Document:

Exhibit 10.1

WORKING CAPITAL CREDIT
AGREEMENT

dated as of

July 18, 2006

among

PLIANT CORPORATION,

as Parent Borrower,

The Subsidiary Borrowers
Party Hereto,

The Lenders Party Hereto,

and

MERRILL LYNCH BANK
USA,

as Administrative Agent

* * *

MERRILL LYNCH COMMERCIAL FINANCE CORP.,

as Sole Lead Arranger and
Book Manager

 

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  Definitions

  	
  1

  
	
  Section 1.01.

  	
  Defined Terms

  	
  1

  
	
  Section 1.02.

  	
  Classification of Loans
  and Borrowings

  	
  47

  
	
  Section 1.03.

  	
  Terms Generally

  	
  47

  
	
  Section 1.04.

  	
  Accounting Terms; GAAP

  	
  48

  
	
  ARTICLE II

  	
  The Credits

  	
  48

  
	
  Section 2.01.

  	
  Commitments

  	
  48

  
	
  Section 2.02.

  	
  Loans and Borrowings

  	
  50

  
	
  Section 2.03.

  	
  Requests for Borrowings

  	
  50

  
	
  Section 2.04.

  	
  Swingline Loans

  	
  51

  
	
  Section 2.05.

  	
  Letters of Credit

  	
  52

  
	
  Section 2.06.

  	
  Funding of Borrowings

  	
  57

  
	
  Section 2.07.

  	
  Interest Elections

  	
  57

  
	
  Section 2.08.

  	
  Termination and
  Reduction of Commitments

  	
  58

  
	
  Section 2.09.

  	
  Repayment of Loans;
  Evidence of Debt

  	
  59

  
	
  Section 2.10.

  	
  Prepayment of Loans

  	
  60

  
	
  Section 2.11.

  	
  Fees

  	
  64

  
	
  Section 2.12.

  	
  Interest

  	
  65

  
	
  Section 2.13.

  	
  Alternate Rate of
  Interest

  	
  66

  
	
  Section 2.14.

  	
  Increased Costs

  	
  66

  
	
  Section 2.15.

  	
  Break Funding Payments

  	
  67

  
	
  Section 2.16.

  	
  Taxes

  	
  68

  
	
  Section 2.17.

  	
  Payments Generally; Pro
  Rata Treatment; Sharing of Setoffs

  	
  69

  
	
  Section 2.18.

  	
  Mitigation Obligations

  	
  74

  
	
  Section 2.19.

  	
  Protective Advances

  	
  75

  
	
  ARTICLE III

  	
  Representations and
  Warranties

  	
  75

  
	
  Section 3.01.

  	
  Organization; Powers

  	
  75

  
	
  Section 3.02.

  	
  Authorization;
  Enforceability

  	
  76

  
	
  Section 3.03.

  	
  Governmental Approvals;
  No Conflicts

  	
  76

  
	
  Section 3.04.

  	
  Financial Condition; No
  Material Adverse Change

  	
  76

  
					

 

 i
 

 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 3.05.

  	
  Properties

  	
  77

  
	
  Section 3.06.

  	
  Litigation and
  Environmental Matters

  	
  77

  
	
  Section 3.07.

  	
  Compliance with Laws
  and Agreements

  	
  78

  
	
  Section 3.08.

  	
  Investment Company
  Status

  	
  78

  
	
  Section 3.09.

  	
  Taxes

  	
  78

  
	
  Section 3.10.

  	
  ERISA

  	
  78

  
	
  Section 3.11.

  	
  Disclosure

  	
  78

  
	
  Section 3.12.

  	
  Subsidiaries; Loan
  Party Information

  	
  79

  
	
  Section 3.13.

  	
  Insurance

  	
  79

  
	
  Section 3.14.

  	
  Labor Matters

  	
  79

  
	
  Section 3.15.

  	
  Solvency

  	
  79

  
	
  Section 3.16.

  	
  Security Documents

  	
  80

  
	
  Section 3.17.

  	
  Federal Reserve
  Regulations

  	
  81

  
	
  Section 3.18.

  	
  Senior Secured
  Obligations

  	
  81

  
	
  Section 3.19.

  	
  Related Names

  	
  81

  
	
  Section 3.20.

  	
  Permanent Establishment
  in Canada

  	
  81

  
	
  Section 3.21.

  	
  Canadian Pension Plans

  	
  82

  
	
  ARTICLE IV

  	
  Conditions

  	
  75

  
	
  Section 4.01.

  	
  Effective Date

  	
  82

  
	
  Section 4.02.

  	
  Each Credit Event

  	
  88

  
	
  Section 4.03.

  	
  Australian Effective
  Date

  	
  89

  
	
  ARTICLE V

  	
  Affirmative Covenants

  	
  90

  
	
  Section 5.01.

  	
  Financial Statements
  and Other Information

  	
  90

  
	
  Section 5.02.

  	
  Notices of Material
  Events

  	
  93

  
	
  Section 5.03.

  	
  Information Regarding
  Collateral

  	
  94

  
	
  Section 5.04.

  	
  Existence; Conduct of
  Business

  	
  94

  
	
  Section 5.05.

  	
  Payment of Obligations;
  Compliance with Leases

  	
  95

  
	
  Section 5.06.

  	
  Maintenance of
  Properties

  	
  95

  
	
  Section 5.07.

  	
  Insurance

  	
  95

  
					

 

 ii
 

 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 5.08.

  	
  Casualty and Condemnation

  	
  96

  
	
  Section 5.09.

  	
  Books and Records;
  Inspection and Audit Rights

  	
  96

  
	
  Section 5.10.

  	
  Compliance with Laws

  	
  97

  
	
  Section 5.11.

  	
  Use of Proceeds and
  Letters of Credit

  	
  97

  
	
  Section 5.12.

  	
  Additional Subsidiaries

  	
  97

  
	
  Section 5.13.

  	
  Further Assurances

  	
  98

  
	
  Section 5.14.

  	
  Supplemental Disclosure

  	
  99

  
	
  Section 5.15.

  	
  Intellectual Property

  	
  99

  
	
  Section 5.16.

  	
  Landlord Lien Waivers,
  Mortgagee Agreements and Bailee Letters

  	
  99

  
	
  Section 5.17.

  	
  Depository Banks

  	
  99

  
	
  Section 5.18.

  	
  ERISA

  	
  101

  
	
  Section 5.19.

  	
  Post-Closing Conditions

  	
  101

  
	
  Section 5.20.

  	
  Canadian Pension Plans

  	
  101

  
	
  ARTICLE VI

  	
  Negative Covenants

  	
  102

  
	
  Section 6.01.

  	
  Indebtedness

  	
  102

  
	
  Section 6.02.

  	
  Certain Equity
  Securities

  	
  103

  
	
  Section 6.03.

  	
  Liens

  	
  103

  
	
  Section 6.04.

  	
  Fundamental Changes

  	
  105

  
	
  Section 6.05.

  	
  Investments, Loans,
  Advances, Guarantees and Acquisitions

  	
  106

  
	
  Section 6.06.

  	
  Asset Sales

  	
  107

  
	
  Section 6.07.

  	
  Sale and Lease-Back
  Transactions

  	
  109

  
	
  Section 6.08.

  	
  Swap Agreements

  	
  109

  
	
  Section 6.09.

  	
  Restricted Payments;
  Certain Payments of Indebtedness

  	
  109

  
	
  Section 6.10.

  	
  Transactions with
  Affiliates

  	
  110

  
	
  Section 6.11.

  	
  Restrictive Agreements

  	
  110

  
	
  Section 6.12.

  	
  Amendment of Material
  Documents

  	
  111

  
	
  Section 6.13.

  	
  Designated Senior Debt

  	
  111

  
	
  Section 6.14.

  	
  Cash Held by Foreign
  Loan Parties

  	
  112

  
					

 

 iii
 

 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 6.15.

  	
  ERISA

  	
  112

  
	
  Section 6.16.

  	
  Cancellation of
  Indebtedness

  	
  112

  
	
  Section 6.17.

  	
  Change in Fiscal Year;
  Accounting Policies

  	
  112

  
	
  Section 6.18.

  	
  Financial Covenants

  	
  112

  
	
  Section 6.19.

  	
  [Intentionally Omitted]

  	
  112

  
	
  Section 6.20.

  	
  Pliant Investment, Inc.
  and Alliant Company LLC

  	
  113

  
	
  ARTICLE VII

  	
  Events of Default

  	
  113

  
	
  ARTICLE VIII

  	
  The Administrative
  Agent

  	
  116

  
	
  Section 8.01.

  	
  Authorization, Action,
  Etc

  	
  116

  
	
  Section 8.02.

  	
  Declaration of Trust
  (Treuhand) and Appointment as Administrator

  	
  118

  
	
  Section 8.03.

  	
  Quebec Security

  	
  118

  
	
  ARTICLE IX

  	
  Miscellaneous

  	
  119

  
	
  Section 9.01.

  	
  Notices

  	
  119

  
	
  Section 9.02.

  	
  Waivers; Amendments

  	
  120

  
	
  Section 9.03.

  	
  Expenses; Indemnity;
  Damage Waiver; Joint and Several Obligations

  	
  122

  
	
  Section 9.04.

  	
  Successors and Assigns

  	
  124

  
	
  Section 9.05.

  	
  Survival

  	
  127

  
	
  Section 9.06.

  	
  Counterparts;
  Integration; Effectiveness

  	
  128

  
	
  Section 9.07.

  	
  Severability

  	
  128

  
	
  Section 9.08.

  	
  Right of Setoff

  	
  128

  
	
  Section 9.09.

  	
  Governing Law;
  Jurisdiction; Consent to Service of Process

  	
  128

  
	
  Section 9.10.

  	
  WAIVER OF JURY TRIAL

  	
  129

  
	
  Section 9.11.

  	
  Headings

  	
  130

  
	
  Section 9.12.

  	
  Confidentiality

  	
  130

  
	
  Section 9.13.

  	
  Conversion of
  Currencies

  	
  130

  
	
  Section 9.14.

  	
  Interest Rate
  Limitation

  	
  131

  
	
  Section 9.15.

  	
  Parallel Obligations

  	
  131

  
					

 

 iv
 

 

 

SCHEDULES:

	
  Schedule 1.01(a)

  	
   

  	
  Mortgaged Properties

  	 

	
  Schedule 1.01(b)

  	
   

  	
  Existing Letters of Credit

  	 

	
  Schedule 1.01(c)

  	
   

  	
  Borrower Account

  	 

	
  Schedule 2.01(a)

  	
   

  	
  Commitments

  	 

	
  Schedule 3.05

  	
   

  	
  Owned or Leased Property

  	 

	
  Schedule 3.12(a)

  	
   

  	
  Subsidiaries

  	 

	
  Schedule 3.12(b)

  	
   

  	
  Loan Party Information

  	 

	
  Schedule 3.13

  	
   

  	
  Insurance

  	 

	
  Schedule 3.16(d)

  	
   

  	
  Mortgage Filing Offices

  	 

	
  Schedule 5.07

  	
   

  	
  Insurance Levels

  	 

	
  Schedule 5.17

  	
   

  	
  Deposit Accounts

  	 

	
  Schedule 5.19

  	
   

  	
  Post-Closing Conditions

  	 

	
  Schedule 6.01

  	
   

  	
  Existing Indebtedness

  	 

	
  Schedule 6.03

  	
   

  	
  Existing Liens

  	 

	
  Schedule 6.05(b)

  	
   

  	
  Existing Investments

  	 

	
  Schedule 6.06

  	
   

  	
  Asset Sales

  	 

	
  Schedule 6.10

  	
   

  	
  Affiliate Transactions

  	 

	
  Schedule 6.11

  	
   

  	
  Existing Restrictions

  	 

	
   

  	
   

  	
   

  	 

	
  EXHIBITS:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	 

	
  Exhibit A

  	
   

  	
  Form of Assignment and Assumption

  
	
  Exhibit B-1

  	
   

  	
  Form of Domestic Guarantee Agreement

  
	
  Exhibit B-2

  	
   

  	
  Form of Foreign Guarantee Agreement

  
	
  Exhibit C-1

  	
   

  	
  Form of Domestic Pledge Agreement

  
	
  Exhibit C-2

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit C-3a

  	
   

  	
  Form of Canadian Pledge Agreement (Pliant
  Corporation)

  
	
  Exhibit C-3b

  	
   

  	
  Form of Canadian Pledge Agreement (Uniplast
  Holdings, Inc.)

  
	
  Exhibit C-4

  	
   

  	
  Form of German Pledge Agreement

  
	
  Exhibit C-5

  	
   

  	
  Form of Mexican Pledge Agreement

  
	
  Exhibit D-1

  	
   

  	
  Form of Domestic Security Agreement

  
	
  Exhibit D-2

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit D-3a

  	
   

  	
  Form of Canadian Security Agreement (Domestic)

  
	
  Exhibit D-3b

  	
   

  	
  Form of Canadian Security Agreement (Canadian)

  
	
  Exhibit D-4

  	
   

  	
  Form of German Global Assignment Agreement

  
	
  Exhibit D-5

  	
   

  	
  Form of Mexican Security Agreement

  
	
  Exhibit E

  	
   

  	
  Form of Borrowing Base Certificate

  
	
  Exhibit F

  	
   

  	
  Form of Perfection Certificate

  
	
  Exhibit G

  	
   

  	
  Form of Borrowing Request

  

 

 v
 

 

 

	
  Exhibit H

  	
   

  	
  Form of Compliance Certificate

  
	
  Exhibit I

  	
   

  	
  Form of Letter of Credit Request

  
	
  Exhibit J

  	
   

  	
  Form of Swingline Loan Request

  
	
  Exhibit K

  	
   

  	
  Form of Revolving Credit Note

  

 

 vi

WORKING CAPITAL CREDIT AGREEMENT, dated as of July 18,
2006 (this “Agreement”), among PLIANT CORPORATION, a Delaware
corporation (the “Parent Borrower”), the Subsidiary Borrowers party
hereto, the Lenders party hereto and MERRILL LYNCH BANK USA, as Administrative
Agent (in such capacity, the “Administrative Agent”).

RECITALS

WHEREAS, the Borrowers have requested that the Lenders
make available for the purposes specified in this Agreement a revolving credit
facility; and

WHEREAS, the Lenders are willing to make available to
the Borrowers such revolving credit facility upon the terms and subject to the
conditions set forth herein;

NOW THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01.  Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:

“ABR”, when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are bearing interest at a rate determined by reference to the Alternate Base
Rate.

“Account” shall have the meaning assigned to
such term in the New York Uniform Commercial Code and shall also include any
right to payment for goods sold or leased, or for services rendered, whether or
not earned by performance.

“Account Debtor” means any Person who is, or
may be, obligated to any Loan Party under, with respect to or on account of an
Account.

“Adjusted Eligible Accounts Receivable” means,
on any date, the amount of Eligible Accounts Receivable on such date, minus
the Dilution Reserve on such date.

“Adjusted Eligible Finished Goods” means, on
any date, the amount of Eligible Finished Goods on such date, minus the
Inventory Reserves with respect to such Eligible Finished Goods on such date.

“Adjusted Eligible Raw Materials” means, on any
date, the amount of Eligible Raw Materials on such date, minus the
Inventory Reserves with respect to such Eligible Raw Materials on such date.

 

“Adjusted Eligible Work in Process” means, on
any date, the amount of Eligible Work in Process on such date, minus the
Inventory Reserves with respect to such Eligible Work in Process on such date.

“Administrative Agent” has the meaning assigned
to such term in the preamble hereto.

“Administrative Questionnaire” means an
Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affiliate” means, with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
the Person specified.

“Agreement” has the meaning assigned to such
term in the preamble hereto.

“Alternate Base Rate” means, for any day, a rate
per annum equal to the greater of (a) the Prime Rate in effect on such day
and (b) the Federal Funds Effective Rate in effect on such day plus 1⁄2
of 1%.  Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

“Applicable Percentage” means, (a) with respect
to any Domestic Lender, the percentage of the total amount of the Commitments
represented by such Domestic Lender’s Commitment, (b) with respect to any
Australian Lender, the percentage of the total amount of the Australian
Revolving Exposure represented by such Australian Lender’s Australian Revolving
Exposure, (c) with respect to any Canadian Lender, the percentage of the total
amount of the Canadian Revolving Exposure represented by such Canadian Lender’s
Canadian Revolving Exposure, (d) with respect to any German Lender, the
percentage of the total amount of the German Revolving Exposure represented by
such German Lender’s German Revolving Exposure, and (e) with respect to any
Mexican Lender, the percentage of the total amount of the Mexican Revolving
Exposure represented by such Mexican Lender’s Mexican Revolving Exposure.  If the Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the
Commitments most recently in effect, giving effect to any assignments.  If any of the Australian Revolving Exposure,
Canadian Revolving Exposure, German Revolving Exposure or Mexican Revolving
Exposure is $0, the Applicable Percentage with respect to any Australian
Lender, Canadian Lender, German Lender or Mexican Lender shall be determined
based upon the percentage of the total amount of the Commitments represented by
such Australian Lender’s, Canadian Lender’s, German Lender’s or Mexican Lender’s
Commitment, as applicable.

“Applicable Rate” means, as of each date of
determination:

(a)           with
respect to any ABR Loan or Eurodollar Loan (other than any German Revolving
Loan), the applicable rate per annum set forth below under the caption “ABR
Spread” or “Eurodollar Spread”, as the case may be, based upon the Average
Revolving Exposure for such day (calculated as of the end of such day):

 2
 

 

 

	
  Average Revolving Exposure

  	
   

  	
  ABR Spread

  	
   

  	
  Eurodollar Spread

  	
   

  
	
  Category 1

  Greater than 75% of Available Credit

  	
   

  	
  2.00

  	
  %

  	
  3.00

  	
  %

  
	
  Category 2

  Less than or equal to 75% of Available Credit

  	
   

  	
  1.75

  	
  %

  	
  2.75

  	
  %

  

 

Each date of determination for the Applicable Rate
shall be on each Interest Payment Date. 
Changes in the Applicable Rate resulting from a change in the Average
Revolving Exposure on any date of determination shall become effective as to
all ABR Loans and Eurodollar Loans (other than any German Revolving Loans) from
and including the first day following such date of determination.  Notwithstanding the foregoing, the Applicable
Rate with respect to any ABR Loan or Eurodollar Loan (other than any German
Revolving Loan) will be determined by reference to Category 1 (i) at any
time that an Event of Default has occurred and is continuing or (ii) if
the Parent Borrower fails to deliver any Borrowing Base Certificate required to
be delivered by it pursuant to Section 5.01(f), during the period from the
expiration of the time for delivery thereof until the Parent Borrower delivers
such Borrowing Base Certificate.

(b)           with
respect to any German Revolving Loan, (i) 5.00% per annum in the case of ABR
Loans and (ii) 6.00% per annum in the case of Eurodollar Loans.

“Approved Fund” means any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in
bank loans and similar extensions of credit in the ordinary course of its
business and that is administered, managed or controlled by (a) a Lender, (b)
an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers, manages or controls a Lender.

“Arranger” means Merrill Lynch Commercial
Finance Corp., as sole lead arranger and book manager for the Loans.

“Asset Disposition” means any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition of assets
or property or series of related dispositions of assets or property (excluding
any such disposition permitted by Section 6.06(a), (b), (c) and (g)) that
yields gross proceeds to the Parent Borrower or any of its Subsidiaries in
excess of $1,000,000 in the aggregate for all such dispositions.

“Assignment and Assumption” means an assignment
and assumption entered into by a Lender and an assignee (with the consent of
any party whose consent is required by Section 9.04), and accepted by
the Administrative Agent, in the form of Exhibit A or any other
form approved by the Administrative Agent.

“Australian Availability Period” means the
period from and including the Australian Effective Date to but excluding the
earlier of the Maturity Date and the date of termination of the Commitments.

“Australian Borrowing Base” means, at any time
of determination, an amount equal to the sum, without duplication of:

 3
 

 

(a)           (i) 95% of each Australian Loan Party’s
Adjusted Eligible Accounts Receivable, plus (ii) 85% of each
Australian Loan Party’s Adjusted Eligible Finished Goods, plus
(iii) 55% of each Australian Loan Party’s Adjusted Eligible Work in
Process, plus (iv) 55% of each Australian Loan Party’s Adjusted Eligible
Raw Materials, minus

(b)           the Rent Reserve with respect to each
Australian Loan Party, minus

(c)           the Priority Payables Reserve with
respect to each Australian Loan Party, minus

(d)           the Secured Obligations Reserve with
respect to each Australian Loan Party, minus

(e)           any Reserves with respect to each
Australian Loan Party.

The Australian Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent pursuant to this Agreement.  Standards of eligibility and reserves and
advance rates of the Australian Borrowing Base may be revised and adjusted from
time to time solely at the commercially reasonable discretion of the
Administrative Agent, with any changes in such standards to be effective
immediately after delivery of notice thereof to the Parent Borrower.  For purposes of calculating the Australian
Borrowing Base on any date, all amounts reflected or outstanding in Australian
Dollars shall be translated into dollars at the exchange rate in effect on such
date, as determined in good faith by the Parent Borrower.

“Australian Dollar” or “A$” refers to
the lawful money of Australia.

“Australian Effective Date” means the date on
which the conditions specified in Section 4.03 are satisfied.

 “Australian
Lender” means each Domestic Lender or any Affiliate of a Domestic Lender
designated by such Domestic Lender to the Parent Borrower as an “Australian
Lender”.  The Australian Lender on the
Effective Date shall be Merrill Lynch International (Australia) Limited.

“Australian Loan Party” means the Australian
Subsidiary Borrower and any other Loan Party organized under the laws of
Australia or any state or province thereof.

“Australian Pledge Agreement” means an
Australian Pledge Agreement, in form and substance reasonably satisfactory to
the Parent Borrower and the Administrative Agent, among the Parent Borrower,
the Australian Subsidiary Borrower and the Administrative Agent, pursuant to
which the Parent Borrower will pledge 65% of the outstanding Equity Interests
of the Australian Subsidiary Borrower in favor of the Administrative Agent, for
the ratable benefit of the Secured Parties, as security for the Obligations.

“Australian Revolving Exposure” means, with
respect to any Australian Lender at any time, the sum of the outstanding
principal amount of such Australian Lender’s Australian Revolving Loans.

 4
 

 

“Australian Revolving Loan” means a Loan made
by an Australian Lender pursuant to Section 2.01(b).  Each Australian Revolving Loan shall be a
Eurodollar Loan or an ABR Loan.

“Australian Security Agreement” means an
Australian Security Agreement, in form and substance reasonably satisfactory to
the Parent Borrower and the Administrative Agent, among the Australian
Subsidiary Borrower and the Administrative Agent, pursuant to which the
Australian Subsidiary Borrower will grant liens on its Foreign Working Capital
Collateral in favor of Merrill Lynch Bank USA, for the ratable benefit of the
Foreign Secured Parties, as security for the Foreign Obligations, and each
other security agreement or other instrument or document executed and delivered
by any Australian Loan Party to secure any of the Foreign Obligations.

“Australian Sublimit” means $5,000,000.

“Australian Subsidiary Borrower” means Pliant
Corporation Pty Ltd., a company organized under the laws of Australia (ABN 36
055 367 925).

“Availability Amount” means, at any time, an
amount equal to (a) the lesser of (i) the total amount of the
Commitments at such time and (ii) the Borrowing Base in effect at such
time minus (b) the total Revolving Exposure at such time.

“Available Commitments” means, at any time, (a)
the total amount of the Commitments at such time minus (b) the aggregate
Fixed Asset Revolving Exposure at such time.

“Available Credit” means, at any time, an
amount equal to the lesser of (a) the total amount of the Available
Commitments at such time and (b) the Borrowing Base in effect at such
time.

“Average Revolving Exposure” means, for any period,
the average daily Revolving Exposure during such period.

“Bailee Letter” means a written agreement
reasonably acceptable to the Administrative Agent, pursuant to which a bailee
of Inventory of any Loan Party agrees to hold such Inventory for the benefit of
the Administrative Agent, to waive or subordinate its rights and claims as
bailee in such Inventory, including warehouseman’s liens, processor’s liens,
rights of levy and distraint for rent, grant access to the Administrative Agent
for the repossession and sale of such Inventory, and make other agreements
relative thereto.

“Bankruptcy Code” means Chapter 11 of Title 11
of the United States Code, 11 U.S.C. 101 et seq.

“Bankruptcy Court” means the United States
Bankruptcy Court for the District of Delaware.

 5
 

 

“Banking Services” means overdrafts and related
liabilities owed to any of the Lenders (or any Affiliates thereof) arising from
treasury, depositary and cash management services or in connection with any
automated clearinghouse transfers of funds.

“Banking Services Obligations” of any Loan
Party means all monetary obligations of such Loan Party in respect of Banking
Services.

“Board” means the Board of Governors of the
Federal Reserve System of the United States of America.

“Borrower” means the Parent Borrower or any
Subsidiary Borrower.

“Borrower Account” means, with respect to each
Borrower, such Borrower’s account set forth on Schedule 1.01(c), as such
Schedule may be amended from time to time on five Business Days’ prior written
notice from the Parent Borrower to the Administrative Agent.

“Borrowing” means (a) Loans of the same
Class and Type made, converted or continued on the same date and, in the case
of Eurodollar Loans, as to which a single Interest Period is in effect,
(b) a Swingline Loan and (c) a Protective Advance.

“Borrowing Base” means, at any time of
determination, an amount equal to the sum, without duplication of the Domestic
Borrowing Base, the Australian Borrowing Base, the Canadian Borrowing Base, the
German Borrowing Base and the Mexican Borrowing Base.

“Borrowing Base Certificate” means a
certificate substantially in the form of Exhibit E (with such
changes therein as may be required by the Administrative Agent, to reflect the
components of, and reserves against, the Borrowing Base as provided for
hereunder from time to time), executed and certified as accurate and complete
by a Financial Officer of the Parent Borrower, which certificate shall include
appropriate exhibits, schedules, supporting documentation and reports as reasonably
requested by the Administrative Agent.

“Borrowing Request” means a request by a
Borrower for a Borrowing in substantially the form of Exhibit G hereto.

“Business Day” means any day that is not a
Saturday, Sunday or other day on which commercial banks in New York City
are authorized or required by law to remain closed; provided that (a)
when used in connection with a Eurodollar Loan, the term “Business Day”
shall also exclude any day on which banks generally are not open for dealings
in dollar deposits in the London interbank market, (b) when used in connection
with any Australian Revolving Loan, the term “Business Day” shall also exclude
any day on which banks are not open for deposits in Sydney, Australia, (c) when
used in connection with any Canadian Revolving Loan, the term “Business Day”
shall also exclude any day on which banks are not open for deposits in Toronto,
Canada, (d) when used in connection with any German Revolving Loan, the term “Business
Day” shall also exclude any day on which banks are not open for deposits in
Berlin, Germany, and (e) when used in connection with any Mexican Revolving
Loan, the term “Business Day” shall also exclude any day on which banks are not
open for deposits in Mexico City, Mexico.

 6
 

 

“Canadian Borrowing Base” means, with respect
to each Canadian Subsidiary Borrower, at any time of determination, an amount
equal to the sum, without duplication of:

(a)           (i) 95% of such Canadian Subsidiary
Borrower’s Adjusted Eligible Accounts Receivable, plus (ii) 85% of such
Canadian Subsidiary Borrower’s Adjusted Eligible Finished Goods, plus
(iii)  55% of such Canadian Subsidiary Borrower’s Adjusted Eligible Work
in Process, plus (iv) 55% of such Canadian Subsidiary Borrower’s
Adjusted Eligible Raw Materials, minus

(b)           the Rent Reserve with respect to such
Canadian Subsidiary Borrower, minus

(c)           the Priority Payables Reserve with
respect to such Canadian Subsidiary Borrower, minus

(d)           the Secured Obligations Reserve with
respect to such Canadian Subsidiary Borrower, minus

(e)           any Reserves with respect to such
Canadian Subsidiary Borrower.

Each Canadian Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent pursuant to this Agreement.  Standards of eligibility and reserves and
advance rates of each Canadian Borrowing Base may be revised and adjusted from
time to time solely at the commercially reasonable discretion of the
Administrative Agent, with any changes in such standards to be effective immediately
after delivery of notice thereof to the Parent Borrower.  For purposes of calculating each Canadian
Borrowing Base on any date, all amounts reflected or outstanding in Canadian
Dollars shall be translated into dollars at the exchange rate in effect on such
date, as determined in good faith by the Parent Borrower.

“Canadian Confirmation Order” means an order of
the Canadian Court, which shall, among other things, order and declare that the
Confirmation Order and the Plan of Reorganization are recognized and shall be
implemented, binding and effective in Canada in accordance with their terms as
if originally made in Canada.

“Canadian Court” means the Ontario Superior
Court of Justice (Commercial List).

“Canadian Dollars” or “Cdn$” refers to
lawful money of Canada.

“Canadian Lender” means each Domestic Lender or
any Affiliate of a Domestic Lender designated by such Domestic Lender to the
Parent Borrower as a “Canadian Lender”. 
The Canadian Lender on the Effective Date shall be Merrill Lynch Capital
Canada Inc.

“Canadian Lending Office” means, as to any
Canadian Lender, the applicable branch, office or Affiliate of such Canadian
Lender designated by such Canadian Lender to make Canadian Revolving Loans to
the Canadian Subsidiary Borrowers.

 7
 

 

“Canadian Loan Party” means the Canadian
Subsidiary Borrowers and any other Loan Party organized under the laws of
Canada or any province or territory thereof.

“Canadian Pension Plan” means any pension
benefit plan within the meaning of the Pension Benefits Act (Ontario) in
respect of which any Loan Party makes or has made contributions in respect of
its employees.

“Canadian Pledge Agreement” means the Canadian
Pledge Agreements, substantially in the form of Exhibit C-3a
and Exhibit C-3b, among the Administrative Agent and each of
the Parent Borrower and Uniplast Holdings, Inc.

“Canadian Revolving Exposure” means, with
respect to any Canadian Lender at any time, the sum of the outstanding
principal amount of such Canadian Lender’s Canadian Revolving Loans.

“Canadian Revolving Loan” means a Loan made by
a Canadian Lender pursuant to Section 2.01(c). 
Each Canadian Revolving Loan shall be a Eurodollar Loan or an ABR Loan.

“Canadian Security Agreement” means the
Canadian Security Agreements, substantially in the form of Exhibit D-3a
and Exhibit D-3b, among, respectively, the Administrative
Agent and the Parent Borrower, Pliant Packaging and Uniplast Canada, and the
Administrative Agent and Pliant Corporation of Canada Ltd., and each other
security agreement or other instrument or document executed and delivered by
any Canadian Loan Party (other than Uniplast Canada) to secure any of the
Foreign Obligations or by Uniplast Canada to secure any of the Domestic
Obligations.

“Canadian Sublimit” means $40,000,000.

“Canadian Subsidiary Borrowers” means Pliant
Corporation of Canada Ltd., a limited liability company organized under the
laws of Ontario, and Uniplast Canada.

 “Capital
Expenditures” means, for any period, without duplication, (a) the
additions to property, plant and equipment and other capital expenditures of
the Parent Borrower and the Subsidiaries that are (or would be) set forth in a
consolidated statement of cash flows of the Parent Borrower and the
Subsidiaries for such period prepared in accordance with GAAP and (b) Capital
Lease Obligations incurred by the Parent Borrower and the Subsidiaries during
such period.

“Capital Lease Obligations” of any Person means
the obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

“Cash Amount” has the meaning assigned to such
term in Section 2.10(g).

 8
 

 

“Cash Collection Period” means the period
commencing on the first Business Day after the occurrence of a Cash Collection
Triggering Event and ending on the date the Commitments have expired or
terminated and the principal of and interest on each Loan and all fees payable
hereunder have been paid in full and all Letters of Credit have expired or
terminated and all LC Disbursements shall have been reimbursed.

“Cash Collection Triggering Event” means that
(a) the Facilities Availability Amount at any time is less than $15,000,000 or
(b) an Event of Default has occurred and is continuing.

“Cash Interest Expense” means, for any period,
Consolidated Interest Expense for such period excluding any portion thereof in
respect of interest not required to be paid in cash during such period or
within one year thereafter.

“Cash Management Arrangement” means any
arrangement pursuant to which any financial institution provides any Loan Party
with treasury, depositary or cash management services or automated
clearinghouse transfers of funds.

“CERCLA” means the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.

“Change in Control” means, at any time,
(a) the failure by the Control Group to own, directly or indirectly,
beneficially and of record, common stock of the Parent Borrower representing at
least 25% of the issued and outstanding common stock of the Parent Borrower;
(b)  the acquisition of ownership, directly or indirectly, beneficially or
of record, by any Person or group (within the meaning of the Securities
Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the
Effective Date) other than the Control Group, of common stock of the Parent
Borrower representing more than 50% of the issued and outstanding common stock
of the Parent Borrower; (c) the occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Parent Borrower by
Persons who were neither (i) nominated by members of the Control Group or
the board of directors of the Parent Borrower nor (ii) appointed by
directors so nominated; provided, however, that a Change in
Control shall not have occurred under this clause (c) as a result of the
occurrence of a vacancy on the board of directors of the Parent Borrower if,
within 30 days after the occurrence of such vacancy, such vacancy is filled by
a person who is nominated by members of the Control Group; (d) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person other than the Parent Borrower (or a Wholly Owned Subsidiary of the
Parent Borrower that is a Loan Party) of any Equity Interests in any Subsidiary
Borrower; or (e) the occurrence of a “Change of Control” as defined under
the Senior First Lien Note Documents, the Senior Second Lien Note Documents or
the Senior Subordinated Note Documents or a “Liquidation Event” as defined
under the terms of any Preferred Stock.

“Change in Law” means (a) the adoption of
any law, rule or regulation after the Effective Date, (b) any change in
any law, rule or regulation or in the interpreta­tion or application thereof by
any Governmental Authority after the Effective Date or (c) compliance by
any Lender or the Issuing Bank (or, for purposes of Section 2.14(b),
by any lending office of such Lender or by such Lender’s or the Issuing Bank’s
holding company, if any) with any

 9
 

 

request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the
Effective Date.

“Chapter 11 Case” and Chapter 11 Cases”
means the Chapter 11 Case Nos. 06-10000 through 06-10010, jointly administered
under Chapter 11 Case No. 06-10001, of the Filing Companies pursuant to the
voluntary petitions for reorganization under the Bankruptcy Code filed with the
Bankruptcy Court.

“Class”, when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are Domestic Revolving Loans, Australian Revolving Loans, Canadian Revolving
Loans, German Revolving Loans, Mexican Revolving Loans, Swingline Loans or
Protective Advances.  “Class”,
when used in reference to any Lender, refers to whether such Lender has a Loan
or Commitment with respect to a particular Class.

“Class of Eligible Inventory” means each of
Eligible Finished Goods, Eligible Raw Materials and Eligible Work in Process.

“Code” means the Internal Revenue Code of 1986,
as amended from time to time.

“Collateral” means any and all “Collateral”, as
defined in any applicable Security Document, and any and all other property and
interests in property and proceeds thereof now owned or hereafter acquired by
any Loan Party in or upon which a Lien is granted under any Security Document.

“Commitment” means, with respect to each
Domestic Lender, the commitment of such Domestic Lender to make Domestic
Revolving Loans and to acquire participations in Letters of Credit and
Swingline Loans hereunder, expressed as an amount representing the maximum
aggregate amount of such Domestic Lender’s Domestic Revolving Exposure
hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.08 and (b) reduced or increased from time to
time pursuant to assignments by or to such Domestic Lender pursuant to Section
9.04, together with the commitment of such Lender to acquire participations
in Protective Advances hereunder.  The
initial amount of each Domestic Lender’s Commitment is set forth on Schedule 2.01(a),
or in the Assignment and Assumption pursuant to which such Domestic Lender
shall have assumed its Commitment, as applicable.  The initial aggregate amount of the Domestic
Lenders’ Commitments is $200,000,000.

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

“Confirmation Order” has the meaning assigned
to such term in Section 4.01(b).

“Consolidated EBITDA” means, for any period,
Consolidated Net Income for such period, plus, without duplication and
to the extent deducted from revenues in determining Consolidated Net Income,
the sum of (a) the aggregate amount of Consolidated Interest Expense for
such period, (b) the aggregate amount of income tax expense for such
period, (c) all amounts attributable to depreciation, amortization and
other non-cash charges or losses for such period (but excluding any such charge
that requires an accrual of, or a cash reserve for, anticipated cash charges
for any future period); provided that any non-cash charges or losses
that are added-back

 10
 

 

to Consolidated Net Income pursuant to this
clause (c) shall be treated as cash charges or losses in any subsequent
period during which cash disbursements attributable thereto are made;
(d) non-cash expenses resulting from the grant of stock options or other
equity-related incentives to any director, officer or employee of the Parent
Borrower or any Subsidiary pursuant to a written plan or agreement,
(e) all non-recurring transaction and financing expenses resulting from
the Transactions, (f) all non-recurring transaction and financing expenses
incurred in the fiscal quarter ended December 31, 2005 resulting from
modifications to the Existing Senior Subordinated Note Indenture entered into
in connection with the Pre-Petition Loan Agreement, (g) all losses during such
period resulting from the sale or other disposition of any asset of the Parent
Borrower or any Subsidiary outside the ordinary course of business,
(h) any Excluded Charges during such period and (i) all non-recurring
restructuring charges in connection with the Chapter 11 Cases specifically
identified by the Parent Borrower to the Administrative Agent and incurred not
later than October 31, 2006 and minus, without duplication and to the
extent added to revenues in determining Consolidated Net Income for such
period, (a) all extraordinary gains during such period and (b) all
gains during such period resulting from the sale or other disposition of any
asset of the Parent Borrower or any Subsidiary outside the ordinary course of
business, all as determined on a consolidated basis with respect to the Parent
Borrower and the Subsidiaries in accordance with GAAP.  If the Parent Borrower or any Subsidiary has
made any sale, transfer, lease or other disposition of assets outside of the
ordinary course of business permitted by Section 6.06 during the
relevant period for determining Consolidated EBITDA, Consolidated EBITDA for
the relevant period shall be calculated after giving pro forma effect thereto,
as if such sale, transfer, lease or other disposition of assets (and any
related incurrence, repayment or assumption of Indebtedness, with any new
Indebtedness being deemed to be amortized over the relevant period in
accordance with its terms, and assuming that any Loans borrowed in connection with
such acquisition are repaid with excess cash balances when available) had
occurred on the first day of the relevant period for determining Consolidated
EBITDA.

“Consolidated Interest Expense” means, for any
period, the interest expense, both expensed and capitalized (including the
interest component in respect of Capital Lease Obligations), accrued by the
Parent Borrower and the Subsidiaries during such period (net of payments made
or received under interest rate protection agreements and net of interest
income), determined on a consolidated basis in accordance with GAAP.

“Consolidated Net Income” means, for any
period, net income or loss of the Parent Borrower and the Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP; provided
that there shall be excluded (a) the income of any unconsolidated
Subsidiary and any Person in which any other Person (other than the Parent
Borrower or any of the Subsidiaries or any director holding qualifying shares
in compliance with applicable law or any other third party holding a de minimus
number of shares in order to comply with other similar requirements) has an
Equity Interest, except to the extent of the amount of dividends or other
distributions actually paid by such Subsidiary or other Person during such
period to the Parent Borrower or any other Subsidiary that is not subject to
the restrictions set forth in clause (a) or (b) hereof (provided
that the Parent Borrower’s or any other Subsidiary’s equity in the net loss of
any such Subsidiary or Person for such period shall be included in determining
Consolidated Net Income), (b) the income (but not the loss) of any
Subsidiary to the extent that such Subsidiary is contractually or legally
prohibited from paying

 11
 

 

dividends, except to the extent of the amount of
dividends or other distributions actually paid by such Subsidiary during such
period to the Parent Borrower or any other Subsidiary that is not subject to
the restrictions set forth in clause (a) or (b) hereof, (c) the income
(or loss) of any Person accrued prior to the date it becomes (or, for pro forma
purposes, is deemed to have become) a Subsidiary or is merged into or
consolidated with the Parent Borrower or any of the Subsidiaries or the date
that Person’s assets are acquired by the Parent Borrower or any of the
Subsidiaries and (d) expenses and fees incurred by the Filing Companies and
allowed by the Bankruptcy Court in the Chapter 11 Cases.

“Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ability to exercise voting power, by
contract or otherwise.  “Controlling”
and “Controlled” have meanings correlative thereto.

“Control Agreement” means, with respect to any
deposit account, any securities account, commodity account, securities
entitlement or commodity contract (each, as defined in the New York Uniform
Commercial Code), an agreement, in form and substance reasonably satisfactory
to the Administrative Agent, among the Administrative Agent, the financial
institution or other Person at which such account is maintained or with which
such entitlement or contract is carried and the Loan Party maintaining such
account, effective to grant “control” (as defined under the applicable Uniform
Commercial Code) over such account to the Administrative Agent.

“Control Group” means collectively the Sponsor
and all Persons Controlled by the Sponsor (other than any operating company
Controlled by the Sponsor).

“Controlled Deposit Account” means each deposit
account (including all funds on deposit therein) that is (a) either (i) the
subject of an effective Control Agreement or (ii) otherwise subject to the
control of the Administrative Agent on terms satisfactory to the Administrative
Agent in its sole discretion and (b) maintained by any Loan Party with a
financial institution reasonably satisfactory to the Administrative Agent.

“Controlled Securities Account” means each
securities account or commodity account (including all financial assets held
therein and all certificates and instruments, if any, representing or
evidencing such financial assets) that is (a) either (i) the subject of an
effective Control Agreement or (ii) otherwise subject to the control of the
Administrative Agent on terms satisfactory to the Administrative Agent in its
sole discretion and (b) maintained by any Loan Party with a securities
intermediary or commodity intermediary reasonably satisfactory to the
Administrative Agent.

“Credit Exposure” means, as to any Lender at
any time, the sum of (a) such Lender’s Revolving Exposure at such time, plus
(b) an amount equal to its Applicable Percentage, if any, of the aggregate
principal amount of Protective Advances outstanding at such time.

 12
 

 

“Default” means any event or condition that
constitutes an Event of Default or that upon notice, lapse of time or both
would, unless cured or waived, become an Event of Default.

“Dilution Factors” means, without duplication,
with respect to any period, the aggregate amount of all deductions, credit
memos, returns, adjustments, allowances, bad debt write-offs and other non-cash
credits that are recorded to reduce accounts receivable of the Loan Parties in
a manner consistent with current and historical accounting practices of the
Loan Parties.

“Dilution Ratio” means, at any date,
(a) the amount (expressed as a percentage) equal to (i) the aggregate
amount of the applicable Dilution Factors for the 12 most recently ended
fiscal months of the Parent Borrower divided  by (ii) total
gross sales of the Loan Parties for the 12 most recently ended fiscal
months of the Parent Borrower, minus (b) 5%; provided that
the Dilution Ratio shall not be less than zero.

“Dilution Reserve” means, at any date, the
Dilution Ratio on such date multiplied  by the amount of Eligible
Accounts Receivable on such date.

“DIP Credit Agreement” means the Senior
Secured, Super Priority, Priming Debtor-in-Possession Credit Agreement, dated
as of January 4, 2006, among Old Pliant, the Domestic Subsidiary Borrowers
party thereto, the Lenders party thereto, Morgan Stanley Senior Funding Inc.,
as Syndication Agent, and General Electric Capital Corporation, as
Administrative Agent and Collateral Agent.

“dollars” or “$” refers to lawful money
of the United States of America.

“Domestic Borrowers” means the Parent Borrower
and the Domestic Subsidiary Borrowers.

“Domestic Borrowing Base” means, at any time of
determination, an amount equal to the sum, without duplication of:

(a)           (i) 95% of each Domestic Loan Party’s
Adjusted Eligible Accounts Receivable, plus (ii) 85% of each Domestic
Loan Party’s Adjusted Eligible Finished Goods, plus (iii) 55% of
each Domestic Loan Party’s Adjusted Eligible Work in Process, plus (iv)
55% of each Domestic Loan Party’s Adjusted Eligible Raw Materials, minus

(b)           the Rent Reserve with respect to each
Domestic Loan Party, minus

(c)           the Priority Payables Reserve with
respect to each Domestic Loan Party, minus

(d)           the Secured Obligations Reserve with
respect to each Domestic Loan Party, minus

(e)           any Reserves with respect to each
Domestic Loan Party.

 13
 

 

The Domestic Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent pursuant to this Agreement.  Standards of eligibility and reserves and
advance rates of the Domestic Borrowing Base may be revised and adjusted from
time to time solely at the commercially reasonable discretion of the
Administrative Agent, with any changes in such standards to be effective
immediately after delivery of notice thereof to the Parent Borrower.

“Domestic Collateral Proceeds Account” means an
account maintained by and in the name of the Administrative Agent, and
designated by the Administrative Agent as the “Domestic Collateral Proceeds
Account” for purposes of this Agreement and the other Loan Documents.

 “Domestic
Guarantee Agreement” means the Domestic Guarantee Agreement, substantially
in the form of Exhibit B-1, among each Domestic Loan Party,
Uniplast Canada and the Administrative Agent.

“Domestic Lender” means the Persons listed on Schedule 2.01(a)
and any other Person that shall have become a party hereto as a Domestic Lender
pursuant to an Assignment and Assumption, other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Assumption.  Unless the context otherwise requires, the
term “Domestic Lenders” includes the Swingline Lender.

“Domestic Loan Party” means the Parent
Borrower, the Domestic Subsidiary Borrowers and any other Loan Party organized
under the laws of any state of the United States of America or the District of
Columbia.

“Domestic Obligations” means (a) all principal
of and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Domestic Revolving Loans, Swingline Loans and Protective Advances when and
as due, whether at maturity, by acceleration, upon one or more dates set for
prepayment, or otherwise, (b) all principal of and premium, if any, and
interest (including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding) on the Canadian Revolving Loans made
to Uniplast Canada when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment, or otherwise, (c) each payment required
to be made by the Borrowers under this Agreement in respect of any Letter of
Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral, (d)
all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of each Domestic Loan Party and
Uniplast Canada to the Domestic Secured Parties under this Agreement and the
other Loan Documents, (e) all covenants, agreements, obligations and
liabilities of each Domestic Loan Party and Uniplast Canada under or pursuant
to this Agreement and the other Loan Documents, (f) all Swap Obligations and
(g) the due and punctual payment and performance of all Banking Services
Obligations.

 14
 

 

“Domestic Pledge Agreement” means the Domestic
Pledge Agreement, substantially in the form of Exhibit C-1,
among each Domestic Loan Party, Uniplast Canada and the Administrative Agent.

“Domestic Revolving Exposure” means, with
respect to any Domestic Lender at any time, the sum of the outstanding
principal amount of such Domestic Lender’s Domestic Revolving Loans and its LC
Exposure and Swingline Exposure at such time.

“Domestic Revolving Loan” means a Loan made by
a Domestic Lender pursuant to Section 2.01(a).  Each Domestic Revolving Loan shall be a
Eurodollar Loan or an ABR Loan.

“Domestic Secured Parties” means (a) the
Domestic Lenders and the Canadian Lenders, (b) the Administrative Agent, (c)
the Issuing Banks, (d) each counterparty to a Swap Agreement with a Loan Party
the obligations under which constitute Domestic Obligations, (e) the
beneficiaries of each indemnification obligation undertaken by any Domestic
Loan Party or Uniplast Canada under any Loan Document, (f) each lender in
respect of overdrafts and related liabilities owed to any of the Lenders (or
any Affiliates thereof) and arising from treasury, depositary and cash
management services or in connection with any automated clearinghouse transfers
of funds and (g) the permitted successors and assigns of each of the foregoing.

“Domestic Security Agreement” means the
Domestic Security Agreement, substantially in the form of Exhibit D-1,
among each Domestic Loan Party, Uniplast Canada and the Administrative Agent.

“Domestic Subsidiary” means any subsidiary
organized under the laws of any State of the United States of America or the
District of Columbia or that is a subsidiary of an entity that is a “United
States person” as defined in Section 7701(a)(30) of the U.S. Internal Revenue
Code and is disregarded as an entity separate from its owner, or is otherwise
fiscally transparent, for U.S. federal income tax purposes.

“Domestic Subsidiary Borrowers” means Uniplast
Holdings, Inc., a Delaware corporation, and Uniplast U.S., Inc., a Delaware
corporation.

“Effective Date” means the date on which the
conditions specified in Section 4.01 are satisfied (or waived in
accordance with Section 9.02).

