Corporate Power.  The execution, delivery, and performance by
the Borrowers of this Agreement, the Notes, and the other Credit Documents to
which each is a party and the consummation of the transactions contemplated
hereby and thereby (a) are within such Borrower’s corporate powers,
(b) have been duly authorized by all necessary corporate action,
(c) do not contravene (i) such Borrower’s articles or certificate of
incorporation or statuts (as applicable) or bylaws
or (ii) any law or any contractual restriction binding on or affecting
such Borrower, and (d) will not result in or require the creation or
imposition of any Lien prohibited by this Agreement.  At the time of each Advance, such Advance and
the use of the proceeds of such Advance will be within such Borrower’s
corporate powers, will have been duly authorized by all necessary corporate
action, will not contravene (i) such Borrower’s articles or certificate of
incorporation or statuts (as applicable) or bylaws
or (ii) any law or any contractual restriction binding on or affecting
such Borrower and will not result in or require the creation or imposition of
any Lien prohibited by this Agreement.


Section .03.            Authorization and Approvals.  No authorization or approval or other action
by, and no notice to or filing with, any Governmental Authority is required for
the due execution, delivery and performance by the Borrowers of this Agreement,
the Notes, or the other Credit Documents to which the Borrowers are a party or
the consummation of the transactions contemplated thereby, other than those
that have been duly obtained.  At the
time of each Advance, no authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority will be required for such
Advance or the use of the proceeds of such Advance.


Section .04.            Enforceable Obligations.  This Agreement, the Notes, and the other
Credit Documents to which the Borrowers are a party have been duly executed and
delivered by the Borrowers.  Each Credit
Document to which the Borrowers are a party is the legal, valid, and binding
obligation of the Borrowers and is enforceable against the Borrowers in
accordance with its terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium, or similar law
affecting creditors’ rights generally.


Section .05.            Financial Statements.


(a)           The audited consolidated balance
sheet of the Company as at December 31, 2005, and the related audited
consolidated statements of income, changes in owners’ equity and cash 



 40
 






 



flows of the Company for
the fiscal year then ended, copies of which have been furnished to the Banks,
and the unaudited consolidated balance sheet of the Company as at March 31,
2006, and the related unaudited consolidated statements of income, changes in owners’
equity and cash flows of the Company for the three months then ended, duly
certified by an authorized financial officer of the Company, copies of which
have been furnished to the Banks, fairly present, subject to the assumptions
set forth therein and, in the case of said balance sheet as at March 31, 2006
and said statements of income, changes in owners’ equity and cash flows for the
three months then ended, subject to year-end audit adjustments, the
consolidated financial condition of the Company as at such dates and the
consolidated result of the operations of the Company for the periods ended on
such dates, and such balance sheet and statements of income, changes in owners’
equity and cash flows were prepared in accordance with GAAP.


(b)           The unaudited, unconsolidated balance
sheet of SARL as at December 31, 2005, and the related unaudited,
unconsolidated statement of income for SARL for the fiscal year then ended,
copies of which have been furnished to the Banks, and the unaudited,
unconsolidated balance sheet of SARL as at March 31, 2006, and the related
unaudited, unconsolidated statement of income of SARL for the three months then
ended, duly certified by an authorized financial officer of the Company, copies
of which have been furnished to the Banks, fairly present, subject to the
assumptions set forth therein, the financial condition of SARL as at such dates
and the results of the operations of SARL for the periods ended on such dates,
and such balance sheet and statements of income were prepared in accordance
with GAAP.


(c)           The unaudited, consolidated balance
sheet of Papeteries de Mauduit S.A.S. as at December 31, 2005, and the related
unaudited, consolidated statement of income for Papeteries de Mauduit S.A.S.
for the fiscal year then ended, copies of which have been furnished to the
Banks, and the unaudited, consolidated balance sheet of Papeteries de Mauduit
S.A.S. as at March 31, 2006, and the related unaudited, consolidated
statement of income of Papeteries de Mauduit S.A.S. for the three months then
ended, duly certified by an authorized financial officer of the Company, copies
of which have been furnished to the Banks, fairly present, subject to the
assumptions set forth therein, the financial condition of Papeteries de Mauduit
S.A.S. as at such dates and the results of the operations of Papeteries de
Mauduit S.A.S. for the periods ended on such dates, and such balance sheet and
statements of income were prepared in accordance with GAAP.


(d)           The unaudited, unconsolidated balance
sheet of LTR Industries S.A. as at December 31, 2005, and the related
unaudited, unconsolidated statement of income for LTR Industries S.A. for the
fiscal year then ended, copies of which have been furnished to the Banks, and
the unaudited, unconsolidated balance sheet of LTR Industries S.A. as at March
31, 2006, and the related unaudited, unconsolidated statement of income of LTR
Industries S.A. for the three months then ended, duly certified by an
authorized financial officer of the Company, copies of which have been
furnished to the Banks, fairly present, subject to the assumptions set forth
therein, the financial condition of LTR Industries S.A. as at such dates and
the results of the operations of LTR Industries S.A. for the periods ended on
such dates, and such balance sheet and statements of income were prepared in
accordance with GAAP.


(e)           The unaudited, unconsolidated balance
sheet of Schweitzer-Mauduit do Brasil S.A. as at December 31, 2005, and
the related unaudited, unconsolidated statement of income for 



 41
 






 



Schweitzer-Mauduit do
Brasil S.A. for the fiscal year then ended, copies of which have been furnished
to the Banks, and the unaudited, unconsolidated balance sheet of
Schweitzer-Mauduit do Brasil S.A. as at March 31, 2006, and the related
unaudited, unconsolidated statement of income of Schweitzer-Mauduit do Brasil
S.A. for the three months then ended, duly certified by an authorized financial
officer of the Company, copies of which have been furnished to the Banks,
fairly present, subject to the assumptions set forth therein, the financial
condition of Schweitzer-Mauduit do Brasil S.A. as at such dates and the results
of the operations of Schweitzer-Mauduit do Brasil S.A. for the periods ended on
such dates, and such balance sheet and statements of income were prepared in
accordance with GAAP.


(f)            The unaudited, consolidated balance
sheet of Papeteries de Saint-Girons S.A.S. as at December 31, 2005, and
the related unaudited, consolidated statement of income for Papeteries de
Saint-Girons S.A.S. for the fiscal year then ended, copies of which have been
furnished to the Banks, and the unaudited, consolidated balance sheet of
Papeteries de Saint-Girons S.A.S. as at March 31, 2006, and the related
unaudited, consolidated statement of income of Papeteries de Saint-Girons
S.A.S. for the three months then ended, duly certified by an authorized
financial officer of the Company, copies of which have been furnished to the
Banks, fairly present, subject to the assumptions set forth therein, the
financial condition of Papeteries de Saint-Girons S.A.S. as at such dates and
the results of the operations of Papeteries de Saint-Girons S.A.S. for the
periods ended on such dates, and such balance sheet and statements of income
were prepared in accordance with GAAP.


(g)           Since December 31, 2005, no Material
Adverse Change has occurred.


Section .06.            True and Complete Disclosure.  (a) The Company’s annual report on Form 10-K
most recently filed with the  SEC and the
Company’s quarterly report on Form 10-Q most recently filed with the SEC, did
not, as of the respective dates such Form 10-K and Form 10-Q were filed with
the SEC, contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (b) from the
date of filing of the Company’s most recent quarterly or annual report on
Form 10-Q or Form 10-K, no event or condition exists or has occurred
which has required or would require the Company to file a current report on
Form 8-K pursuant to the Securities Exchange Act of 1934, as amended.


Section .07.            Litigation.  Except as set forth in the attached
Schedule 4.07, there is no pending by the express terms of pleadings duly
served on a Borrower or any Material Subsidiary, or, to the best of the
knowledge of the Borrowers, threatened, action or proceeding affecting any of
the Borrowers or any Material Subsidiary before any court, Governmental
Authority or arbitrator, which could reasonably be expected to cause a Material
Adverse Change or which purports to affect the legality, validity, binding
effect or enforceability of this Agreement, any Note, or any other Credit
Document.  Additionally, to the best
knowledge of the Borrowers, there is no pending or threatened action or
proceeding instituted against any of the Borrowers or the Material Subsidiaries
which seeks to adjudicate any of the Borrowers or the Material Subsidiaries as
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of 



 42
 






 



an order for relief or
the appointment of a receiver, trustee or other similar official for it or for
any substantial part of its property.


Section .08.            Use of Proceeds.  The proceeds of the Advances will be used by
the Borrowers for the purposes described in Section 5.08.  None of the Borrowers is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U).  No proceeds of any Advance will be used to
purchase or carry any margin stock in violation of Regulation T, U
or X.


Section .09.            Investment Company Act.  None of the Borrowers is an “investment
company” or a company “controlled” by an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.


Section .10.            Taxes.  All federal and all material state, local and
foreign tax returns, reports and statements required to be filed (after giving
effect to any extension granted in the time for filing) by the Borrowers or any
member of the Controlled Group (hereafter collectively called the “Tax Group”)
have been filed with the appropriate governmental agencies in all jurisdictions
in which such returns, reports and statements are required to be filed, and all
taxes (which are material in amount) and other impositions due and payable have
been timely paid prior to the date on which any fine, penalty, interest, late
charge or loss may be added thereto for non-payment thereof except where
contested in good faith and by appropriate proceedings and after providing
adequate reserves therefor in accordance with GAAP.