“Eligible Accounts Receivable” means, at any
time of determination, the aggregate of the amounts (determined as provided in
the second succeeding sentence) for each Account of the Loan Parties that satisfies
the following criteria at the time of creation and continues to meet the same
at such time of determination:  such
Account (i) has been invoiced to, and represents the bona fide amounts due
to any Loan Party  from, the purchaser of
goods or services, in each case originated in the ordinary course of business
of such Loan Party, and (ii) is not ineligible for inclusion in the
calculation of the Borrowing Base pursuant to any of clauses (a) through
(v) below or otherwise deemed, in the commercially reasonable discretion of the
Administrative Agent to be ineligible for inclusion in the calculation of the
Borrowing Base.  Without limiting the
foregoing, to qualify as Eligible Accounts Receivable, an Account shall
indicate no Person other than a Loan Party as payee or remittance party.  The amount to be so included in Eligible
Accounts Receivable at any time with respect to Accounts shall be the face

 15
 

 

amount of Accounts, reduced by, without duplication
and to the extent not reflected in such face amount, (i) the amount of all
accrued and actual discounts, claims, credits or credits pending, debit memos,
promotional program allowances, price adjustments, finance charges or other
allowances (including any amount that the applicable Loan Party may be obligated
to rebate to a customer pursuant to the terms of any agreement or understanding
(written or oral)), (ii) the aggregate amount of all limits and deductions
provided for in this definition and elsewhere in this Agreement, (iii) the
aggregate amount of all cash received in respect of such Account but not yet
applied by the applicable Loan Party to reduce the amount of such Account and
(iv) with respect to an Account of the Canadian Loan Parties, the amount
of all goods and services taxes, harmonized taxes and sales taxes payable in
respect of such Account.  Standards of
eligibility may be fixed from time to time in the commercially reasonable
discretion of the Administrative Agent, with any changes in such standards to
be effective immediately after delivery of notice thereof to the Parent
Borrower.  Unless otherwise approved from
time to time in writing by the Administrative Agent, no Account shall be an
Eligible Account Receivable if:

(a)           the applicable Loan
Party does not have sole lawful and absolute title to such Account; or

(b)           such Account
(i) is unpaid more than 90 days from the original date of invoice or
60 days from the original due date or (ii) has been written off the
books of the applicable Loan Party or has been otherwise designated on such
books as uncollectible; or

(c)           more than 50% in
face amount of all Accounts of the Account Debtor with respect to such Account
are ineligible pursuant to clause (b) above; or

(d)           the Account Debtor
with respect to such Account is insolvent or the subject of any bankruptcy case
or insolvency proceeding of any kind, unless (i) the sale to such Account
Debtor in respect of such Account is made following the commencement of the
applicable bankruptcy case or insolvency proceeding, (ii) the Administrative
Agent determines in its commercially reasonable discretion that such Account
Debtor has sufficient liquidity to make payment with respect to such Account,
(iii) such Account has administrative claim priority (or equivalent under
applicable law) in the bankruptcy case or insolvency proceeding of such Account
Debtor and (iv) such Account may be paid currently by such Account Debtor under
applicable law; or

(e)           (i) with respect to
an Account of the Domestic Loan Parties, such Account is not payable in dollars or Canadian Dollars or the
applicable Account Debtor is either not organized under the laws of the United
States of America or any State thereof or the District of Columbia or is
located or has its principal place of business or substantially all its assets
outside the United States, (ii) with respect to an Account of the Australian
Loan Parties, such Account is not payable in Australian Dollars or New Zealand
Dollars or the applicable Account Debtor is either not organized under the laws
of Australia or any province or territory thereof or is located or has its
principal place of business or substantially all its assets outside Australia,
(iii) with respect to an Account of the Canadian Loan Parties, such Account is
not payable in Canadian Dollars or dollars or the applicable Account Debtor is
either not organized under the laws of Canada or any

 16
 

 

province thereof
or is located or has its principal place of business or substantially all its
assets outside Canada, (iv) with respect to an Account of the German Loan
Parties, such Account is not payable in Euros or Pounds or the applicable
Account Debtor is either not organized under the laws of Germany or any
province thereof or is located or has its principal place of business or
substantially all its assets outside Germany, or (v) with respect to an Account
of the Mexican Loan Parties, such Account is not payable in Mexican Pesos,
dollars or Canadian Dollars or the applicable Account Debtor is either not
organized under the laws of Mexico or any province thereof or is located or has
its principal place of business or substantially all its assets outside Mexico,
unless in the case of clauses (i) through (v), the Administrative Agent is
reasonably satisfied that it has a legal, valid, perfected and enforceable
security interest in such Account under the laws of the jurisdiction in which
the applicable Account Debtor is located pursuant to the applicable Security
Documents; or

(f)            the applicable
Account Debtor is the government of the United States of America, Mexico or
Canada (or any state, municipality, province or territory thereof) or any
department, agency or instrumentality thereof, unless the relevant Loan Party
duly assigns its rights to payment of such Account to, or for the benefit of,
the Administrative Agent pursuant to the Assignment of Claims Act of 1940, as
amended, or the Financial Administration Act (Canada) (or such other
legislation as may govern the assignment of government debt in such province or
territory), as amended, or the Ley de Adquisiciones, Arrendamientos y Servicios
del Sector Publico, as amended, as applicable, which assignment and related
documents and filings shall be in form and substance reasonably satisfactory to
the Administrative Agent; or

(g)           such Account is
subject to any adverse security deposit, progress payment, retainage or other
similar advance made by or for the benefit of the applicable Account Debtor, in
each case to the extent thereof; or

(h)           such Account is not
subject to a valid and perfected first-priority Lien (or equivalent under
applicable law) in favor of the Administrative Agent, subject to no other
Liens, other than Liens described under clauses (a) and (e) of the
definition of “Permitted Encumbrances”; or

(i)            (A) such
Account was invoiced (1) in advance of goods or services provided or
(2) twice or more or (B) income associated with such Account has not
been earned; or

(j)            such Account is a
non-trade Account, or relates to payments for interest; or

(k)           the sale to the
applicable Account Debtor in respect of such Account is on a bill-and-hold,
guarantee sale, sale-and-return, ship-and-return, sale on approval, extended
terms or consignment or other similar basis or made pursuant to any other
agreement providing for repurchase or return of any merchandise that has been
claimed to be defective or otherwise unsatisfactory; or

 17
 

 

(l)            the goods giving
rise to such Account have not been shipped or title has not been transferred to
the applicable Account Debtor, or such Account represents a progress-billing or
otherwise does not represent a complete sale; provided that, for purposes
hereof, “progress-billing” means any invoice for goods sold or leased or
services rendered under a contract or agreement pursuant to which such Account
Debtor’s obligation to pay such invoice is conditioned upon the applicable Loan
Party’s completion of any further performance under the contract or agreement;
or

(m)          such Account arises
out of a sale made by the applicable Loan Party to an employee, officer, agent,
director, stockholder, subsidiary or Affiliate of any Loan Party; or

(n)           such Account was
created as a new receivable for the unpaid portion of an outstanding Account
(including chargebacks, debit memos or other adjustments for unauthorized
deductions); or

(o)           the applicable
Account Debtor (i) is a creditor of any Loan Party, (ii) has, or has
asserted, a right of set-off against any Loan Party (unless such Account Debtor
has entered into a written agreement reasonably acceptable to the
Administrative Agent to waive such set-off rights) or (iii) has disputed
its liability (whether by chargeback or otherwise) or made any asserted or
unasserted claim with respect to such Account or any other Account of any Loan
Party that has not been resolved, in each case, without duplication, to the
extent of (A) the amount owed by such Loan Party to such Account Debtor,
(B) the amount of such actual or asserted right of set-off or (C) the
amount of such dispute or claim, as the case may be; or

(p)           such Account does
not comply in all material respects with the requirements of all applicable
laws and regulations, whether Federal, state, provincial, local or foreign,
including the Federal Consumer Credit Protection Act, the Federal Truth in
Lending Act and Regulation Z of the Board; or

(q)           as to all or any
part of such Account, a check, promissory note, draft, trade acceptance or
other Instrument for the payment of money has been received, presented for
payment and returned uncollected for any reason; or

(r)            such Account is for
goods that have been sold under a purchase order or pursuant to the terms of a
contract or other agreement or understanding (written or oral) that indicates
that any Person other than the applicable Loan Party has or has had or has
purported to have or have had an ownership interest in such goods; or

(s)           such Account is an
extended terms account that is due and payable more than 90 days from the
original date of invoice; or

(t)            such Account is
created on cash in advance terms; or

(u)           such Account
consists of bonus volume rebate accruals or sales allowance accruals, but only
to the extent of such accruals; or

 18
 

 

(v)           such Account
constitutes manual billings or re-bills, other than manual billings from scrap
sales.

Notwithstanding the forgoing, (i) all Accounts of any
single Account Debtor and its Affiliates that, in the aggregate, exceed
(A) 25% in respect of an Account Debtor whose securities are rated
Investment Grade or (B) 15% in respect of all other Account Debtors, in
either case of the total amount of all Accounts of the Loan Parties at any time
of determination, shall be deemed not to be Eligible Accounts Receivable to the
extent of such excess and (ii) all Accounts that constitute bill and storage
receivables and otherwise qualify as Eligible Accounts Receivable shall be
included in each applicable Borrowing Base at an advance rate equal to 85%.

“Eligible Finished Goods” means, on any date,
the amount of Eligible Inventory defined as Finished Goods by each Loan Party
on such date as shown on its perpetual inventory records in accordance with its
current and historical accounting practices.

“Eligible Inventory” means, at any time of
determination, without duplication, the Inventory Value of the Inventory of the
Loan Parties at such time that is not ineligible for inclusion in the
calculation of the Borrowing Base pursuant to any of clauses (a) through
(n) below or otherwise deemed, in the commercially reasonable discretion of the
Administrative Agent, to be ineligible for inclusion in the calculation of the
Borrowing Base.  Without limiting the
foregoing, to qualify as “Eligible Inventory”, no Person other than a Loan
Party shall have any direct or indirect ownership, interest or title to such
Inventory and no Person other than a Loan Party shall be indicated on any
purchase order or invoice with respect to such Inventory as having or
purporting to have an interest therein. 
Standards of eligibility may be fixed from time to time in the
commercially reasonable discretion of the Administrative Agent, with any
changes in such standards to be effective immediately after delivery of notice
thereof to the Parent Borrower.  Unless
otherwise approved from time to time in writing by the Administrative Agent, no
Inventory shall be deemed Eligible Inventory if:

(a)           such Inventory is not owned solely by
a Loan Party or a Loan Party does not have sole and good, valid and
unencumbered title thereto; or

(b)           (i) with respect to Inventory of the
Domestic Loan Parties, such Inventory is not located in the United States, (ii)
with respect to Inventory of the Australian Loan Parties, such Inventory is not
located in Australia, (iii) with respect to Inventory of the Canadian Loan
Parties, such Inventory is not located in Canada, (iv) with respect to
Inventory of the German Loan Parties, such Inventory is not located in Germany,
or (v) with respect to Inventory of the Mexican Loan Parties, such Inventory is
not located in Mexico, unless in the case of clauses (i) through (v), the
Administrative Agent is reasonably satisfied that it has a legal, valid,
perfected and enforceable security interest in such Inventory under the laws of
the jurisdiction in which such Inventory is located pursuant to the applicable
Security Documents; or

(c)           such Inventory is
not either (i) located in a third party warehouse or in another location
not owned by a Loan Party and either (A) covered by a Landlord Lien Waiver
or Bailee Letter, as applicable, in each case in form and substance acceptable
to

 19
 

 

the Administrative
Agent, or (B) a Rent Reserve has been taken with respect to such Inventory
or (ii) located on property owned by a Loan Party; or

(d)           such Inventory
constitutes goods returned or rejected due to quality issues by a customer of
the applicable Loan Party, or constitutes goods in transit to third parties; or

(e)           such Inventory
constitutes operating supplies, packaging or shipping materials, cartons,
repair parts, labels or miscellaneous spare parts or other such materials not
considered for sale in the ordinary course of business; or

(f)            such Inventory is
not subject to a valid and perfected first-priority Lien (or equivalent under
applicable law) in favor of the Administrative Agent, subject to no other
Liens, other than Liens described under clauses (a), (b) and (e) of the
definition of “Permitted Encumbrances”; or

(g)           such Inventory is
consigned or at a customer location but still accounted for in the perpetual
inventory balance of the applicable Loan Party; or

(h)           such Inventory is
being processed offsite at a third party location or outside processor, or is
in transit to or from the such third party location or outside processor, or is
located at a closed facility; or

(i)            such Inventory is
seconds or thirds or stale or is scrap, obsolete or slow moving or
unmerchantable or is identified as overstock or excess by the applicable Loan
Party; or

(j)            such Inventory is
used as a sample or prototype, displays or display items, not first-quality or
non-saleable in the ordinary course of business or has been returned by a
customer; or

(k)           such Inventory is a
discontinued product or component thereof; or

(l)            any portion of the
Inventory Value of such Inventory is attributable to intercompany profit
between any Loan Party and any of its Affiliates; or

(m)          such Inventory is
damaged, returned or marked for return to vendor; or

(n)           such Inventory is
not in good condition, does not meet all material standards imposed by any
Governmental Authority having regulatory authority over it, is repair or
replacement parts for machinery and equipment, is rejected, defective or
undergoing quality review.

“Eligible Raw Materials” means, on any date,
the amount of Eligible Inventory defined as Raw Materials by each Loan Party on
such date as shown on its perpetual inventory records in accordance with its
current and historical accounting practices.

 20
 

 

“Eligible Work in Process” means, on any date,
the amount of Eligible Inventory that (a) is defined as Work in Process by each
Loan Party on such date as shown on its perpetual inventory records in
accordance with its current and historical accounting practices and (b)
constitutes either plain film waiting to be converted or printed film on roll
stock.

“Environmental Laws” means all laws (including
common law), rules, regulations, codes, ordinances, orders, decrees, judgments,
injunctions, notices or binding agreements issued, promulgated or entered into
by or with any Governmental Authority, relating in any way to the environment,
preservation or reclamation of natural resources, handling, treatment, storage,
disposal, Release or threatened Release of any Hazardous Material or to health
and safety matters.

“Environmental Liability” means any liability,
obligation, claim, action, suit, judgment or order, contingent or otherwise
(including, but not limited to, any liability for damages, natural resource
damage, costs of environmental remediation, administrative oversight costs,
fines, penalties or indemnities), of the Parent Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to
any Hazardous Materials, (d) the release or threatened release of any
Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

“Equity Interests” means shares of capital
stock, partnership interests, membership interests in a limited liability
company, beneficial interests in a trust or other equity ownership interests in
a Person, and any warrants, options or other rights entitling the holder
thereof to purchase or acquire any such equity interest.

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

“ERISA Affiliate” means any trade or business
(whether or not incorporated) that, together with the Parent Borrower, is
treated as a single employer under Section 414(b) or (c) of the Code or,
solely for purposes of Section 302 of ERISA and Section 412 of the
Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable
event”, as defined in Section 4043 of ERISA or the regulations issued
thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant
to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Parent Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Parent Borrower or any
ERISA Affiliate from the PBGC or a plan administrator of any notice relating to
an intention to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; (f) the incurrence by the Parent Borrower or any of
its ERISA Affiliates of any liability

 21
 

 

with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by the Parent
Borrower or any ERISA Affiliate of any notice, or the receipt by any
Multiemployer Plan from the Parent Borrower or any ERISA Affiliate of any
notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.

“Euro” means the single currency of
participating member States of the European Union.

“Eurodollar”, when used in reference to any
Loan or Borrowing, refers to whether such Loan, or the Loans comprising such
Borrowing, are bearing interest at a rate determined by reference to the LIBO
Rate.

“Event of Default” has the meaning assigned to
such term in Article VII.

“Excluded Charges” means non-recurring charges
incurred after the Effective Date in respect of restructurings, plant closings,
headcount reductions or other similar actions, including severance charges in
respect of employee terminations; provided that the aggregate amount of
Excluded Charges shall not exceed (a) $45,000,000 during the term of this
Agreement and (b) $15,000,000 during any one fiscal year (or, in each
case, such greater amount acceptable to the Administrative Agent in its sole
discretion).

“Excluded Taxes” means, with respect to the
Administrative Agent, any Lender, the Issuing Bank or any other recipient of
any payment to be made by or on account of any obligation of any Borrower
hereunder, (a) income or franchise taxes imposed on (or measured by) its
net income by the United States of America, or by the jurisdiction under
the laws of which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable lending
office is located, (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction
described in clause (a) above, (c) in the case of a Foreign Lender
with respect to any Borrower (other than an assignee pursuant to a request by
the Parent Borrower under Section 2.18(b)), any withholding tax
(including, without limitation, taxes imposed under Part XIII of the Income Tax
Act (Canada)) that is imposed on amounts payable by such Borrower to such
Foreign Lender that is attributable to such Foreign Lender’s failure to comply
with Section 2.16(e) and (d) in the case of a Foreign Lender with
respect to any Domestic Borrower (other than an assignee pursuant to a request
by Parent Borrower under Section 2.18(b)), any U.S. withholding tax that
is imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new lending office) (or becomes
a Participant hereunder), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled, at the time of designation of a new lending
office (or assignment), to receive additional amounts from the applicable
Borrower with respect to such tax pursuant to Section 2.16(a).

“Existing Letters of
Credit” means the letters of credit issued by LaSalle Business Credit, LLC
and Wachovia Bank, National Association and outstanding as of the Effective Date,
which are listed on Schedule 1.01(b).

 22
 

 

“Existing Senior Subordinated Note Indenture”
means collectively, (a) the indenture dated as of May 31, 2000, between Old
Pliant and The Bank of New York, as trustee, and (b) the indenture dated as of
April 10, 2002, between Old Pliant and The Bank of New York, as trustee.

“Extraordinary Receipts” means any cash
received by any Loan Party or any of their respective subsidiaries in excess of
$500,000 in the aggregate not in the ordinary course of business (and not
consisting of proceeds from the issuance of Stock, debt or disposition of
Collateral), including, without limitation, (i) foreign, United States, state
or local tax refunds paid  in connection
with or as the result of any settlement, audit, or amendment to any tax return,
(ii) pension plan reversions, (iii) judgments, proceeds of settlements or other
consideration of any kind in connection with any cause of action, and (iv)
indemnity payments (but excluding therefrom working capital adjustments).

“Facilities Availability Amount” means, at any
time, an amount equal to (a) (i) the lesser of (A) the total
amount of the Available Commitments at such time and (B) the Borrowing
Base in effect at such time minus (ii) the total Revolving Exposure
at such time plus (b) (i) the lesser of (A) the total amount of the
Fixed Asset Commitments at such time and (B) the Fixed Asset Borrowing
Base in effect at such time minus (ii) the total Fixed Asset
Revolving Exposure at such time.

“FCCR Period” means any period (a) beginning on
the first Business Day on which the Facilities Availability Amount is less than
$20,000,000 for 5 consecutive days and (b) ending on the first Business Day on
which the Facilities Availability Amount is greater than or equal to
$20,000,000 for more than 15 consecutive days.

“Federal Funds Effective Rate” means, for any
day, a floating rate equal to the weighted average of the rates on overnight
Federal funds transactions among members of the Federal Reserve System, as
determined by the Administrative Agent in its sole discretion, which
determination shall be final, binding and conclusive (absent manifest error).

“Fee Letter” means that certain Fee Letter
dated May 18, 2006 between Old Pliant and the Administrative Agent.

“Filing Companies” means Old Pliant, Uniplast
Industries Co., Pliant Corporation International, Pliant Film Products of
Mexico, Inc., Pliant Packaging of Canada, LLC, Pliant Solutions Corporation,
Uniplast Holdings, Inc., Uniplast U.S., Inc., Pliant Investment, Inc., Alliant
Company LLC, Pliant Corporation of Canada Ltd. and Uniplast Industries Co.

“Financial Officer” means the chief financial
officer, principal accounting officer, treasurer, assistant treasurer or
controller of the Parent Borrower.

“Finished Goods” means completed goods that
require no additional processing or manufacturing to be sold to customers
(other than customers that are Affiliates of any Loan Party) by a Loan Party in
the ordinary course of business.

“First Priority Assets” means (a) at all times
prior to the 2004 Notes First Lien Transition Date (as defined in the
Intercreditor Agreement), the assets referred to in clauses (a)(i)

 23
 

 

through (xi) of the definition of the term “Senior
Lender First Lien Collateral” in the Intercreditor Agreement, and (b) at all
times on and after the 2004 Notes First Lien Termination Date, any and all
assets.

“First Priority Collateral” shall have the
meaning assigned to the term “Senior Lender First Lien Collateral” in the
Intercreditor Agreement.

“Fixed Asset Borrowing Base” shall have the
meaning assigned to the term “Borrowing Base” in the Fixed Asset Credit
Agreement.

“Fixed Asset Commitments” shall have the
meaning assigned to the term “Commitments” in the Fixed Asset Credit Agreement.

“Fixed Asset Credit Agreement” means the Fixed
Asset Credit Agreement, dated as of the date hereof, among Pliant Corporation
Pty Ltd., Pliant Corporation of Canada Ltd., Pliant Film Products GmbH and
ASPEN Industrial, S.A. de C.V., as borrowers, the lenders party thereto and
Merrill Lynch Bank USA, as administrative agent thereunder.

“Fixed Asset Loan Documents” shall have the
meaning assigned to the term “Loan Documents” in the Fixed Asset Credit
Agreement.

“Fixed Asset Loan Party” shall have the meaning
assigned to the term “Loan Party” in the Fixed Asset Credit Agreement.

“Fixed Asset Obligations” shall have the
meaning assigned to the term “Obligations” in the Fixed Asset Credit Agreement.

“Fixed Asset Revolving Exposure” shall have the
meaning assigned to the term “Revolving Exposure” in the Fixed Asset Credit
Agreement.

“Fixed Charge Coverage Ratio” means, as of the
end of any period of twelve consecutive fiscal months of the Parent Borrower,
the ratio of (a) Consolidated EBITDA for such period to (b) the sum
of (i) the aggregate amount of scheduled principal or similar payments
made during such period in respect of Indebtedness of the Parent Borrower and
the Subsidiaries (other than (A) payments made by the Parent Borrower or
any Subsidiary to the Parent Borrower or a Subsidiary, (B) payments made
by the Parent Borrower or a Subsidiary in respect of loans under the
Pre-Petition Loan Agreement and the DIP Credit Agreement and (C) payments
made by the Parent Borrower or a Subsidiary in respect of any of the Loans and
the loans under the Fixed Asset Credit Agreement) plus (ii) Cash
Interest Expense during such period plus (iii) cash dividends or
other distributions paid by the Parent Borrower in respect of its Equity
Interests during such period, plus (iv) the aggregate amount of
Taxes paid in cash during such period, plus (v) Capital
Expenditures made during such period (excluding Capital Expenditures funded
with the proceeds of a Reinvestment Event), all as determined on a consolidated
basis with respect to the Parent Borrower and the Subsidiaries in accordance
with GAAP.

“Foreign Collateral Proceeds Account” means an
account maintained by and in the name of the Administrative Agent, and
designated by the Administrative Agent as the

 24
 

 

“Foreign Collateral Proceeds Account” for purposes of
this Agreement and the other Loan Documents.

“Foreign Fixed Asset Collateral” means all
Collateral of the Foreign Loan Parties (other than Uniplast Canada), other than
the Foreign Working Capital Collateral.

“Foreign Guarantee Agreement” means the Foreign
Guarantee Agreement, substantially in the form of Exhibit B-2,
among each Foreign Loan Party (other than Uniplast Canada and the German Loan
Parties) and the Administrative Agent.

“Foreign Lender” means (a) with respect to the
Domestic Borrowers, any Lender that is organized under the laws of a
jurisdiction other than the United States of America, any State thereof or the
District of Columbia and (b) with respect to the Canadian Subsidiary Borrowers,
any Lender that is (i) not a resident of Canada for the purposes of the Income
Tax Act (Canada) or (ii) a bank that would receive payment under the Loan
Documents in respect of its Canadian banking business for the purposes of
subsection 212(13.3) of the Income Tax Act (Canada).

“Foreign Loans Parties” means the Australian Loan
Parties, Canadian Loan Parties, German Loan Parties and Mexican Loan Parties.

“Foreign Obligations” means (a) all principal
of and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Foreign Revolving Loans (other than the Canadian Revolving Loans made to
Uniplast Canada) when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment, or otherwise, (b) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of each Foreign Loan Party (other than Uniplast
Canada) to the Foreign Secured Parties under this Agreement and the other Loan
Documents, and (c) all covenants, agreements, obligations and liabilities of
each Foreign Loan Party (other than Uniplast Canada) under or pursuant to this
Agreement and the other Loan Documents.

“Foreign Revolving Exposure” means, with
respect to any Lender at any time, the sum of the Australian Revolving
Exposure, Canadian Revolving Exposure, German Revolving Exposure and Mexican
Revolving Exposure of such Lender.

“Foreign Revolving Loans” means the Australian
Revolving Loans, Canadian Revolving Loans, German Revolving Loans and Mexican
Revolving Loans.

“Foreign
Secured Parties” means (a) the Australian Lenders, (b) the Canadian
Lenders, (c) the German Lenders, (d) the Mexican Lenders, (e) the
Administrative Agent, (f) the beneficiaries of each indemnification obligation
undertaken by any Foreign Loan Party under any Loan Document and (g) the
permitted successors and assigns of each of the foregoing.

 25

 

“Foreign Security Documents” means the
Australian Security Agreement, Canadian Security Agreement, German Security
Agreement, Mexican Pledge Agreement, Mexican Security Agreement, and each other
security agreement or other instrument or document executed and delivered by
any Foreign Loan Party to secure any of the Foreign Obligations.

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

“Foreign Subsidiary Borrowers” means the
Australian Subsidiary Borrower, Canadian Subsidiary Borrowers, German
Subsidiary Borrower and Mexican Subsidiary Borrower.

“Foreign Working Capital Collateral” means any
and all of the following assets and properties now owned or at any time
hereafter acquired by any Foreign Loan Party (other than Uniplast Canada) that
constitutes Collateral:  (i) all
Accounts; (ii) all Inventory; (iii) all Payment Intangibles (as defined in the
New York Uniform Commercial Code) (including corporate tax refunds and payments
made by distributors and wholesalers to whom loans have been made by any Loan
Party), other than any Payment Intangibles that represent tax refunds in
respect of or otherwise relate to real property, Fixtures (as defined in the
New York Uniform Commercial Code), Equipment or Intellectual Property; (iv) all
Investment Property (as defined in the New York Uniform Commercial Code)
(including capital stock of subsidiaries), marketable securities and other
Financial Assets (as defined in the New York Uniform Commercial Code); (v) all
indebtedness owed to any Foreign Loan Party (other than Uniplast Canada) that
arises from cash advances made after the date hereof to enable the obligor or
obligors thereon to acquire Inventory; (vi) all credit card proceeds of the
Foreign Loan Parties (other than Uniplast Canada), all collection accounts,
Deposit Accounts (as defined in the New York Uniform Commercial Code),
commodity accounts and securities accounts and any cash or other assets
(including Investment Property, marketable securities and other Financial
Assets) in any such accounts; (vii) all hedging, commodity or other derivative
contracts (and any cash and other deposits securing the same); (viii) all
permits and licenses related to any of the foregoing (excluding any permits or
licenses related to the ownership or operation of real property, Fixtures,
Equipment or Intellectual Property); (ix) all books and records related to the
foregoing; (x) to the extent evidencing, governing, securing or otherwise
related to the preceding clauses (i) through (ix), all (A) General Intangibles
(as defined in the New York Uniform Commercial Code), (B) Chattel Paper (as
defined in the New York Uniform Commercial Code), (C) Instruments (as defined
in the New York Uniform Commercial Code) and (D) Documents (as defined in the
New York Uniform Commercial Code); and (xi) all products and Proceeds (as
defined in the New York Uniform Commercial Code) of any and all of the
foregoing in whatever form received, including proceeds of insurance policies
related to Inventory of the Foreign Loan Parties (other than Uniplast Canada)
and including proceeds of business interruption insurance to the extent related
to the first 45 days of the covered period with respect to any business
interruption.

“GAAP” means, subject to Section 1.04,
generally accepted accounting principles in the United States of America.

 26
 

 

“German Borrowing Base” means, at any time of
determination, an amount equal to the sum, without duplication of:

(a)           (i) 95% of each German Loan Party’s
Adjusted Eligible Accounts Receivable, plus (ii) 85% of each German Loan
Party’s Adjusted Eligible Finished Goods, plus (iii) 55% of each German
Loan Party’s Adjusted Eligible Work in Process, plus (iv) 55% of each
German Loan Party’s Adjusted Eligible Raw Materials, minus

(b)           the Rent Reserve with respect to each
German Loan Party, minus

(c)           the Priority Payables Reserve with
respect to each German Loan Party, minus

(d)           the Secured Obligations Reserve with
respect to each German Loan Party, minus

(e)           any Reserves with respect to each
German Loan Party.

The German Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent pursuant to this Agreement.  Standards of eligibility and reserves and
advance rates of the German Borrowing Base may be revised and adjusted from
time to time solely at the commercially reasonable discretion of the
Administrative Agent, with any changes in such standards to be effective
immediately after delivery of notice thereof to the Parent Borrower.  For purposes of calculating the German
Borrowing Base on any date, all amounts reflected or outstanding in Euros shall
be translated into dollars at the exchange rate in effect on such date, as
determined in good faith by the Parent Borrower.

“German Collateral Proceeds Account” means an
account maintained by and in the name of the Administrative Agent, and
designated by the Administrative Agent as the “German Collateral Proceeds
Account” for purposes of this Agreement, the German Security Agreements and the
German Pledge Agreement.

 “German
Lender” means each Domestic Lender or any Affiliate of a Domestic Lender
designated by such Domestic Lender to the Parent Borrower as a “German Lender”.  The German Lender on the Effective Date shall
be Merrill Lynch Capital Markets Bank Limited.

“German Loan Party” means the German Subsidiary
Borrower and any other Loan Party organized under the laws of Germany or any
state or province thereof.

“German Obligations” means (a) all principal of
and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the German Revolving Loans when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment, or otherwise, (b) all
other monetary obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable

 27
 

 

in such proceeding), of each German Loan Party to the
Foreign Secured Parties under this Agreement and the other Loan Documents, and
(c) all covenants, agreements, obligations and liabilities of each German Loan
Party under or pursuant to this Agreement and the other Loan Documents.

 “German
Pledge Agreement” means the German Pledge Agreement, substantially in the
form of Exhibit C-4, among the Parent Borrower, the German
Loan Parties and the Administrative Agent.

 “German
Revolving Exposure” means, with respect to any German Lender at any time,
the sum of the outstanding principal amount of such German Lender’s German
Revolving Loans.

“German Revolving Loan” means a Loan made by a
German Lender pursuant to Section 2.01(d). 
Each German Revolving Loan shall be a Eurodollar Loan or an ABR Loan.

“German Security Agreements” mean the German
Global Assignment Agreement, substantially in the form of Exhibit D-4,
among the German Loan Parties and the Administrative Agent, and each other
security agreement or other instrument or document executed and delivered by
any German Loan Party to secure any of the German Obligations.

“German Sublimit” means $15,000,000.

“German Subsidiary Borrower” means Pliant Film
Products GmbH, a corporation organized under the laws of Germany.

“Governmental Authority” means the government
of the United States of America, Australia, Canada, Germany or Mexico, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

“Guarantee” of or by any Person (the “guarantor”)
means any obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of the guarantor, direct
or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase
(or to advance or supply funds for the purchase of) any security for the
payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment thereof, (c) to maintain working capital, equity capital or
any other financial statement condition or liquidity of the primary obligor so
as to enable the primary obligor to pay such Indebtedness or other obligation
or (d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or obligation; provided
that the term “Guarantee” shall not include endorsements for collection or
deposit in the ordinary course of business.

 28
 

 

“Guarantee Agreements” means the Domestic
Guarantee Agreement and the Foreign Guarantee Agreement.

“Guarantor Payment” has the meaning assigned to
such term in Section 11.07(a).

“Hazardous Materials” means all explosive,
radioactive, hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes,
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law, including any material listed as a hazardous substance under
Section 101(14) of CERCLA.

“Indebtedness” of any Person means, without
duplication, (a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of
the deferred purchase price of property or services (excluding accounts payable
incurred in the ordinary course of business that are not overdue by more than
90 days, unless the payment thereof is being contested in good faith) (it
being understood that “deferred purchase price” in connection with any purchase
of property or assets shall include only that portion of the purchase price
that shall be deferred beyond the date on which the purchase is actually
consummated), (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by such Person, whether
or not the Indebtedness secured thereby has been assumed, (f) all
Guarantees by such Person of Indebtedness of others, (g) all Capital Lease
Obligations of such Person, (h) all obligations, contingent or otherwise,
of such Person as an account party in respect of letters of credit and letters
of guaranty, (i) all obligations, contingent or otherwise, of such Person
in respect of bankers’ acceptances and (j) all obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value any Equity
Interests of such Person, valued, in the case of redeemable preferred stock, at
its involuntary liquidation preference plus accrued and unpaid dividends.  The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor. 
Notwithstanding the foregoing, “Indebtedness” shall not include
(i) deferred taxes or (ii) unsecured indebtedness of the Parent
Borrower or any Subsidiary to finance insurance premiums in a principal amount
not in excess of the casualty and other insurance premiums to be paid by the
Parent Borrower or any Subsidiary for a three-year period beginning on the date
of any incurrence of such indebtedness.

“Indemnified Taxes” means Taxes other than
Excluded Taxes.

“Initial Lender” means Merrill Lynch Bank USA
and its Affiliates.

“Instrument” has the meaning assigned to such
term in the New York Uniform Commercial Code.

 29
 

 

“Intercreditor Agreement” means that certain
Amended and Restated Intercreditor Agreement dated as of February 17, 2004
among Old Pliant, the Pre-Petition Collateral Agent (as successor to Deutsche
Bank Trust Company Americas), the Senior First Lien Note Trustee and the Senior
Second Lien Note Trustee (or any other trustee or agent to which Liens are
granted under the Senior First Lien Security Documents or the Senior Second
Lien Security Documents).

“Interest Election Request” means a request by
a Borrower to convert or continue a Revolving Loan in accordance with Section 2.07.

“Interest Payment Date” means, with
respect to any ABR Loan (including any Swingline Loan) or any Eurodollar Loan,
the tenth Business Day of each calendar month.

“Interest Period” means, with respect to any
Eurodollar Borrowing, the period commencing on the date of such Borrowing and
ending on the tenth Business Day of the first calendar month thereafter.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter
shall be the effective date of the most recent conversion or continuation of
such Borrowing.

“Inventory” has the meaning assigned to such
term in Article 9 of the New York Uniform Commercial Code.

“Inventory Reserves” means reserves against
Inventory equal to the sum of the following (with each reserve determined at
the commercially reasonable discretion of the Administrative Agent):

(a)           a reserve for shrink that arises from
discrepancies between the perpetual accounting system of the applicable Loan
Party and physical counts of the Inventory pertaining to inventory quantities
on hand;

(b)           a reserve for royalties;

(c)           a reserve for Inventory that is
designated to be returned to vendors or that is recognized as damaged,
off-quality or not to customer specifications by the applicable Loan Party;

(d)           to the extent not included in the
calculation of Inventory Value, a revaluation reserve whereby capitalized
favorable variances shall be deducted from Eligible Inventory and unfavorable
variances shall not be added to Eligible Inventory;

(e)           a lower of the cost or market reserve
for any differences between the applicable Loan Party’s actual cost to produce
versus its selling price to third parties determined on a product line basis;

(f)            a reserve for prepaid freight;

(g)           a reserve for vendor rebates;

 30
 

 

(h)           with respect to the German Loan
Parties, a reserve for any amounts payable by such German Loan Party to
suppliers for such Inventory; and

(i)            any other reserve as deemed
appropriate from time to time.

“Inventory Value” means, with respect to any
Inventory of any Loan Party at any time of determination, the lesser of (a) the
cost of such Inventory as shown on the perpetual inventory records of each Loan
Party stated on a basis consistent with its current and historical accounting
practices, in dollars, determined on a first-in, first-out basis, less any
markup on such Inventory from an Affiliate and (b) the market value of such
Inventory.

“Investment Grade” means, in the case of
S&P, a rating of BBB- or better and, in the case of Moody’s, a rating
of Baa3 or better.

“Issuing Bank” means Merrill Lynch Bank USA, in
its capacity as the issuer of Letters of Credit hereunder, and its successors
in such capacity as provided in Section 2.05(i) and such other
financial institutions as may become Issuing Banks as provided in Section 2.05(i).  The Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term “Issuing Bank” shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.  In the event that there is more than one Issuing
Bank at any time, references herein and in the other Loan Documents to the
Issuing Bank shall be deemed to refer to the Issuing Bank in respect of the
applicable Letter of Credit or to all Issuing Banks, as the context requires.

“Landlord Lien Waiver” means a written
agreement reasonably acceptable to the Administrative Agent, pursuant to which
a Person shall waive or subordinate its rights and claims as landlord in any
Inventory of the applicable Loan Party for unpaid rents, grant access to the
Administrative Agent for the repossession and sale of such Inventory, and make
other agreements relative thereto.

“LC Availability Period” means the period from
and including the Effective Date to but excluding the earlier of (a) the
date that is 30 days prior to the Maturity Date and (b) the date of
termination of the Commitments.

“LC Disbursement” means a payment made by the
Issuing Bank pursuant to a Letter of Credit.

“LC Exposure” means, at any time, the sum of
(a) the aggregate undrawn amount of all outstanding Letters of Credit at
such time plus (b) the aggregate amount of all
LC Disbursements that have not yet been reimbursed by or on behalf of the
Parent Borrower at such time.  The
LC Exposure of any Domestic Lender at any time shall be its Applicable
Percentage of the total LC Exposure at such time.

“Lenders” means the Domestic Lenders, the
Australian Lenders, the Canadian Lenders, the German Lenders and the Mexican
Lenders.

“Letter of Credit” means any letter of credit
issued pursuant to this Agreement.

 31
 

 

“Letter of Credit Request” means a request by
the Parent Borrower for a Letter of Credit in substantially the form of Exhibit
I hereto.

“LIBO Rate” means, with respect to any
Eurodollar Borrowing for any Interest Period, the rate per annum determined by
the Administrative Agent equal to:

(a)           the rate of interest which is
identified and normally published by Bloomberg Professional Service Page BBAM 1
as the offered rate for loans in dollars for a one month period under the
caption British Bankers Association LIBOR Rates as of 11:00 a.m. (London time),
on the second full Business Day next preceding the first day of such Interest
Period; divided  by

(b)           a number equal to 1.0 minus
the aggregate (but without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on the day that is 2 Business Days
prior to the beginning of such Interest Period (including basic, supplemental,
marginal and emergency reserves under any regulations of the Federal Reserve
Board or other Governmental Authority having jurisdiction with respect thereto,
as now and from time to time in effect) for Eurodollar funding (currently
referred to as “Eurocurrency Liabilities” in Regulation D of the Federal
Reserve Board) that are required to be maintained by a member bank of the
Federal Reserve System.

If such interest rates shall cease to be available
from Bloomberg Professional Service (or its successor satisfactory to the
Administrative Agent), the LIBO Rate shall be determined from such financial
reporting service or other information as shall be mutually acceptable to the
Administrative Agent and the Parent Borrower.

“Lien” means, with respect to any asset,
(a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance,
charge or security interest in, on or of such asset, (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such asset and (c) in
the case of securities, any purchase option, call or similar right of a third
party with respect to such securities.

“Loan Documents” means this Agreement, the Fee
Letter, the Guarantee Agreements, the Security Documents, the Intercreditor
Agreement, all Swap Agreements between any Loan Party and any counterparty that
was a Lender (or an Affiliate thereof) at the time it entered into such Swap
Agreement, all agreements or other documents executed by any Loan Party in
respect of Banking Services and each other agreement or document executed by a
Loan Party and delivered to the Administrative Agent or any Lender in
connection with or pursuant to any of the foregoing.

“Loan Parties” means the Parent Borrower, the
Subsidiary Borrowers, and each of the other Subsidiaries that executes and
delivers a Loan Document.

“Loans” means the loans made by the Lenders to
the Borrowers pursuant to this Agreement, including Swingline Loans and
Protective Advances.

“Margin Stock” has the meaning assigned to such
term in Regulation U.

 32
 

 

“Mark-to-Market Value” has the meaning assigned
to such term in the Intercreditor Agreement.

“Material Adverse Effect” means a material
adverse effect on (a) the business, operations, properties, assets,
performance or condition (financial or otherwise) or contingent or other
liabilities of the Parent Borrower and the Subsidiaries, taken as a whole,
(b) the ability of the Loan Parties to perform any material obligations
under any Loan Document or (c) the rights of or benefits available to the
Lenders under any Loan Document.

“Material Indebtedness” means Indebtedness
(other than the Loans, Letters of Credit and loans under the Fixed Asset Credit
Agreement), or obligations in respect of one or more Swap Agreements, of any
one or more of the Parent Borrower and the Subsidiaries in an aggregate
principal or similar amount exceeding $10,000,000.  For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of the Parent Borrower
or any Subsidiary in respect of any Swap Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that the
Parent Borrower or such Subsidiary would be required to pay if such Swap
Agreement were terminated at such time.

“Maturity Date” means the earliest of (a) July
18, 2011, (b) the date of termination of the Lenders’ obligations to make Loans
and to incur LC Exposure or permit existing Loans to remain outstanding
pursuant to Article VII, (c) May 15, 2009, if the Senior First Lien Notes
outstanding on the Effective Date are not refinanced in full prior to such date
with the proceeds of Permitted Refinancing Indebtedness, (d) August 1, 2009, if
the Senior Second Lien Notes outstanding on the Effective Date are not
refinanced in full prior to such date with the proceeds of Permitted
Refinancing Indebtedness and (e) May 1, 2010, if the Senior Subordinated Notes
outstanding on the Effective Date are not refinanced in full prior to such date
with the proceeds of Permitted Refinancing Indebtedness.

“Mexican Borrowing Base” means, at any time of
determination, an amount equal to the sum, without duplication of:

(a)           (i) 95% of each Mexican Loan Party’s
Adjusted Eligible Accounts Receivable, plus (ii) 85% of each
Mexican Loan Party’s Adjusted Eligible Finished Goods, plus (iii) 55% of
each Mexican Loan Party’s Adjusted Eligible Work in Process, plus (iv)
55% of each Mexican Loan Party’s Adjusted Eligible Raw Materials, minus

(b)           the Rent Reserve with respect to each
Mexican Loan Party, minus

(c)           the Priority Payables Reserve with
respect to each Mexican Loan Party, minus

(d)           the Secured Obligations Reserve with
respect to each Mexican Loan Party, minus

(e)           any Reserves with respect to each
Mexican Loan Party, including, without limitation, commencing 60 days after the
Effective Date, Reserves with respect to any liens registered in favor of
Bancomer (now known as BBVA Bancomer) on the Accounts or Inventory of any
Mexican Loan Party.

 33
 

 

The Mexican Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent pursuant to this Agreement.  Standards of eligibility and reserves and
advance rates of the Mexican Borrowing Base may be revised and adjusted from
time to time solely at the commercially reasonable discretion of the
Administrative Agent, with any changes in such standards to be effective
immediately after delivery of notice thereof to the Parent Borrower.  For purposes of calculating the Mexican
Borrowing Base on any date, all amounts reflected or outstanding in Mexican
Pesos shall be translated into dollars at the exchange rate in effect on such
date, as determined in good faith by the Parent Borrower.

“Mexican Lender” means each Domestic Lender or
any Affiliate of a Domestic Lender designated by such Domestic Lender to the
Parent Borrower as a “Mexican Lender”. 
The Mexican Lender on the Effective Date shall be Merrill Lynch Mortgage
Capital Inc.

“Mexican Loan Party” means the Mexican
Subsidiary Borrower and any other Loan Party organized under the laws of Mexico
or any state or province thereof.

“Mexican Peso” or “P” refers to the
lawful money of Mexico.

“Mexican Pledge Agreement” means the Mexican
Pledge Agreement, substantially in the form of Exhibit C-5,
among the Parent Borrower, Pliant Corporation International, the Mexican Loan
Parties and the Administrative Agent.

 “Mexican
Revolving Exposure” means, with respect to any Mexican Lender at any time,
the sum of the outstanding principal amount of such Mexican Lender’s Mexican
Revolving Loans.

“Mexican Revolving Loan” means a Loan made by a
Mexican Lender pursuant to Section 2.01(e). 
Each Mexican Revolving Loan shall be a Eurodollar Loan or an ABR Loan.

“Mexican Security Agreement” means the Mexican
Security Agreement, substantially in the form of Exhibit D-5,
among the Mexican Loan Parties and the Administrative Agent, and each other
security agreement or other instrument or document executed and delivered by
any Mexican Loan Party to secure any of the Foreign Obligations.

“Mexican Sublimit” means $15,000,000.

“Mexican Subsidiary Borrower” means Aspen
Industrial, S.A. de C.V., a corporation organized under the laws of Mexico.

“Mexico” means the United Mexican States.

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

“Mortgage” means a mortgage, deed of trust,
assignment of leases and rents, leasehold mortgage or other security document,
including any amendment thereto, granting a Lien on any Mortgaged Property to
secure the Obligations.

 34
 

 

“Mortgaged Property” means, initially, each
parcel of real property and the improvements thereto owned by a Loan Party and
identified on Schedule 1.01(a), and includes each other parcel of
real property and improvements thereto with respect to which a Mortgage is
granted pursuant to Section 5.12 or 5.13.

“Multiemployer Plan” means a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.

“Net Proceeds” means, with respect to any event
(a) the cash proceeds received by the Parent Borrower and the Subsidiaries
in respect of such event including (i) any cash received in respect of any
non-cash proceeds (excluding interest payments), but only as and when received,
(ii) in the case of a casualty, insurance proceeds, and (iii) in the
case of a condemnation or similar event, condemnation awards and similar
payments, net of (b) the sum of (i) all reasonable fees and
out-of-pocket expenses paid by the Parent Borrower and the Subsidiaries to
third parties (other than to the Parent Borrower or a Subsidiary) in connection
with such event, (ii) in the case of a sale, transfer or other disposition
of an asset (including pursuant to a sale and leaseback transaction or a
casualty or other insured damage or condemnation or similar proceeding), the
amount of all payments required to be made by the Parent Borrower and the
Subsidiaries as a result of such event to repay Indebtedness (other than Loans)
secured by such asset or otherwise subject to mandatory prepayment as a result
of such event (including in order to obtain any consent required therefor) and (iii) the
amount of all taxes paid (or reasonably estimated to be payable) by the Parent
Borrower and the Subsidiaries, and the amount of any reserves established by
the Parent Borrower and the Subsidiaries to fund contingent liabilities
reasonably estimated to be payable, and that are directly attributable to such
event (as determined reasonably and in good faith by the chief financial
officer of the Parent Borrower).  In the
case of Net Proceeds denominated in a currency other than dollars, the amount
of such Net Proceeds shall be the dollar equivalent thereof based upon the
exchange rates prevailing at the time of the transaction giving rise to such
Net Proceeds.

“New York Uniform Commercial Code” means the
Uniform Commercial Code as from time to time in effect in the State of New
York.

“New Zealand Dollar” refers to the lawful money
of New Zealand.

“Non-Consenting Lender” has the meaning
assigned to such term in Section 9.02(c).

“Obligations” means the Domestic Obligations
and the Foreign Obligations.

“Old Pliant” means Pliant Corporation, a Utah
corporation and the predecessor to the Parent Borrower.

“Original Obligations” has the meaning assigned
to such term in Section 9.15.

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

 35
 

 

“Parallel Debt Security” has the meaning
assigned to such term in Section 9.15.

“Parallel Obligations” has the meaning assigned
to such term in Section 9.15.

“Parent Borrower” has the meaning specified in
the preamble.

“PBGC” means the Pension Benefit Guaranty
Corporation referred to and defined in ERISA and any successor entity
performing similar functions.

“Perfection Certificate” means a certificate
substantially in the form of Exhibit F, completed and supplemented with the
schedules and attachments contemplated thereby, and duly executed by an
executive officer of each Loan Party.

“Permitted Acquisition” means any acquisition
by the Parent Borrower or any of its Subsidiaries of all or substantially all
of the assets or all of the Equity Interests of any Person or any operating
division thereof (the “Target”), or the merger of any Target with or
into the Parent Borrower or any Subsidiary (and, in the case of a merger with
any Borrower, with such Borrower being the surviving corporation), subject to
the satisfaction of each of the following conditions:

(a)           the Administrative Agent shall
receive at least 10 days’ prior written notice of such proposed acquisition,
which notice shall include, without limitation, a reasonably detailed
description of such proposed acquisition;

(b)           such proposed acquisition shall only
involve assets located in the United States and comprising a business, or those
assets of a business, of the type engaged in by the Parent Borrower and its
Subsidiaries as of the Effective Date;

(c)           such proposed acquisition shall be
consensual and shall have been approved by the Target’s board of directors;

(d)           no additional Indebtedness or other
liabilities shall be incurred, assumed or otherwise be reflected on a
consolidated balance sheet of the Parent Borrower and Target after giving effect
to such proposed acquisition, except (i) Loans made hereunder, (ii) ordinary
course trade payables and accrued expenses and (iii) Indebtedness of the Target
permitted under Section 6.01;

(e)           the sum of (i) all amounts payable in
connection with such proposed acquisition, (ii) all other Permitted
Acquisitions consummated after the Effective Date (including in the case of
clauses (i) and (ii) all transaction costs and all Indebtedness and liabilities
incurred or assumed in connection therewith or otherwise reflected in a
consolidated balance sheet of the Parent Borrower and Target) and (iii) all
Investments made pursuant to Section 6.05(j) shall not exceed
$50,000,000 during the term of this Agreement;

(f)            at or prior to the closing of such
proposed acquisition, the Parent Borrower (or the Subsidiary making such
proposed acquisition) and the Target shall have executed such documents and
taken such actions as may be required under Sections 5.12  and 5.13;

 36
 

 

(g)           the Parent Borrower shall have
delivered to the Administrative Agent, in form and substance reasonably
satisfactory to the Administrative Agent and no later than 10 days prior to
such proposed acquisition, such other financial information, documentation or
other information relating to such proposed acquisition as the Administrative
Agent or any Lender shall reasonably request;

(h)           on or prior to the date of such
proposed acquisition, the Administrative Agent shall have received, in form and
substance reasonably satisfactory to the Administrative Agent, copies of the
acquisition agreement and any other documents reasonably requested by the
Administrative Agent; and

(i)            at the time of such proposed
acquisition and after giving effect thereto, (A) no Default or Event of Default
shall have occurred and be continuing and (B) the Fixed Charge Coverage Ratio
for the most recent 12-month period for which financial statements have been
provided to the Administrative Agent, after giving pro forma effect to such
proposed acquisition, shall not be less than 1.10 to 1.00 and the
Administrative Agent shall have received reasonably detailed calculations
setting forth the Parent Borrower’s compliance with the foregoing.

“Permitted Encumbrances” means:

(a)           Liens
imposed by law for Taxes that (i) are not yet due or (ii) are being contested
in compliance with Section 5.05;

(b)           carriers’,
warehousemen’s, mechanics’, materialmen’s, processors’, landlords’, repairmen’s
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than 60 days or are
being contested in compliance with Section 5.05;

(c)           pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations;

(d)           deposits
made to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature, in each case in the ordinary course of business;

(e)           judgment
liens in respect of judgments that do not constitute an Event of Default under
clause (k) of Article VII;

(f)            Liens
of a collection bank arising in the ordinary course of business under § 4-208
of the Uniform Commercial Code in effect in the relevant jurisdiction;

(g)           Liens
(i) disclosed on title policies delivered to the Administrative Agent in
respect of any Mortgaged Property and (ii) easements, zoning restrictions,
rights-of-way and similar restrictions and encumbrances (including minor title
and survey defects) on real property imposed by law or arising in the ordinary
course of business that do not secure any Indebtedness and do not materially
detract from the value of the affected

 37
 

 

property or interfere
with the ordinary conduct of business of the Parent Borrower or any Subsidiary;

(h)           Liens
in respect of real property that become Mortgaged Property after the Effective
Date pursuant to Section 5.13 to the extent such Lien is permitted
by the applicable Mortgage and reasonably acceptable to the Administrative
Agent; and

(i)            Canadian
statutory Liens for employee source deductions and vacation pay;

provided that the term “Permitted
Encumbrances” shall not include any Lien securing Indebtedness.

“Permitted Investments” means: (i) a
marketable obligation, maturing within two years after issuance thereof, issued
or guaranteed by the United States of America or an instrumentality or
agency thereof, (ii) a certificate of deposit or banker’s acceptance,
maturing within one year after issuance thereof, issued by any Lender, or a
national or state bank or trust company or a European, Canadian or Japanese
bank in each case having capital, surplus and undivided profits of at least
$100,000,000 and whose long-term unsecured debt has a rating of “A” or better
by S&P or A2 or better by Moody’s or the equivalent rating by any other
nationally recognized rating agency (provided that the aggregate face amount of
all investments in certificates of deposit or banker’s acceptances issued by
the principal offices of or branches of such European or Japanese banks located
outside the United States shall not at any time exceed 33-1/3% of
all investments described in this definition), (iii) open market
commercial paper, maturing within 270 days after issuance thereof, which
has a rating of A1 or better by S&P or P1 or better by Moody’s, or the
equivalent rating by any other nationally recognized rating agency,
(iv) repurchase agreements and reverse repurchase agreements with a term
not in excess of one year with any financial institution that has been elected
a primary government securities dealer by the Federal Reserve Board or whose
securities are rated AA-or better by S&P or Aa3 or better by Moody’s
or the equivalent rating by any other nationally recognized rating agency relating
to marketable direct obligations issued or unconditionally guaranteed by the
United States of America or any agency or instrumentality thereof and
backed by the full faith and credit of the United States of America,
(v) ”money market” preferred stock maturing within six months after
issuance thereof or municipal bonds issued by a corporation organized under the
laws of any state of the United States, which has a rating of “A” or
better by S&P or Moody’s or the equivalent rating by any other nationally recognized
rating agency, (vi) tax exempt floating rate option tender bonds backed by
letters of credit issued by a national or state bank whose long-term unsecured
debt has a rating of AA or better by S&P or Aa2 or better by Moody’s or the
equivalent rating by any other nationally recognized rating agency, (vii) ”money
market” funds that invest in the investments specified in clauses (i)
through (vi) above and (viii) demand deposit accounts with commercial
banks.

“Permitted Redemption Indebtedness” means any
Indebtedness of the Parent Borrower issued to refinance, redeem, repurchase or
otherwise replace (collectively, “refinance”) all or any portion of any
of the Series AA Preferred Stock; provided that (a) the aggregate
principal amount at maturity of such Permitted Redemption Indebtedness does not
exceed the aggregate liquidation preference of the Series AA Preferred Stock
(plus accrued and unpaid

 38
 

 

dividends) being refinanced, (b) such Permitted
Redemption Indebtedness has a rate of interest at a market rate determined at
the time of pricing, but in any event, at no time greater than the rate of
interest of the Senior Subordinated Notes, (c) the stated maturity of such
Permitted Redemption Indebtedness is no earlier than 180 days after the
Maturity Date, (d) such Permitted Redemption Indebtedness does not require
any scheduled amortization, principal or sinking fund payments earlier than 180
days after the Maturity Date, (e) such Permitted Redemption Indebtedness is
unsecured and subordinated in right of payment to the Obligations on terms no
less favorable to the Lenders than those contained in the Senior Subordinated
Note Documents, (f) such Permitted Redemption Indebtedness does not have
different obligors or guarantors than those with respect to the Senior
Subordinated Notes, and (g) all other terms and conditions (including, as
applicable, any intercreditor provisions) of such Permitted Redemption
Indebtedness are not less favorable to the Lenders or the Parent Borrower and
its subsidiaries in any material respect than those contained in the Senior
Subordinated Notes.

 “Permitted
Refinancing Indebtedness” means any Indebtedness of the Parent Borrower
issued to refinance, redeem, repurchase or otherwise replace (collectively, “refinance”)
all or any portion of any of the Senior First Lien Notes, Senior Second Lien
Notes or Senior Subordinated Notes (or previous refinancings, redemptions,
repurchases or replacements thereof constituting Permitted Refinancing
Indebtedness); provided that (a) the aggregate principal amount at
maturity of such Permitted Refinancing Indebtedness does not exceed the
aggregate principal amount at maturity of the Indebtedness being refinanced
(plus unpaid accrued interest and premium thereon), (b) if the aggregate
principal amount at maturity of the Indebtedness being refinanced exceeds the
accreted value of such Indebtedness, the accreted value of such Permitted
Refinancing Indebtedness does not exceed the accreted value of the Indebtedness
being refinanced (plus unpaid accrued interest (not included in the accreted
value) and premium thereon), (c) such Permitted Refinancing Indebtedness has a
rate of interest at a market rate determined at the time of pricing, but in any
event, at no time greater than the rate of interest of any of the Indebtedness
being refinanced, (d) the stated maturity of such Permitted Refinancing
Indebtedness is no earlier than the later of (i) 180 days after the Maturity
Date and (ii) the date on which the Indebtedness being refinanced would
otherwise come due in accordance with its terms, (e) such Permitted
Refinancing Indebtedness does not require any scheduled amortization, principal
or sinking fund payments earlier than the later of (i) 180 days after the
Maturity Date and (ii) the date on which the Indebtedness being refinanced
would otherwise come due in accordance with its terms, (f) with respect to any
refinancing of the Senior Subordinated Notes, such Permitted Refinancing
Indebtedness is unsecured and subordinated in right of payment to the
Obligations on terms no less favorable to the Lenders than those contained in
the Senior Subordinated Note Documents, (g) such Permitted Refinancing
Indebtedness does not have different obligors or guarantors than those with
respect to the Senior First Lien Notes, Senior Second Lien Notes or Senior
Subordinated Notes, as applicable, being refinanced and (h) all other
terms and conditions (including, as applicable, any collateral and
intercreditor provisions) of such Permitted Refinancing Indebtedness are not
less favorable to the Lenders or the Parent Borrower and its subsidiaries in
any material respect than those contained in (i) except in the case of
Permitted Refinancing Indebtedness referred to in clause (ii) below, the Senior
First Lien Notes, Senior Second Lien Notes or Senior Subordinated Notes, as
applicable, being refinanced, or (ii) if such Permitted Refinancing
Indebtedness is refinancing any Senior First Lien Notes described in clause (b)
of the definition thereof, the Senior First Lien Notes described in clause (a)
of the definition thereof.

 39
 

 

“Person” means any natural person, corporation,
limited liability company, trust, joint venture, association, company,
partnership, Governmental Authority or other entity.

“Plan” means any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA,
Section 412 of the Code or Section 302 of ERISA, and in respect of
which the Parent Borrower or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an “employer”
as defined in Section 3(5) of ERISA.

“Plan of Reorganization” means the Debtors’
Fourth Amended Joint Plan of Reorganization dated June 19, 2006 filed by the
Filing Companies with the Bankruptcy Court.

“Pledge Agreements” means the Domestic Pledge
Agreement, Australian Pledge Agreement, Canadian Pledge Agreement, German
Pledge Agreement and Mexican Pledge Agreement.

“Pliant Packaging” means Pliant Packaging of
Canada, LLC, a Utah limited liability company.

“Pounds” refers to the lawful money of the
United Kingdom.

“Pre-Petition Collateral Agent” means the “Collateral
Agent” under and as defined in the Pre-Petition Loan Agreement.

“Pre-Petition Loan Agreement” means the Amended
and Restated Credit Agreement, dated as of November 21, 2005, among the Parent
Borrower, Uniplast Industries Co., and the Subsidiaries of Parent Borrower
party thereto as borrowers, as Borrowers, the Lenders party thereto, Morgan
Stanley Senior Funding, Inc., as Domestic B Agent, and GE Capital, as Domestic
A Agent, Administrative Agent and Collateral Agent.

“Preferred Stock” means the Series AA Preferred
Stock and the Series M Preferred Stock.

“Prepayment Fee” means a fee payable to the
Administrative Agent, for the benefit of the Lenders, in connection with the
reduction in all or a portion of the Commitments or the termination of all or a
portion of the Commitments in an amount equal to the amount of the Commitment
so reduced or terminated multiplied  by 1.00%.

“Prime Rate” means the rate publicly quoted
from time to time by The Wall Street Journal as the “prime rate” (or, if
The Wall Street Journal ceases quoting a prime rate, the highest per
annum rate of interest published by the Federal Reserve Board in Federal
Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as
the Bank prime loan rate or its equivalent); each change in the Prime Rate
shall be effective from and including the date such change is publicly
announced as being effective.

“Priority Payables Reserve” means, with respect
to any Person at any time, any amount payable by such Person that is secured by
a Lien in favor of a Governmental Authority that ranks or is capable of ranking
prior to or pari  passu with the Liens created by the Security

 40
 

 

Documents in respect of any Eligible Accounts
Receivable or Eligible Inventory, including, if applicable, amounts owing for
wages, vacation pay, severance pay, employee deductions (including with respect
to any Australian Loan Party any accrued annual leave, long service leave, sick
leave, parental leave, rostered days off, annual leave loading and any payments
in lieu of notice), sales tax, excise tax, Taxes payable pursuant to
Part IX of the Excise Tax Act (Canada) (net of GST input credits), income
tax, workers compensation, government royalties, pension fund obligations,
overdue rents or Taxes, and other statutory or other claims.

“Process Agent” has the meaning assigned to
such term in Section 9.09(e).

“Pro Forma Opening Borrowing Base” means the
Borrowing Base, calculated as of June 30, 2006.

“Projections” has the meaning assigned to such
term in Section 4.01(l).

“Protective Advances” has the meaning assigned
to such term in Section 2.19(a).

“Qualified Preferred Stock” means, with respect
to any Person, any preferred Equity Interest that by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable) or upon the happening of any event does not
(a) (i) mature or becomes mandatorily redeemable pursuant to a sinking
fund obligation or otherwise; (ii) become convertible or exchangeable at
the option of the holder thereof for Indebtedness or preferred stock that is
not Qualified Preferred Stock; or (iii) become redeemable at the option of
the holder thereof (other than as a result of a change of control event), in
whole or in part, in each case on or prior to the first anniversary of the
Maturity Date and (b) provide holders thereunder with rights upon the
occurrence of a “change of control” event or have other terms relating to “change
of control” events.

“Raw Materials” means items or materials used
or consumed in the manufacturing of goods to be sold by the applicable Loan
Party in the ordinary course of business.

“Real Estate” has the meaning assigned to such
term in Section 3.05.

“Recovery Event” means (a) any loss of or
damage to property of the Parent Borrower or any of its Subsidiaries that
results in the receipt by such Person of proceeds of insurance in excess of
$500,000 in the aggregate or (b) any taking of property of the Parent Borrower
or any of its Subsidiaries that results in the receipt by such Person of a
compensation payment in respect thereof in excess of $500,000 in the aggregate.

“Register” has the meaning assigned to such
term in Section 9.04.

“Regulation U” means Regulation U of
the Board as from time to time in effect and all official rulings and
interpretations thereunder or thereof.

“Regulation X” means Regulation X of
the Board as from time to time in effect and all official rulings and interpretations
thereunder or thereof.

 41
 

 

“Regulation Z” means Regulation Z of
the Board as from time to time in effect and all official rulings and
interpretations thereunder or thereof.

“Reinvestment Event” means any Asset
Disposition or Recovery Event in respect of which the Parent Borrower has
delivered a Reinvestment Notice.

“Reinvestment Notice” means a written notice
executed by a Financial Officer stating that no Default or Event of Default has
occurred and is continuing and that the Parent Borrower (directly or indirectly
through a Subsidiary) intends and expects to use all or a specified portion of
the proceeds of an Asset Disposition or Recovery Event to acquire assets useful
in its business.

“Reinvestment Prepayment Amount” means, with
respect to any Reinvestment Event, the cash proceeds from such Reinvestment
Event less any amount expended prior to the relevant Reinvestment Prepayment
Date to acquire assets useful in the Parent Borrower’s business.

“Reinvestment Prepayment Date” means, with
respect to any Reinvestment Event, the earliest of (a) the date occurring 180
days after such Reinvestment Event, (b) the date on which the Parent Borrower
shall have determined not to, or shall have otherwise ceased to, acquire assets
useful in the Parent Borrower’s business with all or any portion of the
relevant proceeds from a Reinvestment Event and (c) the date an Event of
Default shall occur and be continuing.

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

“Release” means any release, spill, emission,
leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal,
leaching or migration into or through the environment.

“Rent Reserve” means, with respect to any
location that is not owned by a Loan Party where any Inventory (to the extent
subject to Liens arising by operation of law or otherwise to secure rent,
warehousing fees or similar payment obligations payable by any Loan Party in
respect of such location) is located and with respect to which no Landlord Lien
Waiver or Bailee Letter, as applicable, is in effect, a reserve equal to three
months’ rent, warehousing fees or similar payment obligations at such location;
provided, however, that no Rent Reserve shall be established
until 60 days after the Effective Date (or such later date acceptable to the
Administrative Agent in its sole discretion).

“Required Canadian Lenders” means, at any time,
Canadian Lenders having Canadian Revolving Exposure representing more than 50%
of the sum of the total Canadian Revolving Exposure at such time.

“Required Lenders” means, at any time, Lenders
having Credit Exposure and unused Commitments representing more than 50% of the
sum of the total Credit Exposure and unused Commitments at such time.

 42
 

 

“Reserves” means any reserves against Eligible
Accounts Receivable, Eligible Finished Goods, Eligible Raw Materials or
Eligible Work in Progress of any Loan Party or the Availability Amount that the
Administrative Agent may, in its reasonable credit judgment, establish from
time to time, including, without limitation, reserves for the cost of enforcing
the rights of the Secured Parties under the Security Documents.

“Restricted Payment” means any dividend or
other distribution (whether in cash, securities or other property) with respect
to any Equity Interests in the Parent Borrower or any Subsidiary, or any
payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests in the
Parent Borrower or any Subsidiary or any option, warrant or other right to
acquire any such Equity Interests in the Parent Borrower or any Subsidiary.

“Revolving Availability Period” means the
period from and including the Effective Date to but excluding the earlier of
the Maturity Date and the date of termination of the Commitments.

“Revolving Credit Note” means a revolving
credit note in substantially the form of Exhibit K hereto.

“Revolving Exposure” means, with respect to any
Lender at any time, the sum of the Domestic Revolving Exposure and Foreign
Revolving Exposure of such Lender.

“Revolving Loan” means a Domestic Revolving
Loan or any Foreign Revolving Loan.

“S&P” means Standard & Poor’s
Ratings Group, a division of The McGraw-Hill Companies, Inc.

“SEC” means the Securities and Exchange
Commission.

“Second Priority Collateral” shall have the
meaning assigned to the term “2004 Notes First Lien Collateral” in the
Intercreditor Agreement.

“Secured Obligations Reserve” means, at any
time, the sum of (a) the Mark-to-Market Value of the Swap Obligations of
the Loan Parties at such time, (b) if, at such time, any Cash Management
Arrangement is in effect that could give rise to Banking Services Obligations,
the actual amount of Banking Services Obligations at such time and (c) any
amount payable by a Loan Party that is secured by the First Priority Collateral
and ranks pari passu with or senior to the Obligations.

“Secured Parties” means the Domestic Secured
Parties and the Foreign Secured Parties.

“Security Agreements” means the Domestic
Security Agreement, Australian Security Agreement, Canadian Security Agreement,
German Security Agreement and Mexican Security Agreement.

 43
 

 

“Security Documents” means the Security
Agreements, the Pledge Agreements, the Mortgages and each other security
agreement or other instrument or document executed and delivered by any Loan
Party to secure any of the Obligations.

“Senior First Lien Note Documents” means the
Senior First Lien Notes, the Senior First Lien Note Indenture, the Senior First
Lien Security Documents, the Intercreditor Agreement and all other instruments,
agreements and documents evidencing, guaranteeing or otherwise governing the
terms of the Senior First Lien Notes.

“Senior First Lien Note Indenture” means (a)
the amended and restated indenture dated as of May 6, 2005, between the Parent
Borrower and Wilmington Trust Company, as trustee, (b) the indenture dated as
of February 17, 2004, between the Parent Borrower and Wilmington Trust Company,
as trustee, (c) the supplemental first lien notes indenture, dated as of the
Effective Date (the “Supplemental First Lien Notes Indenture”), between
the Parent Borrower and Wilmington Trust Company, as trustee, and (d) any other
indenture or similar agreement or instrument, in each case pursuant to which
any Senior First Lien Notes are issued.

“Senior First Lien Notes” means (a) the
$298,200,000 principal amount at maturity of 11-5/8% senior secured notes due
2009 of the Parent Borrower outstanding on the Effective Date, (b) the
$7,800,000 principal amount at maturity of 11-1/8% senior secured discount
notes due 2009 of the Parent Borrower outstanding on the Effective Date and (c)
any Permitted Refinancing Indebtedness in respect thereof.

“Senior First Lien Note Trustee” means the
trustee under the Senior First Lien Note Indenture, or any successor thereto.

“Senior First Lien Security Documents” means
any and all security agreements, pledge agreements, mortgages and other
agreements and documents pursuant to which any Liens are granted to secure any
Indebtedness or other obligations in respect of the Senior First Lien Notes.

“Senior Second Lien Note Documents” means the
Senior Second Lien Notes, the Senior Second Lien Note Indenture, the Senior
Second Lien Security Documents, the Intercreditor Agreement and all other
instruments, agreements and documents evidencing, guaranteeing or otherwise
governing the terms of the Senior Second Lien Notes.

“Senior Second Lien Note Indenture” means the
indenture dated as of May 30, 2003, between the Parent Borrower and Wells Fargo
Bank, N.A. (as successor to Wilmington Trust Company), as trustee, or any other
indenture or similar agreement or instrument, in each case pursuant to which
any Senior Second Lien Notes are issued.

“Senior Second Lien Notes” means the
$250,000,000 aggregate principal amount of 11-1/8% senior secured notes due
2009 of the Parent Borrower outstanding on the Effective Date and any Permitted
Refinancing Indebtedness in respect thereof.

“Senior Second Lien Note Trustee” means the
trustee under the Senior Second Lien Note Indenture, or any successor thereto.

 44
 

 

“Senior Second Lien Security Documents” means
any and all security agreements, pledge agreements, mortgages and other
agreements and documents pursuant to which any Liens are granted to secure any
Indebtedness or other obligations in respect of the Senior Second Lien Notes.

“Senior Subordinated Note Documents” means the
Senior Subordinated Notes, the Senior Subordinated Note Indenture and all other
instruments, agreements and documents evidencing, guaranteeing or otherwise
governing the terms of the Senior Subordinated Notes.

“Senior Subordinated Note Indenture” means
collectively, (a) the indenture dated as of July 18, 2006, between the Parent
Borrower and The Bank of New York Trust Company, N.A., as trustee, and (b) any
other indenture or similar agreement or instrument, in each case pursuant to
which any Senior Subordinated Notes are issued.

“Senior Subordinated Notes” means the
$35,000,000 aggregate principal amount of 13% senior subordinated notes due
2010 of the Parent Borrower outstanding on the Effective Date and any Permitted
Refinancing Indebtedness in respect thereof.

“Series AA Preferred Stock” means the Series AA
Preferred Stock of the Parent Borrower having the terms specified in the Parent
Borrower’s Amended and Restated Certificate of Incorporation dated July 18,
2006, as such terms may be amended or modified from time to time pursuant to Section
6.12(a).

“Series M Preferred Stock” means the Series M
Preferred Stock of the Parent Borrower having the terms specified in the Parent
Borrower’s Amended and Restated Certificate of Incorporation dated July 18,
2006, as such terms may be amended or modified from time to time pursuant to Section
6.12(a).

“Sponsor” means J.P. Morgan Partners, LLC.

“Statutory Reserve Rate” means a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board to which
the Administrative Agent is subject with respect to the LIBO Rate, for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board).  Such
reserve percentages shall include those imposed pursuant to such
Regulation D.  Eurodollar Loans
shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. 
The Statutory Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.

“subsidiary” means, with respect to any Person
(the “parent”) at any date, any corporation, limited liability company,
partnership, association or other entity the accounts of which would be
consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP
as of such date, as well as any other corporation, limited liability company,
partnership, association or other

 45
 

 

entity of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the ordinary
voting power or, in the case of a partnership, more than 50% of the general
partnership interests are, as of such date, owned, controlled or held.

“Subsidiary” means any direct or indirect
subsidiary of the Parent Borrower.

“Subsidiary Borrower” means each of the
Australian Subsidiary Borrower, the Canadian Subsidiary Borrowers, the Domestic
Subsidiary Borrowers, the German Subsidiary Borrower and the Mexican Subsidiary
Borrower.

“Swap Agreement” means any agreement with
respect to any swap, spot, forward, future or derivative transaction or option
or similar agreement involving, or settled by reference to, one or more rates,
currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk
or value or any similar transaction or any combination of these transactions; provided
that no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Parent Borrower or the Subsidiaries shall be a Swap
Agreement.

“Swap Obligations” of each Loan Party means all
obligations, monetary or otherwise, under each Swap Agreement that (i) is
effective on the Effective Date with a counterparty that is a Lender (or an
Affiliate of a Lender) as of the Effective Date or (ii) is entered into after
the Effective Date with any counterparty that is a Lender (or an Affiliate
thereof) at the time such Swap Agreement is entered into.

“Swingline Exposure” means, at any time, the
aggregate principal amount of all Swingline Loans outstanding at such
time.  The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.

“Swingline Lender” means Merrill Lynch Bank
USA, in its capacity as lender of Swingline Loans hereunder.

“Swingline Loan” has the meaning assigned to
such term in Section 2.04.

“Swingline Loan Request” means a request by the
Parent Borrower for a Swingline Loan in substantially the form of Exhibit J
hereto.

“Taxes” means any and all present or future
taxes, levies, imposts, duties, deductions, charges or withholdings imposed by
any Governmental Authority.

“Transactions” means (a) the execution,
delivery and performance by each Loan Party of the Loan Documents to which it
is to be a party, the borrowing of Loans, the use of the proceeds thereof and
the issuance of Letters of Credit hereunder, (b) the execution, delivery and
performance by each Fixed Asset Loan Party of the Fixed Asset Loan Documents to
which it is to be a party, the borrowing of loans thereunder and the use of the
proceeds thereof, (c) the termination of the Pre-Petition Loan Agreement, and
the payment in full of all loans, interest and other amounts accrued or owing
thereunder (other than in respect of the Existing Letters of Credit, which will
be fully cash collateralized or backstopped with Letters of Credit issued under

 46
 

 

this Agreement on or prior to the Effective Date), (d)
the termination of the DIP Credit Agreement, and the payment in full of all
loans, interest and other amounts accrued or owing thereunder (other than in
respect of the Existing Letters of Credit, which will be fully cash
collateralized or backstopped with Letters of Credit issued under this
Agreement on or prior to the Effective Date), and (e) the payment of the
Transaction Costs.

“Transaction Costs” means the fees and expenses
incurred by, or required to be reimbursed or paid by, the Parent Borrower and
the Subsidiaries in connection with the Transactions.

“Type”, when used in reference to any Loan or
Borrowing, refers to whether the rate of interest on such Loan, or on the Loans
comprising such Borrowing, is determined by reference to the LIBO Rate or the
Alternate Base Rate.

“Uniplast Canada” means Uniplast Industries
Co., an unlimited liability company organized under the laws of Nova Scotia.

“USA Patriot Act” means the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act) Act of 2001.

“Wholly Owned Subsidiary” means a Subsidiary of
which securities (except for directors’ qualifying shares or other de minimus
shares) or other ownership interests representing 100% of the equity are at the
time owned, directly or indirectly, by the Parent Borrower.

“Withdrawal Liability” means liability of the
Parent Borrower or any ERISA Affiliate to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

“Work in Process” means items that require
additional processing or manufacturing to be sold to customers (other than
customers that are Affiliates of any Loan Party) by a Loan Party in the
ordinary course of its business, other than Raw Materials.

SECTION 1.02.  Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be
classified and referred to by Class (e.g., a “Revolving Loan”) or by
Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar
Revolving Loan”).  Borrowings also may be
classified and referred to by Class (e.g., a “Revolving Loan”) or by
Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g.,
a “Eurodollar Revolving Loan”).

SECTION 1.03.  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or

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modifications set forth herein), (b) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (c) the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

SECTION 1.04.  Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if
the Parent Borrower notifies the Administrative Agent that the Parent Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Parent Borrower that the Required Lenders request an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given before
or after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.

ARTICLE II

THE CREDITS

SECTION 2.01.  Commitments.  (a) 
Subject to the terms and conditions set forth herein, each Domestic
Lender agrees to make loans in dollars to the Parent Borrower and the Domestic
Subsidiary Borrowers from time to time during the Revolving Availability Period
in an aggregate principal amount that will not result in (i) such Lender’s
Domestic Revolving Exposure exceeding such Lender’s Commitment (after giving
effect to the application of any proceeds being applied contemporaneously with
the advance of such Domestic Revolving Loans), (ii) the total Domestic
Revolving Exposure exceeding the lesser of (A) the total amount of the
Available Commitments at such time and (B) the Domestic Borrowing Base
then in effect, (iii) the total Revolving Exposure exceeding the total
amount of the Available Commitments at such time or (iv) the total Revolving
Exposure plus the total Fixed Asset Revolving Exposure exceeding the total
amount of the Commitments at such time, subject to the Administrative Agent’s
authority, in its sole discretion, to make Protective Advances pursuant to the
terms of Section 2.19.

(b)           Subject to the terms and conditions
set forth herein, each Australian Lender agrees to make loans in dollars to the
Australian Subsidiary Borrower from time to time during the Australian Availability
Period in an aggregate principal amount that will not result in (i) such Lender’s
Australian Revolving Exposure exceeding such Lender’s Applicable Percentage of
the Australian Sublimit, (ii) the total Australian Revolving Exposure
exceeding the lesser of (A) the Australian Sublimit and (B) the
Australian Borrowing Base then in effect, (iii) the total Revolving
Exposure exceeding the total amount of the Available Commitments at such time
or (iv) the total Revolving Exposure plus the total Fixed Asset Revolving
Exposure

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exceeding the total amount of the Commitments at such
time, subject to the Administrative Agent’s authority, in its sole discretion,
to make Protective Advances pursuant to the terms of Section 2.19.  Notwithstanding anything herein to the
contrary, the obligations of each Australian Lender to make Australian
Revolving Loans to the Australian Subsidiary Borrower pursuant to this
Agreement shall terminate if any Domestic Lender is unable to designate an
Affiliate reasonably satisfactory to it as the Australian Lender hereunder.

(c)           Subject to the terms and conditions
set forth herein, each Canadian Lender agrees to make loans in dollars to the
Canadian Subsidiary Borrowers from time to time during the Revolving
Availability Period in an aggregate principal amount that will not result in
(i) such Lender’s Canadian Revolving Exposure exceeding such Lender’s
Applicable Percentage of the Canadian Sublimit, (ii) the total Canadian
Revolving Exposure exceeding the Canadian Sublimit, (iii) the Canadian
Revolving Exposure with respect to each Canadian Subsidiary Borrower exceeding
such Canadian Subsidiary Borrower’s Canadian Borrowing Base then in effect,
(iv) the total Revolving Exposure exceeding the total amount of the
Available Commitments at such time or (v) the total Revolving Exposure plus the
total Fixed Asset Revolving Exposure exceeding the total amount of the
Commitments at such time, subject to the Administrative Agent’s authority, in
its sole discretion, to make Protective Advances pursuant to the terms of Section
2.19.

(d)           Subject to the terms and conditions
set forth herein, each German Lender agrees to make loans in dollars to the
German Subsidiary Borrower from time to time during the Revolving Availability
Period in an aggregate principal amount that will not result in (i) such Lender’s
German Revolving Exposure exceeding such Lender’s Applicable Percentage of the
German Sublimit, (ii) the total German Revolving Exposure exceeding the
lesser of (A) the German Sublimit and (B) the German Borrowing Base
then in effect, (iii) the total Revolving Exposure exceeding the total
amount of the Available Commitments at such time or (iv) the total Revolving
Exposure plus the total Fixed Asset Revolving Exposure exceeding the total
amount of the Commitments at such time, subject to the Administrative Agent’s
authority, in its sole discretion, to make Protective Advances pursuant to the
terms of Section 2.19.

(e)           Subject to the terms and conditions
set forth herein, each Mexican Lender agrees to make loans in dollars to the
Mexican Subsidiary Borrower from time to time during the Revolving Availability
Period in an aggregate principal amount that will not result in (i) such Lender’s
Mexican Revolving Exposure exceeding such Lender’s Applicable Percentage of the
Mexican Sublimit, (ii) the total Mexican Revolving Exposure exceeding the
lesser of (A) the Mexican Sublimit and (B) the Mexican Borrowing Base
then in effect, (iii) the total Revolving Exposure exceeding the total
amount of the Available Commitments at such time or (iv) the total Revolving
Exposure plus the total Fixed Asset Revolving Exposure exceeding the total
amount of the Commitments at such time, subject to the Administrative Agent’s
authority, in its sole discretion, to make Protective Advances pursuant to the
terms of Section 2.19.

(f)            Within
the foregoing limits and subject to the terms and conditions set forth herein,
(i) the Borrowers (other than the Australian Subsidiary Borrower) may borrow,
prepay and reborrow Revolving Loans (other than Australian Revolving Loans)
during the Revolving Availability Period and (ii) the Australian Subsidiary
Borrower may borrow, prepay and reborrow Australian Revolving Loans during the
Australian Availability Period.

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SECTION 2.02.  Loans and Borrowings.  (a) Each Domestic Revolving Loan (other than
a Swingline Loan) shall be made as part of a Borrowing consisting of Domestic
Revolving Loans of the same Type made by the Domestic Lenders ratably in
accordance with their respective Commitments. 
Each Australian Revolving Loan shall be made as part of a Borrowing
consisting of Australian Revolving Loans of the same Type made by the
Australian Lenders ratably in accordance with their respective Applicable
Percentage.  Each Canadian Revolving Loan
shall be made as part of a Borrowing consisting of Canadian Revolving Loans of
the same Type made by the Canadian Lenders ratably in accordance with their
respective Applicable Percentage.  Each
German Revolving Loan shall be made as part of a Borrowing consisting of German
Revolving Loans of the same Type made by the German Lenders ratably in
accordance with their respective Applicable Percentage.  Each Mexican Revolving Loan shall be made as
part of a Borrowing consisting of Mexican Revolving Loans of the same Type made
by the Mexican Lenders ratably in accordance with their respective Applicable
Percentage.  The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder; provided that the Commitments of the Lenders
are several and no Lender shall be responsible for any other Lender’s failure
to make Loans as required.  Any
Protective Advance and any Swingline Loan shall be made in accordance with the
procedures set forth in Sections 2.19 and 2.04.

(b)           Subject to Section 2.13,
each Revolving Loan shall be comprised entirely of ABR Loans or Eurodollar
Loans as the applicable Borrower may request in accordance herewith.  Each Swingline Loan shall be an ABR Loan.

(c)           At the commencement of each Interest
Period for any Eurodollar Revolving Loan, such Borrowing shall be in an
aggregate amount that is an integral multiple of $1,000,000 and not less than
$5,000,000.  At the time that each ABR
Revolving Loan is made, such Borrowing shall be in an aggregate amount that is
an integral multiple of $500,000 and not less than $1,000,000; provided
that an ABR Revolving Loan of any Class may be in an aggregate amount that is
equal to the entire unused balance of the total amount of the Commitments of
such Class or that is equal to the amount required to finance the reimbursement
of an LC Disbursement as contemplated by Section 2.05(e).  Each Swingline Loan shall be in an amount
that is an integral multiple of $100,000 and not less than $500,000.  Borrowings of more than one Type and Class
may be outstanding at the same time; provided that there shall not at
any time be more than a total of eight Eurodollar Borrowings outstanding.

(d)           Notwithstanding any other provision
of this Agreement, no Borrower shall be entitled to request, or to elect to
convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Maturity Date.

SECTION 2.03.  Requests for Borrowings.  To request a Revolving Loan, the Parent
Borrower shall deliver a Borrowing Request to the Administrative Agent (on
behalf of itself or another Borrower) (a) in the case of a Eurodollar
Borrowing, not later than 12:00 noon, New York City time, three
Business Days before the date of the proposed Borrowing or (b) in the case
of an ABR Borrowing, not later than 4:00 p.m., New York City
time, one Business Day before the date of the proposed Borrowing; provided
that any such notice of an ABR Revolving Loan to finance the reimbursement of
an LC Disbursement as contemplated by Section 2.05(e) may be given
not later than 10:00 a.m., New York City time, on the date of the
proposed

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Borrowing.  Each
such Borrowing Request shall be irrevocable and shall be signed by the Parent
Borrower (on behalf of itself or another Borrower).  Each such Borrowing Request shall specify the
following information in compliance with Section 2.02:

(i)            whether the Parent Borrower is
requesting such Borrowing on behalf of itself or for another Borrower (and, if
on behalf of another Borrower, the identity of such Borrower);

(ii)           whether the requested Borrowing is a
Domestic Revolving Borrowing, Australian Revolving Borrowing, Canadian
Revolving Borrowing, German Revolving Borrowing or Mexican Revolving Borrowing;

(iii)          the aggregate amount of such
Borrowing;

(iv)          the date of such Borrowing, which
shall be a Business Day; and

(v)           whether such Borrowing is to be an
ABR Borrowing or a Eurodollar Borrowing.

If no election as to the Type of Borrowing is
specified, then the requested Borrowing shall be an ABR Borrowing.  Promptly following receipt of a Borrowing
Request with respect to a Borrowing of any Class in accordance with this
Section, the Administrative Agent shall advise each Lender with respect to such
Class of the details thereof and of the amount of such Lender’s Loan to be made
as part of the requested Borrowing.  The
Australian Subsidiary Borrower may not request more than two Australian
Borrowings and Australian Borrowings (as defined in the Fixed Asset Credit
Agreement) in the aggregate per calendar month.

SECTION 2.04.  Swingline Loans.  (a) Subject to the terms and conditions set
forth herein, the Swingline Lender agrees to make loans (“Swingline Loans”)
to the Parent Borrower from time to time during the Revolving Availability
Period, in an aggregate principal amount at any time outstanding that will not
result in (i) the aggregate principal amount of outstanding Swingline
Loans exceeding $10,000,000, (ii) the total Domestic Revolving Exposure
exceeding the lesser of (A) the total amount of the Available Commitments and
(B) the Domestic Borrowing Base then in effect, (iii) the total Revolving
Exposure exceeding the total amount of the Available Commitments then in effect
and (iv) the total Revolving Exposure plus the total Fixed Asset Revolving
Exposure exceeding the total amount of the Commitments then in effect; provided
that the Swingline Lender shall not be required to make a Swingline Loan to
refinance an outstanding Swingline Loan. 
Within the foregoing limits and subject to the terms and conditions set
forth herein, the Parent Borrower may borrow, prepay and reborrow Swingline
Loans.

(b)           To request a Swingline Loan, the
Parent Borrower shall deliver a Swingline Loan Request to the Administrative
Agent, not later than 3:00 p.m., New York City time, on the day of a
proposed Swingline Loan.  Each such
Swingline Loan Request shall be irrevocable and shall specify the requested
date (which shall be a Business Day) and the amount of the requested Swingline
Loan.  The Administrative Agent will
promptly advise the Swingline Lender of any such notice received from the
Parent Borrower.  The Swingline Lender
shall make each Swingline Loan available to the Parent Borrower by wire transfer
to the account specified

 51
 

 

by the Parent Borrower in the request for such
Swingline Loan (or, in the case of a Swingline Loan made to finance the
reimbursement of an LC Disbursement as provided in Section 2.05(e),
by remittance to the Issuing Bank) by 2:00 p.m., New York City time,
on the requested date of such Swingline Loan.

(c)           The Swingline Lender may by written
notice given to the Administrative Agent not later than 10:00 a.m.,
New York City time, on any Business Day require the Domestic Lenders to
acquire participations on such Business Day in all or a portion of the
Swingline Loans outstanding.  Such notice
shall specify the aggregate amount of Swingline Loans in which Domestic Lenders
will participate.  Promptly upon receipt
of such notice, the Administrative Agent will give notice thereof to each
Domestic Lender, specifying in such notice such Domestic Lender’s Applicable
Percentage of such Swingline Loan or Loans. 
Each Domestic Lender hereby absolutely and unconditionally agrees, upon
receipt of notice as provided above, to pay to the Administrative Agent, for
the account of the Swingline Lender, such Domestic Lender’s Applicable
Percentage of such Swingline Loan or Loans. 
Each Domestic Lender acknowledges and agrees that its obligation to
acquire participations in Swingline Loans pursuant to this paragraph is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default or reduction
or termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.  Each Domestic Lender shall comply with its
obligation under this paragraph by making a wire transfer to the Administrative
Agent for the benefit of the Swingline Lender of immediately available funds,
in the same manner as provided in Section 2.06 with respect to
Domestic Revolving Loans made by such Domestic Lender (and Section 2.06
shall apply, mutatis  mutandis, to the payment obligations of the
Domestic Lenders), and the Administrative Agent shall promptly pay to the
Swingline Lender the amounts so received by it from the Lenders.  The Administrative Agent shall notify the
Parent Borrower of any participations in any Swingline Loan acquired pursuant to
this paragraph, and thereafter payments in respect of such Swingline Loan shall
be made to the Administrative Agent and not to the Swingline Lender.  Any amounts received by the Swingline Lender
from the Parent Borrower (or other party on behalf of the Parent Borrower) in
respect of a Swingline Loan after receipt by the Swingline Lender of the
proceeds of a sale of participations therein shall be promptly remitted to the
Administrative Agent; any such amounts received by the Administrative Agent
shall be promptly remitted by the Administrative Agent to the Domestic Lenders
that shall have made their payments pursuant to this paragraph and to the
Swingline Lender, as their interests may appear.  The purchase of participations in a Swingline
Loan pursuant to this paragraph shall not relieve the Parent Borrower of any
default in the payment thereof.

SECTION 2.05.  Letters of Credit.  (a) General.  Subject to the terms and conditions set forth
herein, the Issuing Bank agrees to issue at the request of the Parent Borrower
one or more Letters of Credit from time to time on any Business Day during the
LC Availability Period.  The Parent
Borrower may request the issuance of Letters of Credit for its own account or
the account of any other Domestic Loan Party (provided that the Parent
Borrower shall be a co-applicant with respect to each Letter of Credit issued
for the account of or in favor of such other Loan Party, and the issuance of
any such Letter of Credit shall constitute a Guarantee by the Parent Borrower
of Indebtedness of such Loan Party pursuant to Section 6.05(e)), in
a form reasonably acceptable to the Administrative Agent and the Issuing Bank,
at any time and from time to time during the LC Availability Period.  All Letters of Credit shall be denominated in

 52
 

 

dollars.  In the
event of any inconsistency between the terms and conditions of this Agreement
and the terms and conditions of any form of letter of credit application or
other agreement submitted by the Parent Borrower to, or entered into by the
Parent Borrower with, the Issuing Bank relating to any Letter of Credit, the
terms and conditions of this Agreement shall control.

(b)           Notice of Issuance, Amendment,
Renewal, Extension; Certain Conditions. 
To request the issuance of a Letter of Credit (or the amendment, renewal
or extension of an outstanding Letter of Credit), the Parent Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the
Issuing Bank and the Administrative Agent (reasonably in advance of the
requested date of issuance, amendment, renewal or extension) a Letter of Credit
Request requesting the issuance of a Letter of Credit, or identifying the
Letter of Credit to be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension (which shall be a Business Day), the
date on which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the
name and address of the beneficiary thereof and such other information as shall
be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, the Parent
Borrower also shall submit a letter of credit application on the Issuing Bank’s
standard form in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Parent Borrower shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension
(i) the LC Exposure shall not exceed $20,000,000, (ii) the total Domestic
Revolving Exposure shall not exceed the lesser of (A) the total amount of the
Available Commitments and (B) the Domestic Borrowing Base then in effect,
(iii) the total Revolving Exposure shall not exceed the total amount of
the Available Commitments then in effect and (iv) the total Revolving Exposure
plus the total Fixed Asset Revolving Exposure shall not exceed the total amount
of the Commitments then in effect.

(c)           Expiration Date.  Each Letter of Credit shall expire at or
prior to the close of business on the earlier of (i) the date one year
after the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and
(ii) the date that is 30 days prior to the Maturity Date.

(d)           Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Domestic Lender, and each Domestic Lender hereby acquires
from the Issuing Bank, a participation in such Letter of Credit equal to such
Domestic Lender’s Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit.  In
consideration and in furtherance of the foregoing, each Domestic Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Domestic Lender’s Applicable Percentage
of each LC Disbursement made by the Issuing Bank and not reimbursed by the
Parent Borrower on the date due as provided in paragraph (e) of this
Section, or of any reimbursement payment required to be refunded to the Parent
Borrower for any reason.  Each Domestic
Lender acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of

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Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.

(e)           Reimbursement.  If the Issuing Bank shall make any
LC Disbursement in respect of a Letter of Credit, the Parent Borrower
shall reimburse such LC Disbursement by paying to the Administrative Agent
an amount equal to such LC Disbursement not later than 12:00 noon,
New York City time, on the date that such LC Disbursement is made, if
the Parent Borrower shall have received notice of such LC Disbursement
prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Parent Borrower prior to such time on such
date, then not later than 12:00 noon, New York City time, on (i) the
Business Day that the Parent Borrower receives such notice, if such notice is
received prior to 10:00 a.m., New York City time, on the day of
receipt, or (ii) the Business Day immediately following the day that the
Parent Borrower receives such notice, if such notice is not received prior to
such time on the day of receipt; provided that, if the Parent Borrower
does not otherwise elect by notice to the Administrative Agent to make such
payment, the Parent Borrower shall be deemed to have requested in accordance
with Section 2.03 (but without regard to the minimum borrowing
amounts specified in Section 2.02) that such LC Disbursement
be financed with an ABR Domestic Revolving Loan in an amount equal to such
LC Disbursement, the Administrative Agent shall notify the Domestic
Lenders thereof, the Domestic Lenders shall (subject to the conditions to
borrowing herein) advance their respective ABR Domestic Revolving Loans (which
shall be applied to reimburse such LC Disbursement) and, to the extent
such ABR Domestic Revolving Loans are so advanced and applied, the Parent
Borrower’s obligation to make such payment shall be deemed discharged as of the
date due and replaced by the resulting ABR Domestic Revolving Loans.  If and to the extent that the Parent Borrower’s
obligation to make such payment is not fully discharged and replaced by ABR
Domestic Revolving Loans as aforesaid (whether as a result of the failure to
satisfy any condition to borrowing or otherwise) and if the Parent Borrower
otherwise fails to make such payment when due, the Administrative Agent shall
notify each Domestic Lender of the applicable LC Disbursement, the payment
then due from the Parent Borrower in respect thereof and such Domestic Lender’s
Applicable Percentage thereof.  Promptly
following receipt of such notice, each Domestic Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Parent Borrower, in the same manner as provided in Section 2.06
with respect to Domestic Revolving Loans made by such Domestic Lender (and Section 2.06
shall apply, mutatis  mutandis, to the payment obligations of the
Domestic Lenders), and the Administrative Agent shall promptly pay to the
Issuing Bank the amounts so received by it from the Domestic Lenders.  Promptly following receipt by the
Administrative Agent of any payment from the Parent Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
Issuing Bank or, to the extent that Domestic Lenders have made payments
pursuant to this paragraph to reimburse the Issuing Bank, then to such Domestic
Lenders and the Issuing Bank as their interests may appear.  Any payment made by a Domestic Lender
pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement
(other than the funding of ABR Domestic Revolving Loans as contemplated above)
shall not constitute a Loan and shall not relieve the Parent Borrower of its
obligation to reimburse such LC Disbursement.

(f)            Obligations Absolute.  The Parent Borrower’s obligation to reimburse
LC Disbursements as provided in paragraph (e) of this Section shall
be absolute, unconditional

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and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability
of any Letter of Credit or this Agreement, or any term or provision therein,
(ii) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent or invalid in any respect or any statement therein
being untrue or inaccurate in any respect, (iii) payment by the Issuing
Bank under a Letter of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit or (iv) any
other event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Parent Borrower’s obligations hereunder. 
Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor
any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of
Credit or any payment or failure to make any payment thereunder (irrespective
of any of the circumstances referred to in the preceding sentence), or any
error, omission, interruption, loss or delay in transmission or delivery of any
draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Issuing Bank; provided that nothing in this Section 2.05
shall be construed to excuse the Issuing Bank from liability to the Parent
Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Parent Borrower to
the extent permitted by applicable law) suffered by the Parent Borrower that
are caused by the Issuing Bank’s failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof.  The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of the Issuing Bank, the Issuing Bank shall be deemed to
have exercised care in each such determination. 
In furtherance of the foregoing and without limiting the generality
thereof, the parties agree that, with respect to documents presented that
appear on their face to be in substantial compliance with the terms of a Letter
of Credit, the Issuing Bank may, in its sole discretion, either accept and make
payment upon such documents without responsibility for further investigation,
regardless of any notice or information to the contrary, or refuse to accept
and make payment upon such documents if such documents are not in strict
compliance with the terms of such Letter of Credit.

(g)           Disbursement Procedures.  The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit.  The
Issuing Bank shall promptly notify the Administrative Agent and the Parent
Borrower by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Bank has made or will make an LC Disbursement
thereunder; provided that any failure to give or delay in giving such
notice shall not relieve the Parent Borrower of its obligation to reimburse the
Issuing Bank and the Domestic Lenders with respect to any such
LC Disbursement.

(h)           Interim Interest.  If the Issuing Bank shall make any
LC Disbursement, then, unless the Parent Borrower shall reimburse such
LC Disbursement in full on the date such LC Disbursement is made, the
unpaid amount thereof shall bear interest, for each day from and including the
date such LC Disbursement is made to but excluding the date that the
Parent Borrower reimburses such LC Disbursement, at the rate per annum
then applicable to ABR

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Domestic Revolving Loans; provided that, if the
Parent Borrower fails to reimburse such LC Disbursement when due pursuant
to paragraph (e) of this Section, then Section 2.12(d) shall
apply.  Interest accrued pursuant to this
paragraph shall be for the account of the Issuing Bank, except that interest
accrued on and after the date of payment by any Domestic Lender pursuant to
paragraph (e) of this Section to reimburse the Issuing Bank shall be for
the account of such Lender to the extent of such payment.

(i)            Replacement of the Issuing Bank;
Additional Issuing Banks.  The
Issuing Bank may be replaced at any time by written agreement among the Parent
Borrower, the Administrative Agent, the replaced Issuing Bank and the successor
Issuing Bank.  The Administrative Agent
shall notify the Domestic Lenders of any such replacement of the Issuing Bank
or any such additional Issuing Bank.  At
the time any such replacement shall become effective, the Parent Borrower shall
pay all unpaid fees accrued for the account of the replaced Issuing Bank
pursuant to Section 2.11(b). 
From and after the effective date of any such replacement or addition,
as applicable, (i) the successor or additional Issuing Bank shall have all
the rights and obligations of the Issuing Bank under this Agreement with
respect to Letters of Credit to be issued thereafter and (ii) references
herein to the term “Issuing Bank” shall be deemed to refer to such successor or
such addition or to any previous Issuing Bank, or to such successor or such
addition and all previous Issuing Banks, as the context shall require.  After the replacement of an Issuing Bank
hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of
Credit.  If at any time there is more
than one Issuing Bank hereunder, the Parent Borrower may, in its discretion,
select which Issuing Bank is to issue any particular Letter of Credit.

(j)            Cash Collateralization.  If any Event of Default shall occur and be
continuing, on the Business Day that the Parent Borrower receives notice from
the Administrative Agent or the Required Lenders (or, if the maturity of the
Loans has been accelerated, Domestic Lenders with LC Exposure representing
greater than 50% of the total LC Exposure) demanding the deposit of cash
collateral pursuant to this paragraph, the Parent Borrower shall deposit in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Domestic Lenders, an amount in cash equal to 105% of
the LC Exposure as of such date plus any accrued and unpaid interest
thereon; provided that the obligation to deposit such cash collateral
shall become effective immediately, and such deposit shall become immediately
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Parent Borrower described in clause
(h) or (i) of Article VII.  The Parent
Borrower also shall deposit cash collateral pursuant to this paragraph as and
to the extent required by Section 2.10(b), and any such cash
collateral so deposited and held by the Administrative Agent hereunder shall
constitute part of the Borrowing Base for purposes of determining compliance
with Section 2.10(b).  Each
such deposit shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of the Parent Borrower under this
Agreement.  The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account.  Other
than any interest earned on the investment of such deposits, which investments
shall be made at the option and sole discretion of the Administrative Agent and
at the Parent Borrower’s risk and expense, such deposits shall not bear
interest.  Interest or profits, if any,
on such

 56
 

 

investments shall accumulate in such account.  Moneys in such account shall be applied by
the Administrative Agent to reimburse the Issuing Bank for
LC Disbursements for which it has not been reimbursed and, to the extent
not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Parent Borrower for the LC Exposure at such time or, if
the maturity of the Loans has been accelerated (but subject to the consent of
Domestic Lenders with LC Exposure representing greater than 50% of the
total LC Exposure), be applied to satisfy other obligations of the Parent
Borrower under this Agreement.  If the
Parent Borrower is required to provide an amount of cash collateral hereunder
as a result of the occurrence of an Event of Default, such amount (to the
extent not applied as aforesaid) shall be returned to the Parent Borrower
within three Business Days after all Events of Default have been cured or
waived.  If the Parent Borrower is
required to provide an amount of cash collateral hereunder pursuant to Section 2.10(b),
such amount (to the extent not applied as aforesaid) shall be returned to the
Parent Borrower as and to the extent that, after giving effect to such return,
the Parent Borrower would remain in compliance with Section 2.10(b)
and no Default shall have occurred and be continuing.

SECTION 2.06.  Funding of Borrowings.  (a) Each Lender shall make each Loan of any
Class to be made by it hereunder on the proposed date thereof by wire transfer
of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose for such Class by notice to the Lenders; provided that Swingline
Loans shall be made as provided in Section 2.04.  The Administrative Agent will make such Loans
available to the applicable Borrower by promptly transferring the amounts so
received, in like funds, to the applicable Borrower Account; provided
that ABR Domestic Revolving Loans made to finance the reimbursement of (i) an
LC Disbursement as provided in Section 2.05(e) shall be
remitted by the Administrative Agent to the Issuing Bank and (ii) a Protective
Advance shall be made by the Administrative Agent.

(b)           Unless the Administrative Agent shall
have received notice from a Lender prior to the proposed date of any Borrowing
that such Lender will not make available to the Administrative Agent such
Lender’s share of such Borrowing, the Administrative Agent may, in its sole
discretion, assume that such Lender has made such share available on such date
in accordance with paragraph (a) of this Section and may, in reliance upon
such assumption, make available to the applicable Borrower a corresponding
amount.  In such event, if a Lender has not
in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the applicable Borrower
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount with interest thereon, for each day from and including the
date such amount is made available to such Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of any Borrower, the interest rate
applicable to ABR Loans.  If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender’s Loan included in such Borrowing.

SECTION 2.07.  Interest Elections.  (a) Each Revolving Borrowing initially shall
be of the Type specified in the applicable Borrowing Request.  Thereafter, the Parent Borrower may elect (on
behalf of itself or another Borrower) to convert such Borrowing to a different
Type or to continue such Borrowing, all as provided in this Section.  The Parent Borrower (on behalf

 57
 

 

of itself or another Borrower) may elect different
options with respect to different portions of the affected Borrowing, in which
case each such portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each such portion
shall be considered a separate Borrowing. 
This Section shall not apply to Swingline Loans or Protective Advances,
which may not be converted or continued.

(b)           To make an election pursuant to this
Section, the Parent Borrower shall notify the Administrative Agent of such
election in writing by the time that a Borrowing Request would be required
under Section 2.03 if the Parent Borrower were requesting a
Revolving Borrowing of the Class and Type resulting from such election to be
made on the effective date of such election. 
Each such Interest Election Request shall be irrevocable and shall be in
a form approved by the Administrative Agent and signed by the Parent Borrower.

(c)           Each Interest Election Request shall
specify the following information in compliance with Section 2.02:

(i)            the Borrowing (including the
identity of the applicable Borrower) to which such Interest Election Request
applies and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clause (iii) below shall be specified for each resulting Borrowing);

(ii)           the effective date of the election
made pursuant to such Interest Election Request, which shall be a Business Day;
and

(iii)          whether the resulting Borrowing is to be
an ABR Borrowing or a Eurodollar Borrowing.

(d)           Promptly following receipt of an
Interest Election Request, the Administrative Agent shall advise each Lender of
the details thereof and of such Lender’s portion of each resulting Borrowing.

(e)           If the Parent Borrower fails to
deliver a timely Interest Election Request with respect to a Eurodollar
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Parent Borrower, then, so long as an Event of Default is continuing (i) no
outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be
converted to an ABR Borrowing at the end of the Interest Period applicable
thereto.

SECTION 2.08.  Termination and Reduction of Commitments.  (a) Unless previously terminated, the
Commitments shall terminate on the Maturity Date.

(b)           The Parent Borrower may at any time
terminate, or from time to time reduce, the Commitments; provided that
(i) each reduction of the Commitments shall be in an amount that is an
integral multiple of $1,000,000 and not less than $5,000,000 and (ii) the
Parent

 58
 

 

Borrower shall not terminate or reduce the Commitments
if (A) the total Revolving Exposure would exceed the total amount of the
Available Commitments or (B) after giving pro forma effect to such
reduction, the Facilities Availability Amount would be less than
$10,000,000.  In connection with such
termination or reduction, the Borrowers shall pay the applicable Prepayment
Fee; provided, however, that no Prepayment Fee shall be payable
on the Commitments in the event this Agreement is terminated in connection with
a refinancing of the Obligations in a transaction in which the Initial Lender
provides for the Borrowers a credit facility in which the Initial Lender is the
sole lead arranger and book manager and the sole administrative agent.

(c)           The Parent Borrower shall notify the
Administrative Agent of any election to terminate or reduce the Commitments
under paragraph (b) of this Section at least three Business Days prior to
the effective date of such termination or reduction, specifying such election
and the effective date thereof.  Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders with respect to such Commitments of the contents thereof.  Each notice delivered by the Parent Borrower
pursuant to this Section shall be irrevocable; provided that a notice of
termination of the Commitments delivered by the Parent Borrower under
paragraph (b) of this Section may state that such notice is conditioned
upon the effectiveness of other borrowings or the completion of the sale or
issuance of stock of the Parent Borrower or the sale of assets of the Parent
Borrower, in which case such notice may be revoked by the Parent Borrower (by
notice to the Administrative Agent on or prior to the specified effective date)
if such condition is not satisfied.  Any
termination or reduction of the Commitments shall be permanent.  Each reduction of the Commitments shall be
made ratably among the Lenders in accordance with their respective Commitments.

SECTION 2.09.  Repayment of Loans; Evidence of Debt.  (a) The Parent Borrower hereby
unconditionally promises to pay (i) to the Administrative Agent for the
account of each Domestic Lender the then unpaid principal amount of each
Domestic Revolving Loan of such Domestic Lender made to it on the Maturity
Date, (ii) to the Administrative Agent the then unpaid amount of each Protective
Advance on the earlier of the Maturity Date and demand by the Administrative
Agent and (iii) to the Swingline Lender the then unpaid principal amount
of each Swingline Loan on the Maturity Date. 
Each Domestic Subsidiary Borrower hereby unconditionally promises to
pay to the Administrative Agent for the account of each Domestic Lender
the then unpaid principal amount of each Domestic Revolving Loan of such
Domestic Lender made to it on the Maturity Date.  The Australian Subsidiary Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Australian Lender the then unpaid principal amount of each Australian
Revolving Loan of such Australian Lender on the Maturity Date.  Each Canadian Subsidiary Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each Canadian Lender the then unpaid principal amount of each Canadian
Revolving Loan of such Canadian Lender made to it on the Maturity Date.  The German Subsidiary Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
each German Lender the then unpaid principal amount of each German Revolving
Loan of such German Lender on the Maturity Date.  The Mexican Subsidiary Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of each Mexican
Lender the then unpaid principal amount of each Mexican Revolving Loan of such
Mexican Lender on the Maturity Date.