Section .11.            Pension Plans.  No Termination Event has occurred with
respect to any Plan, and each Plan has complied with and been administered in
all material respects in accordance with applicable provisions of ERISA and the
Code.  No material “accumulated funding
deficiency” (as defined in Section 302 of ERISA) has occurred and there has
been no excise tax imposed under Section 4971 of the Code.  To the knowledge of any Responsible Officer
of each Borrower, no Reportable Event has occurred with respect to any
Multiemployer Plan, and each Multiemployer Plan has complied with and been
administered in all material respects with applicable provisions of ERISA and
the Code.  The present value of all
benefits vested under each Plan (based on the assumptions used to fund such
Plan) did not, as of the last annual valuation date applicable thereto, exceed
the value of the assets of such Plan allocable to such vested benefits in any
amount that would reasonably be expected to cause a Material Adverse Change.  None of the Borrowers nor any member of the
Controlled Group has had a complete or partial withdrawal from any
Multiemployer Plan for which there is any material withdrawal liability.  As of the most recent valuation date
applicable thereto, none of the Borrowers nor any member of the Controlled
Group has received notice that any Multiemployer Plan is insolvent or in
reorganization.  Based upon GAAP existing
as of the date of this Agreement and current factual circumstances, none of the
Borrowers has any reason to believe that the annual cost during the term of
this Agreement to such Borrower or any of its Subsidiaries for post-retirement
benefits to be provided to the current and former employees of the Borrower or
any of its Subsidiaries under welfare benefit plans (as defined in Section 3(1)
of ERISA) could, in the aggregate, reasonably be expected to cause a Material
Adverse Change.


Section .12.            Condition of Property; Casualties.  The material Properties used or to be used in
the continuing operations of the Borrowers and each of their Subsidiaries,
taken as a 



 43
 






 



whole, are (a) in
substantially the same or better repair, working order, and condition as such
Properties were as of December 31, 2005, normal wear and tear excepted and
(b) in such repair, working order and condition to permit the Borrowers
and their Subsidiaries to operate such Properties in substantially the same or
better manner as operated as of December 31, 2005.  Neither the business nor the material
properties of the Borrowers and each of their Subsidiaries, taken as a whole,
has been affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of property or cancellation of contracts, permits or
concessions by a Governmental Authority, riot, activities of armed forces or
acts of God or of any public enemy, which affect would reasonably be expected
to cause a Material Adverse Change.


Section .13.            Insurance.  Each of the Borrowers and their Subsidiaries
carry insurance with reputable insurers in respect of such of their respective
Properties, in such amounts and against such risks as is customarily maintained
by other Persons of similar size engaged in similar businesses or, self-insure
to the extent that is customary for Persons of similar size engaged in similar
businesses.


Section .14.            No Burdensome Restrictions; No
Defaults.


(a)           None of the Borrowers nor any of
their Subsidiaries is a party to any indenture, loan or credit agreement or any
lease or other agreement or instrument or subject to any charter or corporate
restriction or provision of applicable law or governmental regulation which
would reasonably be expected to cause a Material Adverse Change.  None of the Borrowers or their Subsidiaries
is in default under or with respect to any contract, agreement, lease or other
instrument to which such Borrower or Subsidiary is a party and which would
reasonably be expected to cause a Material Adverse Change.  To the knowledge of a Responsible Officer of
the Borrowers, none of the Borrowers nor any of their Subsidiaries has received
any notice of default under any contract, agreement, lease or other instrument
to which any Borrower or its Subsidiaries is a party which is continuing or
which, if not cured, would reasonably be expected to cause a Material Adverse
Change.


(b)           No Default has occurred and is
continuing.  Additionally, no event of
default under any financing agreement, material contract or instrument to which
any Borrower is a party has occurred and is continuing which could reasonably
be expected to result in a Material Adverse Change.


Section .15.            Supply Agreement.  Except as disclosed to the Agent, the Supply
Agreement has not been amended, modified, supplemented or terminated, and the
Supply Agreement is in full force and effect and no notice of termination or
cancellation has either been given by or delivered to either the Company or
Philip Morris thereunder.


Section .16.            Environmental Condition.


(a)           Except as set forth on Schedule 4.16,
each of the Borrowers and its Subsidiaries, taken as a whole, (i) have
been and are in compliance with all material requirements of applicable
Environmental Laws of which the failure to comply would reasonably be expected
to cause a Material Adverse Change; (ii) have not received notice of any
violation or alleged 



 44
 






 



violation of any
Environmental Law the violation of which would reasonably be expected to cause
a Material Adverse Change; and (iii) are not subject to any actual or
contingent Environmental Claim, which Environmental Claim would reasonably be
expected to cause a Material Adverse Change.


(b)           Except as set forth on Schedule 4.16,
to the best of the Borrowers’ knowledge (i) none of the Borrowers has ever
caused the release of any Hazardous Substances into the Environment in
violation of applicable Environmental Laws which would reasonably be expected
to result in a Material Adverse Change, (ii) none of the Borrowers’ currently
or previously owned Property has been subjected to the release of or is
contaminated by any Hazardous Substances which would reasonably be expected to
result in a Material Adverse Change, and (iii) none of the Borrowers has ever
received notice of and have ever been investigated for any violation or alleged
violation of any Environmental Law which has not been remedied in accordance
with applicable Environmental Laws and which is reasonably likely to cause a
Material Adverse Change.


Section .17.            Liens and Encumbrances.  None of the Property of the Borrowers or any
of the Material Subsidiaries is subject to any Lien other than Liens permitted
by Section 6.01.






AFFIRMATIVE COVENANTS


So long as the
Notes or any amount under any Credit Document shall remain unpaid, or any Bank
shall have any Commitment hereunder, the Borrowers agree, unless the Majority
Banks otherwise consent in writing, to comply with the following covenants.


Section .01.            Compliance with Laws, Etc.  Each of the Borrowers will comply in all
material respects with all Legal Requirements except where the failure to so
comply could not reasonably be expected to cause a Material Adverse
Change.  Without limiting the generality
and coverage of the foregoing, the Borrowers shall comply in all material
respects with all applicable Environmental Laws, and all laws, regulations, or
directives with respect to equal employment opportunity and employee safety in
all jurisdictions in which the Borrowers do business except where the failure
to so comply could not reasonably be expected to cause a Material Adverse
Change; provided, however, that this Section 5.01 shall not prevent
the Borrowers from, in good faith and with reasonable diligence, contesting the
validity or application of any such laws or regulations by appropriate legal
proceedings.


Section .02.            Maintenance of Insurance.  Each of the Borrowers will maintain insurance
with responsible and reputable insurance companies or associations in such
amounts and covering such risks as are usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which the Borrowers operate; provided that, the Borrowers may self-insure
to the extent and in the manner normal for similarly situated companies of like
size, type and financial condition that are part of a group of companies under
common control.


 



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Section .03.            Preservation of Corporate
Existence, Etc.  Each of the
Borrowers will preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified as a foreign corporation in each jurisdiction in which
qualification is necessary or desirable in view of its business and operations
or the ownership of its Properties and where failure to qualify could
reasonably be expected to cause a Material Adverse Change; provided,
however, that nothing herein contained shall prevent any transaction permitted
by Section 6.02.


Section .04.            Payment of Taxes, Etc.  Each of the Borrowers will pay and discharge
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
Property that are material in amount, prior to the date on which penalties
attach thereto and (b) all lawful claims that are material in amount
which, if unpaid, might by law become a Lien upon its Property; provided,
however, that the Borrowers shall not be required to pay or discharge
any such tax, assessment, charge, levy, or claim which is being contested in
good faith and by appropriate proceedings, and with respect to which reserves
in conformity with Applicable Accounting Rules have been provided.


Section .05.            Reporting Requirements.  The Borrowers will furnish to the Agent and
the Banks:


(a)           Defaults.  (i) As soon as possible and in any event
within three Business Days after a Responsible Officer of a Borrower becomes
aware of the occurrence of a Default known to any of the Borrowers which is
continuing on the date of such statement, a statement of an authorized officer
of the Company setting forth the details of such Default and (ii) within ten
Business Days after a Responsible Officer of a Borrower becomes aware of the
occurrence of such Default, a statement of an authorized officer of the Company
setting forth the actions which the Borrowers have taken and propose to take with
respect thereto;


(b)           Quarterly Financials.  As soon as available and in any event not
later than 50 days after the end of each of the first three fiscal quarters of
each fiscal year of the Company, SARL, SME, LTR Industries S.A., Papeteries de
Mauduit S.A.S., Schweitzer-Mauduit do Brasil S.A., and Papeteries de
Saint-Girons S.A.S., the consolidated and, with respect to the Company only,
consolidating, balance sheets of such entities as of the end of such quarter
and the consolidated and, with respect to the Company only, consolidating,
statements of income and changes in owners’ equity of such entities and the
Company’s statement of cash flows for the fiscal quarter then ended and for the
period commencing at the end of the previous year and ending with the end of
such fiscal quarter, all in reasonable detail and duly certified with respect
to such statements (subject to year-end audit adjustments) by an
authorized financial officer of the Company as having been prepared in
accordance with GAAP;


(c)           Audited Annual Financials of the
Company.  As soon as available and in
any event not later than 105 days after the end of each fiscal year of the
Company, copies of the annual audit report for such year for the Company,
including therein a consolidated balance sheet of the Company and consolidated
statements of income, changes in owners’ equity and cash flows for such fiscal
year, in each case certified by Deloitte & Touche L.L.P. or other
independent certified public accountants of nationally recognized standing or
otherwise reasonably acceptable to the Agent and the Majority Banks and
including any management 



 46
 






 



letters delivered by such
accountants to the Company in connection with such audit together with a
certificate of such accounting firm to the Agent and the Banks stating that, in
the course of the regular audit of the business of the Company, which audit was
conducted by such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge that a Default
has occurred and is continuing, or if, in the opinion of such accounting firm,
a Default has occurred and is continuing, a statement as to the nature thereof;


(d)           Unaudited Annual Financials of
Certain Entities.  As soon as
available and in any event not later than 105 days after the end of each fiscal
year of the Company, SARL, SME, LTR Industries S.A., Papeteries de Mauduit
S.A.S., Schweitzer-Mauduit do Brasil S.A., and Papeteries de Saint-Girons
S.A.S., copies of the unaudited, consolidated and, with respect to the Company
only, consolidating,  balance sheets of
such entities and unaudited, consolidated, with respect to the Company only,
consolidating, statements of income and changes in owners’ equity and the
Company’s statement of cash flows for such fiscal year, together with a
certificate of an authorized financial officer of each such entity certifying
that such consolidated statements having been prepared in accordance with GAAP;