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(b)           Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of each Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid
to such Lender from time to time hereunder.

(c)           The Administrative Agent shall
maintain accounts in which it shall record (i) the amount of each Loan
made hereunder, the Class and Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or
to become due and payable from each Borrower to each Lender hereunder and
(iii) the amount of any sum received by the Administrative Agent hereunder
for the account of the Lenders and each Lender’s share thereof.

(d)           The entries made in the accounts maintained
pursuant to paragraph (b) or (c) of this Section shall be conclusive
evidence (absent manifest error) of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of any Borrower to repay the Loans in
accordance with the terms of this Agreement.

(e)           Any Lender may request that Loans
made by it be evidenced by a Revolving Credit Note.  In such event, the applicable Borrower shall
prepare, execute and deliver to such Lender a Revolving Credit Note payable to
the order of such Lender (or, if requested by such Lender, to such Lender and
its registered assigns).  Thereafter, the
Loans evidenced by such Revolving Credit Note and interest thereon shall at all
times (including after assignment pursuant to Section 9.04) be
represented by one or more Revolving Credit Notes in such form payable to the
order of the payee named therein (or, if such Revolving Credit Note is a
registered note, to such payee and its registered assigns).

SECTION 2.10.  Prepayment of Loans.  (a) The Borrowers shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to the requirements of this Section.

(b)           (i)            If
at any time the total Domestic Revolving Exposure exceeds the lesser of
(A) the total amount of the Available Commitments at such time and
(B) the Domestic Borrowing Base then in effect, then in any such case the
Domestic Borrowers shall immediately prepay first, Protective Advances, second,
Swingline Loans and third, Domestic Revolving Loans, without demand or
notice of any kind, to the extent necessary to eliminate such excess.  If any such excess remains after all Domestic
Revolving Loans, Protective Advances and Swingline Loans are prepaid, the
Parent Borrower shall deposit cash collateral pursuant to Section 2.05(j)
in an amount equal to such remaining excess.

(ii)           If at any time the total Australian
Revolving Exposure exceeds the lesser of (A) the Australian Sublimit at
such time and (B) the Australian Borrowing Base then in effect, then in
any such case the Australian Subsidiary Borrower shall immediately prepay the
Australian Revolving Loans, without demand or notice of any kind, to the extent
necessary to eliminate such excess.

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(iii)          If at any time (A) the total Canadian
Revolving Exposure exceeds the Canadian Sublimit at such time or (B) the
Canadian Revolving Exposure with respect to any Canadian Subsidiary Borrower
exceeds such Canadian Subsidiary Borrower’s Canadian Borrowing Base then in
effect, then in any such case the Canadian Subsidiary Borrowers shall
immediately prepay their respective Canadian Revolving Loans, without demand or
notice of any kind, to the extent necessary to eliminate such excess.

(iv)          If at any time the total German
Revolving Exposure exceeds the lesser of (A) the German Sublimit at such
time and (B) the German Borrowing Base then in effect, then in any such
case the German Subsidiary Borrower shall immediately prepay the German
Revolving Loans, without demand or notice of any kind, to the extent necessary
to eliminate such excess.

(v)           If at any time the total Mexican
Revolving Exposure exceeds the lesser of (A) the Mexican Sublimit at such
time and (B) the Mexican Borrowing Base then in effect, then in any such
case the Mexican Subsidiary Borrower shall immediately prepay the Mexican
Revolving Loans, without demand or notice of any kind, to the extent necessary
to eliminate such excess.

(vi)          If at any time the total Revolving
Exposure exceeds the total amount of the Available Commitments at such time,
then in any such case (A) the Domestic Borrowers shall immediately prepay first,
Protective Advances, second, Swingline Loans and third, Domestic
Revolving Loans, (B) the Australian Subsidiary Borrower shall immediately
prepay Australian Revolving Loans, (C) the Canadian Subsidiary Borrowers shall
immediately prepay Canadian Revolving Loans, (D) the German Subsidiary Borrower
shall immediately prepay German Revolving Loans, and (E) the Mexican Subsidiary
Borrower shall immediately prepay Mexican Revolving Loans, in each case,
without demand or notice of any kind, to the extent necessary to eliminate such
excess.  If any such excess remains after
all Revolving Loans, Protective Advances and Swingline Loans are prepaid, the
Parent Borrower shall deposit cash collateral pursuant to Section 2.05(j)
in an amount equal to such remaining excess.

(c)           Subject to Section 2.17(b), (c) and
(d) if an Event of Default shall have occurred and be continuing, during a Cash
Collection Period, the Administrative Agent may, and at the request of the
Required Lenders shall, (i) apply cash deposited in the Domestic Collateral
Proceeds Account on each Business Day to prepay, first, Protective
Advances, second, Swingline Loans and third, Domestic Revolving
Loans, (ii) apply cash deposited in the Foreign Collateral Proceeds Account on
each Business Day to prepay Foreign Revolving Loans and (iii) apply cash
deposited in the German Collateral Proceeds Account on each Business Day to
prepay German Revolving Loans; provided, however, that, in the
case of clauses (ii) and (iii), proceeds of Foreign Fixed Asset Collateral
shall be applied first, to the payment of the Fixed Asset Obligations to the
extent required by the Fixed Asset Credit Agreement and then, to the payment of
the Foreign Revolving Loans and German Revolving Loans, respectively.  To the extent the terms of this clause (c) do
not require any payment to be allocated to any specific Class of Revolving
Borrowings, the Administrative Agent will apply any prepayment of Revolving
Borrowings made pursuant to this clause (c) to each Class of Revolving
Borrowings on a pro rata basis, with each prepayment of Revolving Borrowings
within any Class applied to prepay ABR

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Borrowings before any other Borrowings, with any
excess prepayment amount applied to prepay Eurodollar Borrowings in order of
expiration of their respective Interest Periods (and applied on a pro rata
basis in respect of Eurodollar Borrowings with Interest Periods expiring on the
same date).

(d)           (i)            Unless
a Reinvestment Notice shall be delivered in respect thereof, immediately upon
receipt by any Loan Party of cash proceeds of any Asset Disposition or Recovery
Event, the Borrowers shall prepay the Loans in an amount equal to all such
proceeds, net of (A) commissions and other reasonable and customary
transaction costs, fees and expenses properly attributable to such transaction
and payable by Borrowers in connection therewith (in each case, paid to
non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of senior
Liens on such asset (to the extent such Liens constitute Permitted Encumbrances
hereunder), if any, and (D) an appropriate reserve for income taxes in
accordance with GAAP in connection therewith; provided, however,
that, proceeds of Foreign Fixed Asset Collateral shall be applied first, to the
payment of the Fixed Asset Obligations to the extent required by the Fixed
Asset Credit Agreement and then, to the payment of the Loans.  On each Reinvestment Prepayment Date, the
Loans shall be prepaid by an amount equal to the Reinvestment Prepayment Amount
with respect to the relevant Reinvestment Event.  Any such prepayment pursuant to this clause (i)
shall be applied in accordance with Section 2.17.

(ii)           If any Loan Party issues any Equity
Interests or any debt securities (other than (A) in connection with the Plan of
Reorganization, (B) Permitted Refinancing Indebtedness and Permitted Redemption
Indebtedness and (C) the Series M Preferred Stock to officers and employees of
the Parent Borrower and the Subsidiaries), no later than the Business Day
following the date of receipt of proceeds thereof in excess of $500,000, all
Borrowers (in the case of an issuance by a Loan Party that is not a Borrower)
or the issuing Borrower shall prepay the Loans (and cash collateralize Letter
of Credit Obligations) in an amount equal to all such proceeds, net of
underwriting discounts and commissions and other reasonable costs paid to
non-Affiliates in connection therewith. 
Any such prepayment shall be applied in accordance with Section 2.17.

(iii)          If at any time any Loan Party or any
of their respective subsidiaries receives any Extraordinary Receipts, the
Borrowers shall prepay the Loans in an amount equal to all such Extraordinary
Receipts no later than the Business Day following the date of receipt
thereof.  Any such prepayment shall be
applied in accordance with Section 2.17.

(e)           Prior to any optional or mandatory prepayment
of Borrowings hereunder (other than a mandatory prepayment made pursuant to
clause (c) above), the Parent Borrower shall, subject to the requirements of
clause (b) above, select the Borrowing or Borrowings to be prepaid and shall
specify such selection in the notice of such prepayment pursuant to paragraph
(e) of this Section; provided that (i) the Parent Borrower may elect not
to provide notice, or select the Borrowing or Borrowings to be prepaid, in
connection with a mandatory prepayment pursuant to clause (b) above and, in
such an event, (A), such prepayment shall be applied to outstanding Borrowings
in such manner as the Administrative Agent deems appropriate to comply with the
terms of clause (b) above and (B) to the extent that the terms of clause (b)
above

 62
 

 

and subclause (A) of this clause (i) do not require
any prepayment to be allocated to any specific Class of Revolving Borrowings,
the Administrative Agent shall apply such prepayment to each Class of Revolving
Borrowings on a pro rata basis, and (ii) each prepayment of Revolving
Borrowings within any Class shall be applied to prepay ABR Borrowings before
any other Borrowings, with any excess prepayment amount applied to prepay
Eurodollar Borrowings in order of expiration of their respective Interest
Periods (and applied on a pro rata basis in respect of Eurodollar Borrowings
with Interest Periods expiring on the same date).

(f)            The Parent Borrower shall notify the
Administrative Agent (and, in the case of prepayment of a Swingline Loan, the
Swingline Lender) in writing of any prepayment hereunder (i) in the case
of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m.,
New York City time, three Business Days before the date of prepayment,
(ii) in the case of prepayment of an ABR Borrowing, not later than
11:00 a.m., New York City time, one Business Day before the date of
prepayment or (iii) in the case of prepayment of a Swingline Loan, not
later than 12:00 noon, New York City time, on the date of prepayment.  Each such notice shall be irrevocable and
shall specify the prepayment date, the principal amount of each Borrowing or
portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment; provided
that (A) no notice shall be required in respect of any mandatory
prepayment made pursuant to clause (c) above, (B) in the event the
Parent Borrower elects to provide notice of a mandatory prepayment pursuant to
clause (b) above to identify the Borrowings to be prepaid in connection
therewith, such notice shall be given to the Administrative Agent on the same
day that the applicable prepayment is required to be made pursuant to such
clause, it being understood that any failure or delay on the part of the Parent
Borrower in providing such notice to the Administrative Agent shall not affect
the obligations of the Parent Borrower to make such prepayment, and (C) if
a notice of optional prepayment is given in connection with a conditional
notice of termination of the Commitments as contemplated by Section 2.08,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.08.  Promptly following receipt of any such notice
(other than a notice relating solely to Swingline Loans), the Administrative
Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowing
shall be in an amount such that the remaining amount of such Borrowing not so
prepaid would be permitted in the case of an advance of a Borrowing of the same
Type as provided in Section 2.02, except as necessary to apply
fully the required amount of a mandatory prepayment.  Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.12.

(g)           If, at 3:00 p.m., New York City time,
on any Business Day the amount, determined reasonably and in good faith by the
Parent Borrower (the “Cash Amount”), equal to (i) the aggregate amount
of “cash and cash equivalents” and “marketable securities” of the Foreign Loan
Parties (other than Uniplast Canada), in each case that would be required to be
reflected on a consolidated balance sheet of the Parent Borrower and the
Subsidiaries prepared as of such time in accordance with GAAP (excluding any
such “cash” that is “restricted” cash, including, without limitation, any such
cash subject to the Liens permitted by Section 6.03(j)), minus (ii) the
aggregate amount of payments in such cash and cash equivalents that will be
made (and will reduce such cash and cash equivalents) on such Business Day is
more than $11,000,000, then on such Business Day (A) the Australian Subsidiary
Borrower shall immediately prepay Australian Revolving Loans, (B) the Canadian
Subsidiary Borrowers (other

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than Uniplast Canada) shall immediately prepay
Canadian Revolving Loans, (C) the German Subsidiary Borrower shall immediately
prepay German Revolving Loans, and (D) the Mexican Subsidiary Borrower shall
immediately prepay Mexican Revolving Loans, in each case to the extent
necessary so that, after giving effect to such prepayment and the receipt by
the applicable Foreign Subsidiary Borrower of the proceeds of any Foreign
Revolving Loans made or to be made on such Business Day, the Cash Amount will
not exceed $11,000,000.  For purposes of
any calculation required by this clause (g), Section 4.02(e) and Section 6.14,
the amount of any cash and cash equivalents and marketable securities held by
the Foreign Loan Parties (other than Uniplast Canada) at any time and
denominated in a currency other than dollars shall be deemed to be the dollar
equivalent thereof determined in good faith by the Parent Borrower based upon
prevailing exchange rates at such time.

SECTION 2.11.  Fees. 
(a) The Parent Borrower agrees to pay to the Administrative Agent for
the account of the office (or Affiliate) of each Lender from which such Lender
would make Revolving Loans of any Class to the Borrowers hereunder (which
office or Affiliate shall be specified by each Lender for each Class of such
Lender’s Commitments in a notice to the Administrative Agent prior to the
initial payment to such Lender under this paragraph) a commitment fee, which
shall accrue at a per annum rate of 0.375% on the average daily unused amount
of the Commitment of such Lender during the period from and including the
Effective Date to but excluding the date on which such Commitment
terminates.  Accrued commitment fees with
respect to each Commitment shall be payable in arrears on the first Business
Day of each month and on the date on which such Commitment terminates,
commencing on the first such date to occur after the date hereof.  All commitment fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).  For purposes of determining the unused amount
of the Commitment of each Lender for purposes of computing commitment fees with
respect to Commitments, a Commitment of a Lender shall be deemed to be used to
the extent of the (i) the outstanding Revolving Loans and LC Exposure of such
Lender (and the Swingline Exposure of such Lender shall be disregarded for such
purpose) and (ii) the Fixed Asset Revolving Exposure.

(b)           The Parent Borrower agrees to pay
(i) to the Administrative Agent for the account of each Domestic Lender a
participation fee with respect to its participations in Letters of Credit,
which shall accrue at the Applicable Rate used to determine the interest rate
applicable to Eurodollar Domestic Revolving Loans on the average daily amount
of such Domestic Lender’s LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date on which
such Domestic Lender’s Commitment terminates and the date on which such
Domestic Lender ceases to have any LC Exposure, and (ii) to the Issuing
Bank a fronting fee, which shall accrue at the rate or rates per annum
separately agreed upon between the Parent Borrower and the Issuing Bank on the
average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any
LC Exposure, as well as the Issuing Bank’s standard fees with respect to
the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. 
Participation fees and fronting fees accrued through and including the
first Business Day of each month of each year shall be payable on

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such first Business Day of each month, commencing on
the first such date to occur after the Effective Date; provided that all
such fees shall be payable on the date on which the Commitments terminate and
any such fees accruing after the date on which the Commitments terminate shall
be payable on demand.  Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand.  All
participation fees and fronting fees shall be computed on the basis of a year
of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

(c)           The Parent Borrower agrees to pay to
the Administrative Agent, for its own account, fees payable in the amounts and
at the times separately agreed upon between the Parent Borrower and the
Administrative Agent.

(d)           All fees payable hereunder shall be
paid on the dates due, in immediately available funds, to the Administrative
Agent (or to the Issuing Bank in the case of fees payable to it) for
distribution, in the case of commitment fees and participation fees, to the
Lenders entitled thereto.  Fees paid
shall not be refundable under any circumstances.

SECTION 2.12.  Interest.  (a) The Loans made by the Lenders comprising
each ABR Borrowing (including each Swingline Loan) shall bear interest at
the Alternate Base Rate plus the Applicable Rate.

(b)           The Loans made by the Lenders
comprising each Eurodollar Borrowing shall bear interest at the LIBO Rate for
the Interest Period in effect for such Borrowing plus the Applicable
Rate.

(c)           Each Protective Advance shall bear
interest at the rate applicable to ABR Domestic Revolving Loans as provided in
paragraph (a) of this Section.

(d)           Notwithstanding the foregoing, so
long as any Event of Default has occurred and is continuing under Article VII
(a), (b), (h) or (i), or so long as any other Event of Default has occurred and
is continuing and at the election of the Administrative Agent (or upon the
written request of the Required Lenders) confirmed by written notice to the
Parent Borrower, the interest rates applicable to Loans and any fee or other
amount payable by any Borrower hereunder shall bear interest, after as well as
before judgment, at a rate per annum equal to (i) in the case of overdue
principal of any Loan, 2.50% plus the rate otherwise applicable to such
Loan as provided in the preceding paragraphs of this Section or (ii) in
the case of any other amount, 2.50% plus the rate applicable to ABR
Domestic Revolving Loans as provided in paragraph (a) of this Section.

(e)           Accrued interest on each Loan shall
be payable in arrears on each Interest Payment Date for such Loan and upon
termination of the Commitments; provided that (A) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand,
(B) in the event of any repayment or prepayment of any Loan (other than a
prepayment of an ABR Revolving Loan (other than an Australian Revolving Loan)
prior to the end of the Revolving Availability Period or an ABR Australian
Revolving Loan prior to the end of the Australian Availability Period), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment and (C) in the event of any conversion of
any 

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Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be payable on the
effective date of such conversion.

(f)            All interest hereunder shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last
day).  The applicable Alternate Base Rate
or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.  Solely for purposes of the Interest Act
(Canada), (i) whenever interest is to be computed or expressed at any rate (the
“Specified Rate”), the annual rate of interest to which each such
Specified Rate is equal is such Specified Rate multiplied  by a
fraction, the numerator of which is the actual number of days in the relevant
year and the denominator of which is 360; (ii) the principle of deemed
reinvestment of interest shall not apply to any interest calculation hereunder;
and (iii) the rates of interest stipulated herein are intended to be nominal
rates and not effective rates or yields.

SECTION 2.13.  Alternate Rate of Interest.  If prior to the commencement of any Interest
Period for a Eurodollar Borrowing:

(a)           the Administrative Agent determines
(which determination shall be conclusive absent manifest error) that adequate
and reasonable means do not exist for ascertaining the LIBO Rate for such
Interest Period; or

(b)           the Administrative Agent is advised
by the Required Lenders or the Required Canadian Lenders that the LIBO Rate for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (or Lender) of making or maintaining their Loans (or its Loan) included
in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice
thereof to the Parent Borrower and the Lenders or the Canadian Lenders, as
applicable, by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Parent Borrower and such Lenders
that the circumstances giving rise to such notice no longer exist, (i) any
Interest Election Request that requests the conversion of any Revolving
Borrowing or Canadian Revolving Borrowing, as applicable, to, or continuation
of any such Borrowing as, a Eurodollar Borrowing shall be ineffective and
(ii) if any Borrowing Request with respect to any Revolving Borrowing or
Canadian Revolving Borrowing, as applicable, requests a Eurodollar Borrowing,
such Borrowing shall be made as an ABR Borrowing.

SECTION 2.14.  Increased Costs.  (a) If any Change in Law shall:

(i)            impose, modify or deem applicable
any reserve, special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the LIBO Rate) or the Issuing Bank; or

(ii)           impose on any Lender or the Issuing
Bank or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;

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and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan
(or of maintaining its obligation to make any such Loan) or to increase the
cost to such Lender or the Issuing Bank of participating in, issuing or
maintaining any Letter of Credit or to reduce the amount of any sum received or
receivable by such Lender or the Issuing Bank hereunder (whether of principal,
interest or otherwise), then the applicable Borrower(s) will pay to such Lender
or the Issuing Bank, as the case may be, such additional amount or amounts as
will compensate (on an after-tax basis) such Lender or the Issuing Bank, as the
case may be, for such additional costs incurred or reduction suffered.

(b)           If any Lender or the Issuing Bank
determines that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender’s or the Issuing
Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such Lender’s
or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing
Bank’s holding company with respect to capital adequacy), then from time to
time the applicable Borrower(s) will pay to such Lender or the Issuing Bank, as
the case may be, following receipt by the Parent Borrower of the certificate
referred to in clause (c) below, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s
holding company for any such reduction suffered.

(c)           A certificate of a Lender or the
Issuing Bank setting forth the amount or amounts necessary to compensate such
Lender or the Issuing Bank or its holding company, as the case may be, as
specified in paragraph (a) or (b) of this Section (and setting forth the
underlying calculations) shall be delivered to the Parent Borrower and shall be
conclusive absent manifest error.  The
applicable Borrower(s) shall pay such Lender or the Issuing Bank, as the case
may be, the amount shown as due on any such certificate within 10 days
after receipt thereof.

(d)           Failure or delay on the part of any
Lender or the Issuing Bank to demand compensation pursuant to this Section
shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to
demand such compensation; provided that the Borrowers shall not be
required to compensate a Lender or the Issuing Bank pursuant to this Section
for any increased costs or reductions incurred more than 180 days prior to
the date that such Lender or the Issuing Bank, as the case may be, notifies the
Parent Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender’s or the Issuing Bank’s intention to claim
compensation therefor; provided  further that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the
180-day period referred to above shall be extended to include the period
of retroactive effect thereof.

SECTION 2.15.  Break Funding Payments.  In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered

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pursuant hereto (regardless of whether such notice may
be revoked under Section 2.10(f) and is revoked in accordance
therewith), or (d) the assignment of any Eurodollar Loan other than on the
last day of the Interest Period applicable thereto as a result of a request by
the Parent Borrower pursuant to Section 2.18, then, in any such
event, the applicable Borrower(s) shall compensate each Lender for the loss,
cost and expense attributable to such event. 
In the case of a Eurodollar Loan, such loss, cost or expense to any
Lender shall be deemed to include an amount reasonably determined by such
Lender to be the excess, if any, of (i) the amount of interest that would
have accrued on the principal amount of such Loan had such event not occurred,
at the LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over
(ii) the amount of interest that would accrue on such principal amount for
such period at the interest rate that such Lender would bid were it to bid, at
the commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market.  A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section (and setting forth the underlying calculations) shall be delivered to
the Parent Borrower and shall be conclusive absent manifest error.  The applicable Borrower(s) shall pay such
Lender the amount shown as due on any such certificate within 10 days
after receipt thereof.

SECTION 2.16.  Taxes. 
(a) Any and all payments by or on account of any obligation of the
Borrowers hereunder or under any other Loan Document shall be made free and
clear of and without deduction or withholding for any Indemnified Taxes or
Other Taxes; provided that if any Borrower shall be required to deduct
or withhold any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making
all required deductions or withholdings (including deductions or withholdings
applicable to additional sums payable under this Section) the Administrative Agent,
Lender or Issuing Bank (as the case may be) receives an amount equal to the sum
it would have received had no such deductions or withholdings been made,
(ii) such Borrower shall make such deductions or withholdings and
(iii) such Borrower shall pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with applicable law.

(b)           In addition, the Borrowers shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.

(c)           The Borrowers shall indemnify the
Administrative Agent, each Lender and the Issuing Bank, within 10 days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank,
as the case may be, on or with respect to any payment by or on account of any
obligation of the Borrowers hereunder or under any other Loan Document
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability (and setting forth the underlying calculations) delivered
to the Parent Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank,
shall be conclusive absent manifest error.

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(d)           As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by a Borrower to a Governmental
Authority, such Borrower shall deliver to the Administrative Agent the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.

(e)           Any Foreign Lender that is entitled
to an exemption from or reduction of withholding Tax under the laws of the
jurisdiction in which a Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement made by
such Borrower, shall deliver to the Parent Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Parent Borrower as will permit such payments to be
made without withholding or at a reduced rate. 
Notwithstanding any other provision of this Section 2.16, no
such Foreign Lender shall be required to deliver any form pursuant to this Section 2.16(e)
that such Foreign Lender is not legally able to deliver or that, in the
reasonable judgment of such Foreign Lender could be disadvantageous to such
Foreign Lender.

(f)            If the Administrative Agent or a
Lender (or transferee) determines, in its reasonable discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by a Borrower or with respect to which a Borrower has paid
additional amounts pursuant to this Section 2.16, it shall pay over
such refund to such Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by such Borrower under this Section 2.16
with respect to the Taxes or Other Taxes giving rise to such refund), net of
all out-of-pocket expenses of the Administrative Agent or such Lender (or
transferee) and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, however,
that the Borrowers, upon the request of the Administrative Agent or such Lender
(or transferee), agree to repay the amount paid over to such Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority), to the Administrative Agent or such Lender (or transferee) in the
event the Administrative Agent or such Lender (or transferee) is required to
repay such refund to such Governmental Authority.  Nothing contained in this Section 2.16(f)
shall require the Administrative Agent or any Lender to make available its Tax
returns (or any other information relating to its Taxes which it deems confidential)
to any Borrower or any other Person.

SECTION 2.17.  Payments Generally; Pro Rata Treatment;
Sharing of Setoffs.  (a) The Parent
Borrower and each Subsidiary Borrower shall make each payment required to be
made by it hereunder or under any other Loan Document (whether of principal,
interest, fees or reimbursement of LC Disbursements, or of amounts payable
under Section 2.14, 2.15 or 2.16, or otherwise) prior
to 2:00 p.m., New York City time, on the date when due, by wire
transfer in immediately available funds, without setoff or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon.  All such payments
shall be made to the Administrative Agent at its offices at 800 Scudders Mill
Road, Plainsboro, NJ 08536, except (i) payments by the Canadian Subsidiary
Borrowers shall be made directly to each Canadian Lender at its Canadian Lending
Office, (ii) payments to be made directly to the Issuing Bank or Swingline
Lender as expressly provided herein, (iii) payments

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pursuant to Sections 2.14, 2.15, 2.16
and 10.03 shall be made directly to the Persons entitled thereto and
(iv) payments pursuant to other Loan Documents shall be made to the Persons
specified therein.  The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof.  If any payment under any Loan Document shall
be due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such
extension.  All payments under each Loan
Document shall be made in dollars.

(b)           Any proceeds of Collateral of the
Domestic Loan Parties or Uniplast Canada received by the Administrative Agent
(i) not constituting either (A) a specific payment of principal, interest, fees
or other sum payable under the Loan Documents (which shall be applied as
specified therein), or (B) a mandatory prepayment pursuant to Section
2.10(b) or (c) (which shall be applied in accordance with Section 2.10)
or (ii) after an Event of Default has occurred and is continuing and the
Administrative Agent so elects or the Required Lenders so direct, such funds
shall be applied, subject to the Intercreditor Agreement, ratably as follows:

first,
to pay any fees, indemnities, or expense reimbursements including amounts then
due to the Administrative Agent and the Issuing Bank from the Domestic  Borrowers and Uniplast Canada (other than in
connection with Banking Services or Swap Obligations);

second,
to pay any fees or expense reimbursements then due to the Lenders from the
Domestic Borrowers and Uniplast Canada (other than in connection with Banking
Services or Swap Obligations);

third,
to pay interest due in respect of the Protective Advances and any amounts owing
with respect to Banking Services;

fourth,
to pay the principal of the Protective Advances;

fifth,
to pay interest then due and payable on the Swingline Loans;

sixth,
to pay the principal of the Swingline Loans;

seventh,
to pay interest on the Domestic Revolving Loans;

eighth,
to pay the principal of the Domestic Revolving Loans and unreimbursed LC
Disbursements;

ninth,
to pay an amount to the Administrative Agent equal to 105% of the aggregate
undrawn face amount of all outstanding Letters of Credit and the aggregate
amount of any unpaid LC Disbursements, to be held as cash collateral for such
Obligations;

tenth,
to pay any amounts owing with respect to Swap Obligations;

 70
 

 

eleventh,
to the payment of any other Domestic Obligation due to the Administrative Agent
or any Lender by any Domestic Borrower or Uniplast Canada; and

twelfth,
if all of the Domestic Obligations (other than contingent obligations for which
no claim has been made) have been indefeasibly paid and performed in full (or
with respect to any outstanding Letters of Credit, a cash deposit has been
delivered to the Administrative Agent as required by this Agreement) and the
Commitments have been terminated, to the Loan Parties to be paid pursuant to
the Senior First Lien Note Indenture or the Senior Second Lien Note Indenture
pursuant to the terms of such documents.

To the extent that the terms of this clause (b) do not
require any payment to be allocated to any specific Class of Revolving
Borrowings, the Administrative Agent shall apply such prepayment to each Class
of Revolving Borrowings on a pro rata basis. 
The Administrative Agent and the Lenders shall have the continuing and
exclusive right to apply and reverse and reapply any and all such proceeds and
payments to any portion of the Obligations in accordance with the payment
priorities established hereby.

(c)           Any proceeds of Collateral of the
Foreign Loan Parties (other than Uniplast Canada and the German Loan Parties)
received by the Administrative Agent (i) not constituting either (A) a specific
payment of principal, interest, fees or other sum payable under the Loan
Documents (which shall be applied as specified therein), or (B) a mandatory
prepayment pursuant to Section 2.10(b) or (c) (which shall be
applied in accordance with Section 2.10) or (ii) after an Event of
Default has occurred and is continuing and the Administrative Agent so elects
or the Required Lenders so direct, such funds shall be applied ratably as
follows:

first,
to pay any fees, indemnities, or expense reimbursements including amounts then
due to the Administrative Agent from the Foreign Subsidiary Borrowers;

second,
to pay any fees or expense reimbursements then due to the Lenders from the
Foreign Subsidiary Borrowers;

third,
to pay interest on the Foreign Revolving Loans;

fourth,
to pay the principal of the Foreign Revolving Loans;

fifth,
to the payment of any other Foreign Obligation due to the Administrative Agent
or any Lender by the Foreign Subsidiary Borrowers; and

sixth,
if all of the Foreign Obligations (other than contingent obligations for which
no claim has been made) have been indefeasibly paid and performed in full and
the Commitments have been terminated, to the Loan Parties.

To the extent that the terms of this clause (c) do not
require any payment to be allocated to any specific Class of Revolving
Borrowings, the Administrative Agent shall apply such prepayment to each Class
of Revolving Borrowings on a pro rata basis. 
The Administrative Agent and the Lenders shall have the continuing and
exclusive right to apply and reverse and reapply any and

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all such proceeds and payments to any portion of the
Obligations in accordance with the payment priorities established hereby.

(d)           Any proceeds of Collateral of the
German Loan Parties received by the Administrative Agent (i) not constituting
either (A) a specific payment of principal, interest, fees or other sum payable
under the Loan Documents (which shall be applied as specified therein), or (B)
a mandatory prepayment pursuant to Section 2.10(b) or (c) (which
shall be applied in accordance with Section 2.10) or (ii) after an
Event of Default has occurred and is continuing and the Administrative Agent so
elects or the Required Lenders so direct, such funds shall be applied ratably
as follows:

first,
to pay any fees, indemnities, or expense reimbursements including amounts then
due to the Administrative Agent from the German Subsidiary Borrower;

second,
to pay any fees or expense reimbursements then due to the Lenders from the
German Subsidiary Borrower;

third,
to pay interest on the German Revolving Loans;

fourth,
to pay the principal of the German Revolving Loans;

fifth,
to the payment of any other German Obligation due to the Administrative Agent
or any Lender by the German Subsidiary Borrower; and

sixth,
if all of the German Obligations (other than contingent obligations for which
no claim has been made) have been indefeasibly paid and performed in full and
the Commitments have been terminated, to the Loan Parties.

To the extent that the terms of this clause (d) do not
require any payment to be allocated to any specific Class of Revolving
Borrowings, the Administrative Agent shall apply such prepayment to each Class
of Revolving Borrowings on a pro rata basis. 
The Administrative Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments
to any portion of the German Obligations in accordance with the payment
priorities established hereby.

(e)           At the election of the Administrative
Agent, all payments of principal, interest, LC Disbursements, fees, premiums,
reimbursable expenses (including, without limitation, all reimbursement for
fees and expenses pursuant to Section 9.03), and other sums payable
under the Loan Documents, may be paid from the proceeds of Borrowings made
hereunder whether made following a request by the Parent Borrower pursuant to Section
2.03 or a deemed request as provided in this Section or may be deducted
from any deposit account of the Borrowers maintained with the Administrative
Agent.  The Borrowers hereby irrevocably
authorize (i) the Administrative Agent to make a Borrowing for the purpose of
paying each payment of principal, interest and fees as it becomes due hereunder
or any other amount due under the Loan Documents and agrees that all such
amounts charged shall constitute Loans (including Swingline Loans, but such a
Borrowing may only constitute a Protective Advance if it is to reimburse costs,
fees and expenses as described in Section 9.03) and that all such
Borrowings shall be deemed to have been requested pursuant to Section 2.03,
2.04 or 2.19, as

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applicable and (ii) the Administrative Agent to charge
any deposit account of the Borrowers maintained with the Administrative Agent
for each payment of principal, interest and fees as it becomes due hereunder or
any other amount due under the Loan Documents. 
If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed
LC Disbursements, interest and fees then due hereunder, such funds shall
be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second,
towards payment of principal and unreimbursed LC Disbursements then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal and unreimbursed LC Disbursements then due to such
parties.

(f)            If any Lender shall, by exercising
any right of set-off or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of its Revolving Loans or participations in
LC Disbursements or Swingline Loans resulting in such Lender receiving payment
of a greater proportion of the aggregate amount of its Revolving Loans and
participations in LC Disbursements and Swingline Loans and accrued
interest thereon than the proportion received by any other Lender, then the
Lender receiving such greater proportion shall purchase (for cash at face
value) participations in the Revolving Loans and participations in
LC Disbursements and Swingline Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the Lenders
ratably in accordance with the aggregate amount of principal of and accrued
interest on their respective Revolving Loans and participations in
LC Disbursements and Swingline Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to
any payment made by any Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Revolving Loans
or participations in LC Disbursements to any assignee or participant,
other than to a Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this paragraph shall apply). 
Each Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against any
Borrower rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Borrower in the
amount of such participation.

(g)           Unless the Administrative Agent shall
have received notice from the Parent Borrower prior to the date on which any
payment is due to the Administrative Agent for the account of the Lenders or the
Issuing Bank hereunder that the applicable Borrower will not make such payment,
the Administrative Agent may assume, in its sole discretion, that such Borrower
has made such payment on such date in accordance herewith and may, in reliance
upon such assumption, distribute to the Lenders or the Issuing Bank, as the
case may be, the amount due.  In such
event, if no Borrower has in fact made such payment, then each of the Lenders
or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative
Agent forthwith on demand the amount so distributed to such Lender or Issuing
Bank with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds

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Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.

(h)           If any Lender shall fail to make any
payment required to be made by it pursuant to Section 2.04(c), 2.05(d),
2.05(e), 2.06(b), 2.17(g) or 10.03(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender’s obligations under
such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.18.  Mitigation Obligations.  (a) If any Lender requests compensation under
Section 2.14, or if any Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 2.16, then, upon the Parent Borrower’s
written request, such Lender shall use commercially reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates (provided that, if such compensation or
additional amounts relate to a particular Class of Loans, such designation or
assignment may relate only to such Class of Loans), if, in the reasonable
judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16,
as the case may be, in the future and (ii) would not subject such Lender
to any unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender.  Each Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

(b)           If any Lender (other than the Initial
Lender) requests compensation under Section 2.14, or if any
Borrower is required to pay any additional amount to any Lender (other than the
Initial Lender) or any Governmental Authority for the account of such Lender
pursuant to Section 2.16, or if any Lender (other than the Initial
Lender) defaults in its obligation to fund Loans hereunder, then the Parent
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in Section 9.04),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Parent
Borrower shall have received the prior written consent of the Administrative
Agent, the Issuing Bank and Swingline Lender, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans and participations in
LC Disbursements and Swingline Loans, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrowers (in the case of all other amounts), (iii) in the case of any
such assignment resulting from a claim for compensation under Section 2.14
or payments required to be made pursuant to Section 2.16, such
assignment will result in a reduction in such compensation or payments and
(iv) with respect to compensation or additional amounts (but not defaults)
in respect of a particular Class of Loans, such assignment may be limited to
such Class of Loans.  A Lender shall not
be required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Parent Borrower to require such 
assignment and delegation cease to apply.

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SECTION 2.19.  Protective Advances.  (a) Subject to the limitations set forth
below, the Administrative Agent is authorized by the Borrowers and the Lenders,
from time to time in the Administrative Agent’s sole discretion (but shall have
absolutely no obligation to), to make Loans to the Borrowers, on behalf of all
Lenders, which the Administrative Agent, in its reasonable discretion, deems
necessary or desirable (i) to preserve or protect the Collateral, or any
portion thereof, (ii) to enhance the likelihood of, or maximize the amount of,
repayment of the Loans and other Obligations, or (iii) to pay any other amount
chargeable to or required to be paid by the Borrowers pursuant to the terms of
this Agreement, including payments of reimbursable expenses (including costs,
fees, and expenses as described in Section 9.03) and other sums payable
under the Loan Documents (any of such Loans are herein referred to as “Protective
Advances”); provided that, the aggregate amount of Protective
Advances outstanding at any time shall not at any time exceed $15,000,000; and provided
further that, the aggregate amount of outstanding Protective Advances plus
the aggregate Revolving Exposure shall not exceed the aggregate unused
Available Commitments.  Protective
Advances may be made even if the conditions precedent set forth in Section
4.02 have not been satisfied.  The
Protective Advances shall be secured by the Liens in favor of the Administrative
Agent in and to the Collateral and shall constitute Obligations hereunder.  All Protective Advances shall be ABR
Borrowings.  The Administrative Agent’s
authorization to make Protective Advances may be revoked at any time by the
Required Lenders.  Any such revocation
must be in writing and shall become effective prospectively upon the
Administrative Agent’s receipt thereof. 
At any time that the Availability Amount is greater than $0 and the
conditions precedent set forth in Section 4.02 have been satisfied, the
Administrative Agent may request the Domestic Revolving Lenders to make a
Domestic Revolving Loan to repay a Protective Advance.  At any other time the Administrative Agent
may require the Lenders to fund their risk participations described in Section
2.19(b).

(b)           Upon the making of a Protective
Advance by the Administrative Agent (whether before or after the occurrence of
a Default), each Domestic Lender shall be deemed, without further action by any
party hereto, to have unconditionally and irrevocably purchased from the
Administrative Agent without recourse or warranty, an undivided interest and
participation in such Protective Advance in proportion to its Applicable
Percentage.  From and after the date, if
any, on which any Domestic Lender is required to fund its participation in any
Protective Advance purchased hereunder, the Administrative Agent shall promptly
distribute to such Lender, such Lender’s Applicable Percentage of all payments
of principal and interest and all proceeds of Collateral received by the
Administrative Agent in respect of such Protective Advance.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each Borrower represents and warrants to the
Administrative Agent and the Lenders that:

SECTION 3.01.  Organization; Powers.  Each of the Parent Borrower and the
Subsidiaries is duly organized, validly existing and, where applicable, in good
standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its

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business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.

SECTION 3.02.  Authorization; Enforceability.  The Transactions entered into and to be
entered into by each Loan Party are within such Loan Party’s corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action.  This Agreement has
been duly executed and delivered by each Borrower and constitutes, and each
other Loan Document to which any Loan Party is to be a party, when executed and
delivered by such Loan Party, will constitute, a legal, valid and binding
obligation of such Borrower or such Loan Party (as the case may be),
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.

SECTION 3.03.  Governmental Approvals; No Conflicts.  The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by,
any Governmental Authority or any other Person, except such as have been
obtained or made and are in full force and effect and except filings necessary
to perfect Liens created under the Loan Documents, (b) will not violate
any applicable law or regulation or the charter, by-laws or other
organizational documents of the Parent Borrower or any of the Subsidiaries or
any order of any Governmental Authority, except, with respect to any violation
of applicable law or regulation, to the extent any such violation would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect, (c) will not violate or result in a default under any
material indenture, agreement or other instrument binding upon the Parent Borrower
or any of the Subsidiaries or its assets, or give rise to a right thereunder to
require any payment to be made by the Parent Borrower or any of the
Subsidiaries, and (d) will not result in the creation or imposition of any
Lien on any asset of the Parent Borrower or any of the Subsidiaries, except
Liens created under the Loan Documents and the Fixed Asset Loan Documents.

SECTION 3.04.  Financial Condition; No Material Adverse
Change.  (a) The Parent Borrower has
heretofore furnished to the Lenders (i) its consolidated balance sheet and
statements of income, stockholders’ equity and cash flows (A) as of and for the
fiscal year ended December 31, 2005, reported on by Ernst & Young
LLP, independent public accountants and (B) as of and for the fiscal
quarter ended March 31, 2006, certified by its chief financial officer and (ii)
its consolidated balance sheet and statements of income and stockholders’
equity as of and for the fiscal month ended May 31, 2006, certified by its
chief financial officer.  Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Parent Borrower and its
consolidated Subsidiaries, as of such dates and for such periods in accordance
with GAAP and in the case of clauses (i)(B) and (ii) above, subject to normal
year-end audit adjustments and the absence of footnotes.

(b)           The Parent Borrower has heretofore
made available to the Lenders its pro forma consolidated balance sheet as of
March 31, 2006, prepared giving effect to the Transactions as if the
Transactions had occurred on such date. 
Such pro forma consolidated balance sheet (i) has been prepared in
good faith based on the same assumptions used to prepare the applicable pro
forma financial statements, which were simultaneously made available to the

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Lenders (which assumptions are believed by the Parent
Borrower to be reasonable), (ii) is based on the best information
available to the Parent Borrower after due inquiry, (iii) accurately
reflects all material adjustments necessary to give effect to the Transactions
and (iv) presents fairly, in all material respects, the pro forma
financial position of the Parent Borrower and its consolidated Subsidiaries as
of March 31, 2006, as if the Transactions had occurred on such date.

(c)           Except as disclosed in the financial
statements referred to above or the notes thereto, after giving effect to the
Transactions, none of the Parent Borrower or any of the Subsidiaries has, as of
the Effective Date, any material contingent liabilities, unusual long-term
commitments or unrealized losses.

(d)           Since December 31, 2005, there has
been no material adverse change in the business, operations, properties,
assets, performance, condition (financial or otherwise) or contingent or other
liabilities of the Parent Borrower and the Subsidiaries, taken as a whole,
other than the commencement of the Chapter 11 Cases.

SECTION 3.05.  Properties.  (a) Each of the Parent Borrower and the
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business (including its Mortgaged
Properties), except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes and other Permitted Encumbrances.

(b)           Each of the Parent Borrower and the
Subsidiaries owns, or is licensed or otherwise permitted to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to the business of the Parent Borrower and the Subsidiaries, taken as
a whole, and the use thereof by the Parent Borrower and the Subsidiaries does
not infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

(c)           Schedule 3.05 sets forth
the address of each parcel of real property that is owned or leased (the “Real
Estate”) by the Parent Borrower or any of the Subsidiaries as of the
Effective Date.

(d)           As of the Effective Date, neither the
Parent Borrower nor any of the Subsidiaries has received notice of, or has
knowledge of, any pending or contemplated condemnation proceeding affecting any
Mortgaged Property or any sale or disposition thereof in lieu of
condemnation.  Neither any Mortgaged
Property nor any interest therein is subject to any right of first refusal,
option or other contractual right to purchase such Mortgaged Property or
interest therein held by any Person, other than any Domestic Loan Party.

SECTION 3.06.  Litigation
and Environmental Matters.  (a) There
are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Parent
Borrower, threatened against or affecting the Parent Borrower or any of the
Subsidiaries (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect or (ii) that involve any of the Loan Documents or the Transactions.

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(b)           Except with respect to any matters
that, individually or in the aggregate, would not be reasonably likely to
result in a Material Adverse Effect, neither the Parent Borrower nor any of the
Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.

SECTION 3.07.  Compliance with Laws and Agreements.  Each of the Parent Borrower and the
Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.  No Default has occurred and is continuing.

SECTION 3.08.  Investment Company Status.  Neither the Parent Borrower nor any of the
Subsidiaries is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.

SECTION 3.09.  Taxes. 
Each of the Parent Borrower and the Subsidiaries has timely filed or
caused to be filed all Tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it,
except (a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Parent Borrower or such Subsidiary, as
applicable, has set aside on its books adequate reserves to the extent required
by GAAP or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.  There is no proposed tax assessment against
any Loan Party that would, if made, have a Material Adverse Effect.  No Loan Party or their subsidiaries is party
to any tax sharing agreement with any other Person pursuant to which it is
liable for any Taxes of any Person that could be reasonably expected to have a
Material Adverse Effect.

SECTION 3.10.  ERISA. 
No ERISA Event has occurred or is reasonably expected to occur that,
when taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect.  The present
value of all accumulated benefit obligations under each Plan individually (based
on the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent audited
financial statements reflecting such amounts, exceed by more than $30,000,000
the fair market value of the assets of such Plan individually, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting
Standards No. 87) did not, as of the date of the most recent audited
financial statements reflecting such amounts, exceed by more than $30,000,000
the fair market value of the assets of all such underfunded Plans.

SECTION 3.11.  Disclosure.  The Parent Borrower has disclosed to the
Lenders all agreements, instruments and corporate or other restrictions to
which the Parent Borrower or any of the Subsidiaries is subject, and all other
matters known to any of them, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect.  The

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reports, financial statements, certificates and other
written information furnished by or on behalf of any Loan Party to the
Administrative Agent, the Arranger or any Lender in connection with the
negotiation of this Agreement or any other Loan Document or delivered hereunder
or thereunder (as modified or supplemented by other information so furnished),
when made or delivered, did not contain any material misstatement of fact or
omit to state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; provided
that, with respect to projected financial information, the Parent Borrower
represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.

SECTION 3.12.  Subsidiaries; Loan Party Information.  (a) Schedule 3.12(a) sets forth
the name of, the jurisdiction of organization of, and the direct or indirect
ownership interest of the Parent Borrower in, each Subsidiary of the Parent
Borrower, in each case as of the Effective Date.

(b)           Schedule 3.12(b) sets forth as
of the Effective Date the name, address of principal place of business and the
federal tax identification number (if any) of each Loan Party.

SECTION 3.13.  Insurance.  Schedule 3.13 sets forth a
description of all insurance maintained by or on behalf of the Parent Borrower
and the Subsidiaries as of the Effective Date. 
As of the Effective Date, all premiums that are due and payable in
respect of such insurance have been paid. 
The Parent Borrower believes that the insurance maintained by or on
behalf of the Parent Borrower and the Subsidiaries is adequate.

SECTION 3.14.  Labor Matters.  As of the Effective Date, there are no
strikes, lockouts or slowdowns against the Parent Borrower or any Subsidiary
pending or, to the knowledge of the Parent Borrower, threatened that could
reasonably be expected to result in a Material Adverse Effect.  All material payments due from the Parent
Borrower or any Subsidiary, or for which any claim may be made against the
Parent Borrower or any Subsidiary, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accrued as a liability
on the books of the Parent Borrower or such Subsidiary.  The consummation of the Transactions will not
give rise to any right of termination or right of renegotiation on the part of
any union under any collective bargaining agreement to which the Parent
Borrower or any Subsidiary is bound.

SECTION 3.15.  Solvency.  Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the
making of each Loan and issuance of each Letter of Credit (if any) on the
Effective Date or such other date as Loans requested hereunder are made or
Letters of Credit are issued, and after giving effect to the application of the
proceeds of such Loans, (a) the fair value of the assets of the Loan
Parties taken as a whole, at a fair valuation, will exceed their debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value
of the property of the Loan Parties taken as a whole will be greater than the
amount that will be required to pay the probable liability of their debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) the Loan Parties taken
as a whole will be able to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; (d) the Loan Parties taken as a whole will not have unreasonably

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small capital with which to conduct the business in
which they are engaged as such business is now conducted and is proposed to be
conducted following the Effective Date; and (e) the Loan Parties taken as a
whole will not be deemed insolvent or bankrupt under any applicable bankruptcy
or insolvency legislation under the laws of Australia, Canada, Germany or
Mexico.

SECTION 3.16.  Security Documents.  (a) The Pledge Agreements are effective (with
respect to the Australian Pledge Agreement, on and after the Australian
Effective Date) to create in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral described therein (and the proceeds thereof) and,
when such Collateral is delivered to the Administrative Agent and any other
requirements set forth therein are completed, the Administrative Agent shall
have a fully perfected first-priority Lien on, and security interest in, all
right, title and interest of the Loan Parties in such Collateral and the
proceeds thereof as security for the Obligations, as applicable, in each case
prior and superior in right to any other Person.

(b)           The Security Agreements are effective
(with respect to the Australian Security Agreement, on and after the Australian
Effective Date) to create in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral described therein (and the proceeds thereof) and,
when financing statements, and/or other filings, notices and registrations, in
the case of Collateral under the Foreign Security Documents in appropriate form
are filed, given or obtained with, to or from the appropriate offices in each
relevant jurisdiction (including those specified on Schedule 6 to the
Perfection Certificate), the Administrative Agent shall have a fully perfected
Lien on, and security interest in, all right, title and interest of the Loan
Parties in such Collateral and, subject to Section 9-315 of the
New York Uniform Commercial Code and the legislation in other
jurisdictions, the proceeds thereof, as security for the Obligations, in each
case prior and superior in right to any other Person, other than with respect
to Liens expressly permitted by Section 6.03.

(c)           When the Domestic Security Agreement
(or a summary thereof) is filed in the United States Patent and Trademark
Office and the United States Copyright Office, the Administrative Agent
shall have a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in the Intellectual Property (as defined
in the Domestic Security Agreement) in which a security interest may be
perfected by filing, recording or registering a security agreement, financing
statement or analogous document in the United States Patent and Trademark
Office or the United States Copyright Office, as applicable, in each case
prior and superior in right to any other Person (it being understood that
subsequent recordings in the United States Patent and Trademark Office and
the United States Copyright Office may be necessary to perfect a lien on
registered trademarks, trademark applications and copyrights acquired by the
Loan Parties after the Effective Date), other than with respect to Liens
permitted by Section 6.03.

(d)           The Mortgages are effective to
create, subject to the exceptions listed in each title insurance policy
covering such Mortgage, in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable Lien on all of
the Loan Parties’ right, title and interest in and to the Mortgaged Properties
thereunder and the proceeds thereof, and when the Mortgages are filed in the
offices specified on Schedule 3.16(d), the

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Administrative Agent shall have a fully perfected Lien
on, and security interest in, all right, title and interest of the Loan Parties
in such Mortgaged Properties and, to the extent applicable, subject to
Section 9-315 of the New York Uniform Commercial Code (and the
equivalent legislation in other jurisdictions), the proceeds thereof, in each
case prior and superior in right to any other Person, other than with respect
to the rights of Persons pursuant to Liens expressly permitted by Section 6.03.

SECTION 3.17.  Federal Reserve Regulations.  (a) Neither the Parent Borrower nor any of
the Subsidiaries is engaged principally, or as one of its important activities,
in the business of extending credit for the purpose of buying or carrying
Margin Stock.

(b)           No part of the proceeds of any Loan
or any Letter of Credit will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately, (i) to purchase or carry
Margin Stock or any security convertible into or exchangeable for Margin Stock,
or extend credit to others for the purpose of purchasing or carrying Margin
Stock or any security convertible into or exchangeable for Margin Stock, or to
refund Indebtedness originally incurred for such purpose, or (ii) for any
purpose that entails a violation of the provisions of the Regulations of the
Board, including Regulation U or Regulation X.

SECTION 3.18.  Senior Secured Obligations.  All the Obligations of the Domestic Loan
Parties and Uniplast Canada constitute (a) ”Credit Agreement Obligations”
under and as defined in the Senior First Lien Note Indenture and the Senior
Second Lien Note Indenture (in each case with respect to the First Priority
Collateral) and (b) ”Second-Priority Obligations” under and as defined in
the Senior First Lien Note Indenture and “Other Second-Lien Obligations” under
and as defined in the Senior Second Lien Note Indenture (in each case with
respect to the Second Priority Collateral).  All the Obligations of the Loan Parties
constitute “Senior Indebtedness” and “Designated Senior Indebtedness” under and
as defined in the Senior Subordinated Note Indenture.  The Liens granted pursuant to the Security
Documents (i) in respect of the First Priority Collateral, are prior to
the Liens granted pursuant to the Senior First Lien Note Documents and the
Senior Second Lien Note Documents in respect of such Collateral and
(ii) in respect of the Second Priority Collateral, are equal in priority
to the Liens granted pursuant to the Senior Second Lien Note Documents in
respect of such Collateral prior to the 2004 Notes First Lien Transition Date
(as defined in the Intercreditor Agreement), and are prior to the Liens granted
pursuant to the Senior Second Lien Note Documents in respect of such Collateral
on or after the 2004 Notes First Lien Transition Date (as defined in the
Intercreditor Agreement).