(e)           Compliance Certificates.  (i) Within 45 days of each fiscal quarter
end for the first three fiscal quarters of each fiscal year and (ii) within 90
days of each fiscal year end, a Compliance Certificate in the form of the
attached Exhibit E for such fiscal quarter or fiscal year then ended indicating
compliance with Sections 6.06 through 6.08;


(f)            Termination Events.  As soon as possible and in any event (i)
within 30 days after any Responsible Officer of any Borrower knows or has
reason to know that any Termination Event described in clause (a) of the
definition of Termination Event with respect to any Plan has occurred, and
(ii) within 10 days after any Responsible Officer of any Borrower knows or
has reason to know that any other Termination Event with respect to any Plan
has occurred, a statement of the chief financial officer of such Borrower
describing such Termination Event and the action, if any, which such Borrower
or such Affiliate proposes to take with respect thereto;


(g)           Termination of Plans.  Promptly and in any event within ten Business
Days after the knowledge of any Responsible Officer of any Borrower of receipt
thereof by such Borrower or any member of the Controlled Group from the PBGC,
copies of each notice received by such Borrower or any such member of the
Controlled Group of the PBGC’s intention to terminate any Plan or to have a
trustee appointed to administer any Plan;


(h)           Other ERISA Notices.  Promptly and in any event within ten Business
Days after the knowledge of any Responsible Officer of any Borrower of receipt
thereof by any Borrower or any member of the Controlled Group from a
Multiemployer Plan sponsor, a copy of each notice received by any Borrower or
any member of the Controlled Group concerning the imposition of withdrawal
liability pursuant to Section 4202 of ERISA in an amount that could reasonably
be expected to cause a Material Adverse Change;


(i)            Disputes, etc.  Prompt written notice of any claims,
proceedings, or disputes, or to the knowledge of any Responsible Officer of any
Borrower threatened, or affecting such Borrower, or any of its Subsidiaries in
which there is a reasonable possibility of an adverse result which could
reasonably be expected to cause a Material Adverse Change;



 47
 






 



(j)            Material Changes.  Prompt written notice of any condition or
event of which a Responsible Officer of any of the Borrowers has knowledge,
which condition or event has resulted or may reasonably be expected to result
in a Material Adverse Change;


(k)           Supply Agreement.  Prompt written notice of (i) any nonrenewal
of the initial term or any renewal term under the Supply Agreement, (ii) any
event or condition which results in, or could be expected to result in, an
early termination or cancellation of the Supply Agreement, (iii) any material
amendment to the Supply Agreement, and (iv) any default by the Company or, to
the knowledge of the Company, Philip Morris under the Supply Agreement;


(l)            Change of Control.  As soon as any of the Chief Executive
Officer, the Chief Financial Officer, the Chief Operating Officer or the
General Counsel of the Company becomes aware of the occurrence of a Change of
Control pursuant to filings made with the SEC, a statement of an authorized
officer of the Company setting forth the details of such Change of Control,
together with any other information regarding such Change of Control as the
Agent may reasonably request; and


(m)          “Know Your Customer” Checks.


(i)            If:


(A)          the introduction of or any change in
(or in the interpretation, administration or application of) any law or
regulation made after the date of this Agreement;


(B)           any change in the status of any
Borrower after the date of this Agreement; or


(C)           a proposed assignment or transfer by
a Bank of any of its rights and obligations under this Agreement to a party
that is not a Bank prior to such assignment or transfer,


obliges the Agent or any Bank (or, in the case of
paragraph (C) above, any prospective new Bank) to comply with “know your
customer” or similar identification procedures as required by any law or
regulation in circumstances where the necessary information is not already
available to it, then promptly upon reasonable request of the Agent or any Bank
supply, or procure the supply of, such documentation and other evidence as is
reasonably requested by the Agent (for itself or on behalf of any Bank) or any
Bank (for itself or, in the case of the event described in paragraph (C) above,
on behalf of any prospective new Bank) in order for the Agent, such Bank or, in
the case of the event described in paragraph (C) above, any prospective new
Bank to carry out and be reasonably satisfied with the results (provided that
the Agent or the relevant Bank shall be so satisfied if the documentation or
evidence provided allows it to comply with any applicable regulations) of all
necessary “know your customer” or other similar checks under all applicable
laws and regulations pursuant to the transactions contemplated in the Credit
Documents.


(n)           Other Information.  Such other information respecting the
business or Properties, or the condition or operations, financial or otherwise,
of the Borrowers as the Agent may from time-to-time reasonably
request.



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Section .06.            Maintenance of Property.  Each of the Borrowers and their Subsidiaries
shall (a) maintain their material owned, leased, or operated property,
equipment, buildings and fixtures in substantially the same or better condition
and repair as the condition and repair as of December 31, 2005, normal wear and
tear excepted and (b) not knowingly or willfully permit the commission of waste
or other injury, or the release of Hazardous Substances on or about the owned
or operated property in violation of applicable Environmental Laws that would
reasonably be expected to cause a Material Adverse Change.


Section .07.            Inspection.  From time-to-time upon reasonable notice, the
Borrowers shall (i) permit the Agent (at the request of any Bank) or after
an Event of Default has occurred, the Banks, to examine and copy their books
and records, (ii) permit the Agent and the Banks to visit and inspect
their Properties, and (iii) permit the Agent and Banks to discuss the
business operations and Properties of the Borrowers with their officers and
directors.


Section .08.            Use of Proceeds.  The Borrowers shall use the proceeds of
Advances to refinance existing Indebtedness under the Existing Credit Agreement
and for general corporate purposes.  The
Borrowers will not engage in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of
Regulation U).  No proceeds of any
Advance will be used to purchase or carry any margin stock in violation of
Regulation T, U, or X.


Section .09.            Status of Obligations.  The Company shall cause all of its
obligations under this Agreement, the Notes and the other Credit Documents to
rank at least pari passu in right of payment with all other unsecured Debt of
the Company.  SARL shall cause all of its
obligations under this Agreement, the Notes and the other Credit Documents to
rank at least pari passu in right of payment with all other unsecured Debt of
SARL.  SME shall cause all of its
obligations under this Agreement, the Notes and the other Credit Documents to
rank at least pari passu in right of payment with all other unsecured Debt of
SME.


Section .10.            Nature of Business.  None of the Borrowers nor any of the
Subsidiaries shall engage in any business if, as a result, the general nature
of the business, taken on a consolidated basis, which would then be engaged in
by the Company and its Subsidiaries would be substantially changed from the
general nature of the business engaged in by the Company and its Subsidiaries
on the date of this Agreement.






NEGATIVE COVENANTS


So long as the Notes or
any amount under any Credit Document shall remain unpaid, or any Bank shall
have any Commitment, the Borrowers agree, unless the Majority Banks otherwise
consent in writing, to comply with the following covenants.


Section .01.            Liens, Etc.  None of the Borrowers nor any Material
Subsidiary will create, assume, incur or suffer to exist, any Lien on or in
respect of any of its Property whether now owned or hereafter acquired, or
assign any right to receive income, except that the Borrowers and the Material
Subsidiaries may create, incur, assume or suffer to exist:



 49
 






 



(a)           Liens securing the Obligations;


(b)           Liens for taxes, assessments or
governmental charges or levies on Property of the Borrowers to the extent not
required to be paid pursuant to Sections 5.01 and 5.04;


(c)           Liens securing Debt set forth in
Schedule 6.01 attached hereto and refinancings of such Debt; provided
that, the aggregate principal amount of such Debt shall not be increased;


(d)           carrier’s, warehousemen’s, mechanic’s,
materialmen’s, repairmen’s or other like Liens arising in the ordinary course
of business (whether or not statutory) which are not overdue for a period of
more than 30 days or which are being contested in good faith and by appropriate
proceedings, for which a reserve or other appropriate provision, if any, as
shall be required by Applicable Accounting Rules shall have been made;


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


(f)            easements, rights-of-way,
restrictions and other similar encumbrances incurred in the ordinary course of
business and encumbrances consisting of zoning restrictions, easements, leases,
subleases, licenses, sublicenses, restrictions on the use of Property or minor
imperfections in title thereto which, in the aggregate, are not material in amount,
and which do not in any case materially detract from the value of the Property
subject thereto or interfere with the ordinary conduct of the business of the
Company or any of its Subsidiaries;


(g)           Liens on Property of Persons which
become Subsidiaries of the Company after the date of this Agreement securing
Debt permitted hereby; provided that, such Liens are in existence at the time
the respective Persons become Subsidiaries of the Company and were not created
in anticipation thereof;


(h)           Liens resulting from progress
payments or partial payments under United States government contracts or
subcontracts;


(i)            Liens arising from legal
proceedings, so long as such proceedings are being contested in good faith by
appropriate proceedings diligently conducted and so long as execution is stayed
on all judgments resulting from any such proceedings;


(j)            Liens arising in the ordinary course
of business out of pledges or deposits under workers’ compensation laws,
unemployment insurance, old age pensions or other social security or retirement
benefits, or similar legislation or to secure public or statutory obligations
of the Borrowers;


(k)           Liens existing on Property acquired
by the Borrowers in the ordinary course of business prior to the Borrowers’
acquisition of such Property; and


(l)            purchase money Liens or purchase
money security interests upon or in any fixed assets acquired or held by the
Borrowers in the ordinary course of business to secure the purchase price of
such fixed assets or to secure indebtedness incurred solely for the purpose of 



 50
 






 



financing the acquisition
of such Property; provided that the aggregate principal amount of the
Debt secured by the Liens permitted by this paragraph (l) shall not, on the
date such Lien is granted and after giving effect thereto, exceed an aggregate
amount equal to 30% of the Company’s Tangible Net Worth at any time.


Section .02.            Merger or Consolidation; Asset
Sales.  None of the Borrowers nor any
of the Material Subsidiaries will (a) merge or consolidate with or into
any other Person or (b) sell, lease, transfer, or otherwise dispose of any
of its Property (other than the sale of inventory in the ordinary course of
business) except that so long as after giving effect thereto no Default or
Event of Default shall exist:


(i)            Any corporation may merge or
consolidate with any of the Borrowers or the Material Subsidiaries provided
that such Borrower or Material Subsidiary shall be the continuing or surviving
corporation; and provided further that if the Company is a party to any such
merger or consolidation, then either (A) the Company shall be the continuing or
surviving corporation or (B) the continuing or surviving corporation shall be a
wholly-owned Subsidiary of the Company organized under the laws of any
political subdivision of the United States that expressly assumes the
obligations of the Company hereunder;


(ii)           Any Material Subsidiary (other than a
Borrower) may merge with any other Subsidiary of the Company;


(iii)          Any Borrower or Material Subsidiary
may sell, lease, transfer or otherwise dispose of any of its assets to (A)(I)
in the case of any Borrower, any other Borrower and in the case of a Material
Subsidiary, any Borrower or any other Material Subsidiary or (II) any other
Person who guarantees the obligations hereunder of the Borrower or Material
Subsidiary making such sale, lease, transfer or disposition or (B) with the
consent of the Agent (not to be unreasonably withheld), any other Person if
such sale or disposition is in the ordinary course of such Borrower’s or Material
Subsidiary’s business and the net proceeds received from such sale or other
disposition equal or exceed (in the reasonable opinion of the Board of
Directors of the Company) the fair market value of the Property transferred to
such Person; and


(iv)          Any Borrower or Material Subsidiary
may sell, lease, transfer or otherwise dispose of any assets which constitute
fixed assets if the net book value of the asset being sold does not exceed
$20,000,000 (or the Dollar Equivalent thereof); provided that, all such asset
sales permitted by this clause (iii) shall not exceed $45,000,000 (or the
Dollar Equivalent thereof) in the aggregate; provided further that the
assets which Philip Morris has the right to recover under the terms of the
Amended and Restated Addendum to Fine Papers Supply Agreement and the Coated
Tobacco Paper Development Agreement are excluded from the limitations set forth
in this Article 6.02.


Section .03.            Investments.  None of the Borrowers will make or permit to
exist any loans, advances or capital contributions to, or make any investment
in, or purchase or commit to purchase any stock or other securities or
evidences of indebtedness of or interests in any Person, except for (a) loans,
advances, capital contributions or investments in any other Borrower or any
other Subsidiary thereof, (b) Liquid Investments, (c) cash investments in joint
ventures and, 



 51
 






 



subject to the terms of
Section 6.02 hereof, non-cash investments in joint ventures, and (d) the
acquisition by the Company or any of its Subsidiaries, in a single transaction
or any series of related transactions, of any Person or the business or all or
substantially all of the assets of any Person, or any division of any Person,
whether through investment, purchase of assets, merger or otherwise, including,
but not limited to, in any transaction pursuant to which any Person that was
not theretofore a Subsidiary of the Company, becomes a Subsidiary of the
Company and is consolidated with the Company for financial reporting purposes;
provided however, in the case of any transaction subject to this clause (d),
that, giving effect to such transaction on a pro forma basis, there exists no
Default or Event of Default.


Section .04.            Transactions With Affiliates.  None of the Borrowers shall, directly or
indirectly, enter into or permit to exist any transaction or series of
transactions (including, but not limited to, the purchase, sale, lease or
exchange of Property, the making of any investment, the giving of any guaranty
or the rendering of any service) with any of their Affiliates other than the
Company, a wholly-owned Subsidiary of the Company or any other Subsidiary of
the Company in which a de minimis ownership is held by local residents or is
mandated by local law unless either (a) such transaction or series of
transactions is on terms no less favorable to such Borrower than those that
could be obtained in a comparable arm’s length transaction with a Person that
is not such an affiliate, or (b) such transaction has been approved by a
majority of the disinterested members of the Company’s Board of Directors.


Section .05.            Compliance with ERISA.  None of the Borrowers or any Material
Subsidiary will (a) terminate, or permit any Affiliate to terminate, any
Plan so as to result in any material (in the reasonable opinion of the Majority
Banks) liability of such Borrower or Material Subsidiary or (b) permit to
exist any occurrence of any Reportable Event (as defined in Title IV of
ERISA), or any other event or condition, which presents a material (in the reasonable
opinion of the Majority Banks) risk of such a termination by the PBGC of any
Plan.


Section .06.            Net Debt to Equity Ratio.  The Company will not permit its Net Debt to
Equity Ratio as of the end of any fiscal quarter to be greater than 1.0 to 1.0.


Section .07.            Net Debt to Adjusted EBITDA Ratio.  The Company will not permit the ratio of the
Company’s (a) Net Debt as of the end of any fiscal quarter to (b) Adjusted
EBITDA as of the end of any fiscal quarter for the four-fiscal quarter period
then ending to be greater than 3.0 to 1.0.


Section .08.            Debt.  The Company will not permit (a) LTR
Industries S.A., (b) PDM Industries S.N.C., (c) Malaucene Industries S.N.C.,
(d) PT PDM Indonesia, (e) PDM Philippines Industries, Inc., (f) Papeteries de
Mauduit S.A.S., (g) Papeteries de Malaucene S.A.S., (h) Schweitzer-Mauduit
Spain, S.L., (i) Schweitzer-Mauduit do Brasil S.A., (j) Papeteries de
Saint-Girons S.A.S., (k) Saint-Girons Industries S.N.C. or (l) any of their
Subsidiaries (other than SARL or SME) to incur any Debt except for:


(i)            intercompany Debt permitted pursuant
to Section 6.03;


(ii)           Debt arising under any employee
benefit plan sponsored by LTR Industries S.A., PDM Industries S.N.C.,
Papeteries de Mauduit S.A.S., Malaucene 



 52
 






 



Industries S.N.C.,
Papeteries de Mauduit S.A.S., Papeteries de Saint-Girons S.A.S., Saint-Girons
Industries S.N.C., or any of their Subsidiaries;


(iii)          Debt of LTR Industries S.A. in an
aggregate principal amount not to exceed €5,000,000.00;


(iv)          Debt of PDM Industries S.N.C.,
Papeteries de Mauduit S.A.S., Papeteries de Saint-Girons S.A.S, Saint-Girons
Industries S.N.C., Papeteries de Malaucene S.A.S., Malaucene Industries S.N.C.,
and their Subsidiaries in an aggregate principal amount not to exceed €6,000,000.00;
provided, that the aggregate principal amount of Debt under clauses (iii) and
(iv) of this Section 6.08 may not exceed €11,000,000 at any time;


(v)           Debt of Schweitzer-Mauduit Spain S.L.
and Schweitzer-Mauduit do Brasil S.A.S. in an aggregate principal amount not to
exceed $10,000,000;


(vi)          Debt of any Subsidiaries of the
Company located in Southeast Asia (including, without limitation, PT PDM
Indonesia and PDM Philippines Industries Inc.) in an aggregate principal amount
not to exceed $10,000,000;


(vii)         Debt of any Subsidiaries of the Company
acquired, created or established after the Closing Date in an aggregate
principal amount not to exceed $5,000,000; provided, that the aggregate
principal amount of Debt under clauses (v), (vi) and (vii) of this Section 6.08
may not exceed $15,000,000 at any time;


(viii)        other Debt of
any such Person of the type permitted to be secured by Section 6.01(l); and


(ix)           all reimbursement
obligations arising under letters of credit (including standby and commercial),
bankers’ acceptances, bank guaranties, surety bonds and similar instruments
arising in the ordinary course of business.


Section .09.            Special Provisions for Material
Subsidiaries of SARL and SME. 
Notwithstanding any of the provisions of this Article VI, none of the
Material Subsidiaries of SARL or SME shall be under any obligation pursuant
thereto.  However, each of SARL and SME
shall procure that any and all of its Material Subsidiaries shall comply with
Sections 6.01, 6.02, 6.05 and 6.08; provided, that (i) such
commitment of SARL and SME shall have the same legal effect as a “promesse de porte-fort” as provided for under Article 1120
of the French Civil Code and (ii) the “promesse de porte-fort”
shall be deemed to have been breached upon the occurrence of any act or
omission of any of the Material Subsidiaries of SARL or SME or any situation
relating to such Material Subsidiaries which does not comply with any of the
provisions of this Article VI.


Section .10.            Stock Purchases.  The Company will not purchase, redeem or
otherwise acquire any shares of its capital stock except that the Company may
purchase (a) up to $20,000,000 of its capital stock in any fiscal year, (b) its
capital stock in connection with its employee 401(k) retirement plan, and (c)
its capital stock sold in connection with a cashless exercise of stock options
granted under the Company’s equity participation plan.