SECTION 3.19.  Related Names.  None of Huntsman Corporation Canada
Inc.,  Huntsman Chemical Company of Canada
Inc., Tioxide Canada Inc., Huntsman ICI (Canada) Corp., La Corporation Huntsman
Canada Inc., Huntsman Corporation Canada Inc./La Corporation Huntsman Canada
Inc., La Corporation Huntsman Canada Inc./Huntsman Corporation Canada Inc.  or Huntsman - Tioxide Canada Inc. are
subsidiaries of  any Loan Party.

SECTION 3.20.  Permanent Establishment in Canada.  Neither the Parent Borrower nor Pliant
Solutions Corporation (a) maintains any location in Canada, (b) has any income
attributable to a permanent establishment in Canada or (c) is required to pay
any income taxes in Canada.

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SECTION 3.21.  Canadian Pension Plans.   The Canadian Pension Plans are duly
registered under the Income Tax Act (Canada) and any other applicable laws
which require registration, have been administered in accordance with the
Income Tax Act (Canada) and such other applicable laws and no event has
occurred which could reasonably be expected to cause the loss of such
registered status, except to the extent that any failure to do so could not
reasonably be expected to have a Material Adverse Effect.  All material obligations of each of the Loan
Parties (including fiduciary, funding, investment and administration
obligations) required to be performed in connection with the Canadian Pension Plans
and the funding agreements therefor have been performed on a timely basis,
except to the extent that any failure to do so could not reasonably be expected
to have a Material Adverse Effect.  There
are no outstanding disputes concerning the assets of the Canadian Pension
Plans.  No promises of benefit
improvements under the Canadian Pension Plans have been made except where such
improvement could not reasonably be expected to have a Material Adverse Effect.  All contributions or premiums required to be made
or paid by each of the Loan Parties to the Canadian Pension Plans have been
made on a timely basis in accordance with the terms of such plans and all
applicable laws.  There have been no
improper withdrawals or applications of the assets of the Canadian Pension
Plans.  Each of the Canadian Pension
Plans is fully funded on a solvency basis and going concern basis (using
actuarial methods and assumptions which are consistent with the valuations last
filed with the applicable Governmental Authorities and which are consistent
with GAAP).   No Canadian Pension Plan or
fund maintained by or on behalf of any Loan Party for the benefit of any
officer, director or employee of such Loan Party is a so-called defined benefit
plan.  For any Canadian Pension Plan or fund,
and for any other employee benefit plan, which is a defined contribution plan
requiring any Loan Party to contribute thereto, or to deduct from payments to
any individual and pay such deductions into or to the credit of such Canadian
Pension Plan or fund, all required employer contributions have been properly
withheld by such Loan Party and fully paid into the funding arrangements for
the applicable Pension Plan or fund.  Any
assessments owed to the Pension Benefits Guarantee Fund established under the
Pension Benefits Act (Ontario), or other assessments or payments required under
similar legislation in any other jurisdiction, have been paid when due.

ARTICLE IV

CONDITIONS

SECTION 4.01.  Effective Date.  The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):

(a)           The Administrative Agent (or its
counsel) shall have received from the Parent Borrower, the Subsidiary Borrowers
and each Lender, a counterpart of this Agreement signed on behalf of such
party.

(b)           (i) The Bankruptcy Court shall have
entered an order (the “Confirmation Order”), in form and substance
reasonably satisfactory to the Administrative Agent, confirming the Plan of
Reorganization and approving and authorizing the transactions contemplated
thereby; (ii) the Plan of Reorganization shall not have been modified,

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altered, amended or
otherwise changed or supplemented without the prior written consent of the
Administrative Agent; (iii) all material conditions precedent to the
effectiveness of the Plan of Reorganization shall have been satisfied (or
waived with the prior written consent of the Administrative Agent) and the
Effective Date (as defined in the Plan of Reorganization) shall have occurred
(other than the extension of credit under this Agreement); (iv) unless
otherwise agreed by the Administrative Agent, ten days shall have passed since
the entry of the Confirmation Order and the Confirmation Order shall not be
subject to any stay; (v) the Administrative Agent shall be reasonably satisfied
that, except as otherwise consented to by it, the Bankruptcy Court’s retention
of jurisdiction under the Confirmation Order will not govern the enforcement of
the Loan Documents; (vi) the transactions set forth in the Plan of
Reorganization shall have been consummated in accordance with all applicable
Requirements of Law and otherwise to the reasonable satisfaction of the
Administrative Agent; and (vii) the Administrative Agent shall have received a
copy of the Confirmation Order, certified by a Financial Officer as complete
and correct.

(c)           (i) The Canadian Court shall have
issued and entered the Canadian Confirmation Order, in form and substance
reasonably satisfactory to the Administrative Agent made on notice (the length
of which is reasonably satisfactory to the Administrative Agent) to the service
list and such other parties as the Administrative Agent may designate, acting
reasonably; (ii) the Canadian Confirmation Order shall be in full force and
effect and not be subject to any stay; and (iii) the Administrative Agent shall
have received a copy of the Canadian Confirmation Order, certified by a
Financial Officer as complete and correct.

(d)           The Administrative Agent shall have
received a certificate of the Secretary of each Loan Party certifying (i) the
names and true signatures of each officer of such Loan Party that has been
authorized to execute and deliver any Loan Document or other document required
hereunder to be executed and delivered by or on behalf of such Loan Party, (ii)
a copy of the certificate of incorporation (or equivalent organizational
document) of such Loan Party, certified as of a recent date by the Secretary of
State of the state of organization of such Loan Party (other than the Mexican
Loan Parties), together with certificates of such official attesting to the
good standing of such Loan Party, (iii) the by-laws (or equivalent organizational
document) of such Loan Party as in effect on the date of such certification,
and (iv) the resolutions of such Loan Party’s Board of Directors (or equivalent
governing body) approving and authorizing the execution, delivery and
performance of the Loan Documents to which it is a party, all in form and
substance reasonably satisfactory to the Administrative Agent and its counsel.

(e)           The Administrative Agent shall have
received a certificate, dated the Effective Date and signed by the President, a
Vice President or a Financial Officer of the Parent Borrower, (i) confirming
compliance with the conditions set forth in paragraphs (a) and (b) of
Section 4.02, (ii) certifying that the conditions set forth in paragraphs
(b) (other than clauses (v) and (vii) thereof), (c) (other than clause (iii)
thereof) and (q) of this Section 4.01 have been satisfied and (iii) certifying
that the liens registered in favor of Bancomer (now known as BBVA Bancomer)
against any Mexican

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Loan Party do not secure
any Indebtedness or other obligation of such Mexican Loan Party.

(f)            The Administrative Agent shall have
received all fees and other amounts due and payable on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or payment of
all reasonable out-of-pocket expenses required to be reimbursed or paid by any
Loan Party hereunder or under any other Loan Document.

(g)           The Administrative Agent shall have
received counterparts of each Pledge Agreement (other than the Australian
Pledge Agreement) signed on behalf of each Loan Party party thereto, together
with certificates (if any) representing all the outstanding Equity Interests of
each Subsidiary owned by or on behalf of any Loan Party as of the Effective
Date after giving effect to the Transactions (except that such delivery of
certificates by a Domestic Loan Party representing Equity Interests of a
Foreign Subsidiary (i) may be limited to 65% of the outstanding voting Equity
Interests of a first-tier Foreign Subsidiary and (ii) shall not include Equity
Interests of any second-tier or lower-tier Foreign Subsidiary, in each case, if
a pledge in excess of such Equity Interests would, in the good faith judgment
of the Parent Borrower, result in materially adverse tax consequences to the
Loan Parties, taken as a whole), promissory notes evidencing all intercompany
Indebtedness owed to any Loan Party by the Parent Borrower or any Subsidiary as
of the Effective Date after giving effect to the Transactions and stock powers
and other applicable instruments of transfer, endorsed in blank, with respect
to such certificates and promissory notes.

(h)           The Administrative Agent shall have
received counterparts of each Security Agreement (other than the Australian
Security Agreement) signed on behalf of each Loan Party party thereto, together
with the following:

(i)            all documents and instruments,
including Uniform Commercial Code (or equivalent) financing statements,
required by the Security Agreements or by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded to create or perfect
the Liens intended to be created under the Security Agreements, in proper form
for filing, registration or recordation;

(ii)           a completed Perfection Certificate
dated the Effective Date and signed by an executive officer of each Loan Party,
together with all attachments contemplated thereby, including the results of a
search of the Uniform Commercial Code filings or other filings, notices or
registrations made with respect to the Loan Parties in the jurisdictions contemplated
by the Perfection Certificate and copies of the financing statements (or
similar documents) disclosed by such search and evidence reasonably
satisfactory to the Administrative Agent that the Liens indicated by such
financing statements (or similar documents) are permitted by Section 6.03
or have been released;

(iii)          counterparts of a Mortgage with
respect to each Mortgaged Property signed on behalf of the record owner of such
Mortgaged Property;

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(iv)          a UCC fixture financing statement for
each Mortgaged Property to be filed upon the Administrative Agent’s request in
the appropriate jurisdiction as necessary, in the Administrative Agent’s
commercially reasonable discretion, to perfect the Administrative Agent’s Lien
on such Mortgaged Property;

(v)           a policy or policies of title
insurance issued by a nationally recognized title insurance company, insuring
the Lien of each such Mortgage as a valid second priority Lien on the Mortgaged
Property described therein, free of any other Liens except as permitted by
Section 6.03, in form and substance reasonably acceptable to the Administrative
Agent, together with such endorsements, coinsurance and reinsurance as the
Administrative Agent may reasonably request;

(vi)          copies of all existing surveys and
such other information and documents with respect to the Mortgaged Properties
as shall be necessary for the aforesaid title insurance policies to be issued
without a survey exception; and

(vii)         such other customary documentation with
respect to the Mortgaged Properties as the Administrative Agent may reasonably
require.

(i)            The Administrative Agent shall have
received counterparts of each Guarantee Agreement signed on behalf of each Loan
Party party thereto.

(j)            The Administrative Agent shall have
received a favorable written opinion (addressed to the Administrative Agent,
the Issuing Bank and the Lenders and dated the Effective Date) of each of
(i) Sidley Austin LLP, counsel for the Parent Borrower and the other Loan
Parties, (ii) General Counsel of the Parent Borrower and the other Loan
Parties, (iii) Van Cott, Bagley, Cornwall & McCarthy, P.C., Utah
counsel for certain Loan Parties, (iv) Ontario counsel for the Canadian
Loan Parties acceptable to the Administrative Agent, (v)  Nova Scotia
counsel for Uniplast Industries Co. acceptable to the Administrative Agent,
(vi) German counsel for the German Loan Parties acceptable to the
Administrative Agent and (vii) Mexican counsel for the Mexican Loan Parties
acceptable to the Administrative Agent and, in the case of each such opinion
required by this paragraph, covering such other matters relating to the Loan
Parties, the Loan Documents or the Transactions as the Administrative Agent
shall reasonably request and otherwise in form and substance reasonably
satisfactory to the Administrative Agent. 
Each Borrower hereby requests such counsel to deliver such opinions.

(k)           The Lenders shall have received the
financial statements described in Section 3.04, which financial statements
shall not be materially inconsistent with the financial statements or forecasts
previously provided to the Lenders.

(l)            The Lenders shall have received
projections of the Parent Borrower and the Subsidiaries through the fiscal year
ending December 31, 2009, presented on a monthly basis through December
31, 2006 and on an annual basis thereafter (the “Projections”), which
Projections shall not be materially inconsistent with the projections
previously provided to the Administrative Agent and the Arranger.

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(m)          The Administrative Agent shall have
received evidence reasonably satisfactory to it that the insurance required by Section 5.07
is in effect, together with insurance certificates naming the Administrative
Agent as additional insured and/or loss payee to the extent required by Section
5.07.

(n)           The Administrative Agent shall have
received copies of the Senior First Lien Note Documents, Senior Second Lien
Note Documents, the Senior Subordinated Note Documents and the Intercreditor
Agreement, each certified by a Financial Officer as complete and correct.  The Administrative Agent shall be satisfied,
in its reasonable discretion, with the terms of the Senior Subordinated Note
Documents and the Supplemental First Lien Notes Indenture.  The Administrative Agent shall have received
evidence reasonably satisfactory to it that the Senior First Lien Note Trustee
and the Senior Second Lien Note Trustee have received notice of the Parent
Borrower’s designation of this Agreement as the “Senior Credit Agreement” under
the Intercreditor Agreement.

(o)           Each of the Pre-Petition Loan
Agreement and the DIP Credit Agreement shall have been terminated, and all
loans, interest and other amounts accrued or owing thereunder shall have been
paid in full (other than the Existing Letters of Credit, which shall have been
fully cash collateralized or backstopped with Letters of Credit issued under
this Agreement on or prior to the Effective Date) and all Liens granted in
respect thereof shall have been released and the terms and conditions of any
such release shall be reasonably satisfactory to the Administrative Agent.  The Administrative Agent shall have received
payoff letters in form and substance reasonably satisfactory to the
Administrative Agent from General Electric Capital Corporation with respect to
the Pre-Petition Loan Agreement and the DIP Credit Agreement.

(p)           The Fixed Asset Credit Agreement
shall have been duly and properly authorized, executed and delivered by the
respective parties thereto on terms and conditions reasonably satisfactory to
the Administrative Agent, consummated pursuant to the terms thereof and shall
be in full force and effect as of the Effective Date.

(q)           After giving effect to the
Transactions, the Parent Borrower and the Subsidiaries shall not have any
outstanding Indebtedness or preferred stock other than (i) Indebtedness
incurred under the Loan Documents and the Fixed Asset Loan Documents,
(ii) the Senior First Lien Notes, (iii) the Senior Second Lien Notes,
(iv) the Senior Subordinated Notes, (v) the Preferred Stock, and
(vi) the Indebtedness permitted pursuant to Section 6.01(ii).

(r)            The Administrative Agent shall have
received all documentation and other information requested by it to satisfy the
requirements of bank regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including the USA
Patriot Act.

(s)           The Administrative Agent shall have
received a completed Borrowing Base Certificate that sets forth the Pro Forma
Opening Borrowing Base.

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(t)            The Administrative Agent shall have
received Control Agreements with respect to each of the accounts set forth on Schedule
5.17 to the extent required by Section 5.17.

(u)           The Administrative Agent shall have
received a certificate, dated the Effective Date and signed by the Executive
Vice President and Chief Operating Officer of the Parent Borrower, to the
effect that immediately after the consummation of the Transactions to occur on
the Effective Date and immediately following the making of each Loan and
issuance of each Letter of Credit (if any) on the Effective Date and after
giving effect to the application of the proceeds of such Loans, (i) the
fair value of the assets of the Loan Parties taken as a whole, at a fair
valuation, will exceed their debts and liabilities, subordinated, contingent or
otherwise; (ii) the present fair saleable value of the property of the
Loan Parties taken as a whole will be greater than the amount that will be
required to pay the probable liability of their debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (iii) the Loan Parties taken as a whole will
be able to pay their debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured; (iv) the
Loan Parties taken as a whole will not have unreasonably small capital with
which to conduct the business in which they are engaged as such business is now
conducted and is proposed to be conducted following the Effective Date; and (v)
the Loan Parties taken as a whole will not be deemed insolvent or bankrupt
under any applicable bankruptcy or insolvency legislation under the laws of
Australia, Canada, Germany or Mexico.

(v)           The Administrative Agent shall have
received evidence reasonably satisfactory to it of the merger of Old Pliant
with and into the Parent Borrower, with the Parent Borrower as the surviving
corporation.

(w)          The Administrative Agent shall have
received a Compliance Certificate signed by a Financial Officer and the chief
legal officer of the Parent Borrower, dated the Effective Date (delivered, and
containing a statement that it was delivered, in good faith after reasonable
investigation) to the effect that the Loans made and Letters of Credit (if any)
issued on the Effective Date do not violate the provisions of the Senior First
Lien Note Indenture, the Senior Second Lien Note Indenture and the Senior
Subordinated Note Indenture (including a reasonably detailed summary as to the
calculations necessary to determine the absence of any such violation).

(x)            The Administrative Agent shall have
received evidence reasonably satisfactory to it that the Process Agent required
by Section 9.09(e) shall have been duly appointed by the Foreign Subsidiary
Borrowers.

(y)           The Administrative Agent shall have
received such other documents as the Administrative Agent, the Issuing Bank,
any Lender or their respective counsel may have reasonably requested.

The Administrative Agent shall notify the Parent
Borrower and the Lenders of the Effective Date, and such notice shall be
conclusive and binding.

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SECTION 4.02.  Each Credit Event.  The obligation of each Lender to make a Loan
on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:

(a)           The representations and warranties of
each Loan Party set forth in the Loan Documents qualified as to materiality
shall be true and correct and those not so qualified shall be true and correct
in all material respects on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent such representations and warranties expressly
relate to an earlier date in which case such representations and warranties
shall be true and correct as of such earlier date.

(b)           At the time of and immediately after
giving effect to such Borrowing or the issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, no Default shall have
occurred and be continuing.

(c)           At the time of, and after giving
effect to, such Borrowing or the issuance, amendment, renewal or extension of
such Letter of Credit, (i) the total Domestic Revolving Exposure shall not
exceed the lesser of (A) the total amount of the Available Commitments and
(B) the Domestic Borrowing Base then in effect, (ii) the total
Australian Revolving Exposure shall not exceed the lesser of (A) the
Australian Sublimit and (B) the Australian Borrowing Base then in effect,
(iii) the total Canadian Revolving Exposure shall not exceed the Canadian
Sublimit and the Canadian Revolving Exposure with respect to each Canadian
Subsidiary Borrower shall not exceed such Canadian Subsidiary Borrower’s
Canadian Borrowing Base then in effect, (iv) the total German Revolving
Exposure shall not exceed the lesser of (A) the German Sublimit and
(B) the German Borrowing Base then in effect, (v) the total Mexican
Revolving Exposure shall not exceed the lesser of (A) the Mexican Sublimit
and (B) the Mexican Borrowing Base then in effect, (vi) the total
Revolving Exposure shall not exceed the total amount of the Available
Commitments then in effect and (vii) the total Revolving Exposure plus the
total Fixed Asset Revolving Exposure shall not exceed the total amount of the
Commitments at such time.

(d)           If at the time of, and after giving
effect to, such Borrowing or the issuance, amendment, renewal or extension of
such Letter of Credit, the total Revolving Exposure and Fixed Asset Revolving
Exposure exceeds 85% of the maximum amount of Indebtedness permitted to be
incurred under this Agreement and the Fixed Asset Credit Agreement pursuant to
the Senior First Lien Indenture, the Senior Second Lien Note Indenture and the
Senior Subordinated Note Indenture, the Administrative Agent shall have
received a Compliance Certificate signed by a Financial Officer and the chief
legal officer of the Parent Borrower, dated the date of such Borrowing, or the
issuance, amendment, renewal or extension of such Letter of Credit (delivered,
and containing a statement that it was delivered, in good faith after
reasonable investigation) to the effect that such Borrowing, or the issuance,
amendment, renewal or extension of such Letter of Credit, does not violate the
provisions of the Senior First Lien Note Indenture, the Senior Second Lien Note
Indenture and the Senior Subordinated Note Indenture (including a

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reasonably detailed
summary as to the calculations necessary to determine the absence of any such
violation).

(e)           With respect to any Borrowing of
Foreign Revolving Loans (other than Borrowings of Canadian Revolving Loans by
Uniplast Canada), at the time of the Borrowing Request with respect to such
Borrowing, the amount that the Parent Borrower reasonably and in good faith
estimates will be the Cash Amount at 3:00 p.m., New York City time,
on the requested date of such Borrowing (after giving effect to such Borrowing)
shall not exceed $11,000,000, and such Borrowing Request shall contain a
statement to that effect and that the Parent Borrower reasonably and in good
faith expects to be in compliance with Section 6.14 as of the date of such
Borrowing.

(f)            The making of such Loan or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, does not violate any applicable law or regulation and is not
enjoined, temporarily, preliminarily or permanently.

The making of any Loan on the occasion of each
Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Parent Borrower on the date thereof as to the matters specified in this
Section.

SECTION 4.03.Australian
Effective Date.  The obligations of
the Australian Lenders to make Australian Revolving Loans hereunder shall not
become effective until the date on which each of the following conditions is
satisfied:

(a)           The Administrative Agent shall have
received counterparts of the Australian Pledge Agreement signed on behalf of
the Parent Borrower and the Australian Subsidiary Borrower.

(b)           The Administrative Agent shall have
received a counterpart of the Australian Security Agreement signed on behalf of
the Australian Subsidiary Borrower, together with all documents and
instruments, including Uniform Commercial Code (or equivalent) financing
statements, required by the Australian Security Agreement or by law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded to create or perfect the Liens intended to be created under the
Australian Security Agreement, in proper form for filing, registration or
recordation.

(c)           The Administrative Agent shall have
received a favorable written opinion (addressed to the Administrative Agent,
the Issuing Bank and the Lenders and dated the Australian Effective Date) of
Australian counsel for the Australian Loan Parties acceptable to the
Administrative Agent, covering such other matters relating to the Australian
Loan Parties, the Loan Documents or the Transactions as the Administrative
Agent shall reasonably request and otherwise in form and substance reasonably
satisfactory to the Administrative Agent. 
The Australian Subsidiary Borrower hereby requests such counsel to
deliver such opinions.

(d)           The Administrative Agent shall have
received a certificate of the Secretary of the Australian Subsidiary Borrower
certifying (i) the names and true signatures of each officer of the Australian
Subsidiary Borrower that has been authorized to execute and

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deliver any Loan Document
or other document required hereunder to be executed and delivered by or on
behalf of the Australian Subsidiary Borrower, (ii) that there have been no
changes to the certificate of incorporation (or equivalent organizational
document) of the Australian Subsidiary Borrower from the certificate of
incorporation (or equivalent organizational document) delivered to the
Administrative Agent on the Effective Date, and attaching a good standing
certificate of the Australian Subsidiary Borrower dated as of a recent date
from its jurisdiction of organization, (iii) that there have been no changes to
the by-laws (or equivalent organizational document) of the Australian
Subsidiary Borrower from the by-laws (or equivalent organizational document)
delivered to the Administrative Agent on the Effective Date, and (iv) the
resolutions of the Australian Subsidiary Borrower’s Board of Directors (or
equivalent governing body) approving and authorizing the execution, delivery
and performance of the Loan Documents to which it is a party, all in form and
substance reasonably satisfactory to the Administrative Agent and its counsel.

(e)           The Administrative Agent shall have
received a certificate, dated the Australian Effective Date and signed by the
President, a Vice President or a Financial Officer of the Parent Borrower,
confirming compliance with the conditions set forth in paragraphs (a) and
(b) of Section 4.02.

(f)            The Administrative Agent shall have
received a completed Borrowing Base Certificate, dated the Australian Effective
Date, that sets forth the Australian Borrowing Base.

(g)           The Administrative Agent shall have
received such other documents as the Administrative Agent, any Australian
Lender or their respective counsel may have reasonably requested.

ARTICLE
V

AFFIRMATIVE COVENANTS

Until the Commitments have expired or been terminated
and the principal of and interest on each Loan and all fees and other
Obligations payable hereunder shall have been paid in full and all Letters of
Credit shall have expired or terminated and all LC Disbursements shall have
been reimbursed, each Borrower covenants and agrees with the Administrative
Agent and the Lenders that:

SECTION 5.01.  Financial Statements and Other Information.  The Parent Borrower will furnish to the
Administrative Agent, which will deliver to each Lender:

(a)           within 90 days after the end of
each fiscal year of the Parent Borrower, its audited consolidated balance sheet
and related statements of operations, stockholders’ equity and cash flows as of
the end of and for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on by Ernst &
Young LLP or other independent public accountants of recognized national
standing (without a “going concern” or like qualification or exception and
without any

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qualification or
exception as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Parent Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied;

(b)           within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the Parent
Borrower, its consolidated and consolidating balance sheet and related statements
of operations, stockholders’ equity and cash flows as of the end of and for
such fiscal quarter and the then elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for the corresponding period
or periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Parent Borrower and its consolidated Subsidiaries on a
consolidated and consolidating basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;

(c)           within 30 days after the end of
each fiscal month of each fiscal year (other than the final fiscal month of
each fiscal quarter) of the Parent Borrower, its consolidated and consolidating
balance sheet and related statements of operations as of the end of and for
such fiscal month and the then elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for the corresponding period
or periods of (or, in the case of the balance sheet, as of the end of) (i) the
previous fiscal year and (ii) the Projections or the most recent forecasts delivered
to the Administrative Agent pursuant to Section 5.01(i) below, all certified by
one of its Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Parent Borrower and its
consolidated Subsidiaries on a consolidated and consolidating basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments and the absence of footnotes;

(d)           concurrently with any delivery of
financial statements under clause (a), (b) or (c) above, a certificate of
a Financial Officer of the Parent Borrower (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect thereto, (ii) during
any FCCR Period, setting forth reasonably detailed calculations of the Fixed
Charge Coverage Ratio as of the last day of the last fiscal period covered by
such financial statements and (iii) stating whether any change in GAAP or
in the application thereof has occurred since the date of the Parent Borrower’s
audited financial statements referred to in Section 3.04 and, if
any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;

(e)           concurrently with any delivery of
financial statements under clause (a) or (b) above, a Compliance
Certificate signed by a Financial Officer and the chief legal officer of the
Parent Borrower (delivered, and containing a statement that it was delivered,
in good faith after reasonable investigation) to the effect that the then
outstanding Revolving Exposure and Fixed Asset Revolving Exposure do not
violate the provisions of the Senior First Lien Note Indenture, the Senior
Second Lien Note

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Indenture and the Senior
Subordinated Note Indenture (including a reasonably detailed summary as to the
calculations necessary to determine the absence of any such violation);

(f)            no later than 12:00 noon,
New York City time, on Wednesday of each week, and at any time an Event of
Default has occurred and is continuing, at such other times as may be requested
by the Administrative Agent, a completed Borrowing Base Certificate calculating
and certifying the Borrowing Base as of the last day of the prior week and
accompanied by such supporting detail and documentation as shall be reasonably
requested by the Administrative Agent; provided, however, that
(A) the unit cost for Eligible Raw Materials may be calculated as of the last
day of the immediately preceding calendar month and (B) the cost for polyvinyl
chloride (PVC) resin, polyethylene (PE) resin and polypropylene (PP) resin may
be calculated on a weekly average basis;

(g)           to the extent requested by the
Administrative Agent at any time when it reasonably believes that the
then-existing Borrowing Base Certificate is materially inaccurate or that the
Borrowing Base at such time would, if calculated at such time, be materially
different than such Borrowing Base reflected in such then-existing Borrowing
Base Certificate, within 10 Business Days of such request, a completed
Borrowing Base Certificate that satisfies the requirements of Section 5.01(f)
showing such Borrowing Base as of the date so requested, accompanied by the
reports and supporting information contemplated thereby or otherwise requested
by the Administrative Agent;

(h)           within two Business Days of any
request therefor, such other information concerning the amount, composition and
manner of computation of the Borrowing Base as the Administrative Agent may
reasonably request (in such detail as may reasonably be requested by the
Administrative Agent);

(i)            not later than 30 days following the
commencement of each fiscal year, (i) the annual business plan of the Parent
Borrower and its Subsidiaries for such fiscal year approved by the Board of
Directors of the Parent Borrower, and (ii) forecasts  prepared by management of the Parent Borrower
for such fiscal year and each of the succeeding fiscal years through the fiscal
year in which the Maturity Date is scheduled to occur (including a projected
consolidated balance sheet and related statements of projected operations and
cash flow as of the end of and for each such fiscal year), presented on a
monthly basis for such fiscal year and on an annual basis thereafter, and, promptly
when available, any significant revisions of such business plan and forecasts;

(j)            promptly after the same become
publicly available, copies of all periodic and other reports, proxy statements
and other materials filed by the Parent Borrower or any Subsidiary with the
SEC, or any Governmental Authority succeeding to any or all of the functions of
the SEC, or with any national securities exchange, as the case may be;

(k)           promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of the Parent Borrower or any Subsidiary, or compliance
with the terms of any Loan Document, as the Administrative Agent, the
Administrative Agent or any Lender may reasonably request;

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(l)            as soon as available but in any
event within fifteen days after the end of each calendar month, and at such
other times as may be requested by the Administrative Agent, as of the period
then ended:

(i)            with respect to each Loan Party, a
summary of Inventory by location and type and, if requested by the
Administrative Agent, a supporting perpetual Inventory report, in each case
accompanied by such supporting detail and documentation as may be reasonably
requested by the Administrative Agent;

(ii)           with respect to each Loan Party, a
monthly trial balance showing Accounts outstanding aged from invoice date as
follows:  1 to 30 days, 31 to 60 days, 61
to 90 days and 91 days or more, accompanied by such supporting detail and
documentation as may be reasonably requested by the Administrative Agent;

(iii)          with respect to each Loan Party, a
schedule and aging of such Loan Party’s accounts payable; and

(iv)          with respect to each Loan Party, a
report from the resin integration purchase system (RIPS) listing all resin
payments due as of the date of delivery of such report;

(m)          as soon as available but in any event
within five Business Days of after the end of each calendar month, and at such
other times as may be requested by the Administrative Agent, a report setting
forth additions and reductions (cash and non-cash) with respect to Accounts of
each Loan Party, as of the period then ended; and

(n)           promptly after the Parent Borrower
obtains knowledge thereof, notice of the occurrence of any FCCR Period or Cash
Collection Triggering Event.

SECTION 5.02.  Notices of Material Events.  The Parent Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of the following:

(a)           the occurrence of any Default;

(b)           the filing or commencement of any
action, suit or proceeding by or before any arbitrator or Governmental
Authority against or, to the knowledge of an executive officer or a Financial
Officer of the Parent Borrower, affecting the Parent Borrower or any Affiliate
thereof that would reasonably be expected to result in a Material Adverse
Effect;

(c)           any downgrade of the ratings of the
Parent Borrower’s senior secured indebtedness for borrowed money by S&P,
Moody’s or any other rating agency;

(d)           the occurrence of any ERISA Event
that, alone or together with any other ERISA Events that have occurred, would
reasonably be expected to result in liability of the Parent Borrower and the
Subsidiaries in an aggregate amount exceeding $5,000,000; and

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(e)           any other development that results
in, or would reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be
accompanied by a statement of a Financial Officer or other executive officer of
the Parent Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.

SECTION 5.03.  Information Regarding Collateral.  (a) The Parent Borrower will furnish to the
Administrative Agent 10 day’s prior written notice of any change (i) in
any Loan Party’s corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party’s chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by
it having an aggregate fair value in excess of $250,000 with respect to First
Priority Collateral and $1,000,000 with respect to Second Priority Collateral
is located (including the establishment of any such new office or facility),
(iii) in any Loan Party’s identity or corporate structure, (iv) in
any Loan Party’s Federal Taxpayer Identification Number or other organizational
identification number (or, with respect to each Foreign Subsidiary, any
comparable identification numbers issued by any Governmental Authority) or
(v) in any Loan Party’s jurisdiction of incorporation or
organization.  The Parent Borrower agrees
not to effect or permit any change referred to in the preceding sentence unless
all filings have been made under the Uniform Commercial Code or the applicable
legislation of other jurisdictions or otherwise that are required in order for
the Administrative Agent to continue at all times following such change to have
a valid, legal and perfected security interest in all the Collateral.

(b)           At the time of delivery of the annual
financial statements with respect to the preceding fiscal year pursuant to
clause (a) of Section 5.01, the Parent Borrower shall deliver
to the Administrative Agent a certificate of a Financial Officer and the chief
legal officer of the Parent Borrower, (i) setting forth the information
required pursuant to Section 2 of the Perfection Certificate or confirming
that there has been no change in such information since the date of the
Perfection Certificate delivered on the Effective Date or the date of the most
recent certificate delivered pursuant to this Section and (ii) certifying
that all Uniform Commercial Code financing statements (including fixture
filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral have been filed of record in each governmental,
municipal or other appropriate office in each jurisdiction identified pursuant
to clause (i) above to the extent necessary to protect and perfect the
security interests under the Security Agreements for a period of not less than
18 months after the date of such certificate (except as noted therein with
respect to any continuation statements to be filed within such period).

SECTION 5.04.  Existence; Conduct of Business.  The Parent Borrower will, and will cause each
of the Subsidiaries to, do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of the business of the
Parent Borrower and the Subsidiaries, taken as a whole; provided that
the

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foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.04.

SECTION 5.05.  Payment of Obligations; Compliance with
Leases.  (a) The Parent Borrower
will, and will cause each of the Subsidiaries to, pay (i) all Taxes and
other charges of any Governmental Authority imposed on it or any of its
properties or assets or in respect of any of its franchises, business, income
or property before any penalty or interest accrues thereon and (ii) all
claims (including claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien
(other than a Lien permitted under Section 6.03) upon any of the
property or assets of the Parent Borrower or any of the Subsidiaries, prior to
the time when any penalty or fine shall be incurred with respect thereto,
except with respect to subsections (i) and (ii) of this Section 5.05 where
(A) the validity or amount thereof is being contested in good faith by
appropriate procedures or proceedings, (B) the Parent Borrower or such
Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP, (C) such contest effectively suspends collection of
the contested obligation and the enforcement of any Lien securing such
obligation and (D) the failure to make payment pending such contest would
not reasonably be expected to result in a Material Adverse Effect.

(b)           The Parent Borrower will, and will
cause each of the Subsidiaries to, comply with all material terms of each lease
under which the Parent Borrower or any Subsidiary leases any property, as
lessee, and at which Accounts or Inventory that has an aggregate fair value in
excess of $250,000 and is included in the calculation of the Borrowing Base is
located.

SECTION 5.06.  Maintenance of Properties.  The Parent Borrower will, and will cause each
of the Subsidiaries to, keep and maintain all property material to the conduct
of the business of the Parent Borrower and the Subsidiaries taken as a whole in
good working order and condition, ordinary wear and tear excepted.

SECTION 5.07.  Insurance.  The Parent Borrower will, and will cause each
of the Subsidiaries to, maintain insurance with respect to its material
properties and business against loss or damage of the kinds customarily insured
against by Persons engaged in the same or similar business, of such types and
in such amounts as are customarily carried under similar circumstances by such
other Persons.  Such insurance shall be
maintained with financially sound and reputable insurers, except that a portion
of such insurance program (not to exceed that which is customary in the case of
companies engaged in the same or similar business or having similar properties
similarly situated) may be effected through self-insurance, provided adequate
reserves therefor, in accordance with GAAP, are maintained.  All insurance policies or certificates (or
certified copies thereof) with respect to such insurance (A) shall,
subject to the terms of the Intercreditor Agreement, be endorsed to the
Administrative Agent’s reasonable satisfaction for the benefit of the Lenders
(including by naming the Administrative Agent as loss payee or additional
insured, as appropriate); and (B) shall state that such insurance policy
shall not be canceled without 30 days’ prior written notice thereof (or,
in connection with any cancellation resulting from the non-payment of premiums,
10 days’ prior written notice thereof). 
The Parent Borrower shall promptly notify the Administrative Agent of
any material change or revision, or notice of expiration or non-renewal, with
respect to any such insurance policy. 
The Parent Borrower shall furnish to the Administrative Agent, on the
Effective Date and on the date of

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delivery of each annual financial statement, full
information as to the insurance carried. 
At any time that insurance at levels described in Schedule 5.07
is not being maintained by or on behalf of the Parent Borrower or any of the
Subsidiaries, the Parent Borrower will notify the Administrative Agent in
writing within two Business Days thereof and, if thereafter notified by the
Administrative Agent or the Required Lenders to do so, the Parent Borrower or
any such Subsidiary, as the case may be, shall obtain insurance at such levels
at least equal to those set forth on Schedule 5.07; provided
that such insurance can be obtained at commercially reasonable rates.

SECTION 5.08.  Casualty and Condemnation.  The Parent Borrower will furnish to the
Administrative Agent and the Lenders prompt written notice of any casualty or
other insured damage to any portion of any Collateral or the commencement of
any action or proceeding for the taking of any Collateral or any part thereof
or interest therein under power of eminent domain or by condemnation or similar
proceeding, where the reduction in the fair market value of the Collateral so
affected in connection with any such casualty event or condemnation is at least
$2,500,000.

SECTION 5.09.  Books and Records; Inspection and Audit
Rights.  (a) The Parent Borrower
will, and will cause each of the Subsidiaries to, keep proper books of record
and account in which full, true and correct entries are made in all material
respects of all dealings and transactions in relation to its business and
activities.  The Parent Borrower will,
and will cause each of the Subsidiaries to, permit any representatives
designated by the Administrative Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers and independent accountants (and the Parent Borrower shall be
provided the opportunity to participate in any such discussions with such
independent accountants), all at such reasonable times and as often as
reasonably requested.  The Parent
Borrower shall pay the reasonable fees and expenses of any representatives
retained by the Administrative Agent to conduct any such inspection; provided,
however that so long as no Event of Default shall have occurred and be
continuing, the Parent Borrower shall only be required to pay for one such
inspection per fiscal year of the Parent Borrower.

(b)           The Parent Borrower will, and will
cause each of the Subsidiaries to, upon reasonable prior notice, permit any
representatives designated by the Administrative Agent (including any
consultants, accountants, lawyers and appraisers retained by the Administrative
Agent) to conduct evaluations and appraisals of the Parent Borrower’s
computation of the Borrowing Base and the assets included in the Borrowing
Base, all at such reasonable times and as often as reasonably requested.  The Parent Borrower shall pay the reasonable
fees and expenses of any representatives retained by the Administrative Agent
to conduct any such evaluation or appraisal; provided, however
that so long as no Event of Default shall have occurred and be continuing, the
Parent Borrower shall only be required to pay for one such evaluation or
appraisal pursuant to this clause (b) per calendar year for each category of
Collateral included in each Borrowing Base. 
The Parent Borrower also agrees to modify or adjust the computation of
the Borrowing Base (which may include maintaining additional reserves or
modifying the eligibility criteria for the components of the Borrowing Base) to
the extent required by the Administrative Agent or the Required Lenders as a
result of any such evaluation or appraisal or otherwise.

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(c)           In the event that historical
accounting practices, systems or reserves relating to the components of the
Borrowing Base are modified in a manner that is adverse to the Lenders in any
material respect, the Parent Borrower will agree to maintain such additional
reserves (for purposes of computing the Borrowing Base) in respect of the
components of the Borrowing Base and make such other adjustments to its
parameters for including the components of the Borrowing Base as the Administrative
Agent or the Required Lenders in their commercially reasonable discretion shall
require based upon such modifications.

SECTION 5.10.  Compliance with Laws.  The Parent Borrower will, and will cause each
of the Subsidiaries to, comply with all laws, rules, regulations and orders of
any Governmental Authority applicable to it or its property, including
Environmental Laws except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

SECTION 5.11.  Use of Proceeds and Letters of Credit.  (a) The proceeds of the Domestic Revolving
Loans will be used solely (i) to refinance the Pre-Petition Loan Agreement and
the DIP Credit Agreement, (ii) to pay Transaction Costs and (iii) for ordinary
working capital and general corporate purposes of the Parent Borrower and its
Subsidiaries, including, without limitation, the payment of amounts payable
pursuant to the Plan of Reorganization on the Effective Date.

(b)           The proceeds of the Foreign Revolving
Loans will be used solely for ordinary working capital and general corporate
purposes of the applicable Borrower and its subsidiaries.

(c)           No part of the proceeds of any Loan
will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to purchase or carry Margin Stock or any
security convertible into or exchangeable for Margin Stock, or extend credit to
others for the purpose of purchasing or carrying Margin Stock or any security
convertible into or exchangeable for Margin Stock, or to refund Indebtedness
originally incurred for such purpose, or (ii) for any purpose that entails
a violation of any of the Regulations of the Board, including Regulation U
and Regulation X.

(d)           Letters of Credit will be issued only
for general corporate purposes.

SECTION 5.12.  Additional Subsidiaries.  If any additional Subsidiary is formed or
acquired after the Effective Date, the Parent Borrower will notify the
Administrative Agent and the Lenders thereof and (i) if (x) such
Subsidiary is a Domestic Subsidiary, the Parent Borrower will cause such
Subsidiary to become a party to (1) the Domestic Guarantee Agreement, as a
Guarantor thereunder, (2) the Domestic Security Agreement, the Domestic Pledge
Agreement and each other applicable Security Document in the manner provided
therein and such other mortgages and security, pledge, guarantee and
subordination agreements as reasonably requested by the Administrative Agent to
guarantee and secure the Domestic Obligations and (y) if such Subsidiary
is a Foreign Subsidiary, the Parent Borrower will cause such Subsidiary to
become a party to the applicable Foreign Security Documents in the manner
provided therein and such other mortgages and security, pledge, guarantee and subordination
agreements as reasonably requested by the Administrative Agent to guarantee and
secure the

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Foreign Obligations, in each case within three
Business Days after such Subsidiary is formed or acquired and promptly take
such actions to create and perfect Liens on such Subsidiary’s assets to secure
the Obligations as the Administrative Agent or the Required Lenders shall
reasonably request and (ii) if any Equity Interests or Indebtedness of
such Subsidiary are owned by or on behalf of any Loan Party, the Parent
Borrower will cause certificates and promissory notes evidencing such Equity
Interests and Indebtedness to be pledged to secure the Obligations within three
Business Days after such Subsidiary is formed or acquired; provided, however,
that, subject to the following proviso, if such Subsidiary is a Foreign
Subsidiary, Equity Interests of such Subsidiary that are owned by or on behalf
of a Domestic Loan Party and that are to be pledged to secure the Domestic
Obligations may be limited to 65% of the outstanding voting Equity Interests of
a first-tier Foreign Subsidiary and none of the Equity Interests of a
second-tier or lower-tier Foreign Subsidiary, in each case, if a pledge in
excess of such Equity Interests would, in the good faith judgment of the Parent
Borrower, result in materially adverse tax consequences to the Loan Parties,
taken as a whole; provided, further, that if the Facilities
Availability Amount is less than $15,000,000 at any time, the Parent Borrower
shall, and shall cause each Domestic Loan Party to, promptly pledge 100% of the
outstanding voting Equity Interests of each Foreign Subsidiary (other than the
Mexican Subsidiary Borrower and its subsidiaries) owned by it to the
Administrative Agent to secure the Domestic Obligations.

SECTION 5.13.  Further Assurances.  (a) The Parent Borrower will, and will cause
each other Loan Party to, execute any and all further documents, financing
statements, agreements and instruments, and take all such further actions
(including the filing and recording of financing statements, fixture filings,
mortgages, deeds of trust and other documents), that may be required under any
applicable law, or which the Administrative Agent or the Required Lenders may
reasonably request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens created or
intended to be created by the Security Documents or the validity or priority of
any such Lien, all at the expense of the Loan Parties.  The Parent Borrower also agrees to provide to
the Administrative Agent, from time to time upon request, evidence reasonably
satisfactory to the Administrative Agent as to the perfection and priority of
the Liens created or intended to be created by the Security Documents.

(b)           If any material assets (including any
real property or improvements thereto or any interest therein) are acquired by
the Parent Borrower or any other Loan Party after the Effective Date (other
than assets constituting Collateral that become subject to the Lien of the
appropriate Security Agreements upon acquisition thereof), the Parent Borrower
will notify the Administrative Agent and the Lenders thereof, and, if requested
by the Administrative Agent or the Required Lenders, the Parent Borrower will
cause such assets to be subjected to a Lien securing the Obligations and will
take, and cause the other Loan Parties to take, such actions as shall be
necessary or reasonably requested by the Administrative Agent to grant and
perfect such Liens, including actions described in paragraph (a) of this
Section, all at the expense of the Loan Parties; provided that the
following property shall not be covered by this Section 5.13(b):  (i) owned real estate or leasehold
interests with an aggregate fair market value of less than $5,000,000,
(ii) any other items of tangible personal property with, in each case, a
fair market value of less than $500,000 and (iii) items explicitly
excluded by exceptions in any Security Agreement, Pledge Agreement or other
Security Document, except, in each case, if any Loan Party grants a Lien on
such property to secure any obligation under the Senior First Lien Note
Documents or the Senior Second Lien Note Documents.

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SECTION 5.14.  Supplemental Disclosure.  From time to time as may be reasonably requested
by the Administrative Agent (which request will not be made more frequently
than once each year absent the occurrence and continuance of an Event of
Default) or at the Loan Parties’ election, the Parent Borrower shall supplement
each Schedule, or any representation herein or in any other Loan Document, with
respect to any matter hereafter arising that, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described
in such Schedule or as an exception to such representation or that is necessary
to correct any information in such Schedule or representation which has been
rendered inaccurate thereby (and, in the case of any supplements to any
Schedule, such Schedule shall be appropriately marked to show the changes made
therein); provided that (a) no such supplement to any such Schedule or
representation shall amend, supplement or otherwise modify any Schedule or
representation, or be or be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein, except as consented to by the
Administrative Agent and the Required Lenders in writing, and (b) no supplement
shall be required or permitted as to representations and warranties that relate
solely to the Closing Date.

SECTION 5.15.  Intellectual Property.  The Parent Borrower will, and will cause each
of the Subsidiaries to, conduct its business and affairs without infringement
of or interference with any Intellectual Property (as defined in the Domestic
Security Agreement) of any other Person in any material respect and shall
comply in all material respects with the terms of its Licenses (as defined in
the Domestic Security Agreement).

SECTION 5.16.  Landlord Lien Waivers, Mortgagee
Agreements and Bailee Letters.  As
reasonably requested by the Administrative Agent, the Parent Borrower will, and
will cause each of the Subsidiaries to, use commercially reasonable efforts to
obtain a Landlord Lien Waiver, mortgagee agreement or Bailee Letter, as
applicable, from the lessor of each leased property, mortgagee of owned
property or bailee with respect to any warehouse, processor or converter
facility or other location where (a) First Priority Collateral having an
aggregate fair value in excess of $250,000, (b) Second Priority Collateral having
an aggregate fair value in excess of $1,000,000 or (c) Foreign Working Capital
Collateral having an aggregate fair value in excess of $250,000 is stored or
located, which agreement or letter shall contain a waiver or subordination of
all Liens or claims that the landlord, mortgagee or bailee may assert against
the First Priority Collateral, Second Priority Collateral, Foreign Working
Capital Collateral or Foreign Fixed Asset Collateral, as applicable, at that
location, and shall otherwise be reasonably satisfactory in form and substance
to the Administrative Agent.  Each Loan
Party shall timely and fully pay and perform its obligations under all leases
and other agreements with respect to each leased location or public warehouse
where any Collateral is or may be located.

SECTION 5.17.  Depository Banks.  (a) The Parent
Borrower will, and will cause each of the Subsidiaries to, maintain a bank
reasonably acceptable to the Administrative Agent as its principal depository
bank, including for the maintenance of operating, administrative, cash
management, collection activity, and other deposit accounts for the conduct of
its business.  Schedule 5.17 sets
forth as of the Effective Date all deposit accounts, securities accounts and
commodities accounts of the Parent Borrower and the other Loan Parties.

(b)           Each Borrower shall, and shall cause
each other Loan Party to, (i) deposit all of its cash in deposit accounts that
are Controlled Deposit Accounts, (ii) not establish or

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maintain any securities account or  commodity
account that is not a Controlled Securities Account and (iii) not establish or
maintain any deposit account that is not a Controlled Deposit Account; provided,
however, that the Loan Parties may maintain (A) payroll, withholding tax
and other fiduciary or zero balance accounts, (B) prior to the 2004 Notes First
Lien Transition Date, the Notes Collateral Account (each as defined in the
Intercreditor Agreement), (C) prior to August 31, 2006, cash in deposit
accounts with Wachovia Bank, National Association in an aggregate amount not to
exceed $1,000,000 at any time; provided, further, that the Parent
Borrower shall cause all balances in the accounts referred to in clause (C)
above to be transferred into a Controlled Deposit Account on a weekly basis and
(D) prior to September 30, 2006, cash in deposit accounts with Bank of Montreal
in an aggregate amount not to exceed $1,000,000 at any time; provided, further,
that the Parent Borrower shall cause all balances in the accounts referred to
in clause (D) above to be transferred into a Controlled Deposit Account on a
weekly basis.

(c)           Each Borrower shall, and shall cause
each other Loan Party to, notify and direct each Account Debtor and every other
Person obligated to make payments with respect to any Accounts, Inventory or
other Collateral to make all such payments directly to a Controlled Deposit
Account.  Each Borrower
shall, and shall cause each other Loan Party to, use all reasonable efforts to
cause each Account Debtor and every other Person identified in the preceding
sentence to make all payments with respect to any Accounts, Inventory or other
Collateral directly to a Controlled Deposit Account.  In the event that a Loan Party directly
receives any cash or other funds, notwithstanding the arrangements for payment
directly into the Controlled Deposit Accounts, such remittances shall be held
for the benefit of the Administrative Agent and the Secured Parties and shall
be segregated from other funds of such Loan Party, and each Borrower shall, or
shall cause each other Loan Party to, cause such remittances and payments to be
deposited into a Controlled Deposit Account as soon as practicable after such
Loan Party’s receipt thereof.  Without
the prior written consent of the Administrative Agent, no Loan Party shall,
under any circumstances whatsoever, change the general instructions given to
Account Debtors and other Persons obligated to make payments with respect to
any Accounts, Inventory or other Collateral regarding the deposit of payments
with respect thereto in a Controlled Deposit Account.

(d)           Each Borrower shall, and shall cause
each other Loan Party to, use all reasonable efforts to prevent (i) any funds
that are proceeds of First Priority Collateral from being deposited or
otherwise commingled with proceeds of Second Priority Collateral and (ii) any
funds that are proceeds of Foreign Fixed Asset Collateral from being deposited
or otherwise commingled with proceeds of Foreign Working Capital Collateral.

(e)           During a Cash Collection Period, the
Administrative Agent may, and at the request of the Required Lenders shall,
transfer any funds held in a Controlled Deposit Account or Controlled
Securities Account on each Business Day to a Domestic Collateral Proceeds
Account, Foreign Collateral Proceeds Account or German Collateral Proceeds
Account, as applicable.  With respect to
any Controlled Deposit Account or Controlled Securities Account that is not the
subject of a Control Agreement, during a Cash Collection Period, at the request
of the Administrative Agent, each Borrower shall, and shall cause each Loan
Party to, transfer any funds held in such Controlled Deposit Account or
Controlled Securities Account on each Business Day to a Domestic Collateral
Proceeds Account, Foreign Collateral Proceeds

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Account or German Collateral Proceeds Account, as
applicable.  The Administrative Agent
shall not have any responsibility for, or bear any risk of loss of, any
investment or income of any funds in any Domestic Collateral Proceeds Account,
Foreign Collateral Proceeds Account or German Collateral Proceeds Account.  From time to time after funds are deposited
in any Domestic Collateral Proceeds Account, Foreign Collateral Proceeds
Account or German Collateral Proceeds Account, the Administrative Agent may
apply funds then held in such Domestic Collateral Proceeds Account, Foreign
Collateral Proceeds Account or German Collateral Proceeds Account to the
payment of Obligations in accordance with Section 2.10(c).  No Loan Party and no Person claiming on
behalf of or through any Loan Party shall have any right to demand payment of
any funds held in any Domestic Collateral Proceeds Account, Foreign Collateral
Proceeds Account or German Collateral Proceeds Account at any time prior to the
termination of all Commitments and the payment in full of all Obligations.

SECTION 5.18.  ERISA. 
The Parent Borrower will, and will cause each of the Subsidiaries to,
establish, maintain and operate all Plans to comply in all material respects
with the provisions of ERISA, the Code, and all other applicable laws, and the
regulations and interpretations thereunder other than to the extent that the
Loan Parties are in good faith contesting by appropriate proceedings the
validity or implication of any such provision, law, rule, regulation or interpretation.

SECTION 5.19.  Post-Closing Conditions.  The Parent Borrower will, and will cause each
of the Subsidiaries to, deliver each of the documents, instruments and
agreements, and take each of the actions, set forth on Schedule 5.19 within the
time periods set forth on such Schedule.

SECTION 5.20.  Canadian
Pension Plans.  No Loan Party will
(a) terminate any Canadian Pension Plan in a manner, or take any other action
with respect to any Canadian Pension Plan, which could reasonably be expected
to result in any material liability of a Loan Party, (b) fail to make full
payment when due of all amounts which, under the provisions of any Canadian
Pension Plan, agreement relating thereto or applicable law, such Loan Party is
required to pay as contributions thereto, except where the failure to make such
payments could not reasonably be expected to have a Material Adverse Effect,
(c) permit to exist any accumulated funding deficiency, whether or not waived,
with respect to any Canadian Pension Plan in an amount which could reasonably
be expected to cause a Material Adverse Effect, (d) contribute to or assume an
obligation to contribute to any “multi-employer pension plan” as such term is
defined in the Pension Benefits Act (Ontario), (e) acquire an interest in any
Person if such Person sponsors, maintains or contributes to, or at any time in
the six-year period preceding such acquisition has sponsored, maintained, or
contributed to any “multi-employer pension plan” as such term is defined in the
Pension Benefits Act (Ontario), or (f) permit the actuarial present value of
the benefit liabilities (computed on an accumulated benefit obligation basis in
accordance with GAAP) under all Canadian Pension Plans in the aggregate to
exceed the current value of the assets of all Canadian Pension Plans in the
aggregate that are allocable to such benefit liabilities, in each case only to
the extent such liabilities and assets relate to benefits to be paid to
employees of the Loan Parties, by an amount that could reasonably be expected
to cause a Material Adverse Effect.

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ARTICLE VI

NEGATIVE COVENANTS

Until the Commitments have expired or terminated and
the principal of and interest on each Loan and all fees and other Obligations
payable hereunder have been paid in full and all Letters of Credit have expired
or terminated and all LC Disbursements shall have been reimbursed, each
Borrower covenants and agrees with the Administrative Agent and the Lenders
that:

SECTION 6.01.  Indebtedness.  The Parent Borrower will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:

(i)            Indebtedness created under the Loan
Documents and the Fixed Asset Loan Documents;

(ii)           Indebtedness existing on the
Effective Date and set forth in Schedule 6.01 and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof;

(iii)          Indebtedness of the Parent Borrower to
any Subsidiary and of any Subsidiary to the Parent Borrower or any other
Subsidiary; provided, that (A) any such loans and advances made by a
Loan Party shall be evidenced by a promissory note pledged to secure the
Obligations and (B) the aggregate principal amount of loans and advances made
by any German Loan Party to any other Loan Party shall not exceed the amount of
free reserves of such German Loan Party;

(iv)          Guarantees by the Parent Borrower of
Indebtedness of any Subsidiary and by any Subsidiary of Indebtedness of the
Parent Borrower or any other Subsidiary; provided that (A)  any
Guarantee of the Senior Subordinated Notes by a Subsidiary shall be
subordinated on the same terms as the Senior Subordinated Notes and (B) any
Guarantee of the Senior Subordinated Notes, the Senior First Lien Notes or the
Senior Second Lien Notes shall be given only by a Domestic Subsidiary that is a
Loan Party and Uniplast Canada;

(v)           Indebtedness of the Parent Borrower
or any Subsidiary incurred to finance the acquisition, construction or
improvement of any fixed or capital assets, including Capital Lease Obligations
and any Indebtedness assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition
thereof, including Capital Lease Obligations incurred pursuant to transactions
permitted by Section 6.07, and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding
principal amount thereof; provided that (A) such Indebtedness is
incurred prior to or within 20 days after such acquisition or the
completion of such construction or improvement and (B) the aggregate
principal amount of Indebtedness permitted by this clause (v) shall not
exceed $25,000,000 at any time outstanding;

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(vi)          the Senior First Lien Notes in an
aggregate principal amount at maturity not exceeding $306,000,000 plus
the amount of additional Permitted Refinancing Indebtedness in respect thereof
incurred in respect of unpaid accrued interest (not included in the accreted
value) and premium thereon;

(vii)         Indebtedness with respect to surety,
appeal and performance bonds obtained by the Parent Borrower or any of the
Subsidiaries in the ordinary course of business;

(viii)        the Senior Second Lien Notes in an
aggregate principal amount not exceeding $250,000,000 plus the amount of
additional Permitted Refinancing Indebtedness in respect thereof incurred in
respect of unpaid accrued interest and premium thereon;

(ix)           the Senior Subordinated Notes in an
aggregate principal amount not exceeding $35,000,000 plus the amount of
additional Permitted Refinancing Indebtedness in respect thereof incurred in
respect of unpaid accrued interest and premium thereon;

(x)            any Permitted Redemption
Indebtedness in respect of the Series AA Preferred Stock;

(xi)           the Existing Letters of Credit;

(xii)          Indebtedness in respect of any letters
of credit entered into in the ordinary course of business in an aggregate face
amount not to exceed $5,000,000; and

(xiii)         unsecured Indebtedness of the Parent
Borrower in an aggregate principal amount not exceeding $10,000,000 pursuant to
an overdraft line of credit in form and substance reasonably satisfactory to
the Administrative Agent; provided, however, that to the extent a
legal opinion is delivered by counsel to the Parent Borrower in connection with
such overdraft line of credit, the Administrative Agent shall receive
concurrently therewith a reliance letter in favor of the Administrative Agent,
the Lenders and the Issuing Banks.

SECTION 6.02.  Certain Equity Securities.  The Parent Borrower will not, nor will it
permit any Subsidiary to, issue any preferred stock (other than (a) Qualified
Preferred Stock of the Parent Borrower and (b) the Preferred Stock issued
pursuant to the Plan of Reorganization) or be or become liable in respect of
any obligation (contingent or otherwise) to purchase, redeem, retire, acquire or
make any other payment in respect of any Equity Interests of the Parent
Borrower or any Subsidiary.

SECTION 6.03.  Liens. 
The Parent Borrower will not, and will not permit any Subsidiary to,
create, incur, assume or permit to exist any Lien on any property or asset now
owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:

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(a)           Liens created under the Loan
Documents and the Fixed Asset Loan Documents;

(b)           Permitted Encumbrances;

(c)           any Lien on any property or asset of
the Parent Borrower or any Subsidiary existing on the Effective Date and set
forth in Schedule 6.03; provided that (i) such Lien
shall not apply to any other property or asset of the Parent Borrower or any
Subsidiary and (ii) such Lien shall secure only those obligations that it
secures on the Effective Date and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;

(d)           any Lien existing on any property or
asset prior to the acquisition thereof by the Parent Borrower or any Subsidiary
or existing on any property or asset of any Person that becomes a Subsidiary
after the Effective Date prior to the time such Person becomes a Subsidiary; provided
that (i) such Lien is not created in contemplation of or in connection
with such acquisition or such Person becoming a Subsidiary, as the case may be,
(ii) such Lien shall not apply to any other property or assets of the
Parent Borrower or any Subsidiary and (iii) such Lien shall secure only
those obligations that it secures on the date of such acquisition or the date
such Person becomes a Subsidiary, as the case may be and extensions, renewals
and replacements thereof that do not increase the outstanding principal amount
thereof;

(e)           Liens on fixed or capital assets
acquired, constructed or improved by the Parent Borrower or any Subsidiary; provided
that (i) such Liens secure Indebtedness permitted by clause (v) of Section 6.01,
(ii) such Liens and the Indebtedness secured thereby are incurred prior to
or within 120 days after such acquisition or the completion of such
construction or improvement, (iii) the Indebtedness secured thereby does
not exceed 100% of the cost of acquiring, constructing or improving such fixed
or capital assets and (iv) such security interests shall not apply to any
other property or assets of the Parent Borrower or any Subsidiary other than
property directly related to such fixed or capital assets and of a type
customarily covered by such Liens, except that such security interests may not
apply to any accounts receivable or inventory;

(f)            leases and subleases of real
property and tangible personal property and licenses and sublicenses of
intellectual property rights, in each case granted in the ordinary course of
business and not interfering individually or in the aggregate (with all such
licenses and subleases being taken as a whole) in any material respect with the
conduct of the business of the Parent Borrower and the Subsidiaries;

(g)           Liens granted under the Senior First
Lien Security Documents or the Senior Second Lien Security Documents; provided
that (i) such Liens secure only obligations under the Senior First Lien
Note Documents and the Senior Second Lien Note Documents, respectively, except
that such obligations shall not include obligations under any Indebtedness (or
obligations under any Swap Agreements) except to the extent incurred pursuant
to Section 6.01(viii), with respect to the Senior Second Lien Notes, or
Section 6.01(vi), with respect to the Senior First Lien Notes,
(ii) such Liens do not apply

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to any asset other than
Collateral that is subject to a Lien granted under a Security Document to
secure the Obligations, (iii) any Liens on any First-Priority Collateral
that secure obligations in respect of the Senior First Lien Notes or Senior
Second Lien Notes are subordinated to the Liens on such First-Priority
Collateral that secure the Obligations, (iv) any Liens on any
Second-Priority Collateral that secure obligations in respect of the Senior
Second Lien Notes rank equally and ratably with the Liens on such
Second-Priority Collateral that secure the Obligations and (v) all such
Liens granted under the Senior First Lien Security Documents and Senior Second
Lien Security Documents shall be subject to the terms of the Intercreditor
Agreement;

(h)           Liens on cash deposited with the
issuing bank for any Existing Letter of Credit to cash collateralize such
Existing Letter of Credit (including with respect to interest, fees and
expenses associated therewith); provided that (i) the amount of
such cash subject to such Lien at any time shall not exceed 105% of the face
amount of such Existing Letter of Credit and (ii) upon the termination or
expiration of such Existing Letter of Credit, to the extent there has been no
drawing under such Existing Letter of Credit that has not been reimbursed at
such time, an amount of cash equal to 105% of the face amount of such Existing
Letter of Credit (less any amounts retained to pay interest, fees and expenses
associated therewith) shall be promptly released from such Lien; provided,
further, that such Existing Letters of Credit have not been backstopped
with Letters of Credit issued under this Agreement;

(i)            Liens on cash deposited with the issuing
bank for any letter of credit permitted by clause (xii) of Section 6.01 to cash
collateralize such letter of credit (including with respect to interest, fees
and expenses associated therewith); provided that (i) the amount of
such cash subject to such Lien at any time shall not exceed 105% of the face
amount of such letter of credit and (ii) upon the termination or
expiration of such letter of credit, to the extent there has been no drawing
under such letter of credit that has not been reimbursed at such time, an
amount of cash equal to 105% of the face amount of such letter of credit (less
any amounts retained to pay interest, fees and expenses associated therewith)
shall be promptly released from such Lien;

(j)            Liens on cash deposited in trust for
the benefit of the employees of the Australian Loan Parties; provided
that the amount of such cash subject to such Lien at any time shall not exceed
the lesser of (i) 25% of the outstanding principal amount of the Australian
Revolving Loans under this Agreement and the Australian Revolving Loans under
and as defined in the Fixed Asset Credit Agreement, the proceeds of which have
been distributed by the Australian Subsidiary Borrower to the Parent Borrower
and its Subsidiaries, and (ii) $1,750,000; and

(k)           Liens on cash deposited with National
Australia Bank to cash collateralize obligations of the Australian Loan Parties
to National Australia Bank with respect to a landlord guarantee and payroll
facilities; provided that the amount of such cash subject to such Lien
at any time shall not exceed $210,000.

SECTION 6.04.  Fundamental Changes.  (a) The Parent Borrower will not and will not
permit any Subsidiary to, merge into or consolidate with any other Person, or
permit any

 105
 

 

other Person to merge into or consolidate with it, or
liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be continuing
(i) any Subsidiary may merge into the Parent Borrower in a transaction in
which the Parent Borrower is the surviving corporation, (ii) any
Subsidiary may merge into any Subsidiary that is a Loan Party; provided
that if any Subsidiary that is party to such transaction is (A) a Loan
Party, the surviving entity must be a Loan Party, (B) a Subsidiary
Borrower, the surviving entity must be a Subsidiary Borrower or (C) a Domestic
Loan Party, the surviving entity must be a Domestic Loan Party, (iii) any
Subsidiary that is not a Loan Party may merge into any Subsidiary that is not a
Loan Party; provided that any such merger involving a Person that is not
a Wholly Owned Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 6.05, and (iv)  any
Subsidiary (other than any Subsidiary Borrower) may liquidate or dissolve if
the Parent Borrower determines in good faith that such liquidation or
dissolution is in the best interests of the Parent Borrower and is not
materially disadvantageous to the Lenders.

(b)           The Parent Borrower will not, and
will not permit any of the Subsidiaries to, engage to any material extent in
any business other than businesses of the type conducted by the Parent Borrower
and the Subsidiaries on the Effective Date and businesses reasonably related,
ancillary or complementary thereto.

SECTION 6.05.  Investments, Loans, Advances, Guarantees
and Acquisitions.  The Parent
Borrower will not, and will not permit any of the Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not
a Wholly Owned Subsidiary prior to such merger) any Equity Interests, evidences
of indebtedness or other securities (including any option, warrant or other
right to acquire any of the forgoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any
other Person constituting a business unit, except:

(a)           Permitted Investments;

(b)           investments existing on the date
hereof and set forth on Schedule 6.05(b), to the extent such
investments would not be permitted under any other clause of this Section 6.05;

(c)           investments by the Parent Borrower
and the Subsidiaries in the Equity Interests of their respective subsidiaries
(that are Subsidiaries prior to such Investment);

(d)           loans or advances made by the Parent
Borrower to any Subsidiary and made by any Subsidiary to the Parent Borrower or
any other Subsidiary; provided that (i) any such loans and advances made
by a Loan Party shall be evidenced by a promissory note pledged to secure the
Obligations and (ii) the aggregate principal amount of loans and advances made
by any German Loan Party to any other Loan Party shall not exceed the amount of
free reserves of such German Loan Party;

 106
 

 

(e)           Guarantees by the Parent Borrower of
Indebtedness and other obligations of any Subsidiary and Guarantees by any
Subsidiary of Indebtedness or other obligations of the Parent Borrower or any
other Subsidiary; provided that (i) no Subsidiary shall Guarantee
the Senior First Lien Notes, Senior Second Lien Notes or Senior Subordinated
Notes unless (A) such Subsidiary also has Guaranteed the Domestic
Obligations, and (B) with respect to any Guarantee of the Senior
Subordinated Notes, such Guarantee is subordinated to such Guarantee of the
Domestic Obligations on terms no less favorable to the Lenders than the
subordination provisions of the Senior Subordinated Notes and (ii) any
such Guarantee constituting Indebtedness is permitted by Section 6.01;

(f)            investments received in connection
with the bankruptcy or reorganization of, or settlement of delinquent accounts
and disputes with, customers and suppliers, in each case in the ordinary course
of business;

(g)           payroll, travel and similar advances
to cover matters that are expected at the time of such advances ultimately to
be treated as expenses for accounting purposes and that are made in the
ordinary course of business;

(h)           investments of any Person existing at
the time such Person becomes a Subsidiary or at the time such Person merges or
consolidates with the Parent Borrower or any of the Subsidiaries, in either
case in compliance with the terms of this Agreement; provided that such
investments were not made by such Person in connection with, or in anticipation
or contemplation of, such Person becoming a Subsidiary or such merger or
consolidation;

(i)            Swap Agreements entered into in
compliance with Section 6.08;

(j)            other loans, advances and
investments; provided that the amount of any such loan, advance or
investment made pursuant to this clause (j) together with all amounts payable
in connection with Permitted Acquisitions pursuant to Section 6.05(l)
shall not exceed $50,000,000 in the aggregate during the term of this
Agreement;

(k)           notes or other evidences of
Indebtedness acquired as consideration in connection with a sale, transfer,
lease or other disposition of any asset by the Parent Borrower or any of the
Subsidiaries; and

(l)            Permitted Acquisitions.

SECTION 6.06.  Asset Sales.  The Parent Borrower will not, and will not
permit any of the Subsidiaries to, sell, transfer, lease or otherwise dispose
of any asset, including any Equity Interest owned by it (other than any such
sale, transfer, lease or other disposition resulting from any casualty or
condemnation of any assets of the Parent Borrower or any of the Subsidiaries),
nor will the Parent Borrower permit any of the Subsidiaries to issue any
additional Equity Interest in such Subsidiary, except:

(a)           sales of inventory, used or surplus
tangible property and Permitted Investments in the ordinary course of business;

 107
 

 

(b)           sales, transfers, issuances and
dispositions to the Parent Borrower or a Subsidiary; provided that any
such sales, transfers or dispositions involving a Subsidiary that is not a Loan
Party shall be made in compliance with Section 6.10;

(c)           leases and licenses entered into in
the ordinary course of business;

(d)           sales in connection with
sale-leasebacks permitted under Section 6.07;

(e)           sales of investments referred to in
clauses (b), (f), (j) and (k) of Section 6.05;

(f)            sales, transfers and dispositions of
assets (other than Equity Interests of a Subsidiary) that are not permitted by
any other clause of this Section; provided that the aggregate fair
market value of all assets sold, transferred or otherwise disposed of in
reliance upon this clause (f) shall not exceed (i) $10,000,000 in the
aggregate in any fiscal year of the Parent Borrower or (ii) $50,000,000 in the
aggregate during the term of this Agreement;

(g)           transfers and dispositions
constituting investments permitted under Section 6.05; and

(h)           sales, transfers and dispositions of
the assets set forth in Schedule 6.06; provided that the
Parent Borrower provides the Administrative Agent with written notice of any
such sale, transfer or disposition not less than five Business Days prior to
the consummation thereof;

provided that all sales, transfers,
leases and other dispositions permitted hereby shall be made for an amount not
less than fair value (as determined in good faith by the Board of Directors of
the Parent Borrower), or, in the case of clause (d) above, for an amount,
if less, equal to the aggregate cost expended for the property that is the
subject of such sale-leaseback (except that those permitted by clause (a)
above shall be made on terms that are customary in the ordinary course) and for
consideration in cash.  For purposes of
this Section 6.06, the following shall be deemed to be cash:  (a) the assumption of any liabilities of
the Parent Borrower or any Subsidiary with respect to, and the release of the
Parent Borrower or such Subsidiary from all liability in respect of, any
Indebtedness of the Parent Borrower or the Subsidiaries permitted hereunder (in
the amount of such Indebtedness) in connection with a sale, transfer, lease or
other disposition of Second Priority Collateral permitted under Section 6.06
and (b) securities received by the Parent Borrower or any Subsidiary from
the transferee that are immediately convertible into cash without breach of
their terms or the agreement pursuant to which they were purchased and that are
promptly converted by the Parent Borrower or such Subsidiary into cash.

For purposes of this
Section 6.06 and for so long as any Senior First Lien Notes that are
secured by a first-priority Lien on the Second-Priority Collateral remain
outstanding, (a) any sale, transfer, lease or other disposition of the
Equity Interests of any Loan Party that owns assets constituting First-Priority
Collateral or Second-Priority Collateral shall be deemed to be a sale,
transfer, lease or disposition of such First-Priority Collateral or
Second-Priority Collateral, (b) any sale, transfer, lease or other
disposition of Equity Interests of a Loan Party that owns both First-Priority
Collateral and Second-Priority Collateral shall be deemed to be a

 108
 

 

separate sale, transfer, lease or disposition of such
First-Priority Collateral and such Second-Priority Collateral and (c) the
proceeds received by the Parent Borrower or any Subsidiary in respect of any
such sale, transfer, lease or disposition referred to in clause (b) above
(or any sale, transfer, lease or other disposition of assets (other than those
described in clause (b) above) including both First-Priority Collateral
and Second-Priority Collateral without allocating the purchase price between
First-Priority Collateral and Second-Priority Collateral) shall be allocated to
the First-Priority Collateral and the Second-Priority Collateral pursuant to
the terms of the Intercreditor Agreement.

SECTION 6.07.  Sale and Lease-Back Transactions.  The Parent Borrower will not, and will not
permit any Subsidiary to, enter into any arrangement, directly or indirectly,
with any Person whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
being sold or transferred, except for any such sale of fixed or capital assets
that is consummated within 120 days after the date the Parent Borrower or
such Subsidiary acquires or finishes construction of such fixed or capital
asset.

SECTION 6.08.  Swap Agreements.  The Parent Borrower will not, and will not
permit any of the Subsidiaries to, enter into any Swap Agreement, except
(a) Swap Agreements entered into to hedge or mitigate risks to which the
Parent Borrower or any Subsidiary has actual exposure (other than those in respect
of Equity Interests of the Parent Borrower or any of the Subsidiaries) and
(b) Swap Agreements entered into in order to effectively cap, collar or
exchange interest rates (from fixed to floating rates, from one floating rate
to another floating rate, to a fixed rate or otherwise) with respect to any
interest-bearing liability or investment of the Parent Borrower or any
Subsidiary.

SECTION 6.09.  Restricted Payments; Certain Payments of
Indebtedness.  (a) The Parent
Borrower will not, and will not permit any Subsidiary to, declare or make, or
agree to pay or make, directly or indirectly, any Restricted Payment, or incur
any obligation (contingent or otherwise) to do so, except (i) Wholly Owned
Subsidiaries may declare and pay dividends with respect to their Equity
Interests and Subsidiaries that are not Wholly Owned Subsidiaries may declare
and pay dividends ratably with respect to their Equity Interests, (ii) the
Parent Borrower may, subject to Section 6.02, make dividends with
respect to its Equity Interests consisting solely of additional Equity
Interests permitted hereunder, (iii) the Parent Borrower may purchase the
Parent Borrower’s Equity Interests from present or former officers or employees
of the Parent Borrower or any Subsidiary upon the death, disability or
termination of employment of such officer or employee in an aggregate amount
for all payments under this clause (iii) not to exceed $1,000,000 per fiscal
year of the Parent Borrower; provided, that any such amount not so
expended in the fiscal year for which it is permitted may be carried over for
expenditure in succeeding fiscal years, (iv) the Parent  Borrower may make a payment in connection
with the settlement of the claims of Richard P. Durham and Durham Capital,
L.L.C. in connection with the alleged “put” right of such parties with respect
to certain capital stock and warrants issued by Old Pliant in an aggregate
amount not to exceed the lesser of (A) the actual amount of such settlement and
(B) $12,000,000 and (v) the Parent Borrower may redeem the Series AA Preferred
Stock with proceeds of Permitted Redemption Indebtedness; provided that
in each case, no Default has occurred and is continuing or would result
therefrom.

 109
 

 

(b)           The Parent Borrower will not, and
will not permit any Subsidiary to, make or agree to pay or make, directly or
indirectly, any payment or other distribution (whether in cash, securities or
other property) of or in respect of principal of or interest on any Senior
First Lien Note, Senior Second Lien Note or Senior Subordinated Note, or any
payment or other distribution (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any Senior
First Lien Note, Senior Second Lien Note or Senior Subordinated Note, except
(i) payment of regularly scheduled interest payments as and when due in
respect of the Senior First Lien Notes; provided that, (A) the Parent
Borrower shall not be permitted to make cash interest payments in respect of
the Senior First Lien Notes referred to in clause (a) of the definition thereof
or the interest payable pursuant to the Supplemental First Lien Notes Indenture
and (B) on and prior to June 15, 2007, the Parent Borrower shall not be
permitted to make cash interest payments in respect of the Senior First Lien
Notes referred to in clause (b) of the definition thereof, (ii) payment of
regularly scheduled interest payments as and when due in respect of the Senior
Second Lien Notes and (iii) payment of regularly scheduled interest payments as
and when due in respect of the Senior Subordinated Notes; provided, however,
that on and prior to July 15, 2007, the Parent Borrower shall not be permitted
to make cash interest payments in respect of the Senior Subordinated Notes.

SECTION 6.10.  Transactions with Affiliates.  The Parent Borrower will not, and will not
permit any Subsidiary to, sell, lease or otherwise transfer any property or
assets to, or purchase, lease or otherwise acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates
(including any Subsidiary), except (a) transactions in the ordinary course
of business that are at prices and on terms and conditions not less favorable
to the Parent Borrower or such Subsidiary than could be obtained on an arm’s-length
basis from unrelated third parties (as determined in good faith by members of
the board of directors of the Parent Borrower having a majority of the voting
power held by all disinterested members of the board of directors of the Parent
Borrower), (b) transactions between or among the Loan Parties and not
involving any other Affiliate (except to the extent the involvement with the
other Affiliate otherwise complies with this Section 6.10),
(c) any Restricted Payment permitted by Section 6.09, and (d)
transactions expressly contemplated by Schedule 6.10.

SECTION 6.11.  Restrictive Agreements.  The Parent Borrower will not and will not
permit any Subsidiary to, directly or indirectly, enter into, incur or permit
to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Parent Borrower or any
Subsidiary to create, incur or permit to exist any Lien upon any of its
property or assets or (b) the ability of any Subsidiary to pay dividends
or other distributions with respect to any of its Equity Interests (it being
understood that the priority of any preferred stock in receiving dividends or
liquidating distributions prior to dividends or liquidating distributions being
paid on common stock shall not be deemed a restriction on the ability to make
distributions on capital stock) or to make or repay loans or advances to the
Parent Borrower or any other Subsidiary (it being understood that the
subordination of loans or advances made to the Parent Borrower or any
Subsidiary to other Indebtedness incurred by the Parent Borrower or such
Subsidiary shall not be deemed a restriction on the ability to make loans or
advances) or to Guarantee Indebtedness of the Parent Borrower or any other
Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by any Loan Document or any Fixed
Asset Loan Document, (ii) the foregoing shall not apply to

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restrictions and conditions existing on the Effective
Date identified on Schedule 6.11, (iii) the foregoing shall
not apply to any restriction or condition with respect to a Subsidiary pursuant
to an agreement relating to any Equity Interests or Indebtedness of such
Subsidiary, in each case incurred by such Subsidiary prior to the date on which
such Subsidiary was acquired by the Parent Borrower (other than Equity
Interests or Indebtedness incurred as consideration in, in contemplation of, or
to provide all or any portion of the funds or credit support utilized to
consummate the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary or was otherwise acquired by the Parent
Borrower) and outstanding on such date; (iv) the foregoing shall not apply
to any restriction or condition pursuant to an agreement refinancing an
agreement referred to in clause (i), (ii) or (iii) or this
clause (iv) or contained in any amendment to an agreement referred to in
clause (i), (ii) or (iii) or this clause (iv); provided, however,
that the conditions and restrictions contained in any such refinancing
agreement or amendment are no more restrictive, taken as a whole, than the
encumbrances and restrictions contained in the applicable predecessor
agreement; (v) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary or
assets pending such sale; provided such restrictions and conditions
apply only to the Subsidiary or assets that are to be sold and such sale is
permitted hereunder, (vi) clause (a) of the foregoing shall not apply
to restrictions or conditions imposed by any agreement relating to secured
Indebtedness or other secured obligations permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness or other obligations, (vii) clause (a) of the foregoing
shall not apply to customary provisions in contracts restricting the assignment
thereof, or the subletting, assignment or transfer of any property or asset
that is subject to a lease, license or similar contract; (viii)  the
foregoing shall not apply to net worth provisions in lease and other agreements
entered into by the Parent Borrower or any Subsidiary in the ordinary course of
business; and (ix) the foregoing shall not apply to restrictions imposed
by the Senior First Lien Note Documents, the Senior Second Lien Note Documents
and the Senior Subordinated Note Documents.

SECTION 6.12.  Amendment of Material Documents.  The Parent Borrower will not, and will not
permit any Subsidiary to, amend, modify or waive any of its rights under
(a) its certificate of incorporation, by-laws or other
organizational documents, including the terms related to the Preferred Stock
(other than amendments and modifications that are not adverse to the interests
of the Lenders and do not impair the exercise of remedies under any Security
Document or the Intercreditor Agreement) or (b) the Senior First Lien Note
Documents, the Senior Second Lien Note Documents or the Senior Subordinated
Note Documents (other than amendments to the Senior First Lien Security
Documents or the Senior Second Lien Security Documents permitted by the
Intercreditor Agreement and other amendments and modifications that are not
adverse to the interests of the Lenders and do not impair the exercise of
remedies under any Security Document or the Intercreditor Agreement).

SECTION 6.13.  Designated Senior Debt.  The Parent Borrower shall not designate any
Indebtedness (other than indebtedness under the Loan Documents and the Fixed
Asset Loan Documents, indebtedness in respect of the Senior First Lien Notes
incurred in compliance with Section 6.01(vi) and indebtedness in respect
of the Senior Second Lien Notes incurred in compliance with
Section 6.01(viii)) as “Designated Senior Debt” for purposes of and as
defined in the Senior Subordinated Note Documents.

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SECTION 6.14.  Cash Held by Foreign Loan Parties.  The Parent Borrower will not permit at any
time on any day (a) the aggregate amount of “cash and cash equivalents” and “marketable
securities” of the Foreign Loan Parties (other than Uniplast Canada), in each
case that would be required to be reflected on a consolidated balance sheet of
the Parent Borrower and the Subsidiaries prepared as of such time in accordance
with GAAP (excluding any such “cash” that is “restricted” cash, including,
without limitation, any such cash subject to the Liens permitted by Section
6.03(j)), minus (b) the aggregate amount of payments in such cash and cash
equivalents that the Parent Borrower reasonably and in good faith determines
will be made by the Foreign Loan Parties (and will reduce such cash and cash
equivalents) within the next 30 days to exceed $15,000,000.

SECTION 6.15.  ERISA. 
The Parent Borrower will not, and will not permit any Subsidiary to,
cause or permit any ERISA Affiliate to, cause or permit to occur (i) an event
that could result in the imposition of a Lien under Section 412 of the Code or
Section 302 or 4068 of ERISA or (ii) an ERISA Event to the extent such ERISA
Event would reasonably be expected to result in taxes, penalties and other
liabilities in an aggregate amount in excess of $250,000 in the aggregate.

SECTION 6.16.  Cancellation of Indebtedness.  The Parent Borrower will not, and will not
permit any Subsidiary to, cancel any claim or debt owing to it, except (a) for
reasonable consideration negotiated on an arm’s length basis and in the
ordinary course of its business consistent with past practices and (b) pursuant
to the Plan of Reorganization.

SECTION 6.17.  Change in Fiscal Year; Accounting Policies.  The Parent Borrower will not, and will not
permit any Subsidiary to, change its fiscal year from a year ending December 31
unless required by law, in which case such Loan Party will give the
Administrative Agent at least thirty (30) days prior written notice
thereof.  Subject to Section 1.04,
the Parent Borrower will not, and will not permit any Subsidiary to, change its
accounting policies from those used to prepare the financial statements
delivered pursuant to Section 4.01(i) without the prior written consent
of the Administrative Agent.

SECTION 6.18.  Financial Covenants.

(a)           The Parent Borrower shall have at the
end of each fiscal month ending immediately prior to or during any FCCR Period,
a Fixed Charge Coverage Ratio for the 12-month period then ended of not less
than the amount set forth below:

	
  Fiscal Month Ending

  	
   

  	
  Minimum Fixed Charge Coverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  On or prior to July 18, 2007

  	
   

  	
  1.00 to 1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Each fiscal month thereafter

  	
   

  	
  1.10 to 1.00

  	
   

  

 

(b)           The Parent Borrower shall not permit
the Facilities Availability Amount to be less than $10,000,000 at any time.

SECTION 6.19.  [Intentionally Omitted].

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SECTION 6.20.  Pliant Investment, Inc. and Alliant
Company LLC.  (a) Pliant Investment,
Inc. shall not hold any assets other than (i) the membership interest of
Alliant Company LLC and (ii) a receivable in the amount of $4,000,000 from the
Parent Borrower, and may not have any liabilities other than tax and
routine administrative liabilities in the ordinary course of business and (b)
Alliant Company LLC shall not hold any assets and may not have any liabilities
other than (i) tax and routine administrative liabilities in the ordinary
course of business and (ii) assets and liabilities related to the indemnity
escrow established in connection with the sale of its assets.  The Parent Borrower shall not make any
payment with respect to the receivable referred to in clause (a)(ii) above.

ARTICLE
VII

EVENTS
OF DEFAULT

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

(a)           any Borrower shall fail to pay any
principal of any Loan or any reimbursement obligation in respect of any
LC Disbursement when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for prepayment thereof or otherwise;

(b)           any Borrower shall fail to
(i) pay any interest on any Loan or any fee or any other amount (other
than an amount referred to in clause (a) of this Article) payable under
this Agreement or any other Loan Document, when and as the same shall become
due and payable, or (ii) fail to deliver any Borrowing Base Certificate
required to be delivered pursuant to the terms of this Agreement, and, in the
case of clause (ii), such failure shall continue unremedied for a period of
three Business Days;

(c)           any representation or warranty made
or deemed made by or on behalf of the Parent Borrower or any Subsidiary in or
in connection with any Loan Document or any amendment or modification thereof
or waiver thereunder, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, shall have been
incorrect in any material respect when made or deemed made;

(d)           any Borrower shall fail to observe or
perform any covenant, condition or agreement contained in Section 5.02,
5.04 (with respect to the existence of such Borrower), 5.11, 5.17
or 5.19 or in Article VI;

(e)           any Loan Party shall fail to observe
or perform any covenant, condition or agreement contained in any Loan Document
(other than those specified in clause (a), (b) or (d) of this Article),
and if such failure is capable of being cured, such failure shall continue
unremedied for a period of 30 days after notice thereof from the
Administrative Agent to the Parent Borrower (which notice will be given at the
request of any Lender);

(f)            the Parent Borrower or any
Subsidiary shall fail to make any payment (whether of principal or interest and
regardless of amount) in respect of any Material

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Indebtedness, when and as
the same shall become due and payable, including any applicable grace period;

(g)           any event or condition occurs that
results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice) the
holder or holders of any Material Indebtedness or any trustee or agent on its
or their behalf to cause any Material Indebtedness to become due, or to require
the prepayment, repurchase, redemption or defeasance thereof, prior to its
scheduled maturity; provided that this clause (g) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale,
transfer or other disposition (including as a result of a casualty or
condemnation event) of the property or assets securing such Indebtedness in a
manner not prohibited by this Agreement;

(h)           an involuntary proceeding shall be
commenced or an involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Parent Borrower or any
Subsidiary or its debts, or of a substantial part of its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect or (ii) the appointment of a receiver, interim
receiver, administrator, trustee, custodian, sequestrator, conservator or
similar official for the Parent Borrower or any Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 30 days or an order or decree approving or ordering
any of the foregoing shall be entered;

(i)            the Parent Borrower or any Subsidiary
shall (i) voluntarily commence any proceeding or file any petition seeking
liquidation, reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect,
(ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver, interim
receiver, trustee, custodian, sequestrator, conservator or similar official for
the Parent Borrower or any Subsidiary or for a substantial part of its assets,
(iv) file an answer admitting the material allegations of a petition filed
against it in any proceeding described in clause (h) of this Article, (v) make
a general assignment for the benefit of creditors or (vi) take any action for
the purpose of effecting any of the foregoing;

(j)            the Parent Borrower or any
Subsidiary shall admit in writing its inability or fail generally to pay its
debts as they become due;

(k)           one or more judgments for the payment
of money in an aggregate amount in excess of $5,000,000 (net of amounts covered
by insurance as to which the insurer has not denied liability) shall be
rendered against the Parent Borrower, any Subsidiary or any combination thereof
and the same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any assets of the
Parent Borrower or any Subsidiary to enforce any such judgment;

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(l)            an ERISA Event shall have occurred
that, in the reasonable opinion of the Required Lenders, when taken together
with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Parent Borrower and the Subsidiaries in an aggregate
amount exceeding (i) $7,000,000 in any year or (ii) $15,000,000
during the term of this Agreement;

(m)          (i) any Loan Document shall for any
reason be asserted by the Parent Borrower or any of the Subsidiaries (or, in
the case of the Intercreditor Agreement, any of the other parties thereto) not
to be a legal, valid and binding obligation of any party thereto, (ii) any Lien
purported to be created under any Security Document shall cease to be, or shall
be asserted by any Loan Party not to be, a valid and perfected Lien on any
Collateral, with the priority required by the Loan Documents, except (A) as a
result of the sale or other disposition of the applicable Collateral in a
transaction permitted under the Loan Documents, (B) as a result of (1) the
Administrative Agent’s failure to take any action reasonably requested by the
Parent Borrower in order to maintain a valid and perfected Lien on any
Collateral or (2) any action taken by the Administrative Agent to release any
Lien on any Collateral or (C) Liens on Collateral with a fair market value not
exceeding $500,000 in the aggregate, (iii) the Guarantees pursuant to the
Guarantee Agreements by the Loan Parties of any of the Obligations shall cease
to be in full force and effect (other than in accordance with the terms
thereof), or shall be asserted by any Loan Party not to be in effect or not to
be legal, valid and binding obligations, (iv) the Obligations of any Borrower
or the Guarantees thereof by the Loan Parties pursuant to the Security
Documents, shall cease to constitute “Senior Indebtedness” under the
subordination provisions of the Senior Subordinated Note Documents, or such
subordination provisions shall be invalidated or otherwise cease, or shall be
asserted by any Loan Party to be invalid or to cease, to be legal, valid and
binding obligations of the parties thereto or (v) the Intercreditor Agreement
shall cease to be a legal, valid and binding agreement of the parties thereto;

(n)           a Change in Control shall occur;

(o)           any information contained in any
Borrowing Base Certificate is untrue or incorrect in any respect (other than
(i) inadvertent, immaterial errors not exceeding $250,000 in the aggregate in
any Borrowing Base Certificate and (ii) errors understating the Borrowing
Base); or

(p)           an Event of Default under and as
defined in the Fixed Asset Credit Agreement shall occur;

then, and in every such event (other than an event
with respect to any Borrower described in clause (h) or (i) of this
Article), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders shall, by
notice to the Parent Borrower, take either or both of the following actions, at
the same or different times: 
(i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable (the “remaining Loans”) may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so
declared to be

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due and payable, together with accrued interest
thereon and all fees and other obligations (other than any remaining Loans) of
each Borrower accrued hereunder, shall become due and payable immediately,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by each Borrower; and in case of any event with respect to
any Borrower described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of each Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by each Borrower.  In addition to the remedies set forth above,
in every such event, the Administrative Agent may exercise any remedies under
the other Loan Documents or at law or equity.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

SECTION 8.01.  Authorization, Action, Etc.  Each of the Lenders and the Issuing Bank
hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
of the Loan Documents, together with such actions and powers as are reasonably
incidental thereto.

The bank serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Administrative
Agent, and such bank and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Parent Borrower or any
Subsidiary or other Affiliate thereof as if it were not the Administrative
Agent hereunder.

The Administrative Agent shall not have any duties or
obligations except those expressly set forth in the Loan Documents.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary
or other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circum­stances as provided in Section 9.02), and
(c) except as expressly set forth in the Loan Documents, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Parent
Borrower or any of the Subsidiaries that is communicated to or obtained by the
bank serving as Administrative Agent or any of its Affiliates in any
capacity.  The Administrative Agent shall
not be liable for any action taken or not taken by it with the consent or at
the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02) or in the absence of its own gross negligence or willful
misconduct.  The Administrative Agent
shall not be deemed to have knowledge of any Default unless and until written
notice thereof is given to the Administrative Agent by the Parent Borrower or a
Lender, and the Administrative Agent

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shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made
in or in connection with any Loan Document, (ii) the contents of any
certificate, report or other document delivered thereunder or in connection
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth in any Loan Document,
(iv) the validity, enforce­ability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere
in any Loan Document, other than to confirm receipt of items expressly required
to be delivered to the Administrative Agent.

The Administrative Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to be made
by the proper Person, and shall not incur any liability for relying
thereon.  The Administrative Agent may
consult with legal counsel (who may be counsel for any of the Borrowers),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

The Administrative Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. 
The exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent and to the Related Parties of the Administrative Agent and
any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

The Administrative Agent may resign at any time by
notifying the Lenders, the Issuing Bank and the Parent Borrower.  Upon any such resignation, the Required
Lenders shall have the right, with the consent of the Parent Borrower (such
consent not to be unreasonably withheld and which shall not be required during
the continuance of an Event of Default), to appoint a successor.  If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within
30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders and the Issuing Bank, appoint a successor Administrative Agent selected
from among the Lenders or that shall be a bank with an office in New York, New
York, or an Affiliate of any such bank. 
Upon the acceptance of its appointment as Administrative Agent hereunder
by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder.  The fees payable
by the Parent Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Parent
Borrower and such successor.  After the
Administrative Agent’s resignation hereunder, the provisions of this Article
and Section 9.03 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while it was acting as Administrative Agent.

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Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall from time to
time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.

Notwithstanding any other provision contained herein,
the Arranger shall not, in its capacity as such, have any responsibilities
under this Agreement or the other Loan Documents.

SECTION 8.02.  Declaration of Trust (Treuhand) and
Appointment as Administrator.  The
Administrative Agent shall: (a) hold any Lien or security interest which is
governed by German law and is assigned (Sicherungseigentum/Sicherungsabtretung)
or otherwise transferred to it under a non-accessory security right (nicht
akzessorische Sicherheit) pursuant to any of the German Security Agreements or
otherwise for the purpose of securing any of the Obligations secured thereunder
as trustee (Treuhänder) for the benefit of the Secured Parties; (b) hold any
abstract acknowledgement of indebtedness (abstraktes Schuldanerkenntnis) which
is governed by German law and under which certain Loan Parties have
acknowledged to owe to the Administrative Agent certain Obligations as trustee
(Treuhänder) for the benefit of the Secured Parties; and (c) administer any
Lien or security interest (if any) which is pledged (Verpfändung) or otherwise
transferred under an accessory security right (akzessorische Sicherheit) to it
and/or the Secured Parties pursuant to any of the German Security Agreements or
otherwise for the purpose of securing any of the Obligations secured thereunder
and each Secured Party authorizes the Administrative Agent to accept as its
representative (Stellvertreter) any pledge or other creation of any other
accessory right made to such Secured Party, and shall act in relation to the
Lien and security interests in accordance with the terms and subject to the
conditions of this Agreement and the other Loan Documents.  Each Secured Party hereby ratifies and
approves all acts done by the Administrative Agent on such Secured Party’s
behalf.

It is hereby
agreed that, in relation to any jurisdiction the courts of which would not
recognize or give effect to the trust (Treuhand) expressed to be created by
this Section 8.02, the relationship of the Secured Party to the
Administrative Agent in relation to any Lien or security interest governed by
German law shall be construed as one of principal and agent but, to the extent
permissible under the laws of such jurisdiction, all the other provisions of
this Section 8.02 shall have full force and effect between the parties
hereto.

Each Secured Party
(with the exception of the Administrative Agent) hereby releases the
Administrative Agent acting on its behalf pursuant to the terms of this
Agreement or any other Loan Document from the restrictions of Section 181 of
the German Civil Code (Bürgerliches Gesetzbuch) (restriction of self-dealing).

SECTION 8.03.  Quebec Security.  For greater certainty, and without limiting
the powers of the Administrative Agent, or any other Person acting as an agent
or mandatory for the Administrative Agent hereunder or under any of the other
Loan Documents, each Loan Party

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hereby acknowledges that, for purposes of holding any
security granted by any Loan Party on property pursuant to the laws of the
Province of Quebec to secure obligations of such Loan Party under any bond, the
Administrative Agent shall be the holder of an irrevocable power of attorney
(fondé de pouvoir) (within the meaning of the Civil Code of Québec) for all
present and future Lenders and in particular for all present and future holders
of any such bond.  Each Lender hereby
irrevocably constitutes, to the extent necessary, the Administrative Agent as
the holder of an irrevocable power of attorney (fondé de pouvoir) (within the
meaning of Article 2692 of the Civil Code of Québec) in order to hold security
granted by any Loan Party in the Province of Quebec to secure the obligations
of such Loan Party under any bond.  Each
assignee of a Lender shall be deemed to have confirmed and ratified the
constitution of the Administrative Agent as the holders of such irrevocable power
of attorney (fondé de pouvoir) by execution of an Assignment and
Assumption.  Notwithstanding the
provisions of section 32 of An Act respecting the special powers of legal
persons (Québec), the Administrative Agent may acquire and be the holder of any
bond.  The Borrowers hereby acknowledge
that such bond constitutes a title of indebtedness, as such term is used in
Article 2692 of the Civil Code of Québec.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01.  Notices.  (a) Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

(i)            if to any Borrower, to the Parent
Borrower at 1475 Woodfield Road, Suite 700, Schaumberg, Illinois 60173,
Attention: Chief Financial Officer (Telecopy No. (847) 969-3338), with a
copy to Sidley Austin LLP, One South Dearborn Street, Chicago, Illinois 60603,
Attention: Michael L. Gold (Telecopy No. (312) 853-7036);

(ii)           if to the Administrative Agent or the
Swingline Lender, to Merrill Lynch Bank USA, 4 World Financial Center, Floor
10, New York, New York 10080, Attention: Ryan D. Bell (Telecopy No. (212)
449-6673), with a copy for notices related to borrowings and payments to
Merrill Lynch Bank USA, 800 Scudders Mill Road, Plainsboro, New Jersey 08536,
Attention: Joseph Sandford (Telecopy No. (609) 282-3809), and with further
copies (other than for notices related to borrowings and payments) to Merrill
Lynch Bank USA, 4 World Financial Center, Floor 10, New York, New York 10080,
Attention: Paul Tufaro (Telecopy No. (212) 738-1070), and Weil, Gotshal &
Manges LLP, 767 Fifth Avenue, New York, New York 10153, Attention: Douglas R.
Urquhart (Telecopy No. (212) 310-8007);

(iii)          if to the Issuing Bank, c/o Merrill
Lynch Bank USA, 4 World Financial Center, Floor 10, New York, New York 10080,
Attention: Ryan D. Bell (Telecopy No. (212) 449-6673), with a copy to Merrill
Lynch Bank USA, 800 Scudders Mill Road, Plainsboro, New Jersey 08536,
Attention: Joseph Sandford (Telecopy No. (609) 282-3809); and

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(iv)          if to any other Lender, to it at its
address (or telecopy number) set forth in its Administrative Questionnaire.

(b)           Notices and other communications to
the Lenders hereunder may be delivered or furnished by electronic
communications pursuant to procedures approved by the Administrative Agent; provided
that the foregoing shall not apply to notices pursuant to Article II
unless otherwise agreed by the Administrative Agent and the applicable Lender
or Issuing Bank.  The Administrative
Agent or the Parent 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.

(c)           Any party hereto may change its
address or telecopy number for notices and other communications hereunder by
notice to the other parties hereto.  All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

SECTION 9.02.  Waivers; Amendments.  (a) No failure or delay by the Administrative
Agent, the Issuing Bank or any Lender in exercising any right or power
hereunder or under any other Loan Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power.  The rights and remedies
of the Administrative Agent, the Issuing Bank and the Lenders hereunder and
under the other Loan Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have.  No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the generality of the
foregoing, the making of a Loan or issuance or a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or the Issuing Bank may have had notice or knowledge of such
Default at the time.

(b)           Neither this Agreement nor any other
Loan Document nor any provision hereof or thereof may be waived, amended or
modified except, in the case of this Agreement, pursuant to an agreement or
agreements in writing entered into by the Borrowers and the Required Lenders
or, in the case of any other Loan Document, pursuant to an agreement or
agreements in writing entered into by the Administrative Agent and the Loan
Party or Loan Parties that are parties thereto, in each case with the consent of
the Required Lenders; provided that no such agreement shall have the
effect of:

(i)            increasing the Commitment of any
Lender without the consent of each Lender (provided that the Administrative
Agent may make Protective Advances as set forth in Section 2.15);

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(ii)           reducing the principal amount of any
Loan or LC Disbursement or reducing the rate of interest thereon, or
reducing any fees payable hereunder, without the written consent of each Lender
affected thereby and the Administrative Agent;

(iii)          postponing the maturity of any Loan,
or any scheduled date of payment of the principal amount of any Loan, or the
required date of reimbursement of any LC Disbursement, or any date for the
payment of any interest thereon, or any fees payable hereunder, or reducing the
amount of, waiving or excusing any such payment, or postponing the scheduled
date of expiration of any Commitment, without the written consent of each
Lender affected thereby and the Administrative Agent;

(iv)          changing Section 2.17(b), (c),
(d), (e), or (f) in a manner that would alter the way that
payments are shared, without the written consent of each Lender affected
thereby;

(v)           changing any of the provisions of
this Section or the definition of “Required Lenders” or any other provision of
any Loan Document specifying the number or percentage of Lenders (or Lenders of
any Class, including as contemplated by the term “Required Canadian Lenders”)
required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be);

(vi)          releasing any Loan Party from its
Guarantee under any Guarantee Agreement (except with respect to the
dissolution, consolidation or merger of such Loan Party in accordance with the
terms of Section 6.04 or as expressly provided in the applicable
Guarantee Agreement), or limiting its liability in respect of such Guarantee,
without the written consent of each Lender; provided, however,
that if the Required Lenders have approved the sale of the Equity Interests of
such Loan Party, the consent of the Required Lenders (and not each Lender)
shall be required for such release;

(vii)         releasing all or substantially all the
Collateral from the Liens of the Security Documents (except as expressly
provided therein or in the Intercreditor Agreement), without the written
consent of each Lender;

(viii)        changing any provision of any Loan
Document to permit the Parent Borrower or any of the Subsidiaries to enter into
any accounts receivable or inventory securitization transaction or other
similar financing arrangement, including any sale of, or any grant of a
security interest in, accounts receivable or inventory in connection with any
asset securitization or other similar financing arrangement, without the
written consent of Lenders having Commitments representing in the aggregate
more than 66-2/3% of the total amount of the
Commitments at such time;

(ix)           changing any provision of any Loan
Document in a manner that by its terms adversely affects the rights in respect
of payments due to Lenders holding Loans of any Class differently than those
holding Loans of any other Class without the written consent of Lenders holding
a majority in interest of the outstanding Loans and unused Commitments of each
affected Class; or

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(x)            increasing the Australian Sublimit,
Canadian Sublimit, German Sublimit or Mexican Sublimit, without the written
consent of each Australian Lender, Canadian Lender, German Lender or Mexican
Lender, as applicable, and the Administrative Agent; and

provided  further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, the Issuing Bank or the Swingline Lender without the
prior written consent of the Administrative Agent, the Issuing Bank or the
Swingline Lender, as the case may be.

(c)           If, in connection with any proposed
amendment, waiver or consent  requiring
the consent of “each Lender” or “each Lender affected thereby,” the consent of
the Required Lenders is obtained, but the consent of other necessary Lenders is
not obtained (any such Lender whose consent is necessary but not obtained being
referred to herein as a “Non-Consenting Lender”), then so long as the
Administrative Agent is not a Non-Consenting Lender, the Administrative Agent
may elect to replace a Non-Consenting Lender as a Lender party to this
Agreement, provided that, concurrently with such replacement, (i) another bank
or other entity which is reasonably satisfactory to the Parent Borrower and the
Administrative Agent shall agree, as of such date, to purchase for cash the
Loans and other Obligations due to the Non-Consenting Lender pursuant to an
Assignment and Assumption and to become a Lender for all purposes under this
Agreement and to assume all obligations of the Non-Consenting Lender to be
terminated as of such date and to comply with the requirements of clause (b) of
Section 9.04, and (ii) the Borrowers shall pay to such Non-Consenting
Lender in same day funds on the day of such replacement (1) all interest, fees
and other amounts then accrued but unpaid to such Non-Consenting Lender
by the Borrowers hereunder to and including the date of termination, including
without limitation payments due to such Non-Consenting Lender under Sections
2.14 and 2.16, and (2) an amount, if any, equal to the payment which
would have been due to such Lender on the day of such replacement under Section
2.15 had the Loans of such Non-Consenting Lender been prepaid on such date
rather than sold to the replacement Lender.

SECTION 9.03.  Expenses;
Indemnity; Damage Waiver; Joint and Several Obligations.  (a) The Borrowers jointly and severally shall
pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Arranger and their respective Affiliates, including
the reasonable fees, charges and disbursements of outside counsel for the
Administrative Agent and the Arranger, in connection with the preparation and
administration of the Loan Documents or any amendments, modifications or
waivers of the provisions thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reason­able
out-of-pocket expenses incurred by the Issuing Bank in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder and (iii) all reasonable out-of-pocket expenses
incurred by the Administrative Agent, the Issuing Bank, the Arranger or any
Lender, including the reasonable fees, charges and disbursements of any outside
counsel for the Administrative Agent, the Issuing Bank, the Arranger or any
Lender, in connection with the enforcement or protection of its rights in
connection with the Loan Documents, including its rights under this Section, or
in connection with the Loans made or Letters of Credit issued hereunder,
including all such reasonable out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

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(b)           The Borrowers jointly and severally
shall indemnify the Administrative Agent, the Issuing Bank, the Arranger and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses, including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of any
Loan Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective
obligations thereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the
use of the proceeds therefrom (including any refusal by the Issuing Bank to
honor a demand for payment under a Letter of Credit if the documents presented
in connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or Release of
Hazardous Materials on or from any Mortgaged Property or any other property
currently or formerly owned or operated by the Parent Borrower or any of the
Subsidiaries, or any Environmental Liability related in any way to the Parent
Borrower or any of the Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory and regardless
of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or
any Affiliate of such Indemnitee (or of any officer, director, employee,
advisor or agent of such Indemnitee or any such Indemnitee’s Affiliates) or to
the extent such damages constitute special, indirect or consequential damages
(as opposed to direct or actual damages).