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REMEDIES


Section .01.            Events of Default.  The occurrence of any of the following events
shall constitute an “Event of Default” under any Credit Document:


(a)           Payment.  Any of the Borrowers shall fail to pay (i)
any principal of any Note when the same becomes due and payable, or (ii) any
interest on the Notes or any fee or other amount payable hereunder or under any
other Credit Document within five Business Days after the same becomes due and
payable;


(b)           Representation and Warranties.  Any representation or warranty made or deemed
to be made by any of the Borrowers (or any of their officers) in this Agreement
or in any other Credit Document shall prove to have been incorrect in any
material respect when made or deemed to be made;


(c)           Covenant Breaches.  Any of the Borrowers shall (i) fail to
perform or observe any covenant contained in Sections 5.05(a), 5.08 and
Article VI (other than Section 6.01) of this Agreement, (ii) fail to
perform or observe the covenant contained in Section 5.05(k) if such failure
shall remain unremedied for 30 days after written notice of such default shall
have been given to any of the Borrowers by the Agent or any Bank, or
(iii) fail to perform or observe any other term or covenant set forth in
this Agreement or in any other Credit Document which is not covered by
clauses (i) or (ii) above or any other provision of this Section 7.01
if such failure shall remain unremedied for 10 Business Days after written
notice of such default shall have been given to any of the Borrowers by the
Agent or any Bank;


(d)           Cross-Default.  (i) Any Borrower or any Material
Subsidiary shall fail to pay any principal of or premium or interest on its
Debt which is outstanding in a principal amount of at least $5,000,000 (or the
Dollar Equivalent thereof) individually or when aggregated with all such Debt
of the Borrower and its Material Subsidiaries so in default (but excluding Debt
evidenced by the Notes) when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise),
(ii) any other event shall occur or condition shall exist under any agreement
or instrument relating to Debt which is outstanding in a principal amount of at
least $5,000,000 (or the Dollar Equivalent thereof) individually or when
aggregated with all such Debt of the Borrower and its Material Subsidiaries so
in default (but excluding Debt evidenced by the Notes), and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or (iii) any such
Debt (but excluding Debt evidenced by the Notes) shall be declared to be due
and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof;


(e)           Insolvency.  Any Borrower or Material Subsidiary shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against any Borrower or Material Subsidiary seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, 



 54
 






 



protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against a Borrower or Material Subsidiary, either such
proceeding shall remain undismissed for a period of 60 days or any of the
actions sought in such proceeding shall occur; or any Borrower or Material
Subsidiary shall take any corporate action to authorize any of the actions set
forth above in this paragraph (e);


(f)            Judgments.  Any judgment, decree or order for the payment
of money shall be rendered against any Borrower or any Material Subsidiary in
an amount in excess of $10,000,000 (or the Dollar Equivalent thereof) if
rendered solely against the Borrowers and/or their Subsidiaries, or for which
such Borrower’s or Material Subsidiary’s allocated portion of which (net of any
amounts (i) as to which the applicable insurance company has acknowledged
coverage or (ii) covered by a third party indemnity from an indemnitor with a
net worth, income, or other financial means reasonably acceptable to the Agent
under which such indemnitor has acknowledged responsibility) exceeds $10,000,000
(or the Dollar Equivalent thereof) and either (i) such judgment, decree or
order remains unsatisfied and in effect for a period of 60 consecutive days or
more without being vacated, discharged, satisfied or stayed or bonded pending
appeal or (ii) enforcement proceedings shall have been commenced by any
creditor upon such judgment, decree or order;


(g)           Maintenance of Ownership.  The Company shall cease to own, either
directly or indirectly, all of the shares of common stock in SARL and SME and
the other Material Subsidiaries necessary to maintain the ownership percentages
held by the Company in SARL and SME and the Material Subsidiaries on the date
of this Agreement;


(h)           Termination Events.  Any Termination Event with respect to a Plan
shall have occurred, and, 30 days after notice thereof shall have been given to
any Borrower by the Agent, (i) such Termination Event shall not have been
corrected and (ii) the then present value of such Plan’s vested benefits
exceeds the then current value of assets accumulated in such Plan by an amount
that would reasonably be expected to cause or to have a Material Adverse Change
(or in the case of a Termination Event involving the withdrawal of a “substantial
employer” (as defined in Section 4001(a)(2) of ERISA), the withdrawing employer’s
proportionate share of such excess shall exceed such amount);


(i)            Plan Withdrawals.  Any Borrower or any member of the Controlled
Group as employer under a Multiemployer Plan shall have made a complete or
partial withdrawal from such Multiemployer Plan and the plan sponsor of such
Multiemployer Plan shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in an annual amount that could
reasonably be expected to cause or to have a Material Adverse Change;


(j)            Guaranty.  Any of the guaranty provisions in this
Agreement shall for any reason cease to be valid and binding on the Company or
the Company shall so state in writing; or


(k)           Philip Morris.  During any fiscal year of the Company (i) the
total net sales recorded by the Borrowers and their Subsidiaries during such
year to Philip Morris and its Affiliates shall constitute less than 50% of the
net sales recorded by the Borrowers and their 



 55
 






 



Subsidiaries during the
immediately preceding fiscal year to Philip Morris and its Affiliates, and (ii)
the total consolidated net sales of the Company for such year decline by
greater than 10% compared to the immediately preceding fiscal year, excluding
unfavorable exchange rate impacts.


Section .02.            Optional Acceleration of Maturity.  If any Event of Default (other than an Event
of Default pursuant to paragraph (e) of Section 7.01) shall have
occurred and be continuing, then, and in any such event the Agent
(i) shall at the request of, or may with the consent of, the Majority
Banks, by notice to the Borrowers, declare the obligation of each Bank to make
Advances to be terminated, whereupon the same shall forthwith terminate, and
(ii) shall at the request of, or may with the consent of, the Majority Banks, by
notice to the Borrowers, declare the Notes, all interest thereon, and all other
amounts payable under this Agreement to be forthwith due and payable, whereupon
the Notes, all such interest, and all such amounts shall become and be
forthwith due and payable in full, without presentment, demand, protest or
further notice of any kind (including, without limitation, any notice of intent
to accelerate or notice of acceleration), all of which are hereby expressly
waived by the Borrowers;


Section .03.            Automatic Acceleration of
Maturity.  If any Event of Default
pursuant to paragraph (e) of Section 7.01 shall occur the obligation
of each Bank to make Advances shall immediately and automatically be terminated
and the Notes, and all other amounts payable under this Agreement shall
immediately and automatically become and be due and payable in full, without
presentment, demand, protest or any notice of any kind (including, without
limitation, any notice of intent to accelerate or notice of acceleration), all
of which are hereby expressly waived by the Borrowers.


Section .04.            Non-exclusivity of Remedies.  No remedy conferred upon the Agent is
intended to be exclusive of any other remedy, and each remedy shall be
cumulative of all other remedies existing by contract, at law, in equity, by
statute or otherwise.


Section .05.            Right of Set-off.  Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent, if any, specified by Section 7.02 to authorize the
Agent upon the consent of the Majority Banks to declare the Notes and any other
amount payable hereunder due and payable pursuant to the provisions of Section
7.02 or the automatic acceleration of the Notes and all amounts payable under
this Agreement pursuant to Section 7.03, each Bank is hereby authorized at any
time and from time-to-time, to the fullest extent permitted by law,
to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of the Borrowers against any
and all of the obligations of the Borrowers now or hereafter existing under
this Agreement, the Notes, and the other Credit Documents, irrespective of
whether or not such Bank shall have made any demand under this Agreement, the
Notes, or such other Credit Documents, and although such obligations may be
unmatured.  Each Bank agrees to promptly
notify the Borrowers after any such set-off and application made by it,
provided that the failure to give such notice shall not affect the validity of
such set-off and application.  The
rights of each Bank under this Section are in addition to any other rights and
remedies (including, without limitation, other rights of set-off) which
such Bank may have.










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THE
GUARANTY


Section .01.            Guaranty.  The Company hereby unconditionally and
irrevocably guarantees the punctual payment of the Guaranteed Obligations when
due, whether at stated maturity, by acceleration or otherwise, and agrees to
pay any and all expenses (including reasonable counsel fees and expenses)
incurred by the Agent and the Banks having a Tranche B Commitment in enforcing
any rights under this Section 8.01. 
Without limiting the generality of the foregoing, the Company’s
liability shall extend to all amounts which constitute part of the Guaranteed
Obligations and are owed by the Company even if they are declared unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or
similar proceeding involving SARL or SME. 
The Company will pay to the Banks having a Tranche B Commitment all
amounts due and payable under this Section 8.01 in Euros in immediately
available funds one Business Day after demand from the Agent.


Section .02.            Guaranty Absolute.  The Company guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of this
Agreement and the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Bank with respect thereto. 
The guaranty provided for in Section 8.01 is a guaranty of payment,
not of collection and the Company’s obligations thereunder are primary, not
secondary.  The obligations of the Company
under Section 8.01 are independent of the Guaranteed Obligations, and a
separate action or actions may be brought and prosecuted against the Company to
enforce such obligations, irrespective of whether any action is brought against
SARL, SME or any other Person or whether SARL, SME or any other Person is
joined in any such action or actions. 
The liability of the Company under Section 8.01 shall be absolute
and unconditional irrespective of:


(a)           any lack of validity or
enforceability of any other provision of the Credit Agreement, the Notes or any
other Credit Document;


(b)           any change in the time, manner or
place of payment of, or in any other term of, all or any of the Guaranteed
Obligations or any other liabilities, or any other amendment or waiver of or
any consent to departure from the Credit Agreement, the Notes or any other
Credit Document, including, without limitation, any increase in the Guaranteed
Obligations or any other liabilities resulting from the extension of additional
credit to SARL, SME or otherwise;


(c)           any taking, exchange, release or non-perfection
of any collateral (if any), or any taking, release, amendment or waiver of or
consent to departure from any other guaranty for all or any of the Guaranteed
Obligations or any other liabilities;


(d)           any manner of application of
collateral (if any), or proceeds thereof or of collections on account of any
other guaranty to all or any of the Guaranteed Obligations or any other
liabilities, or any manner of sale or other disposition of any collateral for
all or any of the Guaranteed Obligations or any other liabilities or any other
assets of SARL or SME;



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(e)           any change, restructuring or
termination of the corporate structure or existence of SARL or SME; or


(f)            any other circumstances which might
otherwise constitute a defense available to, or a discharge of, SARL, SME or a
guarantor (other than the defense of prior payment).


Section .03.            Waiver.  The Company hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and the guaranty provided for in Section 8.01 and
any requirement that the Agent or any Bank protect, secure, perfect or insure
any security interest or other Lien or any property subject thereto or exhaust any
right to take any action against the Company or any other Person or any
collateral.


Section .04.            Subrogation.  (a) Until such time as the Guaranteed
Obligations are paid in full, the Company irrevocably waives any and all rights
to which it may be entitled, by operation of law or otherwise, by making any
payment hereunder or otherwise to be subrogated to the rights of the Agent and
the Banks against SARL, SME or any other Person with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by SARL, SME or any other
Person in respect thereof.  If any amount
shall be paid to the Company on account of such subrogation in violation of the
preceding sentence, such amount shall be held in trust for the benefit of the
Agent and the Banks and shall forthwith be paid to the Agent to be credited
against and applied upon the Guaranteed Obligations, whether matured or
unmatured, in such order as may be determined by the Majority Banks.