(c)           To the extent that the Borrowers fail
to pay any amount required to be paid by it to the Administrative Agent, the
Issuing Bank, the Arranger or the Swingline Lender under paragraph (a) or
(b) of this Section, each Lender severally agrees to pay to the Administrative
Agent, the Issuing Bank, the Arranger or the Swingline Lender, as the case may
be, such Lender’s pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent, the Issuing Bank or the Swingline Lender in its capacity
as such.  For purposes hereof, a Lender’s
“pro rata share” shall be determined based upon its share of the sum of the
total Revolving Exposure and unused Commitments at the time.

(d)           To the extent permitted by applicable
law, the Borrowers shall not assert, and each of them hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or
Letter of Credit or the use of the proceeds thereof.

(e)           All amounts due under this Section
shall be payable promptly after written demand therefor.  Notwithstanding anything herein to the
contrary, the maximum liability of the German Subsidiary Borrower with respect
to the expense reimbursement and indemnification

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obligations under this Section 9.03 shall not
exceed the amount of free reserves of the German Subsidiary Borrower.

SECTION 9.04.  Successors and Assigns.  (a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that (i) no
Borrower may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by any Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), Participants
(to the extent provided in paragraph (c) of this Section) and, to the extent
expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Issuing Bank, the Arranger and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

(b)           (i)            Subject to the conditions set forth in
paragraph (b)(ii) below, any Lender may assign to one or more assignees
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans at the time owing to it) with
the prior written consent (such consent not to be unreasonably withheld or
delayed) of:

(A)          the Parent Borrower; provided
that no consent of the Parent Borrower shall be required (1) for an assignment
to a Lender, an Affiliate of a Lender or an Approved Fund or (2) if an Event of
Default has occurred and is continuing;

(B)           the Administrative Agent; and

(C)           the Swingline Lender.

(ii)           Assignments shall be subject to the
following additional conditions:

(A)          except in the case of an assignment to
a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the
entire remaining amount of the assigning Lender’s Commitment or Loans of any
Class, the amount of the Commitment or Loans of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $1,000,000 unless each of the Parent Borrower and the
Administrative Agent otherwise consents;

(B)           each partial assignment shall be made
as an assignment of a proportionate part of all the assigning Lender’s rights
and obligations under this Agreement, except that this clause (B) shall not be
construed to prohibit the

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assignment of a
proportionate part of all the assigning Lender’s rights and obligations in
respect of one Class of Commitments or Loans;

(C)           the parties to each such assignment
relating to the assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500; and

(D)          the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire and all applicable tax documentation.

(iii)          Subject to acceptance and recording
thereof pursuant to paragraph (b)(iv) of this Section, from and after the
effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.14, 2.15, 2.16
and 10.03).  Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does
not comply with this Section 9.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.

(iv)          The Administrative Agent, acting for
this purpose as an agent of the Borrowers, shall maintain at one of its offices
a copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive, and the Parent Borrower, each Subsidiary Borrower, the Administrative
Agent, the Issuing Bank and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Parent Borrower, the Issuing Bank and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.  Each Lender selling a participation to a
Participant shall, as a non-fiduciary agent of the Borrowers, keep a register
(substantially similar in form to the Register) of each such Participant,
specifying such Participant’s entitlement to payments of principal and interest
with respect to such Participation.  The
entries in such register shall be conclusive, and each Lender shall treat each
Person whose name is recorded in such Lender’s register as the Participant,
notwithstanding any notice to the contrary.

(v)           Upon its receipt of a duly completed
Assignment and Assumption and all applicable tax documentation executed by an
assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already

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be a Lender hereunder),
the processing and recordation fee referred to in this Section and any written consent
to such assignment required by this Section, the Administrative Agent shall
accept such Assignment and Assumption and record the information contained
therein in the Register.  No assignment
shall be effective for purposes of this Agreement unless it has been recorded
in the Register as provided in this paragraph.

(c)           (i)            Any
Lender may, without the consent of any Borrower, the Administrative Agent, the
Issuing Bank or the Swingline Lender, sell participations to one or more banks
or other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) each Borrower, the Administrative
Agent, the Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.  Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce the Loan
Documents and to approve any amendment, modification or waiver of any provision
of the Loan Documents; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver described in clauses (ii),
(iii) or (vii) of the first proviso to Section 9.02(b) that affects such
Participant.  Subject to
paragraph (c)(ii) of this Section, the Borrowers agree that each
Participant shall be entitled to the benefits of Sections 2.14, 2.15
and 2.16 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section; provided
such Participant agrees to be subject to Section 2.18(a) as though
it were a Lender.  To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section
9.08 as though it were a Lender; provided such Participant agrees to
be subject to Section 2.17(f) as though it were a Lender.

(ii)           A Participant shall be entitled to
receive greater payment under Section 2.14 or 2.16 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant; provided, however, that
if (A) the aggregate amount of participations sold by the Initial Lender under
this Agreement and the Fixed Asset Credit Agreement exceeds $50,000,000 (the “Participation
Amount”) or (B) the aggregate payments to a Participant under Section 2.14
or 2.16 of this Agreement and Section 2.14 or 2.16 of
the Fixed Asset Credit Agreement in excess of the payments the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant is greater than $500,000 per year (the “Additional
Payment Amount”), a Participant with respect to any amount in excess of the
Participation Amount or any payment in excess of the Additional Payment Amount
shall not be entitled to receive greater payment under Section 2.14
or 2.16 than the Initial Lender would have been entitled to receive with
respect to the participation sold to such Participant unless the Parent
Borrower consents to such participation in excess of the Participation Amount
or payment in excess of the Additional Payment Amount (which consent shall not
be unreasonably withheld).  A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.16 unless such Participant agrees, for the
benefit of the Borrowers, to comply with Section 2.16(e) as though
it were a Lender.

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(d)           Any Lender may at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; provided
that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

(e)           Notwithstanding anything to the
contrary contained herein, any Lender (a “Granting Lender”) may grant to
a special purpose funding vehicle (an “SPC”), identified as such in
writing from time to time by the Granting Lender to the Administrative Agent
and the Parent Borrower, the option to provide to the Borrowers all or any part
of any Loan that such Granting Lender would otherwise be obligated to make to
the Borrowers pursuant to this Agreement; provided, however, that
(i) nothing herein shall constitute a commitment by any SPC to make any Loan
and (ii) if an SPC elects not to exercise such option or otherwise fails to
provide all or any part of such Loan, the Granting Lender shall be obligated to
make such Loan pursuant to the terms hereof. 
The making of a Loan by an SPC hereunder shall utilize the applicable
Commitment of the Granting Lender to the same extent, and as if, such Loan were
made by such Granting Lender.  Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Lender).  In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that
is one year and one day after the payment in full of all outstanding commercial
paper or other senior indebtedness of any SPC, it will not institute against,
or join any other person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof, or the laws of Canada or any
province or territory thereof.  In
addition, notwithstanding anything to the contrary contained in this Section
9.04, any SPC may (i) with notice to, but without the prior written consent
of, the Parent Borrower and the Administrative Agent and without paying any
processing fee therefor, assign all or a portion of its interests in any Loans
to the Granting Lender or to any financial institutions (consented to by the
Parent Borrower and the Administrative Agent) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans and (ii) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or provider
of any surety, guarantee or credit or liquidity enhancement to such SPC.

SECTION 9.05.  Survival.  All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and not­with­standing that the Administrative Agent, the
Issuing Bank or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended
hereunder, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any fee or any other amount payable
under this Agreement is outstanding and unpaid or any Letter of Credit is
outstanding and so long as the Commitments have not expired or terminated.  The provisions of Sections 2.14, 2.15,
2.16,

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10.03
and 10.13 and Article VIII shall survive and remain in full
force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.

SECTION 9.06.  Counterparts; Integration; Effectiveness.  This Agreement may be executed in counter­parts
(and by different parties hereto on different counter­parts), each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract.  This
Agreement, the other Loan Document and any separate letter agreements with
respect to fees payable to the Administrative Agent, the Arranger or the
Issuing Bank constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and under­standings,
oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01,
this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counter­part of a
signature page of this Agreement by telecopy or other electronic transmission
shall be effective as delivery of a manually executed counterpart of this
Agreement.

SECTION 9.07.  Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08.  Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates 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 obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of any Borrower
against any of and all the obligations of the Borrowers now or hereafter
existing under this Agreement or any other Loan Document held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured.  The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
that such Lender may have.

SECTION 9.09.  Governing Law; Jurisdiction; Consent to
Service of Process.  (a) This
Agreement shall be construed in accordance with and governed by the law of the
State of New York.

(b)           Each of the Borrowers hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York
sitting in New York County and of the United States District Court of the
Southern District of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each of parties hereto hereby
irrevocably and unconditionally agrees that all

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claims in respect of any such action or proceeding may
be heard and determined in such New York State or, to the extent permitted by
law, in such Federal court.  Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this Agreement or any other Loan
Document shall affect any right that the Administrative Agent, the Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or any other Loan Document against any Borrower or its
properties in the courts of any jurisdiction.

(c)           Each of the Borrowers hereby
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection that it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to in
paragraph (b) of this Section.  Each
of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

(d)           Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 9.01.  Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

(e)           Each Foreign Subsidiary Borrower
hereby irrevocably designates, appoints and empowers CT Corporation System, 111
Eighth Avenue, New York, NY 10011 (telephone: (212) 894-8800) (the “Process
Agent”), in the case of any suit, action or proceeding brought in the
United States of America as its designee, appointee and agent to receive,
accept and acknowledge for and on its behalf, and in respect of its property,
service of any and all legal process, summons, notices and documents that may
be served in any action or proceeding arising out of or in connection with this
Agreement or any Loan Document.  Such
service may be made by mailing (by registered or certified mail, postage
prepaid) or delivering a copy of such process to such Foreign Subsidiary
Borrower in care of the Process Agent at the Process Agent’s above address, and
such Foreign Subsidiary Borrower hereby irrevocably authorizes and directs the
Process Agent to accept such service on its behalf.

SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

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SECTION 9.11.  Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

SECTION 9.12.  Confidentiality.  Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its
and its Affiliates’ investment advisors, directors, officers, employees and
agents, including accountants, legal counsel and other advisors (the “Representatives”)
and any direct or indirect contractual counterparty in swap agreements entered
into in connection with a Lender’s outstanding Loans from time to time or to
such contractual counterparty’s professional advisor (it being understood that
the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential and, in the case of any such contractual counterparty or its professional
advisor, such persons shall agree in writing to be bound by the provisions of
this Section 9.12), (b) to the extent requested or demanded by any
Governmental Authority or any self-regulatory organization (including the
National Association of Insurance Commissioners or other similar organization),
(c) to the extent required by applicable laws or regulations or by any
subpoena, order or similar legal process; provided that, to the extent
reasonably practicable and not prohibited by applicable laws or regulations or
by any judicial or administrative order, such Person will provide the Parent
Borrower with prior notice of such disclosure, (d) any nationally
recognized rating agency that requires access to information about a Lender’s
investment portfolio in connection with ratings issued with respect to such
Lender, (e) to any other party to this Agreement, (f) in connection
with the exercise of any remedies hereunder or any suit, action or proceeding
relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (g) subject to an agreement containing
provisions substantially the same as those of this Section, to (i) any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, or (ii) any actual
or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to any Borrower and its obligations, (h) with the
consent of the Parent Borrower or (i) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent, the Issuing
Bank or any Lender on a nonconfidential basis from a source other than the
Parent Borrower, any Subsidiary or any of their Representatives that is not
known to such Person to be subject to any obligation of confidentiality to the
Parent Borrower or any Subsidiary.  For
the purposes of this Section, “Information” means all information received
from the Parent Borrower, any Subsidiary or any of their Representatives
relating to the Parent Borrower, the Subsidiaries or their businesses, other
than any such information that is available to the Administrative Agent, the
Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
the Parent Borrower or any Subsidiary. 
Any Person required to maintain the confidentiality of Information as
provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.

SECTION 9.13.  Conversion of Currencies.  (a) If, for the purpose of obtaining judgment
in any court, it is necessary to convert a sum owing hereunder in one currency
into another currency, each party hereto agrees, to the fullest extent that it
may effectively do so, that

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the rate of exchange used shall be that at which in
accordance with normal banking procedures in the relevant jurisdiction the
first currency could be purchased with such other currency on the Business Day
immediately preceding the day on which final judgment is given.

(b)           The obligations of the Borrowers in
respect of any sum due to any party hereto or any holder of the obligations
owing hereunder (the “Applicable Creditor”) shall, notwithstanding any
judgment in a currency (the “Judgment Currency”) other than the currency
in which such sum is stated to be due hereunder (the “Agreement Currency”),
be discharged only to the extent that, on the Business Day following receipt by
the Applicable Creditor of any sum adjudged to be so due in the Judgment
Currency, the Applicable Creditor may in accordance with normal banking procedures
in the relevant jurisdiction purchase the Agreement Currency with the Judgment
Currency; if the amount of the Agreement Currency so purchased is less than the
sum originally due to the Applicable Creditor in the Agreement Currency, each
of the Borrowers agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Applicable Creditor against such loss.  The obligations of the Borrowers contained in
this Section 9.13 shall survive the termination of this Agreement and
the payment of all other amounts owing hereunder.

SECTION 9.14.  Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts that are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) that may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate to
the date of repayment, shall have been received by such Lender.

SECTION 9.15.  Parallel Obligations.  For the purposes of taking and ensuring the
continuing validity of security (the “Parallel Debt Security”) under the
Security Documents subject to the laws of (or to the extent affecting assets
situated in) Germany and such other jurisdictions as the Administrative Agent
and the Parent Borrower (each acting reasonably) agree, notwithstanding any
contrary provision in any Loan Document:

(a)           Abstract Acknowledgement of
Indebtedness.

(i)            Each Borrower undertakes (such
undertakings, the “Parallel Obligations”) to pay to the Administrative
Agent amounts equal to all present and future amounts (the “Original
Obligations”) owing by it to a Secured Party under any Loan Document;

(ii)           the Administrative Agent shall have
its own independent right to demand payment of the Parallel Obligations;

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(iii)          the Parallel Obligations shall not
limit or affect the existence of the Original Obligations for which the Secured
Parties shall have an independent right to demand payment;

(iv)          notwithstanding paragraphs (ii) and
(iii), payment by a Borrower of its Parallel Obligations shall to the same
extent decrease and be a good discharge of the corresponding Original
Obligations owing to the relevant Secured Parties and payment by a Borrower of
its Original Obligations to the relevant Secured Parties shall to the same
extent decrease and be a good discharge of the Parallel Obligations owing by it
to the Administrative Agent;

(v)           the Parallel Obligations are owed to
the Administrative Agent in its own name and the Parallel Debt Security shall
secure the Parallel Obligations so owing;

(vi)          without limiting or affecting the
Administrative Agent’s right to protect, preserve or enforce its rights under
any Security Agreement, the Administrative Agent undertakes to each Secured
Party not to exercise its rights in respect of the Parallel Obligations without
the consent of the relevant Secured Party; and

(vii)         the Administrative Agent undertakes to
distribute to the Secured Parties an amount equal to any amounts collected or
received by the Administrative Agent which it has applied in reduction of the
Parallel Obligations in accordance with the terms of this Agreement as if the
terms of this Agreement as if the Original Obligations had not been discharged.

(b)           Joint and Several Creditor.

(i)            Each Borrower and each of the
Secured Parties (other than the Administrative Agent) agrees that the
Administrative Agent shall be the joint creditor (together with the relevant
Secured Parties) of each and every obligation of any Borrower towards each of
the Secured Parties (other than the Administrative Agent) under the Loan
Documents. Accordingly the Administrative Agent will have its own independent
right to demand performance by the relevant Borrower of those obligations.
However, any discharge of any such obligation to either the Administrative
Agent or a Secured Party (other than the Administrative Agent) shall, to that
extent, discharge the corresponding obligation owing to the other; and

(ii)           without limiting or affecting the
Administrative Agent’s rights against any Borrower (whether under this Section
9.15 or under any other provision of the Loan Documents), the
Administrative Agent agrees with each other Secured Party (on a several and
divided basis) that, subject as set out in the next sentence, it will not
exercise its rights as a joint creditor with a Secured Party (other than the
Administrative Agent) except with the consent of the relevant Secured Party.
However, for the avoidance of doubt, nothing in the previous sentence shall in
any way limit the Administrative Agent’s right to act in the protection or preservation
of rights under, or to enforce any Security Agreement as contemplated by, this
Agreement and/or the relevant Security Agreement (or to do any act reasonably
incidental to any of the foregoing).

 132
 

 

[remainder of page intentionally left blank]

 133

 

IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective authorized officers as
of the day and year first above written.

	
   

  	
  PLIANT CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  UNIPLAST HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PLIANT CORPORATION PTY LTD.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PLIANT CORPORATION OF CANADA

  LTD.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  UNIPLAST INDUSTRIES CO.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  

 

 

[SIGNATURE PAGE TO
WORKING CAPITAL CREDIT AGREEMENT]

 

 

	
  

  	
  PLIANT FILM PRODUCTS GMBH

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ASPEN INDUSTRIAL, S.A. DE C.V.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  

 

 

[SIGNATURE PAGE TO
WORKING CAPITAL CREDIT AGREEMENT]

 

 

	
  

  	
  UNIPLAST U.S., INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title

  	
   

  

 

 

[SIGNATURE PAGE TO
WORKING CAPITAL CREDIT AGREEMENT]

 

 

	
  

  	
  MERRILL LYNCH BANK USA, as

  Administrative Agent, Swingline Lender,

  and Domestic Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MERRILL LYNCH INTERNATIONAL

  (AUSTRALIA) LIMITED, as Australian

  Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MERRILL LYNCH CAPITAL CANADA

  INC., as Canadian Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MERRILL LYNCH CAPITAL MARKETS

  BANK LIMITED, as German Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MERRILL LYNCH MORTGAGE

  CAPITAL INC., as Mexican Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

[SIGNATURE PAGE TO
WORKING CAPITAL CREDIT AGREEMENT]

 

 

	
  

  	
  MERRILL LYNCH BANK USA, as Issuing

  Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

[SIGNATURE PAGE TO
WORKING CAPITAL CREDIT AGREEMENT]Exhibit
10.2

FIXED ASSET CREDIT
AGREEMENT

dated as of

July 18, 2006

among

PLIANT
CORPORATION PTY LTD.,

PLIANT CORPORATION OF CANADA LTD., 

PLIANT FILM PRODUCTS GMBH

and

ASPEN INDUSTRIAL, S.A. DE C.V.,

as Borrowers,

The Lenders Party Hereto,

and

MERRILL LYNCH BANK
USA,

as Administrative Agent

* * *

MERRILL LYNCH COMMERCIAL FINANCE CORP.,

as Sole Lead Arranger and
Book Manager

 

TABLE OF CONTENTS

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  Definitions

  	
  1

  
	
  Section 1.01.

  	
  Defined Terms

  	
  1

  
	
  Section 1.02.

  	
  Classification of Loans
  and Borrowings

  	
  36

  
	
  Section 1.03.

  	
  Terms Generally

  	
  36

  
	
  Section 1.04.

  	
  Accounting Terms; GAAP

  	
  36

  
	
  ARTICLE II

  	
  The Credits

  	
  37

  
	
  Section 2.01.

  	
  Commitments

  	
  37

  
	
  Section 2.02.

  	
  Loans and Borrowings

  	
  38

  
	
  Section 2.03.

  	
  Requests for Borrowings

  	
  39

  
	
  Section 2.04.

  	
  [Intentionally Omitted]

  	
  39

  
	
  Section 2.05.

  	
  [Intentionally Omitted]

  	
  39

  
	
  Section 2.06.

  	
  Funding of Borrowings

  	
  39

  
	
  Section 2.07.

  	
  Interest Elections

  	
  40

  
	
  Section 2.08.

  	
  Termination and
  Reduction of Commitments

  	
  41

  
	
  Section 2.09.

  	
  Repayment of Loans;
  Evidence of Debt

  	
  41

  
	
  Section 2.10.

  	
  Prepayment of Loans

  	
  42

  
	
  Section 2.11.

  	
  [Intentionally Omitted]

  	
  46

  
	
  Section 2.12.

  	
  Interest

  	
  46

  
	
  Section 2.13.

  	
  Alternate Rate of
  Interest

  	
  47

  
	
  Section 2.14.

  	
  Increased Costs

  	
  47

  
	
  Section 2.15.

  	
  Break Funding Payments

  	
  48

  
	
  Section 2.16.

  	
  Taxes

  	
  49

  
	
  Section 2.17.

  	
  Payments Generally; Pro
  Rata Treatment; Sharing of Setoffs

  	
  50

  
	
  Section 2.18.

  	
  Mitigation Obligations

  	
  53

  
	
  Section 2.19.

  	
  [Intentionally Omitted]

  	
  54

  
	
  Section 2.20.

  	
  The Administrative
  Borrower

  	
  54

  
	
  ARTICLE III

  	
  Representations and
  Warranties

  	
  54

  
	
  Section 3.01.

  	
  Organization; Powers

  	
  54

  
	
  Section 3.02.

  	
  Authorization;
  Enforceability

  	
  55

  
	
  Section 3.03.

  	
  Governmental Approvals;
  No Conflicts

  	
  55

  
					

 

 i
 

 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 3.04.

  	
  Financial Condition; No Material Adverse Change

  	
  55

  
	
  Section 3.05.

  	
  Properties

  	
  56

  
	
  Section 3.06.

  	
  Litigation and
  Environmental Matters

  	
  56

  
	
  Section 3.07.

  	
  Compliance with Laws
  and Agreements

  	
  57

  
	
  Section 3.08.

  	
  Investment Company
  Status

  	
  57

  
	
  Section 3.09.

  	
  Taxes

  	
  57

  
	
  Section 3.10.

  	
  ERISA

  	
  57

  
	
  Section 3.11.

  	
  Disclosure

  	
  57

  
	
  Section 3.12.

  	
  Subsidiaries; Loan
  Party Information

  	
  58

  
	
  Section 3.13.

  	
  Insurance

  	
  58

  
	
  Section 3.14.

  	
  Labor Matters

  	
  58

  
	
  Section 3.15.

  	
  Solvency

  	
  58

  
	
  Section 3.16.

  	
  Security Documents

  	
  59

  
	
  Section 3.17.

  	
  Federal Reserve
  Regulations

  	
  59

  
	
  Section 3.18.

  	
  Senior Secured
  Obligations

  	
  60

  
	
  Section 3.19.

  	
  Related Names

  	
  60

  
	
  Section 3.20.

  	
  Permanent Establishment
  in Canada

  	
  60

  
	
  Section 3.21.

  	
  Canadian Pension Plans

  	
  60

  
	
  ARTICLE IV

  	
  Conditions

  	
  61

  
	
  Section 4.01.

  	
  Effective Date

  	
  61

  
	
  Section 4.02.

  	
  Each Credit Event

  	
  65

  
	
  Section 4.03.

  	
  Australian Effective
  Date

  	
  66

  
	
  ARTICLE V

  	
  Affirmative Covenants

  	
  68

  
	
  Section 5.01.

  	
  Financial Statements
  and Other Information

  	
  68

  
	
  Section 5.02.

  	
  Notices of Material
  Events

  	
  70

  
	
  Section 5.03.

  	
  Information Regarding
  Collateral

  	
  71

  
	
  Section 5.04.

  	
  Existence; Conduct of
  Business

  	
  71

  
	
  Section 5.05.

  	
  Payment of Obligations;
  Compliance with Leases

  	
  71

  
	
  Section 5.06.

  	
  Maintenance of
  Properties

  	
  72

  
					

 

 ii
 

 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 5.07.

  	
  Insurance

  	
  72

  
	
  Section 5.08.

  	
  Casualty and
  Condemnation

  	
  73

  
	
  Section 5.09.

  	
  Books and Records;
  Inspection and Audit Rights

  	
  73

  
	
  Section 5.10.

  	
  Compliance with Laws

  	
  74

  
	
  Section 5.11.

  	
  Use of Proceeds

  	
  74

  
	
  Section 5.12.

  	
  Additional Subsidiaries

  	
  74

  
	
  Section 5.13.

  	
  Further Assurances

  	
  74

  
	
  Section 5.14.

  	
  Supplemental Disclosure

  	
  75

  
	
  Section 5.15.

  	
  Intellectual Property

  	
  75

  
	
  Section 5.16.

  	
  Landlord Lien Waivers,
  Mortgagee Agreements and Bailee Letters

  	
  75

  
	
  Section 5.17.

  	
  Depository Banks.

  	
  76

  
	
  Section 5.18.

  	
  ERISA

  	
  77

  
	
  Section 5.19.

  	
  Post-Closing Conditions

  	
  77

  
	
  Section 5.20.

  	
  Canadian Pension Plans

  	
  77

  
	
  ARTICLE VI

  	
  Negative Covenants

  	
  78

  
	
  Section 6.01.

  	
  Indebtedness

  	
  78

  
	
  Section 6.02.

  	
  Certain Equity
  Securities

  	
  79

  
	
  Section 6.03.

  	
  Liens

  	
  79

  
	
  Section 6.04.

  	
  Fundamental Changes

  	
  81

  
	
  Section 6.05.

  	
  Investments, Loans,
  Advances, Guarantees and Acquisitions

  	
  82

  
	
  Section 6.06.

  	
  Asset Sales

  	
  83

  
	
  Section 6.07.

  	
  Sale and Lease-Back
  Transactions

  	
  84

  
	
  Section 6.08.

  	
  Swap Agreements

  	
  84

  
	
  Section 6.09.

  	
  Restricted Payments; Certain
  Payments of Indebtedness

  	
  85

  
	
  Section 6.10.

  	
  Transactions with
  Affiliates

  	
  85

  
	
  Section 6.11.

  	
  Restrictive Agreements

  	
  86

  
	
  Section 6.12.

  	
  Amendment of Material
  Documents

  	
  87

  
	
  Section 6.13.

  	
  Designated Senior Debt

  	
  87

  
					

 

 iii
 

 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 6.14.

  	
  Cash Held by Loan Parties

  	
  87

  
	
  Section 6.15.

  	
  ERISA

  	
  87

  
	
  Section 6.16.

  	
  Cancellation of
  Indebtedness

  	
  87

  
	
  Section 6.17.

  	
  Change in Fiscal Year;
  Accounting Policies

  	
  87

  
	
  Section 6.18.

  	
  Financial Covenants

  	
  88

  
	
  Section 6.19.

  	
  [Intentionally Omitted]

  	
  88

  
	
  Section 6.20.

  	
  [Intentionally Omitted]

  	
  88

  
	
  ARTICLE VII

  	
  Events of Default

  	
  88

  
	
  ARTICLE VIII

  	
  The Administrative
  Agent

  	
  91

  
	
  Section 8.01.

  	
  Authorization, Action,
  Etc

  	
  91

  
	
  Section 8.02.

  	
  Declaration of Trust
  (Treuhand) and Appointment as Administrator

  	
  93

  
	
  Section 8.03.

  	
  Quebec Security

  	
  94

  
	
  ARTICLE IX

  	
  Miscellaneous

  	
  94

  
	
  Section 9.01.

  	
  Notices

  	
  94

  
	
  Section 9.02.

  	
  Waivers; Amendments

  	
  95

  
	
  Section 9.03.

  	
  Expenses; Indemnity;
  Damage Waiver; Joint and Several Obligations

  	
  97

  
	
  Section 9.04.

  	
  Successors and Assigns

  	
  98

  
	
  Section 9.05.

  	
  Survival

  	
  102

  
	
  Section 9.06.

  	
  Counterparts;
  Integration; Effectiveness

  	
  102

  
	
  Section 9.07.

  	
  Severability

  	
  103

  
	
  Section 9.08.

  	
  Right of Setoff

  	
  103

  
	
  Section 9.09.

  	
  Governing Law;
  Jurisdiction; Consent to Service of Process

  	
  103

  
	
  Section 9.10.

  	
  WAIVER OF JURY TRIAL

  	
  104

  
	
  Section 9.11.

  	
  Headings

  	
  104

  
	
  Section 9.12.

  	
  Confidentiality

  	
  104

  
	
  Section 9.13.

  	
  Conversion of
  Currencies

  	
  105

  
	
  Section 9.14.

  	
  Interest Rate
  Limitation

  	
  106

  
	
  Section 9.15.

  	
  Parallel Obligations

  	
  106

  
					

 

 iv
 

 

SCHEDULES:

	
  Schedule 1.01(a)

  	
   

  	
  Mortgaged Properties

  
	
  Schedule 1.01(b)

  	
   

  	
  Existing Letters of Credit

  
	
  Schedule 1.01(c)

  	
   

  	
  Borrower Account

  
	
  Schedule 2.01(a)

  	
   

  	
  Commitments

  
	
  Schedule 3.05

  	
   

  	
  Owned or Leased Property

  
	
  Schedule 3.12(a)

  	
   

  	
  Subsidiaries

  
	
  Schedule 3.12(b)

  	
   

  	
  Loan Party Information

  
	
  Schedule 3.13

  	
   

  	
  Insurance

  
	
  Schedule 3.16(d)

  	
   

  	
  Mortgage Filing Offices

  
	
  Schedule 5.07

  	
   

  	
  Insurance Levels

  
	
  Schedule 5.17

  	
   

  	
  Deposit Accounts

  
	
  Schedule 5.19

  	
   

  	
  Post-Closing Conditions

  
	
  Schedule 6.01

  	
   

  	
  Existing Indebtedness

  
	
  Schedule 6.03

  	
   

  	
  Existing Liens

  
	
  Schedule 6.05(b)

  	
   

  	
  Existing Investments

  
	
  Schedule 6.06

  	
   

  	
  Asset Sales

  
	
  Schedule 6.10

  	
   

  	
  Affiliate Transactions

  
	
  Schedule 6.11

  	
   

  	
  Existing Restrictions

  
	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of Assignment and Assumption

  
	
  Exhibit B-1

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit B-2

  	
   

  	
  Form of Foreign Guarantee Agreement

  
	
  Exhibit C-1

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit C-2

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit C-3

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit C-4

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit C-5

  	
   

  	
  Form of Mexican Pledge Agreement

  
	
  Exhibit D-1

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit D-2

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit D-3

  	
   

  	
  Form of Canadian Security Agreement

  
	
  Exhibit D-4

  	
   

  	
  Form of German Global Assignment Agreement

  
	
  Exhibit D-5

  	
   

  	
  Form of Mexican Security Agreement

  
	
  Exhibit E

  	
   

  	
  Form of Borrowing Base Certificate

  
	
  Exhibit F

  	
   

  	
  Form of Perfection Certificate

  
	
  Exhibit G

  	
   

  	
  Form of Borrowing Request

  
	
  Exhibit H

  	
   

  	
  Form of Compliance Certificate

  
	
  Exhibit I

  	
   

  	
  [Intentionally Omitted]

  

 

 v
 

 

 

	
  Exhibit J

  	
   

  	
  [Intentionally Omitted]

  
	
  Exhibit K

  	
   

  	
  Form of Revolving Credit Note

  

 

 vi

FIXED ASSET CREDIT AGREEMENT, dated as of July 18,
2006 (this, “Agreement”), among PLIANT CORPORATION PTY LTD., PLIANT CORPORATION OF CANADA LTD., PLIANT
FILM PRODUCTS GMBH and ASPEN INDUSTRIAL, S.A. DE C.V., as Borrowers
(collectively, the “Borrowers”), the Lenders party hereto and MERRILL
LYNCH BANK USA, as Administrative Agent (in such capacity, the “Administrative
Agent”).

RECITALS

WHEREAS, the Borrowers have requested that the Lenders
make available for the purposes specified in this Agreement a revolving credit
facility; and

WHEREAS, the Lenders are willing to make available to
the Borrowers such revolving credit facility upon the terms and subject to the
conditions set forth herein;

NOW THEREFORE, in consideration of the premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01.  Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:

“ABR”, when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are bearing interest at a rate determined by reference to the Alternate Base
Rate.

“Administrative Agent” has the meaning assigned
to such term in the preamble hereto.

“Administrative Borrower” has the meaning
assigned to such term in Section 2.20.

“Administrative Questionnaire” means an
Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affiliate” means, with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with
the Person specified.

“Agreement” has the meaning assigned to such
term in the preamble hereto.

“Alternate Base Rate” means, for any day, a
rate per annum equal to the greater of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect on such day plus 1⁄2
of 1%.  Any change in the Alternate Base
Rate due to a change in the Prime

 

Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate or the Federal Funds Effective Rate, respectively.

“Applicable Percentage” means, (a) with respect
to any Australian Lender, the percentage of the total amount of the Australian
Revolving Exposure represented by such Australian Lender’s Australian Revolving
Exposure, (b) with respect to any Canadian Lender, the percentage of the total
amount of the Canadian Revolving Exposure represented by such Canadian Lender’s
Canadian Revolving Exposure, (c) with respect to any German Lender, the
percentage of the total amount of the German Revolving Exposure represented by
such German Lender’s German Revolving Exposure, and (d) with respect to any
Mexican Lender, the percentage of the total amount of the Mexican Revolving
Exposure represented by such Mexican Lender’s Mexican Revolving Exposure.  If the Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the
Commitments most recently in effect, giving effect to any assignments.  If any of the Australian Revolving Exposure,
Canadian Revolving Exposure, German Revolving Exposure or Mexican Revolving
Exposure is $0, the Applicable Percentage with respect to any Australian
Lender, Canadian Lender, German Lender or Mexican Lender shall be determined
based upon the percentage of the total amount of the Commitments represented by
such Australian Lender’s, Canadian Lender’s, German Lender’s or Mexican Lender’s
Commitment, as applicable.

“Applicable Rate” means, as of each date of
determination, with respect to any ABR Loan or Eurodollar Loan, the applicable
rate per annum set forth below under the caption “ABR Spread” or “Eurodollar
Spread”, as the case may be, based upon the Average Revolving Exposure for such
day (calculated as of the end of such day):

	
  Average Revolving Exposure

  	
   

  	
  ABR Spread

  	
   

  	
  Eurodollar Spread

  	
   

  
	
  Category 1

  Greater than 75% of Available Credit 

  	
   

  	
  2.00

  	
  %

  	
  3.00

  	
  %

  
	
  Category 2

  Less than or equal to 75% of Available Credit

  	
   

  	
  1.75

  	
  %

  	
  2.75

  	
  %

  

 

Each date of determination for the Applicable Rate
shall be on each Interest Payment Date. 
Changes in the Applicable Rate resulting from a change in the Average
Revolving Exposure on any date of determination shall become effective as to
all ABR Loans and Eurodollar Loans from and including the first day following
such date of determination. 
Notwithstanding the foregoing, the Applicable Rate with respect to any
ABR Loan or Eurodollar Loan will be determined by reference to Category 1
(i) at any time that an Event of Default has occurred and is continuing or
(ii) if the Administrative Borrower fails to deliver any Borrowing Base
Certificate required to be delivered by it pursuant to Section 5.01(f),
during the period from the expiration of the time for delivery thereof until
the Administrative Borrower delivers such Borrowing Base Certificate.

“Approved Fund” means any Person (other than a
natural person) that is engaged in making, purchasing, holding or investing in
bank loans and similar extensions of credit in the ordinary course of its
business and that is administered, managed or controlled by (a) a Lender,

 2
 

 

(b) an Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers, manages or controls a Lender.

“Arranger” means Merrill Lynch Commercial
Finance Corp., as sole lead arranger and book manager for the Loans.

“Asset Disposition” means any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition of assets
or property or series of related dispositions of assets or property (excluding
any such disposition permitted by Section 6.06(a), (b), (c) and (g)) that
yields gross proceeds to the Parent or any of its Subsidiaries in excess of
$1,000,000 in the aggregate for all such dispositions.

“Assignment and Assumption” means an assignment
and assumption entered into by a Lender and an assignee (with the consent of
any party whose consent is required by Section 9.04), and accepted by
the Administrative Agent, in the form of Exhibit A or any other
form approved by the Administrative Agent.

“Australian Availability Period” means the
period from and including the Australian Effective Date to but excluding the
earlier of the Maturity Date and the date of termination of the Commitments.

“Australian Borrowing Base” means, at any time
of determination, an amount equal to the sum, without duplication of:

(a)           (i) 75% of each Australian Loan Party’s
Eligible Real Estate valued at market value plus (ii) 85% of the Net
Orderly Liquidation Value of each Australian Loan Party’s Eligible Machinery
and Equipment, minus

(b)           the Rent Reserve with respect to each
Australian Loan Party, minus

(c)           the Priority Payables Reserve with
respect to each Australian Loan Party, minus

(d)           the Secured Obligations Reserve with
respect to each Australian Loan Party, minus

(e)           any Reserves with respect to each
Australian Loan Party.

The Australian Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent pursuant to this Agreement.  Standards of eligibility and reserves and
advance rates of the Australian Borrowing Base may be revised and adjusted from
time to time solely at the commercially reasonable discretion of the
Administrative Agent, with any changes in such standards to be effective
immediately after delivery of notice thereof to the Administrative
Borrower.  For purposes of calculating
the Australian Borrowing Base on any date, all amounts reflected or outstanding
in Australian Dollars shall be translated into dollars at the exchange rate in
effect on such date, as determined in good faith by the Administrative
Borrower.

 3
 

 

“Australian Dollar” or “A$” refers to
the lawful money of Australia.

“Australian Effective Date” means the date on
which the conditions specified in Section 4.03 are satisfied.

“Australian Lender” means each Lender or any
Affiliate of a Lender designated by such Lender to the Administrative Borrower
as an “Australian Lender”.  The
Australian Lender on the Effective Date shall be Merrill Lynch International
(Australia) Limited.

“Australian Loan Party” means the Australian
Subsidiary Borrower and any other Loan Party organized under the laws of
Australia or any state or province thereof.

“Australian Revolving Exposure” means, with
respect to any Australian Lender at any time, the sum of the outstanding
principal amount of such Australian Lender’s Australian Revolving Loans.

“Australian Revolving Loan” means a Loan made
by an Australian Lender pursuant to Section 2.01(b).  Each Australian Revolving Loan shall be a
Eurodollar Loan or an ABR Loan.

“Australian Security Agreement” means an
Australian Security Agreement, in form and substance reasonably satisfactory to
the Administrative Borrower and the Administrative Agent, among the Australian
Subsidiary Borrower and the Administrative Agent, pursuant to which the
Australian Subsidiary Borrower will grant liens on its Foreign Fixed Asset
Collateral and Foreign Working Capital Collateral in favor of Merrill Lynch
Bank USA, for the ratable benefit of the Secured Parties, as security for the
Obligations, and each other security agreement or other instrument or document
executed and delivered by any Australian Loan Party to secure any of the
Obligations.

“Australian Sublimit” means $2,000,000.

“Australian Subsidiary Borrower” means Pliant
Corporation Pty Ltd., a company organized under the laws of Australia (ABN 36
055 367 925).

“Availability Amount” means, at any time, an
amount equal to (a) the lesser of (i) the total amount of the
Commitments at such time and (ii) the Borrowing Base in effect at such
time minus (b) the total Revolving Exposure at such time.

“Available Credit” means, at any time, an
amount equal to the lesser of (a) the total amount of the Commitments at
such time and (b) the Borrowing Base in effect at such time.

“Average Revolving Exposure” means, for any
period, the average daily Revolving Exposure during such period.

“Bailee Letter” means a written agreement reasonably
acceptable to the Administrative Agent, pursuant to which a bailee of Equipment
of any Loan Party agrees to hold such Equipment for the benefit of the
Administrative Agent, to waive or subordinate its rights and claims as bailee
in such Equipment, including warehouseman’s liens, processor’s liens,

 4
 

 

rights of levy and distraint for rent, grant access to
the Administrative Agent for the repossession and sale of such Equipment, and
make other agreements relative thereto.

“Bankruptcy Code” means Chapter 11 of Title 11
of the United States Code, 11 U.S.C. 101 et seq.

“Bankruptcy Court” means the United States
Bankruptcy Court for the District of Delaware.

“Board” means the Board of Governors of the
Federal Reserve System of the United States of America.

“Borrower Account” means, with respect to each
Borrower, such Borrower’s account set forth on Schedule 1.01(c), as such
Schedule may be amended from time to time on five Business Days’ prior written
notice from the Administrative Borrower to the Administrative Agent.

“Borrowers” has the meaning specified in the
preamble.

“Borrowing” means Loans of the same Class and
Type made, converted or continued on the same date and, in the case of
Eurodollar Loans, as to which a single Interest Period is in effect.

“Borrowing Base” means, at any time of
determination, an amount equal to the sum, without duplication of the
Australian Borrowing Base, the Canadian Borrowing Base, the German Borrowing
Base and the Mexican Borrowing Base.

“Borrowing Base Certificate” means a certificate
substantially in the form of Exhibit E (with such changes therein
as may be required by the Administrative Agent, to reflect the components of,
and reserves against, the Borrowing Base as provided for hereunder from time to
time), executed and certified as accurate and complete by a Financial Officer
of the Administrative Borrower, which certificate shall include appropriate
exhibits, schedules, supporting documentation and reports as reasonably
requested by the Administrative Agent.

“Borrowing Request” means a request by a
Borrower for a Borrowing in substantially the form of Exhibit G hereto.

“Business Day” means any day that is not a
Saturday, Sunday or other day on which commercial banks in New York City
are authorized or required by law to remain closed; provided that (a)
when used in connection with a Eurodollar Loan, the term “Business Day”
shall also exclude any day on which banks generally are not open for dealings
in dollar deposits in the London interbank market, (b) when used in connection
with any Australian Revolving Loan, the term “Business Day” shall also exclude
any day on which banks are not open for deposits in Sydney, Australia, (c) when
used in connection with any Canadian Revolving Loan, the term “Business Day”
shall also exclude any day on which banks are not open for deposits in Toronto,
Canada, (d) when used in connection with any German Revolving Loan, the term “Business
Day” shall also exclude any day on which banks are not open for deposits in
Berlin, Germany,

 5
 

 

and (e) when used in connection with any Mexican
Revolving Loan, the term “Business Day” shall also exclude any day on which
banks are not open for deposits in Mexico City, Mexico.

“Canadian Borrowing Base” means, at any time of
determination, an amount equal to the sum, without duplication of:

(a)           (i) 75% of each Canadian Loan Party’s
Eligible Real Estate valued at market value plus (ii) 85% of the Net
Orderly Liquidation Value of each Canadian Loan Party’s Eligible Machinery and
Equipment, minus

(b)           the Rent Reserve with respect to each
Canadian Loan Party, minus

(c)           the Priority Payables Reserve with
respect to each Canadian Loan Party, minus

(d)           the Secured Obligations Reserve with
respect to each Canadian Loan Party, minus

(e)           any Reserves with respect to each Canadian
Loan Party.

The Canadian Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent pursuant to this Agreement.  Standards of eligibility and reserves and
advance rates of the Canadian Borrowing Base may be revised and adjusted from
time to time solely at the commercially reasonable discretion of the
Administrative Agent, with any changes in such standards to be effective
immediately after delivery of notice thereof to the Administrative
Borrower.  For purposes of calculating
the Canadian Borrowing Base on any date, all amounts reflected or outstanding
in Canadian Dollars shall be translated into dollars at the exchange rate in effect
on such date, as determined in good faith by the Administrative Borrower.

“Canadian Confirmation Order” means an order of
the Canadian Court, which shall, among other things, order and declare that the
Confirmation Order and the Plan of Reorganization are recognized and shall be
implemented, binding and effective in Canada in accordance with their terms as
if originally made in Canada.

“Canadian Court” means the Ontario Superior
Court of Justice (Commercial List).

“Canadian Dollars” or “Cdn$” refers to
lawful money of Canada.

“Canadian Lender” means each Lender or any
Affiliate of a Lender designated by such Lender to the Administrative Borrower
as a “Canadian Lender”.  The Canadian
Lender on the Effective Date shall be Merrill Lynch Capital Canada Inc.

“Canadian Lending Office” means, as to any
Canadian Lender, the applicable branch, office or Affiliate of such Canadian
Lender designated by such Canadian Lender to make Canadian Revolving Loans to
the Canadian Subsidiary Borrower.

 6
 

 

“Canadian Loan Party” means the Canadian
Subsidiary Borrower and any other Loan Party organized under the laws of Canada
or any province or territory thereof.

“Canadian Pension Plan” means any pension
benefit plan within the meaning of the Pension Benefits Act (Ontario) in
respect of which any Loan Party makes or has made contributions in respect of
its employees.

“Canadian Revolving Exposure” means, with
respect to any Canadian Lender at any time, the sum of the outstanding
principal amount of such Canadian Lender’s Canadian Revolving Loans.

“Canadian Revolving Loan” means a Loan made by
a Canadian Lender pursuant to Section 2.01(c). 
Each Canadian Revolving Loan shall be a Eurodollar Loan or an ABR Loan.

“Canadian Security Agreement” means the
Canadian Security Agreement, substantially in the form of Exhibit D-3,
from the Canadian Subsidiary Borrower in favor of the Administrative Agent, and
each other security agreement or other instrument or document executed and
delivered by any Canadian Loan Party to secure any of the Obligations.

“Canadian Sublimit” means $10,000,000.

“Canadian Subsidiary Borrower” means Pliant
Corporation of Canada Ltd., a limited liability company organized under the
laws of Ontario.

“Capital Expenditures” means, for any period,
without duplication, (a) the additions to property, plant and equipment
and other capital expenditures of the Parent and the Subsidiaries that are (or
would be) set forth in a consolidated statement of cash flows of the Parent and
the Subsidiaries for such period prepared in accordance with GAAP and
(b) Capital Lease Obligations incurred by the Parent and the Subsidiaries
during such period.

“Capital Lease Obligations” of any Person means
the obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof determined
in accordance with GAAP.

“Cash Amount” has the meaning assigned to such
term in Section 2.10(g).

“Cash Collection Period” means the period
commencing on the first Business Day after the occurrence of a Cash Collection
Triggering Event and ending on the date the Commitments have expired or
terminated and the principal of and interest on each Loan and all fees payable
hereunder have been paid in full.

“Cash Collection Triggering Event” means that
(a) the Facilities Availability Amount at any time is less than $15,000,000 or
(b) an Event of Default has occurred and is continuing.

 7
 

 

“Cash Interest Expense” means, for any period,
Consolidated Interest Expense for such period excluding any portion thereof in
respect of interest not required to be paid in cash during such period or
within one year thereafter.

 “CERCLA”
means the Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. § 9601 et seq.

“Change in Control” means, at any time,
(a) the failure by the Control Group to own, directly or indirectly,
beneficially and of record, common stock of the Parent representing at least
25% of the issued and outstanding common stock of the Parent; (b) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person or group (within the meaning of the Securities Exchange Act of 1934
and the rules of the SEC thereunder as in effect on the Effective Date) other
than the Control Group, of common stock of the Parent representing more than
50% of the issued and outstanding common stock of the Parent; (c) the
occupation of a majority of the seats (other than vacant seats) on the board of
directors of the Parent by Persons who were neither (i) nominated by
members of the Control Group or the board of directors of the Parent nor
(ii) appointed by directors so nominated; provided, however,
that a Change in Control shall not have occurred under this clause (c) as a
result of the occurrence of a vacancy on the board of directors of the Parent
if, within 30 days after the occurrence of such vacancy, such vacancy is filled
by a person who is nominated by members of the Control Group; (d) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Person other than the Parent (or a Wholly Owned Subsidiary of the Parent)
of any Equity Interests in any Borrower; or (e) the occurrence of a “Change
of Control” as defined under the Senior First Lien Note Documents, the Senior
Second Lien Note Documents or the Senior Subordinated Note Documents or a “Liquidation
Event” as defined under the terms of any Preferred Stock.

“Change in Law” means (a) the adoption of
any law, rule or regulation after the Effective Date, (b) any change in
any law, rule or regulation or in the interpreta­tion or application thereof by
any Governmental Authority after the Effective Date or (c) compliance by
any Lender (or, for purposes of Section 2.14(b), by any lending
office of such Lender or by such Lender’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the Effective Date.

“Chapter 11 Case” and Chapter 11 Cases”
means the Chapter 11 Case Nos. 06-10000 through 06-10010, jointly administered
under Chapter 11 Case No. 06-10001, of the Filing Companies pursuant to the
voluntary petitions for reorganization under the Bankruptcy Code filed with the
Bankruptcy Court.

“Class”, when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing,
are Australian Revolving Loans, Canadian Revolving Loans, German Revolving
Loans or Mexican Revolving Loans.  “Class”,
when used in reference to any Lender, refers to whether such Lender has a Loan
or Commitment with respect to a particular Class.

“Code” means the Internal Revenue Code of 1986,
as amended from time to time.

 8
 

 

“Collateral” means any and all “Collateral”, as
defined in any applicable Security Document, and any and all other property and
interests in property and proceeds thereof now owned or hereafter acquired by
any Loan Party in or upon which a Lien is granted under any Security Document.

“Collateral Proceeds Account” means an account
maintained by and in the name of the Administrative Agent, and designated by
the Administrative Agent as the “Collateral Proceeds Account” for purposes of
this Agreement and the other Loan Documents.

“Commitment” means, with respect to each
Lender, the commitment of such  Lender to
make Revolving Loans hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender’s Revolving Exposure hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section
2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04.  The initial amount of each Lender’s
Commitment is set forth on Schedule 2.01(a), or in the Assignment
and Assumption pursuant to which such Lender shall have assumed its Commitment,
as applicable.  The initial aggregate
amount of the Lenders’ Commitments is $15,000,000.

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

“Confirmation Order” has the meaning assigned
to such term in Section 4.01(b).

“Consolidated EBITDA” means, for any period,
Consolidated Net Income for such period, plus, without duplication and
to the extent deducted from revenues in determining Consolidated Net Income,
the sum of (a) the aggregate amount of Consolidated Interest Expense for
such period, (b) the aggregate amount of income tax expense for such
period, (c) all amounts attributable to depreciation, amortization and
other non-cash charges or losses for such period (but excluding any such charge
that requires an accrual of, or a cash reserve for, anticipated cash charges
for any future period); provided that any non-cash charges or losses
that are added-back to Consolidated Net Income pursuant to this clause (c)
shall be treated as cash charges or losses in any subsequent period during
which cash disbursements attributable thereto are made; (d) non-cash
expenses resulting from the grant of stock options or other equity-related
incentives to any director, officer or employee of the Parent or any Subsidiary
pursuant to a written plan or agreement, (e) all non-recurring transaction
and financing expenses resulting from the Transactions, (f) all non-recurring
transaction and financing expenses incurred in the fiscal quarter ended
December 31, 2005 resulting from modifications to the Existing Senior
Subordinated Note Indenture entered into in connection with the Pre-Petition
Loan Agreement, (g) all losses during such period resulting from the sale or
other disposition of any asset of the Parent or any Subsidiary outside the
ordinary course of business, (h) any Excluded Charges during such period
and (i) all non-recurring restructuring charges in connection with the Chapter
11 Cases specifically identified by the Administrative Borrower to the
Administrative Agent and incurred not later than October 31, 2006 and minus,
without duplication and to the extent added to revenues in determining
Consolidated Net Income for such period, (a) all extraordinary gains
during such period and (b) all gains during such period resulting from the
sale or other disposition of any asset of the Parent or any Subsidiary outside
the ordinary course of business, all as determined on a consolidated basis with
respect to the Parent and the Subsidiaries in

 9
 

 

accordance with GAAP. 
If the Parent or any Subsidiary has made any sale, transfer, lease or
other disposition of assets outside of the ordinary course of business
permitted by Section 6.06 during the relevant period for
determining Consolidated EBITDA, Consolidated EBITDA for the relevant period
shall be calculated after giving pro forma effect thereto, as if such sale,
transfer, lease or other disposition of assets (and any related incurrence,
repayment or assumption of Indebtedness, with any new Indebtedness being deemed
to be amortized over the relevant period in accordance with its terms, and
assuming that any Loans borrowed in connection with such acquisition are repaid
with excess cash balances when available) had occurred on the first day of the
relevant period for determining Consolidated EBITDA.