(a)           The Company agrees that, to the
extent that any Borrower makes payment to the Agent or any Bank, or the Agent
or any Bank receives any proceeds of collateral, and such payments or proceeds
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, or otherwise required to be repaid, then to the extent
of such repayment the Guaranteed Obligations shall be reinstated and continued
in full force and effect as of the date such initial payment or collection of
proceeds occurred.  The Company shall
defend and indemnify the Agent and the Banks from and against any claim or loss
under this subsection 8.04 (including reasonable attorneys’ fees and
expenses) in the defense of any such action or suit, but excluding any such
losses, liabilities, claims, damages, or expenses incurred by reason of the
gross negligence, bad faith or willful misconduct of the Agent and the Banks.






THE AGENT


Section .01.            Authorization and Action.  Each Bank hereby appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms hereof and of
the other Credit Documents, together with such powers as are reasonably
incidental thereto.  As to any matters
not expressly provided for by this Agreement or any other Credit Document
(including, without limitation, enforcement or collection of the Notes), the
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Majority Banks, and such instructions shall be binding upon all Banks and all
holders of Notes; provided, 



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however, that the Agent
shall not be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement, any other Credit Document, or
applicable law.


Section .02.            Agent’s Reliance, Etc.  Neither the Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted
to be taken (including the Agent’s own negligence) by it or them under or in
connection with this Agreement or the other Credit Documents, except for its or
their own gross negligence, bad faith or willful misconduct.  Without limitation of the generality of the
foregoing, the Agent:  (a) may treat
the payee of any Note as the holder thereof until the Agent receives written
notice of the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (b) may consult with legal counsel (including
counsel for the Borrowers), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any
Bank and shall not be responsible to any Bank for any statements, warranties or
representations made in or in connection with this Agreement or the other
Credit Documents; (d) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or any other Credit Document on the part of the
Borrowers or their Subsidiaries or to inspect the property (including the books
and records) of the Borrowers or their Subsidiaries; (e) shall not be
responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Credit Document; and (f) shall incur no liability under or in
respect of this Agreement or any other Credit Document by acting upon any
notice, consent, certificate or other instrument or writing (which may be by
telecopier, telegram, cable, telex, electronic message, Internet or intranet
website posting or other distribution) believed by it to be genuine and signed
or sent by the proper party or parties.


Section .03.            The Agent and Its Affiliates.  With respect to its Commitments, the Advances
made by it and the Notes issued to it, the Agent shall have the same rights and
powers under this Agreement as any other Bank and may exercise the same as
though it were not the Agent.  The term “Bank”
or “Banks” shall, unless otherwise expressly indicated, include the Agent in
its individual capacity.  The Agent and
its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Borrowers
or any of their Subsidiaries, and any Person who may do business with or own
securities of the Borrowers or any such Subsidiaries, all as if the Agent were
not an agent hereunder and without any duty to account therefor to the Banks.


Section .04.            Bank Credit Decision.  Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based
on the financial statements referred to in Section 4.05 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement.  Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.


Section .05.            Indemnification.  The Banks severally agree to indemnify the
Agent (to the extent not reimbursed by the Borrowers), according to their
respective Pro Rata 



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Shares from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Agreement or any action taken or omitted by
the Agent under this Agreement or any other Credit Document (including the
Agent’s own negligence), provided that no Bank shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent’s
gross negligence or willful misconduct. 
Without limitation of the foregoing, each Bank agrees to reimburse the
Agent promptly upon written demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any other Credit Document, to the
extent that the Agent is not reimbursed for such expenses by the
Borrowers.  Upon the request of any Bank,
the Agent shall supply documentation reasonably evidencing such expenses.


Section .06.            Successor Agent.  The Agent may resign at any time by giving
written notice thereof to the Banks and the Borrowers and may be removed at any
time with or without cause by the Majority Banks upon receipt of written notice
from the Majority Banks to such effect. 
Upon receipt of notice of any such resignation or removal, the Majority
Banks shall have the right to appoint a successor Agent subject to, if an Event
of Default has not occurred and is not continuing, the consent of the Company,
which consent shall not be unreasonably withheld.  If no successor Agent shall have been so
appointed, and shall have accepted such appointment, within 30 days after the retiring
Agent’s giving of notice of resignation or the Majority Banks’ removal of the
retiring Agent then the retiring Agent may, on behalf of the Banks and the
Borrower, appoint a successor Agent, which shall be a commercial bank meeting
the financial requirements of an Eligible Assignee. Upon the acceptance of any
appointment as Agent by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under this Agreement and the other Credit
Documents.  After any retiring Agent’s
resignation or removal hereunder as Agent, the provisions of this
Article IX shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement and the other Credit
Documents.


Section .07.            “Know Your Customer” Checks.  Each Bank shall promptly upon reasonable
request of the Agent supply, or procure the supply of, such documentation and
other evidence as is reasonably requested by the Agent (for itself) in order
for the Agent to carry out and be satisfied it has complied with all necessary “know
your customer” or other similar checks under all applicable laws and
regulations pursuant to the transactions contemplated in the Credit
Documents.  Nothing in this Agreement
shall oblige the Agent to carry out any “know your customer” or other checks in
relation to any person on behalf of any Bank and each Bank confirms to the
Agent that it is solely responsible for any such checks it is required to carry
out and that it may not rely on any statement in relation to such checks made
by the Agent.


 



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MISCELLANEOUS


Section .01.            Amendments, Etc.  No amendment or waiver of any provision of
this Agreement, the Notes, or any other Credit Document, nor consent to any
departure by any Borrower therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Majority Banks and the Borrowers,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall:


(a)           increase any Commitment of any Bank
without the written consent of such Bank;


(b)           increase the aggregate Commitments of
the Banks without the written consent of all of the Banks;


(c)           reduce the principal of, or interest
on, the Notes or any fees or other amounts payable hereunder or under any other
Credit Document without the written consent of each Bank directly affected
thereby;


(d)           postpone any date fixed for any
scheduled payment of principal of, or interest on, the Notes or any fees or
other amounts payable hereunder without the written consent of each Bank
directly affected thereby;


(e)           (i) accelerate any date fixed for any
scheduled payment of principal of, or interest on, the Tranche A Notes or any
fees or other amounts payable hereunder to Banks having Tranche A Commitments
without the written consent of the Majority Tranche B Banks or (ii) accelerate
any date fixed for any scheduled payment of principal of, or interest on, the
Tranche B Notes or any fees or other amounts payable hereunder to Banks having
Tranche B Commitments without the written consent of the Majority Tranche A
Banks;


(f)            change the number of Banks which
shall be required for the Banks or any of them to take any action hereunder or
under any other Credit Document without the written consent of each Bank;


(g)           amend Section 2.12 in a manner that
would alter the pro rata sharing of payments required thereby or this Section
10.01 without the written consent of each Bank;


(h)           release the Company from its
obligations under Article VIII without the written consent of each Bank having
a Tranche B Commitment;


(i)            amend the definition of “Majority
Banks” without the written consent of each Bank;


(j)            amend the definition of “Majority
Tranche A Banks” without the written consent of each Bank having a Tranche A
Commitment;



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(k)           amend the definition of “Majority
Tranche B Banks” without the written consent of each Bank having a Tranche B
Commitment;


(l)            waive any condition set forth in
Section 3.01 without the written consent of each Bank; or


(m)          waive any condition set forth in
Section 3.02 without the written consent of each Bank;


and provided, further,
that no amendment, waiver or consent shall, unless in writing and signed by the
Agent in addition to the Banks required above to take such action, affect the
rights or duties of the Agent under this Agreement or any other Credit
Document.


Section .02.            Notices, Etc.


(a)           All notices and other communications
shall be in writing (including telecopy, telex or electronic mail (subject to
subsection (b) below)) and mailed, telecopied, telexed, hand delivered or
delivered by a nationally recognized overnight courier, if to the Company or
any other Borrower, at its address as set forth on Schedule 1; if to any
Bank,  at its U.S. Lending Office
specified opposite its name on Schedule 1; if to the Agent, at its address
for notices set forth in Schedule 1; and if a Notice of Borrowing or a Notice
of Continuation to the Agent as to Tranche A Advances at the U.S. Lending
Office of the Agent and, as to Tranche B Advances to the Agent at its Paris,
France lending office or if different, the Applicable Lending Office for the
Agent specified opposite its name on Schedule 1 or, as to each party, at
such other address or teletransmission number as shall be designated by such
party in a written notice to the other parties. 
All such notices and communications shall, when mailed, telecopied,
telexed or hand delivered or delivered by overnight courier be effective:  upon receipt, if mailed, when telecopy
transmission is completed, when confirmed by telex answer-back or when
delivered, respectively, except that notices and communications to the Agent
pursuant to Article II or IX shall not be effective until received by the
Agent.


(b)           Notices and other communications to
the Banks hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites) pursuant to procedures
approved by the Agent, provided that the foregoing shall not apply to notices
to any Bank pursuant to Article II if such Bank has notified the Agent that it
is incapable of receiving notices under such Article by electronic
communication. The Agent or any Borrower may, in its discretion, agree to
accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or communications. Unless
the Agent otherwise prescribes, (i) notices and other communications sent to an
e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is not
sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing 



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clause (i) of notification that such notice or
communication is available and identifying the website address therefor.


Section .03.            No Waiver; Remedies.  No failure on the part of any Bank or the
Agent to exercise, and no delay in exercising, any right hereunder or under any
Note shall operate as a waiver thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the
exercise of any other right.  The
remedies provided in this Agreement are cumulative and not exclusive of any
remedies provided by law.


Section .04.            Costs and Expenses.  Each of the Borrowers agrees to pay on demand
all reasonable and documented out-of-pocket costs and expenses of the Agent in
connection with the preparation, execution, delivery, administration,
modification and amendment of this Agreement, the Notes and the other Credit
Documents including, without limitation, the reasonable fees and out-of-pocket
expenses of Bracewell & Giuliani LLP, counsel for the Agent, and with
respect to advising the Agent as to its rights and responsibilities under this
Agreement, and, after the occurrence of an Event of Default, all reasonable out-of-pocket
costs and expenses, if any, of Agent and each Bank (including, without
limitation, reasonable counsel fees and expenses of the Agent and each Bank) in
connection with the enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement, the Notes and the other Credit
Documents.


Section .05.            Binding Effect.  This Agreement shall become effective when it
shall have been executed by the Company, SARL and the Agent, and when the Agent
shall have, as to each Bank, either received a counterpart hereof executed by
such Bank or been notified by such Bank that such Bank has executed it.
Thereafter, this Agreement shall be binding upon and inure to the benefit of
the Borrowers, the Agent and each Bank and their respective successors and
assigns, except that none of the Borrowers shall have the right to assign its
rights or delegate its duties under this Agreement or any interest in this
Agreement without the prior written consent of each Bank.


Section .06.            Bank Assignments and
Participations.


(a)           Assignments.  Any Bank may assign to one or more banks or
other entities all or any portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitments,
the Advances owing to it, and the Notes held by it; provided, however,
that (i) each such assignment shall be of a constant, and not a varying,
percentage of all of such Bank’s rights and obligations under this Agreement,
(ii) the amount of the Commitments and Advances of such Bank being
assigned in the various facilities evidenced hereby pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 or €5,000,000,
as the case may be (or if less, the amount of such Bank’s remaining
Commitments) in the aggregate, (iii) each such assignment shall be to an
Eligible Assignee, (iv) the parties to each such assignment shall execute
and deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with the Notes subject to such assignment,
and (v) each Eligible Assignee (other than the Eligible Assignee of the
Agent) shall pay to the Agent a $3,500 administrative fee.  Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at 



 63
 






 



least three Business Days after the execution thereof,
(A) the assignee thereunder shall be a party hereto for all purposes and,
to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations of
a Bank hereunder and (B) such Bank thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such Bank’s rights and
obligations under this Agreement, such Bank shall cease to be a party hereto).


(b)           Term of Assignments.  By executing and delivering an Assignment and
Acceptance, the Bank thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows:  (i) other than as provided in such
Assignment and Acceptance, such Bank makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency of value of this
Agreement or any other instrument or document furnished pursuant hereto;
(ii) such Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrowers or the
performance or observance by the Borrowers of any of their obligations under this
Agreement or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 4.05 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such Bank or any other Bank and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement;
(v) such assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Bank.


(c)           The Register.  The Agent shall maintain at its address
referred to in Section 10.02 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Banks and the Commitments of, and principal amount of the
Advances owing to, each Bank from time-to-time (the “Register”).  The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrowers, the Agent and the Banks may treat each Person whose name is recorded
in the Register as a Bank hereunder for all purposes of this Agreement.  The Register shall be available for
inspection by the Borrowers or any Bank at any reasonable time and from time-to-time
upon reasonable prior notice. 
Notwithstanding anything herein to the contrary, the Agent shall only be
obliged to accept an Assignment and Acceptance delivered to it by an existing
Bank and a new Bank once it is satisfied it has complied with all necessary “know
your customer” or other similar checks under all applicable laws and
regulations in relation to the transfer to such new Bank.


(d)           Procedures.  Upon its receipt of an Assignment and
Acceptance executed by a Bank and an Eligible Assignee, together with the
Tranche A Notes or Tranche B Notes subject to 



 64
 






 



such assignment, the Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of the
attached Exhibit A, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register, and
(iii) give prompt notice thereof to the Borrowers.  Within five Business Days after its receipt
of such notice, the applicable Borrower, at its own expense, shall execute and
deliver to the Agent in exchange for the surrendered Tranche A Note or Tranche
B Note, a new Tranche A Note or Tranche B Note to the order of such Eligible
Assignee in an amount equal to the Tranche A Commitment and Tranche B
Commitment assumed and Tranche A Advances and Tranche B Advances purchased by
it pursuant to such Assignment and Acceptance and, if such Bank has retained
any Commitments hereunder, a new Tranche A Note or new Tranche B Note to the
order of such Bank in an amount equal to the Tranche A Commitment, Tranche B
Commitment, Tranche A Advances and Tranche B Advances, respectively, retained
by it hereunder.  Such new Notes shall be
dated the effective date of such Assignment and Acceptance and shall otherwise
be in substantially the form of the attached Exhibits B-1 and B-2.


(e)           Participations.  Each Bank may sell participations to one or
more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the Advances owing to it, and the Notes held by
it); provided, however, that (i) such Bank’s obligations
under this Agreement (including, without limitation, its Commitments to the
Borrowers hereunder) shall remain unchanged, (ii) such Bank shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Bank shall remain the holder of any such Notes for
all purposes of this Agreement, (iv) the Borrowers, the Agent and the
other Banks shall continue to deal solely and directly with such Bank in
connection with such Bank’s rights and obligations under this Agreement, and
(v) such Bank shall not require the participant’s consent to any matter
under this Agreement, except for change in the principal amount of the Notes,
reductions in fees or interest,  or
extending the Maturity Date.  Each of the
Borrowers hereby agrees that a Bank may pass through to any of its participants
the same rights under Sections 2.08, 2.09, 2.11(c), and 10.07 to the
extent of their respective participations, provided that no participant
shall be able to collect in excess of amounts payable to the Bank selling to
such participant under such Sections in respect of the interest sold to such
participant or to collect any such amounts from the Borrowers.


(f)            Confidentiality.  Each Bank may furnish any information
concerning the Borrowers and their Subsidiaries in the possession of such Bank
from time-to-time to assignees and participants (including
prospective assignees and participants); provided that, prior to any
such disclosure, the assignee or participant or proposed assignee or
participant shall, in order to preserve the confidentiality of any confidential
information relating to the Borrowers and their Subsidiaries received by it
from such Bank, promptly execute and deliver to the Agent and the Borrowers a
Confidentiality Agreement in the form of the attached Exhibit G.


(g)           Compliance with Securities Laws.  All transfers of any interests in the Notes
shall be in compliance with all applicable Federal and state securities laws.


(h)           “Know Your Customer” Checks.  Notwithstanding anything to the contrary
herein, an assignment will only be effective as among the Agent and the Banks
and against the Borrowers on performance by the Agent of all “know your
customer” or other checks relating to 



 65
 






 



any person that it is required to carry out in
relation to such assignment to a new Bank, the completion of which the Agent
shall promptly notify to the existing Banks and the new Bank.


Section .07.            Indemnification.  Each of the Borrowers shall indemnify the
Agent, the Banks and each affiliate thereof and their respective directors,
officers, employees and agents from, and discharge, release, and hold each of
them harmless against, any and all losses, liabilities, claims or damages to
which any of them may become subject, insofar as such losses, liabilities,
claims or damages arise out of or result from (i) any actual or proposed
use by the Borrowers or any Affiliate of the Borrowers of the proceeds of any
Advance, (ii) any breach by the Borrowers of any provision of this
Agreement or any other Credit Document, (iii) any investigation,
litigation or other proceeding (including any threatened investigation or
proceeding) relating to the foregoing brought by any Person other than a
Borrower, or (iv) any Environmental Claim or requirement of Environmental
Laws concerning or relating to the present or previously-owned or
operated properties, or the operations or business, of the Borrowers or any of
their Subsidiaries, and each of the Borrowers shall reimburse the Agent and
each Bank, and each affiliate thereof and their respective directors, officers,
employees and agents, upon demand for any reasonable out-of-pocket expenses
(including legal fees) incurred in connection with any such investigation,
litigation or other proceeding; and expressly including any such losses,
liabilities, claims, damages, or expense incurred by reason of the Person being
indemnified’s own negligence, but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence, bad
faith or willful misconduct of the Person to be indemnified, or in the case of
clause (iv) above, caused by the affirmative act of the Agent or such Bank.


Section .08.            Execution in Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.  This Agreement may be executed and delivered
by telecopier.


Section .09.            Survival of Representations, etc.  All representations and warranties contained
in this Agreement or made in writing by or on behalf of the Borrower in
connection herewith shall survive the execution and delivery of this Agreement
and the Credit Documents, the making of the Advances and any investigation made
by or on behalf of the Banks, none of which investigations shall diminish any
Bank’s right to rely on such representations and warranties.  All obligations of the Borrower provided for
in Sections 2.08, 2.09, 2.11(c), and 10.07 shall survive any termination
of this Agreement and repayment in full of the Obligations.


Section .10.            Severability.  In case one or more provisions of this
Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality
and enforceability of the remaining provisions contained herein or therein
shall not be affected or impaired thereby.


Section .11.            Usury Not Intended.  It is the intent of the Borrowers and each
Bank in the execution and performance of this Agreement and the other Credit
Documents to contract in strict compliance with applicable usury laws,
including conflicts of law concepts, governing the 



 66
 






 



Advances of each Bank including such applicable laws
of the State of New York and the United States of America from time-to-time
in effect.  In furtherance thereof, the
Banks and the Borrowers stipulate and agree that none of the terms and
provisions contained in this Agreement or the other Credit Documents shall ever
be construed to create a contract to pay, as consideration for the use, forbearance
or detention of money, interest at a rate in excess of the Maximum Rate and
that for purposes hereof “interest” shall include the aggregate of all charges
which constitute interest under such laws that are contracted for, charged or
received under this Agreement; and in the event that, notwithstanding the
foregoing, under any circumstances the aggregate amounts taken, reserved,
charged, received or paid on the Advances, include amounts which by applicable
law are deemed interest which would exceed the Maximum Rate, then such excess
shall be deemed to be a mistake and each Bank receiving same shall credit the
same on the principal of its Notes (or if such Notes shall have been paid in
full, refund said excess to the Borrowers). 
In the event that the maturity of the Notes are accelerated by reason of
any election of the holder thereof resulting from any Event of Default under
this Agreement or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the Maximum Rate and excess interest, if any, provided for in this
Agreement or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited on the
applicable Notes (or, if the applicable Notes shall have been paid in full,
refunded to the Borrowers of such interest). 
In determining whether or not the interest paid or payable under any
specific contingencies exceeds the Maximum Rate, the Borrowers and the Banks
shall to the maximum extent permitted under applicable law amortize, prorate,
allocate and spread in equal parts during the period of the full stated term of
the Notes all amounts considered to be interest under applicable law at any
time contracted for, charged, received or reserved in connection with the
Obligations.  The provisions of this
Section shall control over all other provisions of this Agreement or the other
Credit Documents which may be in apparent conflict herewith.


Section .12.            Global Effective Rate.  Because the interest rates applicable to
certain Types of Advances are variable, it is not possible to calculate the “taux effectif global” of the credit facility made available
to SARL and SME in accordance with Articles L.313-1 and L.313-2 of the French “Code de la Consommation”. 
Each of SARL and SME hereby acknowledges that the Agent has notified
SARL and SME of the effective all-in cost of the credit facility pursuant to a “taux effectif global” letter delivered on or before the date
hereof.


Section .13.            Judgment Currency.  The obligations of the Borrowers hereunder
and under the Notes to make payments in Dollars or in Euros (the “Obligation
Currency”) shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any currency other than
the Obligation Currency except to the extent to which such tender or recovery
shall result in the effective receipt by the Banks of the full amount of the
Obligation Currency expressed to be payable hereunder and under the Notes, and
accordingly such obligations of the Borrowers shall be enforceable as an
alternate or additional cause of action for the purpose of recovery in the
Obligation Currency of the amount (if any) by which such effective receipt
shall fall short of the full amount of the Obligation Currency expressed to be
payable hereunder and under the Notes and shall not be affected by judgment
being obtained for any other sums due under this Agreement and the Notes.


Section .14.            Governing Law; Consent to
Jurisdiction.



 67
 






 



(a)           THIS AGREEMENT AND EACH OF THE OTHER
CREDIT DOCUMENTS SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF.


(b)           Any litigation based hereon, or
arising out of, under, or in connection with, this Agreement or any other
Credit Document, or any course of conduct, course of dealing, statements
(whether oral or written) or actions of the Borrowers, the Agent or the Banks
relating to this Agreement or any other Credit Document may be brought and
maintained in the courts of the State of New York sitting in New York City or
in the United States District Court for the Southern District of New York.  Each of the Borrowers, the Agent and the
Banks hereby expressly and irrevocably submits to the non-exclusive
jurisdiction of the courts of the State of New York sitting in New York City
and the United States District Court for the Southern District of New York for
the purpose of any such litigation as set forth above and irrevocably agrees to
be bound by any judgment rendered thereby in connection with such
litigation.  To the fullest extent
permitted by applicable Legal Requirements, each of the Borrowers, the Agent
and the Banks further irrevocably consents to the service of process, by
registered mail, postage prepaid, or by personal service within or without the
State of New York.  Each of the
Borrowers, the Agent and the Banks hereby expressly and irrevocably waives, to
the fullest extent permitted by Legal Requirements, any objection which it may
have or hereafter may have to the laying of venue of any such litigation
brought in any such court referred to above and any claim that any such
litigation has been brought in an inconvenient forum.  To the extent that any of the Borrowers, the
Agent or the Banks has or hereafter may acquire any immunity from jurisdiction
of any court or from any legal process (whether through service of notice, attachment
prior to judgment, attachment in aid of execution or otherwise) with respect to
itself or its property, each of the Borrowers, the Agent and the Banks hereby
irrevocably waives, to the fullest extent permitted by applicable Legal
Requirements, such immunity in respect of its obligations under this Agreement
and the other Credit Documents.


Section .15.            Confidentiality.  All information and documents concerning the
Borrowers or their respective Subsidiaries supplied by the Borrowers to the
Banks pursuant to this Agreement which are not otherwise in the public domain
shall be held in confidence by the Banks and the Banks shall not disclose such
information and documents to any other Person, except that the Borrowers hereby
authorize the Banks to disclose any information obtained pursuant to this
Agreement (i) to any independent auditors of a Bank, (ii) to any
Person who is an Eligible Assignee and executes and delivers a confidentiality
agreement to the Company and the Agents that is otherwise consistent with this
Section 10.16 (solely for the purpose of evaluating such proposed
participation or assignment) whereby such Eligible Assignee agrees, for the
benefit of the Borrowers, in writing, to be bound by the same confidentiality
obligations as those imposed on the Banks hereunder, and, in the event that
such financial institution does not enter into any proposed participation, such
financial institution agrees to return to the furnishing Bank all information
furnished to it hereunder, (iii) to an Affiliate of the Bank making the
disclosure and to any employees of such Bank or such Affiliate on a need to
know basis, and then only to the extent that such Affiliate and employees have
agreed for the benefit of the Borrowers to be bound to the foregoing
confidentiality provisions, and (iv) to all appropriate governmental
regulatory authorities to the extent requested or subpoenaed in accordance with
all applicable notices and procedures, but only to the extent permitted by
applicable laws and 



 68
 






 



regulations, including those applying to classified
material.  Upon receipt of a request,
demand, or subpoena to disclose any information to any Person other than
governmental bank examiners and independent auditors of a Bank, the affected
Bank will promptly notify, to the extent not prohibited by applicable law,
regulations, or court order, the Borrowers and the Agent of such request.


 



 69














 


 


EXECUTED as of the
31st day of July, 2006.


	
  

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Wayne H. Deitrich

  
	
   

  	
   

  	
  Wayne H. Deitrich

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  SCHWEITZER-MAUDUIT FRANCE
  S.A.R.L.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jean-Yves Klein

  
	
   

  	
   

  	
  Jean-Yves Klein

  
	
   

  	
   

  	
  General Manager Finance and

  
	
   

  	
   

  	
  Administration

  
	
   

  	
   

  	
   

  
	
   

  	
  SCHWEITZER-MAUDUIT ENTREPRISE S.A.S

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


 


 


 


 


Signature Page to
Credit Agreement

Schweitzer-Mauduit International, Inc.









 



 


 


	
  

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  SOCIÉTÉ GÉNÉRALE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anne-Marie Dumortier

  
	
   

  	
  Name:

  	
  Anne-Marie Dumortier

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  BANKS:

  
	
   

  	
   

  	
   

  
	
  TRANCHE A COMMITMENT

  	
  SOCIÉTÉ GÉNÉRALE

  
	
  $15,090,689.67

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TRANCHE B COMMITMENT

  	
  By:

  	
  /s/ Anne-Marie Dumortier

  
	
  €20,613,496.93

  	
  Name:

  	
  Anne-Marie Dumortier

  
	
   

  	
  Title:

  	
  Director

  



 


 


 


 


 


Signature Page to
Credit Agreement

Schweitzer-Mauduit International, Inc.


 









 



 


	
  TRANCHE A COMMITMENT

  	
  NATEXIS BANQUES POPULAIRES

  
	
  $13,294,178.99

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TRANCHE B COMMITMENT

  	
  By:

  	
  /s/ Jacques Rouquette

  
	
  €18,159,509.20

  	
  Name:

  	
  Jacques Rouquette

  
	
   

  	
  Title:

  	
  Regional Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Didier Barbes

  
	
   

  	
  Name:

  	
  Didier Barbes

  
	
   

  	
  Title:

  	
   

  



 


 


 


 


 


Signature Page to
Credit Agreement

Schweitzer-Mauduit International, Inc.


 









 



 


	
  TRANCHE
  A COMMITMENT

  	
  SUNTRUST BANK

  
	
  $36,433,752.00

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TRANCHE B COMMITMENT

  	
  By:

  	
  /s/ Stacy M. Lewis

  
	
  €0

  	
  Name:

  	
  Stacy M. Lewis

  
	
   

  	
  Title:

  	
  Vice President

  



 


 


 


 


 


Signature Page to
Credit Agreement

Schweitzer-Mauduit International, Inc.


 









 



 


	
  TRANCHE A COMMITMENT

  	
  CRÉDIT LYONNAIS

  
	
  $9,341,855.51

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TRANCHE B COMMITMENT

  	
  By:

  	
  /s/ Eric Corbisier

  
	
  €12,760,736.20

  	
  Name:

  	
  Eric Corbisier

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


 


 


 


 


Signature Page to
Credit Agreement

Schweitzer-Mauduit International, Inc.


 









 



 


	
  TRANCHE A COMMITMENT

  	
  JPMORGAN CHASE BANK, N.A.

  
	
  $9,341,855.51

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TRANCHE B COMMITMENT

  	
  By:

  	
  /s/ Robert P. Carswell

  
	
  €12,760,736.20

  	
  Name: 

  	
  Robert P. Carswell

  
	
   

  	
  Title:

  	
  Vice President

  



 


 


 


 


 


Signature Page to
Credit Agreement

Schweitzer-Mauduit International, Inc.


 









 



 


	
  TRANCHE A COMMITMENT

  	
  BNP PARIBAS

  
	
  $7,186,042.70

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TRANCHE B COMMITMENT

  	
  By:

  	
  /s/ Robert Sabourault

  
	
  €9,815,950.92

  	
  Name:

  	
  Robert Sabourault

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jean Euler Bleher

  
	
   

  	
  Name:

  	
  Jean Euler Bleher

  
	
   

  	
  Title:

  	
   

  



 


 


 


 


 


Signature Page to
Credit Agreement

Schweitzer-Mauduit International, Inc.


 









 



 


	
  TRANCHE A COMMITMENT

  	
  BANK OF CHINA LIMITED PARIS BRANCH

  
	
  $4,311,625.62

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  TRANCHE B COMMITMENT

  	
  By:

  	
  /s/ Phan Nhay

  
	
  €5,889,570.55

  	
  Name:

  	
  Phan Nhay

  
	
   

  	
  Title:

  	
  General Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


 


 


 


 


Signature Page to
Credit Agreement

Schweitzer-Mauduit International, Inc.