“Consolidated Interest Expense” means, for any
period, the interest expense, both expensed and capitalized (including the
interest component in respect of Capital Lease Obligations), accrued by the
Parent and the Subsidiaries during such period (net of payments made or
received under interest rate protection agreements and net of interest income),
determined on a consolidated basis in accordance with GAAP.

“Consolidated Net Income” means, for any
period, net income or loss of the Parent and the Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP; provided
that there shall be excluded (a) the income of any unconsolidated
Subsidiary and any Person in which any other Person (other than the Parent or
any of the Subsidiaries or any director holding qualifying shares in compliance
with applicable law or any other third party holding a de minimus number of
shares in order to comply with other similar requirements) has an Equity
Interest, except to the extent of the amount of dividends or other
distributions actually paid by such Subsidiary or other Person during such
period to the Parent or any other Subsidiary that is not subject to the
restrictions set forth in clause (a) or (b) hereof (provided that
the Parent’s or any other Subsidiary’s equity in the net loss of any such
Subsidiary or Person for such period shall be included in determining
Consolidated Net Income), (b) the income (but not the loss) of any
Subsidiary to the extent that such Subsidiary is contractually or legally
prohibited from paying dividends, except to the extent of the amount of
dividends or other distributions actually paid by such Subsidiary during such
period to the Parent or any other Subsidiary that is not subject to the
restrictions set forth in clause (a) or (b) hereof, (c) the income
(or loss) of any Person accrued prior to the date it becomes (or, for pro forma
purposes, is deemed to have become) a Subsidiary or is merged into or
consolidated with the Parent or any of the Subsidiaries or the date that Person’s
assets are acquired by the Parent or any of the Subsidiaries and (d) expenses
and fees incurred by the Filing Companies and allowed by the Bankruptcy Court
in the Chapter 11 Cases.

“Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ability to exercise voting power, by
contract or otherwise.  “Controlling”
and “Controlled” have meanings correlative thereto.

“Control Agreement” means, with respect to any
deposit account, any securities account, commodity account, securities
entitlement or commodity contract (each, as defined in the New York Uniform
Commercial Code), an agreement, in form and substance reasonably satisfactory
to the Administrative Agent, among the Administrative Agent, the financial institution
or other Person at which such account is maintained or with which such
entitlement or

 10
 

 

contract is carried and the Loan Party maintaining
such account, effective to grant “control” (as defined under the applicable
Uniform Commercial Code) over such account to the Administrative Agent.

“Control Group” means collectively the Sponsor
and all Persons Controlled by the Sponsor (other than any operating company
Controlled by the Sponsor).

“Controlled Deposit Account” means each deposit
account (including all funds on deposit therein) that is (a) either (i) the
subject of an effective Control Agreement or (ii) otherwise subject to the
control of the Administrative Agent on terms satisfactory to the Administrative
Agent in its sole discretion and (b) maintained by any Loan Party with a
financial institution reasonably satisfactory to the Administrative Agent.

“Controlled Securities Account” means each
securities account or commodity account (including all financial assets held
therein and all certificates and instruments, if any, representing or
evidencing such financial assets) that is (a) either (i) the subject of an
effective Control Agreement or (ii) otherwise subject to the control of the
Administrative Agent on terms satisfactory to the Administrative Agent in its
sole discretion and (b) maintained by any Loan Party with a securities
intermediary or commodity intermediary reasonably satisfactory to the
Administrative Agent.

“Default” means any event or condition that
constitutes an Event of Default or that upon notice, lapse of time or both
would, unless cured or waived, become an Event of Default.

“DIP Credit Agreement” means the Senior
Secured, Super Priority, Priming Debtor-in-Possession Credit Agreement, dated
as of January 4, 2006, among Old Pliant, the Domestic Subsidiary Borrowers
party thereto, the Lenders party thereto, Morgan Stanley Senior Funding Inc.,
as Syndication Agent, and General Electric Capital Corporation, as
Administrative Agent and Collateral Agent.

“dollars” or “$” refers to lawful money
of the United States of America.

“Domestic Subsidiary” means any subsidiary
organized under the laws of any State of the United States of America or the
District of Columbia or that is a subsidiary of an entity that is a “United
States person” as defined in Section 7701(a)(30) of the U.S. Internal Revenue
Code and is disregarded as an entity separate from its owner, or is otherwise
fiscally transparent, for U.S. federal income tax purposes.

“Effective Date” means the date on which the
conditions specified in Section 4.01 are satisfied (or waived in
accordance with Section 9.02).

“Eligible Machinery and Equipment” means, on
any date, the amount of Equipment of each Loan Party, other than any Equipment
which is ineligible for inclusion in the calculation of the Borrowing Base
pursuant to any of clauses (a) through (e) below or otherwise deemed, in the
commercially reasonable discretion of the Administrative Agent to be ineligible
for inclusion in the calculation of the Borrowing Base.  Standards of eligibility may be fixed from
time to time, in the commercially reasonable discretion of the Administrative
Agent, with

 11
 

 

any changes in such standards to be effective
immediately after delivery of notice thereof to the Administrative
Borrower.  Without limiting the
Administrative Agent’s commercially reasonable discretion provided herein, no
Equipment shall be Eligible Machinery and Equipment if:

(a)           such Equipment is not subject to a
valid and perfected first priority Lien (or equivalent under applicable law) in
favor of the Administrative Agent, subject to no other Liens, other than Liens
described under clauses (a), (b) and (e) of the definition of “Permitted
Encumbrances”;

(b)           such Equipment is not owned solely by
a Loan Party or a Loan Party does not have sole and good, valid and
unencumbered title thereto;

(c)           (i) with respect to Equipment of the
Australian Loan Parties, such Equipment is not located in Australia, (ii) with
respect to Equipment of the Canadian Loan Parties, such Equipment is not
located in Canada, (iii) with respect to Equipment of the German Loan Parties,
such Equipment is not located in Germany, or (iv) with respect to Equipment of
the Mexican Loan Parties, such Equipment is not located in Mexico, unless in
the case of clauses (i) through (iv), the Administrative Agent is reasonably
satisfied that it has a legal, valid, perfected and enforceable security
interest in such Equipment under the laws of the jurisdiction in which such
Equipment is located pursuant to the applicable Security Documents; or

(d)           such Equipment is not located at Real
Estate (i) owned by a Loan Party, which Real Estate is subject to a first
priority perfected Lien (or equivalent under applicable law) in favor of the
Administrative Agent or (ii) leased by a Loan Party where (x) the lessor has
delivered to the Administrative Agent a Landlord Lien Waiver or Bailee Letter,
as applicable or (y) a Rent Reserve has been taken with respect to such
Equipment; or

(e)           such Equipment was not included in
either the Pro Forma Opening Borrowing Base or the most recent appraisal
conducted pursuant to Sections 5.09(b) or 5.19, which appraisal
shall be based upon the Net Orderly Liquidation Value of such Equipment, shall
be in form and substance and from an independent third party appraiser, in each
case reasonably satisfactory to the Administrative Agent.

“Eligible Real Estate” means, on any date, the
amount of Real Estate of each Loan Party, other than any Real Estate which is
ineligible for inclusion in the calculation of the Borrowing Base pursuant to
any of clauses (a) through (c) below or otherwise deemed, in the commercially
reasonable discretion of the Administrative Agent to be ineligible for
inclusion in the calculation of the Borrowing Base.  Standards of eligibility may be fixed from
time to time in the commercially reasonable discretion of the Administrative
Agent, with any changes in such standards to be effective immediately after
delivery of notice thereof to the Administrative Borrower.  Without limiting the Administrative Agent’s
commercially reasonable discretion provided herein, no Real Estate shall be
Eligible Real Estate if:

(a)           such Real Estate is not subject to a
valid and perfected first priority Lien (or equivalent under applicable law) in
favor of the Administrative Agent, subject to no

 12
 

 

other Liens, other than
Liens described under clauses (a), (b) and (e) of the definition of “Permitted
Encumbrances”;

(b)           such Real Estate is not owned solely
by a Loan Party; or

(c)           such Real Estate was not included in
either the Pro Forma Opening Borrowing Base or the most recent appraisal
conducted pursuant to Sections 5.09(b) or 5.19, which appraisal
shall be based upon the market value of such Real Estate, shall be in form and
substance and from an independent third party appraiser, in each case
reasonably satisfactory to the Administrative Agent.

“Environmental Laws” means all laws (including
common law), rules, regulations, codes, ordinances, orders, decrees, judgments,
injunctions, notices or binding agreements issued, promulgated or entered into
by or with any Governmental Authority, relating in any way to the environment,
preservation or reclamation of natural resources, handling, treatment, storage,
disposal, Release or threatened Release of any Hazardous Material or to health
and safety matters.

“Environmental Liability” means any liability,
obligation, claim, action, suit, judgment or order, contingent or otherwise
(including, but not limited to, any liability for damages, natural resource
damage, costs of environmental remediation, administrative oversight costs,
fines, penalties or indemnities), of the Parent or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment
or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

“Equipment” has the meaning assigned to such
term in Article 9 of the New York Uniform Commercial Code and, in any event,
including all of each Loan Party’s machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and computer
equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor,
all substitutes for any of the foregoing, fuel therefor, and all manuals,
drawings, instructions, warranties and rights with respect thereto, and all products
and proceeds thereof and condemnation awards and insurance proceeds with
respect thereto.

“Equity Interests” means shares of capital
stock, partnership interests, membership interests in a limited liability
company, beneficial interests in a trust or other equity ownership interests in
a Person, and any warrants, options or other rights entitling the holder
thereof to purchase or acquire any such equity interest.

 13
 

 

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

“ERISA Affiliate” means any trade or business
(whether or not incorporated) that, together with the Parent, is treated as a
single employer under Section 414(b) or (c) of the Code or, solely for
purposes of Section 302 of ERISA and Section 412 of the Code, is
treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable
event”, as defined in Section 4043 of ERISA or the regulations issued
thereunder with respect to a Plan (other than an event for which the 30-day
notice period is waived); (b) the existence with respect to any Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant
to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Parent or any of its ERISA Affiliates of
any liability under Title IV of ERISA with respect to the termination of
any Plan; (e) the receipt by the Parent or any ERISA Affiliate from the
PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan;
(f) the incurrence by the Parent or any of its ERISA Affiliates of any
liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Parent or any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Parent or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.

“Euro” means the single currency of
participating member States of the European Union.

“Eurodollar”, when used in reference to any
Loan or Borrowing, refers to whether such Loan, or the Loans comprising such
Borrowing, are bearing interest at a rate determined by reference to the LIBO
Rate.

“Event of Default” has the meaning assigned to
such term in Article VII.

“Excluded Charges” means non-recurring charges
incurred after the Effective Date in respect of restructurings, plant closings,
headcount reductions or other similar actions, including severance charges in
respect of employee terminations; provided that the aggregate amount of
Excluded Charges shall not exceed (a) $45,000,000 during the term of this
Agreement and (b) $15,000,000 during any one fiscal year (or, in each
case, such greater amount acceptable to the Administrative Agent in its sole
discretion).

“Excluded Taxes” means, with respect to the
Administrative Agent, any Lender, or any other recipient of any payment to be
made by or on account of any obligation of any Borrower hereunder,
(a) income or franchise taxes imposed on (or measured by) its net income
by the United States of America, or by the jurisdiction under the laws of
which such recipient is organized or in which its principal office is located or,
in the case of any Lender, in which its applicable lending office is located,
(b) any branch profits taxes imposed by the United States of

 14
 

 

America or any similar tax imposed by any other
jurisdiction described in clause (a) above and (c) in the case of a
Foreign Lender with respect to any Borrower (other than an assignee pursuant to
a request by the Administrative Borrower under Section 2.18(b)),
any withholding tax (including, without limitation, taxes imposed under Part
XIII of the Income Tax Act (Canada)) that is imposed on amounts payable by such
Borrower to such Foreign Lender that is attributable to such Foreign Lender’s
failure to comply with Section 2.16(e).

“Existing Letters of
Credit” means the letters of credit issued by LaSalle Business Credit, LLC
and Wachovia Bank, National Association and outstanding as of the Effective
Date, which are listed on Schedule 1.01(b).

“Existing Senior Subordinated Note Indenture”
means collectively, (a) the indenture dated as of May 31, 2000, between Old
Pliant and The Bank of New York, as trustee, and (b) the indenture dated as of
April 10, 2002, between Old Pliant and The Bank of New York, as trustee.

“Extraordinary Receipts” means any cash
received by any Loan Party in excess of $500,000 in the aggregate not in the
ordinary course of business (and not consisting of proceeds from the issuance
of Stock, debt or disposition of Collateral), including, without limitation,
(i) foreign, United States, state or local tax refunds paid  in connection with or as the result of any
settlement, audit, or amendment to any tax return, (ii) pension plan
reversions, (iii) judgments, proceeds of settlements or other consideration of
any kind in connection with any cause of action, and (iv) indemnity payments
(but excluding therefrom working capital adjustments).

“Facilities Availability Amount” means, at any
time, an amount equal to (a) (i) the lesser of (A) the total
amount of the Working Capital Available Commitments at such time and
(B) the Working Capital Borrowing Base in effect at such time minus
(ii) the total Working Capital Revolving Exposure at such time plus
(b) (i) the lesser of (A) the total amount of the Commitments at such time and
(B) the Borrowing Base in effect at such time minus (ii) the
total Revolving Exposure at such time.

“FCCR Period” means any period (a) beginning on
the first Business Day on which the Facilities Availability Amount is less than
$20,000,000 for 5 consecutive days and (b) ending on the first Business Day on
which the Facilities Availability Amount is greater than or equal to
$20,000,000 for more than 15 consecutive days.

“Federal Funds Effective Rate” means, for any
day, a floating rate equal to the weighted average of the rates on overnight
Federal funds transactions among members of the Federal Reserve System, as
determined by the Administrative Agent in its sole discretion, which
determination shall be final, binding and conclusive (absent manifest error).

“Filing Companies” means Old Pliant, Uniplast
Industries Co., Pliant Corporation International, Pliant Film Products of
Mexico, Inc., Pliant Packaging of Canada, LLC, Pliant Solutions Corporation,
Uniplast Holdings, Inc., Uniplast U.S., Inc., Pliant Investment, Inc., Alliant
Company LLC, Pliant Corporation of Canada Ltd. and Uniplast Industries Co.

 15
 

 

“Financial Officer” means the chief financial
officer, principal accounting officer, treasurer, assistant treasurer or
controller of the Administrative Borrower or the Parent, as applicable.

“Fixed Charge Coverage Ratio” means, as of the
end of any period of twelve consecutive fiscal months of the Parent, the ratio
of (a) Consolidated EBITDA for such period to (b) the sum of
(i) the aggregate amount of scheduled principal or similar payments made
during such period in respect of Indebtedness of the Parent and the
Subsidiaries (other than (A) payments made by the Parent or any Subsidiary
to the Parent or a Subsidiary, (B) payments made by the Parent or a
Subsidiary in respect of loans under the Pre-Petition Loan Agreement and the
DIP Credit Agreement and (C) payments made by the Parent or a Subsidiary
in respect of any of the Loans and the loans under the Working Capital Credit
Agreement) plus (ii) Cash Interest Expense during such period plus
(iii) cash dividends or other distributions paid by the Parent in respect
of its Equity Interests during such period, plus (iv) the aggregate
amount of Taxes paid in cash during such period, plus (v) Capital
Expenditures made during such period (excluding Capital Expenditures funded
with the proceeds of a Reinvestment Event), all as determined on a consolidated
basis with respect to the Parent and the Subsidiaries in accordance with GAAP.

“Foreign Fixed Asset Collateral” means all
Collateral other than the Foreign Working Capital Collateral.

“Foreign Guarantee Agreement” means the Foreign
Guarantee Agreement, substantially in the form of Exhibit B-2,
among each Foreign Loan Party (other than the German Loan Parties) and the
Administrative Agent.

“Foreign Lender” means with respect to the
Canadian Subsidiary Borrower, any Lender that is (i) not a resident of Canada
for the purposes of the Income Tax Act (Canada) or (ii) a bank that would
receive payment under the Loan Documents in respect of its Canadian banking
business for the purposes of subsection 212(13.3) of the Income Tax Act
(Canada).

“Foreign Loans Parties” means the Australian
Loan Parties, Canadian Loan Parties, German Loan Parties and Mexican Loan
Parties.

“Foreign Working Capital Collateral” means any
and all of the following assets and properties now owned or at any time
hereafter acquired by any Loan Party that constitutes Collateral:  (i) all Accounts (as defined in the New York
Uniform Commercial Code); (ii) all Inventory (as defined in the New York
Uniform Commercial Code); (iii) all Payment Intangibles (as defined in the New
York Uniform Commercial Code) (including corporate tax refunds and payments
made by distributors and wholesalers to whom loans have been made by any Loan
Party), other than any Payment Intangibles that represent tax refunds in
respect of or otherwise relate to real property, Fixtures (as defined in the
New York Uniform Commercial Code), Equipment or Intellectual Property; (iv) all
Investment Property (as defined in the New York Uniform Commercial Code)
(including capital stock of subsidiaries), marketable securities and other
Financial Assets (as defined in the New York Uniform Commercial Code); (v) all
indebtedness owed to any Loan Party that arises from cash advances made after
the date hereof to enable the obligor or obligors thereon to acquire Inventory;
(vi) all credit card proceeds of the

 16
 

 

Loan Parties, all collection accounts, Deposit
Accounts (as defined in the New York Uniform Commercial Code), commodity
accounts and securities accounts and any cash or other assets (including
Investment Property, marketable securities and other Financial Assets) in any
such accounts; (vii) all hedging, commodity or other derivative contracts (and
any cash and other deposits securing the same); (viii) all permits and licenses
related to any of the foregoing (excluding any permits or licenses related to
the ownership or operation of real property, Fixtures, Equipment or
Intellectual Property); (ix) all books and records related to the foregoing;
(x) to the extent evidencing, governing, securing or otherwise related to the
preceding clauses (i) through (ix), all (A) General Intangibles (as defined in
the New York Uniform Commercial Code), (B) Chattel Paper (as defined in the New
York Uniform Commercial Code), (C) Instruments (as defined in the New York Uniform
Commercial Code) and (D) Documents (as defined in the New York Uniform
Commercial Code); and (xi) all products and Proceeds (as defined in the New
York Uniform Commercial Code) of any and all of the foregoing in whatever form
received, including proceeds of insurance policies related to Inventory of the
Loan Parties and including proceeds of business interruption insurance to the
extent related to the first 45 days of the covered period with respect to any
business interruption.

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

“GAAP” means, subject to Section 1.04,
generally accepted accounting principles in the United States of America.

“German Borrowing Base” means, at any time of
determination, an amount equal to the sum, without duplication of:

(a)           (i) 75% of each German Loan Party’s
Eligible Real Estate valued at market value plus (ii) 85% of the Net
Orderly Liquidation Value of each German Loan Party’s Eligible Machinery and
Equipment, minus

(b)           the Rent Reserve with respect to each
German Loan Party, minus

(c)           the Priority Payables Reserve with
respect to each German Loan Party, minus

(d)           the Secured Obligations Reserve with
respect to each German Loan Party, minus

(e)           any Reserves with respect to each
German Loan Party.

The German Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent pursuant to this Agreement.  Standards of eligibility and reserves and
advance rates of the German Borrowing Base may be revised and adjusted from
time to time solely at the commercially reasonable discretion of the
Administrative Agent, with any changes in such standards to be effective
immediately after delivery of notice thereof to the Administrative Borrower.  For purposes of calculating the German
Borrowing Base on any date, all amounts reflected or outstanding in Euros shall
be translated into dollars at the exchange rate in effect on such date, as
determined in good faith by the Administrative Borrower.

 17
 

 

“German Collateral Proceeds Account” means an
account maintained by and in the name of the Administrative Agent, and
designated by the Administrative Agent as the “German Collateral Proceeds
Account” for purposes of this Agreement and the German Security Agreements.

“German Lender” means each Lender or any
Affiliate of a Lender designated by such Lender to the Administrative Borrower
as a “German Lender”.  The German Lender
on the Effective Date shall be Merrill Lynch Capital Markets Bank Limited.

“German Loan Party” means the German Subsidiary
Borrower and any other Loan Party organized under the laws of Germany or any
state or province thereof.

“German Obligations” means (a) all principal of
and premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the German Revolving Loans when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment, or otherwise, (b) all
other monetary obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of each German Loan Party to the
Secured Parties under this Agreement and the other Loan Documents, and (c) all
covenants, agreements, obligations and liabilities of each German Loan Party
under or pursuant to this Agreement and the other Loan Documents.

“German Revolving Exposure” means, with respect
to any German Lender at any time, the sum of the outstanding principal amount
of such German Lender’s German Revolving Loans.

“German Revolving Loan” means a Loan made by a
German Lender pursuant to Section 2.01(d). 
Each German Revolving Loan shall be a Eurodollar Loan or an ABR Loan.

“German Security Agreements” mean the German
Global Assignment Agreement, substantially in the form of Exhibit D-4,
among the German Loan Parties and the Administrative Agent, and each other
security agreement or other instrument or document executed and delivered by
any German Loan Party to secure any of the German Obligations.

“German Sublimit” means $10,000,000.

“German Subsidiary Borrower” means Pliant Film
Products GmbH, a corporation organized under the laws of Germany.

“Governmental Authority” means the government
of the United States of America, Australia, Canada, Germany or Mexico, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 18
 

 

“Guarantee” of or by any Person (the “guarantor”)
means any obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of the guarantor, direct
or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase
(or to advance or supply funds for the purchase of) any security for the
payment thereof, (b) to purchase or lease property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment thereof, (c) to maintain working capital, equity capital or
any other financial statement condition or liquidity of the primary obligor so
as to enable the primary obligor to pay such Indebtedness or other obligation
or (d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or obligation; provided
that the term “Guarantee” shall not include endorsements for collection or
deposit in the ordinary course of business.

“Guarantor Payment” has the meaning assigned to
such term in Section 11.07(a).

“Hazardous Materials” means all explosive,
radioactive, hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes,
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law, including any material listed as a hazardous substance under
Section 101(14) of CERCLA.

“Indebtedness” of any Person means, without
duplication, (a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (d) all obligations of such Person in respect of
the deferred purchase price of property or services (excluding accounts payable
incurred in the ordinary course of business that are not overdue by more than
90 days, unless the payment thereof is being contested in good faith) (it
being understood that “deferred purchase price” in connection with any purchase
of property or assets shall include only that portion of the purchase price
that shall be deferred beyond the date on which the purchase is actually
consummated), (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by such Person, whether
or not the Indebtedness secured thereby has been assumed, (f) all
Guarantees by such Person of Indebtedness of others, (g) all Capital Lease
Obligations of such Person, (h) all obligations, contingent or otherwise,
of such Person as an account party in respect of letters of credit and letters
of guaranty, (i) all obligations, contingent or otherwise, of such Person
in respect of bankers’ acceptances and (j) all obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value any Equity
Interests of such Person, valued, in the case of redeemable preferred stock, at
its involuntary liquidation preference plus accrued and unpaid dividends.  The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor. 
Notwithstanding the foregoing, “Indebtedness” shall not include
(i) deferred taxes or

 19
 

 

(ii) unsecured indebtedness of the Parent or any
Subsidiary to finance insurance premiums in a principal amount not in excess of
the casualty and other insurance premiums to be paid by the Parent or any
Subsidiary for a three-year period beginning on the date of any incurrence of
such indebtedness.

“Indemnified Taxes” means Taxes other than
Excluded Taxes.

“Initial Lender” means Merrill Lynch Bank USA
and its Affiliates.

“Instrument” has the meaning assigned to such
term in the New York Uniform Commercial Code.

“Intellectual Property” means all intellectual
and similar property of every kind and nature, including inventions, designs,
patents, copyrights, licenses, trademarks, trade secrets, confidential or
proprietary technical and business information, know-how, show-how or other
data or information, software and databases and all embodiments or fixations
thereof and related documentation and registrations, and all additions,
improvements and accessions to, and books and records describing or used in connection
with, any of the foregoing.

“Intercreditor Agreement” means that certain
Amended and Restated Intercreditor Agreement dated as of February 17, 2004
among Old Pliant, the Pre-Petition Collateral Agent (as successor to Deutsche
Bank Trust Company Americas), the Senior First Lien Note Trustee and the Senior
Second Lien Note Trustee (or any other trustee or agent to which Liens are
granted under the Senior First Lien Security Documents or the Senior Second
Lien Security Documents).

“Interest Election Request” means a request by
a Borrower to convert or continue a Revolving Loan in accordance with Section 2.07.

“Interest Payment Date” means, with
respect to any ABR Loan or any Eurodollar Loan, the tenth Business Day of each
calendar month.

“Interest Period” means, with respect to any
Eurodollar Borrowing, the period commencing on the date of such Borrowing and
ending on the tenth Business Day of the first calendar month thereafter.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter
shall be the effective date of the most recent conversion or continuation of
such Borrowing.

“Landlord Lien Waiver” means a written
agreement reasonably acceptable to the Administrative Agent, pursuant to which
a Person shall waive or subordinate its rights and claims as landlord in any
Equipment of the applicable Loan Party for unpaid rents, grant access to the
Administrative Agent for the repossession and sale of such Equipemnt, and make
other agreements relative thereto.

“Lender” means the Persons listed on Schedule 2.01(a),
the Australian Lenders, the Canadian Lenders, the German Lenders, the Mexican
Lenders and any other Person that shall have become a party hereto as a Lender
pursuant to an Assignment and Assumption, other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Assumption.

 20
 

 

“LIBO Rate” means, with respect to any
Eurodollar Borrowing for any Interest Period, the rate per annum determined by
the Administrative Agent equal to:

(a)           the rate of interest which is
identified and normally published by Bloomberg Professional Service Page BBAM 1
as the offered rate for loans in dollars for a one month period under the
caption British Bankers Association LIBOR Rates as of 11:00 a.m. (London time),
on the second full Business Day next preceding the first day of such Interest
Period; divided  by

(b)           a number equal to 1.0 minus
the aggregate (but without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on the day that is 2 Business Days
prior to the beginning of such Interest Period (including basic, supplemental,
marginal and emergency reserves under any regulations of the Federal Reserve
Board or other Governmental Authority having jurisdiction with respect thereto,
as now and from time to time in effect) for Eurodollar funding (currently
referred to as “Eurocurrency Liabilities” in Regulation D of the Federal
Reserve Board) that are required to be maintained by a member bank of the Federal
Reserve System.

If such interest rates shall cease to be available
from Bloomberg Professional Service (or its successor satisfactory to the
Administrative Agent), the LIBO Rate shall be determined from such financial
reporting service or other information as shall be mutually acceptable to the
Administrative Agent and the Administrative Borrower.

“Lien” means, with respect to any asset,
(a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance,
charge or security interest in, on or of such asset, (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such asset and (c) in
the case of securities, any purchase option, call or similar right of a third
party with respect to such securities.

“Loan Documents” means this Agreement, the
Foreign Guarantee Agreement, the Security Documents and each other agreement or
document executed by a Loan Party and delivered to the Administrative Agent or
any Lender in connection with or pursuant to any of the foregoing.

“Loan Parties” means the Borrowers and each of
their subsidiaries that executes and delivers a Loan Document.

“Loans” means the loans made by the Lenders to
the Borrowers pursuant to this Agreement.

“Margin Stock” has the meaning assigned to such
term in Regulation U.

“Material Adverse Effect” means a material
adverse effect on (a) the business, operations, properties, assets,
performance or condition (financial or otherwise) or contingent or other
liabilities of the Parent and the Subsidiaries, taken as a whole, (b) the
ability of the Loan Parties to perform any material obligations under any Loan
Document or (c) the rights of or benefits available to the Lenders under
any Loan Document.

 21
 

 

“Material Indebtedness” means Indebtedness
(other than the Loans and loans and letters of credit under the Working Capital
Credit Agreement), or obligations in respect of one or more Swap Agreements, of
any one or more of the Parent and the Subsidiaries in an aggregate principal or
similar amount exceeding $10,000,000. 
For purposes of determining Material Indebtedness, the “principal amount”
of the obligations of the Parent or any Subsidiary in respect of any Swap
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that the Parent or such Subsidiary would be required to
pay if such Swap Agreement were terminated at such time.

“Maturity Date” means the earliest of (a) July
18, 2011, (b) the date of termination of the Lenders’ obligations to make Loans
or permit existing Loans to remain outstanding pursuant to Article VII,
(c) May 15, 2009, if the Senior First Lien Notes outstanding on the Effective
Date are not refinanced in full prior to such date with the proceeds of
Permitted Refinancing Indebtedness, (d) August 1, 2009, if the Senior Second
Lien Notes outstanding on the Effective Date are not refinanced in full prior
to such date with the proceeds of Permitted Refinancing Indebtedness and (e)
May 1, 2010, if the Senior Subordinated Notes outstanding on the Effective Date
are not refinanced in full prior to such date with the proceeds of Permitted
Refinancing Indebtedness.

“Mexican Borrowing Base” means, at any time of
determination, an amount equal to the sum, without duplication of:

(a)           (i) 75% of each Mexican Loan Party’s
Eligible Real Estate valued at market value plus (ii) 85% of the Net
Orderly Liquidation Value of each Mexican Loan Party’s Eligible Machinery and
Equipment, minus

(b)           the Rent Reserve with respect to each
Mexican Loan Party, minus

(c)           the Priority Payables Reserve with
respect to each Mexican Loan Party, minus

(d)           the Secured Obligations Reserve with
respect to each Mexican Loan Party, minus

(e)           any Reserves with respect to each
Mexican Loan Party, including, without limitation, commencing 60 days after the
Effective Date, Reserves with respect to any liens registered in favor of
Bancomer (now known as BBVA Bancomer) on the Real Estate or Equipment of any
Mexican Loan Party.

The Mexican Borrowing Base at any time shall be
determined by reference to the most recent Borrowing Base Certificate delivered
to the Administrative Agent pursuant to this Agreement.  Standards of eligibility and reserves and
advance rates of the Mexican Borrowing Base may be revised and adjusted from
time to time solely at the commercially reasonable discretion of the
Administrative Agent, with any changes in such standards to be effective
immediately after delivery of notice thereof to the Administrative
Borrower.  For purposes of calculating
the Mexican Borrowing Base on any date, all amounts reflected or outstanding in
Mexican Pesos shall be translated into dollars at the exchange rate in effect
on such date, as determined in good faith by the Administrative Borrower.

 22
 

 

“Mexican Lender” means each Lender or any
Affiliate of a Lender designated by such Lender to the Administrative Borrower
as a “Mexican Lender”.  The Mexican
Lender on the Effective Date shall be Merrill Lynch Mortgage Capital Inc.

“Mexican Loan Party” means the Mexican
Subsidiary Borrower and any other Loan Party organized under the laws of Mexico
or any state or province thereof.

“Mexican Peso” or “P” refers to the
lawful money of Mexico.

“Mexican Pledge Agreement” means the Mexican
Pledge Agreement, substantially in the form of Exhibit C-5,
among the Mexican Loan Parties and the Administrative Agent.

“Mexican Revolving Exposure” means, with
respect to any Mexican Lender at any time, the sum of the outstanding principal
amount of such Mexican Lender’s Mexican Revolving Loans.

“Mexican Revolving Loan” means a Loan made by a
Mexican Lender pursuant to Section 2.01(e). 
Each Mexican Revolving Loan shall be a Eurodollar Loan or an ABR Loan.

“Mexican Security Agreement” means the Mexican
Security Agreement, substantially in the form of Exhibit D-5,
among the Mexican Loan Parties and the Administrative Agent, and each other
security agreement or other instrument or document executed and delivered by
any Mexican Loan Party to secure any of the Obligations.

“Mexican Sublimit” means $10,000,000.

“Mexican Subsidiary Borrower” means Aspen
Industrial, S.A. de C.V., a corporation organized under the laws of Mexico.

“Mexico” means the United Mexican States.

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

“Mortgage” means a mortgage, deed of trust,
assignment of leases and rents, leasehold mortgage or other security document,
including any amendment thereto, granting a Lien on any Mortgaged Property to secure
the Obligations.

“Mortgaged Property” means, initially, each
parcel of real property and the improvements thereto owned by a Loan Party and
identified on Schedule 1.01(a), and includes each other parcel of
real property and improvements thereto with respect to which a Mortgage is
granted pursuant to Section 5.12 or 5.13.

“Multiemployer Plan” means a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.

“Net Orderly Liquidation Value” means the
orderly liquidation value on an as-is-where-is basis (net of costs and expenses
incurred in connection with liquidation) of Equipment,

 23
 

 

as determined by reference to the Pro Forma Opening
Borrowing Base or the most recent appraisal of such Equipment received by the
Administrative Agent pursuant to Sections 5.09(b) or 5.19.

 “Net
Proceeds” means, with respect to any event (a) the cash proceeds
received by the Parent and the Subsidiaries in respect of such event including
(i) any cash received in respect of any non-cash proceeds (excluding
interest payments), but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or
similar event, condemnation awards and similar payments, net of (b) the
sum of (i) all reasonable fees and out-of-pocket expenses paid by the
Parent and the Subsidiaries to third parties (other than to the Parent or a
Subsidiary) in connection with such event, (ii) in the case of a sale,
transfer or other disposition of an asset (including pursuant to a sale and
leaseback transaction or a casualty or other insured damage or condemnation or
similar proceeding), the amount of all payments required to be made by the
Parent and the Subsidiaries as a result of such event to repay Indebtedness
(other than Loans) secured by such asset or otherwise subject to mandatory
prepayment as a result of such event (including in order to obtain any consent
required therefor) and (iii) the amount of all taxes paid (or reasonably
estimated to be payable) by the Parent and the Subsidiaries, and the amount of
any reserves established by the Parent and the Subsidiaries to fund contingent
liabilities reasonably estimated to be payable, and that are directly
attributable to such event (as determined reasonably and in good faith by the
chief financial officer of the Parent). 
In the case of Net Proceeds denominated in a currency other than
dollars, the amount of such Net Proceeds shall be the dollar equivalent thereof
based upon the exchange rates prevailing at the time of the transaction giving
rise to such Net Proceeds.

“New York Uniform Commercial Code” means the
Uniform Commercial Code as from time to time in effect in the State of New
York.

“Non-Consenting Lender” has the meaning
assigned to such term in Section 9.02(c).

“Obligations” means (a) all principal of and
premium, if any, and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) on the Revolving
Loans when and as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment, or otherwise, (b) all other monetary obligations,
including fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding), of each Loan Party to the Secured Parties under this Agreement and
the other Loan Documents, and (c) all covenants, agreements, obligations and
liabilities of each Loan Party under or pursuant to this Agreement and the
other Loan Documents.

“Old Pliant” means Pliant Corporation, a Utah
corporation and the predecessor to the Parent.

“Original
Obligations” has the meaning assigned to such term in Section 9.15.

 24

 

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

“Overall Commitments” shall have the meaning
assigned to the term “Commitments” in the Working Capital Credit Agreement.

“Parallel Debt Security” has the meaning
assigned to such term in Section 9.15.

“Parallel Obligations” has the meaning assigned
to such term in Section 9.15.

“Parent” means Pliant Corporation, a Delaware
corporation.

“PBGC” means the Pension Benefit Guaranty
Corporation referred to and defined in ERISA and any successor entity
performing similar functions.

“Perfection Certificate” means a certificate
substantially in the form of Exhibit F, completed and supplemented with the
schedules and attachments contemplated thereby, and duly executed by an
executive officer of each Loan Party.

“Permitted Acquisition” means any acquisition
by the Parent or any of its Subsidiaries of all or substantially all of the
assets or all of the Equity Interests of any Person or any operating division
thereof (the “Target”), or the merger of any Target with or into the
Parent or any Subsidiary (and, in the case of a merger with any Borrower, with
such Borrower being the surviving corporation), subject to the satisfaction of
each of the following conditions:

(a)           the Administrative Agent shall
receive at least 10 days’ prior written notice of such proposed acquisition,
which notice shall include, without limitation, a reasonably detailed
description of such proposed acquisition;

(b)           such proposed acquisition shall only
involve assets located in the United States and comprising a business, or those
assets of a business, of the type engaged in by the Parent and its Subsidiaries
as of the Effective Date;

(c)           such proposed acquisition shall be
consensual and shall have been approved by the Target’s board of directors;

(d)           no additional Indebtedness or other
liabilities shall be incurred, assumed or otherwise be reflected on a
consolidated balance sheet of the Parent and Target after giving effect to such
proposed acquisition, except (i) Loans made hereunder, (ii) ordinary course trade
payables and accrued expenses and (iii) Indebtedness of the Target permitted
under Section 6.01;

(e)           the sum of (i) all amounts payable in
connection with such proposed acquisition, (ii) all other Permitted
Acquisitions consummated after the Effective Date (including in the case of
clauses (i) and (ii) all transaction costs and all Indebtedness and liabilities
incurred or assumed in connection therewith or otherwise reflected in a

 25
 

 

consolidated balance
sheet of the Parent and Target) and (iii) all Investments made pursuant to
Section 6.05(j) shall not exceed $50,000,000 during the term of this Agreement;

(f)            at or prior to the closing of such
proposed acquisition, the Parent (or the Subsidiary making such proposed
acquisition) and the Target shall have executed such documents and taken such
actions as may be required under Sections 5.12 
and 5.13;

(g)           the Administrative Borrower shall
have delivered to the Administrative Agent, in form and substance reasonably
satisfactory to the Administrative Agent and no later than 10 days prior to
such proposed acquisition, such other financial information, documentation or
other information relating to such proposed acquisition as the Administrative
Agent or any Lender shall reasonably request;

(h)           on or prior to the date of such
proposed acquisition, the Administrative Agent shall have received, in form and
substance reasonably satisfactory to the Administrative Agent, copies of the
acquisition agreement and any other documents reasonably requested by the
Administrative Agent; and

(i)            at the time of such proposed
acquisition and after giving effect thereto, (A) no Default or Event of Default
shall have occurred and be continuing and (B) the Fixed Charge Coverage Ratio
for the most recent 12-month period for which financial statements have been
provided to the Administrative Agent, after giving pro forma effect to such
proposed acquisition, shall not be less than 1.10 to 1.00 and the
Administrative Agent shall have received reasonably detailed calculations
setting forth the Parent’s compliance with the foregoing.

“Permitted Encumbrances” means:

(a)           Liens
imposed by law for Taxes that (i) are not yet due or (ii) are being contested
in compliance with Section 5.05;

(b)           carriers’,
warehousemen’s, mechanics’, materialmen’s, processors’, landlords’, repairmen’s
and other like Liens imposed by law, arising in the ordinary course of business
and securing obligations that are not overdue by more than 60 days or are
being contested in compliance with Section 5.05;

(c)           pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations;

(d)           deposits
made to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature, in each case in the ordinary course of business;

(e)           judgment
liens in respect of judgments that do not constitute an Event of Default under
clause (k) of Article VII;

 26
 

 

(f)            Liens
of a collection bank arising in the ordinary course of business under § 4-208
of the Uniform Commercial Code in effect in the relevant jurisdiction;

(g)           Liens
(i) disclosed on title policies delivered to the Administrative Agent in
respect of any Mortgaged Property and (ii) easements, zoning restrictions,
rights-of-way and similar restrictions and encumbrances (including minor title
and survey defects) on real property imposed by law or arising in the ordinary
course of business that do not secure any Indebtedness and do not materially
detract from the value of the affected property or interfere with the ordinary
conduct of business of the Parent or any Subsidiary;

(h)           Liens
in respect of real property that become Mortgaged Property after the Effective
Date pursuant to Section 5.13 to the extent such Lien is permitted
by the applicable Mortgage and reasonably acceptable to the Administrative
Agent; and

(i)            Canadian
statutory Liens for employee source deductions and vacation pay;

provided that the term “Permitted
Encumbrances” shall not include any Lien securing Indebtedness.

“Permitted Investments” means: (i) a
marketable obligation, maturing within two years after issuance thereof, issued
or guaranteed by the United States of America or an instrumentality or
agency thereof, (ii) a certificate of deposit or banker’s acceptance,
maturing within one year after issuance thereof, issued by any Lender, or a
national or state bank or trust company or a European, Canadian or Japanese
bank in each case having capital, surplus and undivided profits of at least
$100,000,000 and whose long-term unsecured debt has a rating of “A” or better
by S&P or A2 or better by Moody’s or the equivalent rating by any other
nationally recognized rating agency (provided that the aggregate face amount of
all investments in certificates of deposit or banker’s acceptances issued by
the principal offices of or branches of such European or Japanese banks located
outside the United States shall not at any time exceed 33-1/3% of
all investments described in this definition), (iii) open market
commercial paper, maturing within 270 days after issuance thereof, which
has a rating of A1 or better by S&P or P1 or better by Moody’s, or the
equivalent rating by any other nationally recognized rating agency,
(iv) repurchase agreements and reverse repurchase agreements with a term
not in excess of one year with any financial institution that has been elected
a primary government securities dealer by the Federal Reserve Board or whose
securities are rated AA-or better by S&P or Aa3 or better by Moody’s
or the equivalent rating by any other nationally recognized rating agency
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States of America or any agency or instrumentality thereof
and backed by the full faith and credit of the United States of America,
(v) ”money market” preferred stock maturing within six months after
issuance thereof or municipal bonds issued by a corporation organized under the
laws of any state of the United States, which has a rating of “A” or
better by S&P or Moody’s or the equivalent rating by any other nationally
recognized rating agency, (vi) tax exempt floating rate option tender
bonds backed by letters of credit issued by a national or state bank whose
long-term unsecured debt has a rating of AA or better by S&P or Aa2 or
better by Moody’s or the equivalent rating by any other nationally recognized
rating agency, (vii) ”money market” funds

 27
 

 

that invest in the investments specified in
clauses (i) through (vi) above and (viii) demand deposit accounts
with commercial banks.

“Permitted Redemption Indebtedness” means any
Indebtedness of the Parent issued to refinance, redeem, repurchase or otherwise
replace (collectively, “refinance”) all or any portion of any of the
Series AA Preferred Stock; provided that (a) the aggregate principal
amount at maturity of such Permitted Redemption Indebtedness does not exceed
the aggregate liquidation preference of the Series AA Preferred Stock (plus
accrued and unpaid dividends) being refinanced, (b) such Permitted Redemption
Indebtedness has a rate of interest at a market rate determined at the time of
pricing, but in any event, at no time greater than the rate of interest of the
Senior Subordinated Notes, (c) the stated maturity of such Permitted Redemption
Indebtedness is no earlier than 180 days after the Maturity Date, (d) such
Permitted Redemption Indebtedness does not require any scheduled amortization,
principal or sinking fund payments earlier than 180 days after the Maturity
Date, (e) such Permitted Redemption Indebtedness is unsecured and subordinated
in right of payment to the Obligations on terms no less favorable to the
Lenders than those contained in the Senior Subordinated Note Documents, (f)
such Permitted Redemption Indebtedness does not have different obligors or
guarantors than those with respect to the Senior Subordinated Notes, and
(g) all other terms and conditions (including, as applicable, any
intercreditor provisions) of such Permitted Redemption Indebtedness are not
less favorable to the Lenders or the Parent and its subsidiaries in any
material respect than those contained in the Senior Subordinated Notes.

“Permitted Refinancing Indebtedness” means any
Indebtedness of the Parent issued to refinance, redeem, repurchase or otherwise
replace (collectively, “refinance”) all or any portion of any of the
Senior First Lien Notes, Senior Second Lien Notes or Senior Subordinated Notes
(or previous refinancings, redemptions, repurchases or replacements thereof
constituting Permitted Refinancing Indebtedness); provided that (a) the
aggregate principal amount at maturity of such Permitted Refinancing
Indebtedness does not exceed the aggregate principal amount at maturity of the
Indebtedness being refinanced (plus unpaid accrued interest and premium
thereon), (b) if the aggregate principal amount at maturity of the Indebtedness
being refinanced exceeds the accreted value of such Indebtedness, the accreted
value of such Permitted Refinancing Indebtedness does not exceed the accreted
value of the Indebtedness being refinanced (plus unpaid accrued interest (not
included in the accreted value) and premium thereon), (c) such Permitted
Refinancing Indebtedness has a rate of interest at a market rate determined at
the time of pricing, but in any event, at no time greater than the rate of
interest of any of the Indebtedness being refinanced, (d) the stated maturity
of such Permitted Refinancing Indebtedness is no earlier than the later of (i)
180 days after the Maturity Date and (ii) the date on which the Indebtedness
being refinanced would otherwise come due in accordance with its terms,
(e) such Permitted Refinancing Indebtedness does not require any scheduled
amortization, principal or sinking fund payments earlier than the later of (i)
180 days after the Maturity Date and (ii) the date on which the Indebtedness
being refinanced would otherwise come due in accordance with its terms, (f)
with respect to any refinancing of the Senior Subordinated Notes, such
Permitted Refinancing Indebtedness is unsecured and subordinated in right of
payment to the Obligations on terms no less favorable to the Lenders than those
contained in the Senior Subordinated Note Documents, (g) such Permitted
Refinancing Indebtedness does not have different obligors or guarantors than
those with respect to the Senior First Lien Notes, Senior Second Lien Notes or
Senior Subordinated Notes, as applicable, being refinanced and (h) all

 28
 

 

other terms and conditions (including, as applicable, any
collateral and intercreditor provisions) of such Permitted Refinancing
Indebtedness are not less favorable to the Lenders or the Parent and its
subsidiaries in any material respect than those contained in (i) except in the
case of Permitted Refinancing Indebtedness referred to in clause (ii) below,
the Senior First Lien Notes, Senior Second Lien Notes or Senior Subordinated
Notes, as applicable, being refinanced, or (ii) if such Permitted Refinancing
Indebtedness is refinancing any Senior First Lien Notes described in clause (b)
of the definition thereof, the Senior First Lien Notes described in clause (a)
of the definition thereof.

“Person” means any natural person, corporation,
limited liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.

“Plan” means any employee pension benefit plan
(other than a Multiemployer Plan) subject to the provisions of Title IV of
ERISA, Section 412 of the Code or Section 302 of ERISA, and in
respect of which the Parent or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an “employer”
as defined in Section 3(5) of ERISA.

“Plan of Reorganization” means the Debtors’
Fourth Amended Joint Plan of Reorganization dated June 19, 2006 filed by the
Filing Companies with the Bankruptcy Court.

“Pledge Agreement” means the Mexican Pledge
Agreement.

“Pounds” refers to the lawful money of the
United Kingdom.

“Pre-Petition Collateral Agent” means the “Collateral
Agent” under and as defined in the Pre-Petition Loan Agreement.

“Pre-Petition Loan Agreement” means the Amended
and Restated Credit Agreement, dated as of November 21, 2005, among the Parent,
Uniplast Industries Co., and the Subsidiaries of Parent party thereto as borrowers,
as Borrowers, the Lenders party thereto, Morgan Stanley Senior Funding, Inc.,
as Domestic B Agent, and GE Capital, as Domestic A Agent, Administrative Agent
and Collateral Agent.

“Preferred Stock” means the Series AA Preferred
Stock and the Series M Preferred Stock.

“Prepayment Fee” means a fee payable to the
Administrative Agent, for the benefit of the Lenders, in connection with the
reduction in all or a portion of the Commitments or the termination of all or a
portion of the Commitments in an amount equal to the amount of the Commitment
so reduced or terminated multiplied  by 1.00%.

“Prime Rate” means the rate publicly quoted
from time to time by The Wall Street Journal as the “prime rate” (or, if
The Wall Street Journal ceases quoting a prime rate, the highest per
annum rate of interest published by the Federal Reserve Board in Federal
Reserve statistical release H.15 (519) entitled “Selected Interest Rates” as
the Bank prime loan rate or its equivalent); each change in the Prime Rate
shall be effective from and including the date such change is publicly
announced as being effective.

 29
 

 

“Priority Payables Reserve” means, with respect
to any Person at any time, any amount payable by such Person that is secured by
a Lien in favor of a Governmental Authority that ranks or is capable of ranking
prior to or pari  passu with the Liens created by the Security
Documents in respect of any Eligible Machinery and Equipment or Eligible Real
Estate, including, if applicable, amounts owing for wages, vacation pay, severance
pay, employee deductions (including with respect to any Australian Loan Party
any accrued annual leave, long service leave, sick leave, parental leave,
rostered days off, annual leave loading and any payments in lieu of notice),
sales tax, excise tax, Taxes payable pursuant to Part IX of the Excise Tax
Act (Canada) (net of GST input credits), income tax, workers compensation,
government royalties, pension fund obligations, overdue rents or Taxes, and
other statutory or other claims.

“Process Agent” has the meaning assigned to
such term in Section 9.09(d).

“Pro Forma Opening Borrowing Base” means the
Borrowing Base, calculated as of June 30, 2006.

“Projections” has the meaning assigned to such
term in Section 4.01(l).

“Qualified Preferred Stock” means, with respect
to any Person, any preferred Equity Interest that by its terms (or by the terms
of any security into which it is convertible or for which it is exchangeable or
exercisable) or upon the happening of any event does not (a) (i) mature
or becomes mandatorily redeemable pursuant to a sinking fund obligation or
otherwise; (ii) become convertible or exchangeable at the option of the
holder thereof for Indebtedness or preferred stock that is not Qualified
Preferred Stock; or (iii) become redeemable at the option of the holder
thereof (other than as a result of a change of control event), in whole or in
part, in each case on or prior to the first anniversary of the Maturity Date
and (b) provide holders thereunder with rights upon the occurrence of a “change
of control” event or have other terms relating to “change of control” events.

“Real Estate” has the meaning assigned to such
term in Section 3.05.

“Recovery Event” means (a) any loss of or
damage to property of the Parent or any of its Subsidiaries that results in the
receipt by such Person of proceeds of insurance in excess of $500,000 in the
aggregate or (b) any taking of property of the Parent or any of its
Subsidiaries that results in the receipt by such Person of a compensation
payment in respect thereof in excess of $500,000 in the aggregate.

“Register” has the meaning assigned to such
term in Section 9.04.

“Regulation U” means Regulation U of
the Board as from time to time in effect and all official rulings and
interpretations thereunder or thereof.

“Regulation X” means Regulation X of
the Board as from time to time in effect and all official rulings and
interpretations thereunder or thereof.

“Regulation Z” means Regulation Z of
the Board as from time to time in effect and all official rulings and
interpretations thereunder or thereof.

 30
 

 

“Reinvestment Event” means any Asset
Disposition or Recovery Event in respect of which the Administrative Borrower
has delivered a Reinvestment Notice.

“Reinvestment Notice” means a written notice
executed by a Financial Officer stating that no Default or Event of Default has
occurred and is continuing and that the Parent (directly or indirectly through
a Subsidiary) intends and expects to use all or a specified portion of the
proceeds of an Asset Disposition or Recovery Event to acquire assets useful in
its business.

“Reinvestment Prepayment Amount” means, with
respect to any Reinvestment Event, the cash proceeds from such Reinvestment
Event less any amount expended prior to the relevant Reinvestment Prepayment Date
to acquire assets useful in the Parent’s business.

“Reinvestment Prepayment Date” means, with
respect to any Reinvestment Event, the earliest of (a) the date occurring 180
days after such Reinvestment Event, (b) the date on which the Parent shall have
determined not to, or shall have otherwise ceased to, acquire assets useful in
the Parent’s business with all or any portion of the relevant proceeds from a
Reinvestment Event and (c) the date an Event of Default shall occur and be
continuing.

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

“Release” means any release, spill, emission,
leaking, dumping, injection, pouring, deposit, disposal, discharge, dispersal,
leaching or migration into or through the environment.

“Rent Reserve” means, with respect to any
location that is not owned by a Loan Party where any Equipment (to the extent
subject to Liens arising by operation of law or otherwise to secure rent,
warehousing fees or similar payment obligations payable by any Loan Party in
respect of such location) is located and with respect to which no Landlord Lien
Waiver or Bailee Letter, as applicable, is in effect, a reserve equal to three
months’ rent, warehousing fees or similar payment obligations at such location;
provided, however, that no Rent Reserve shall be established
until 60 days after the Effective Date (or such later date acceptable to the
Administrative Agent in its sole discretion).

“Required Canadian Lenders” means, at any time,
Canadian Lenders having Canadian Revolving Exposure representing more than 50%
of the sum of the total Canadian Revolving Exposure at such time.

“Required Lenders” means, at any time, Lenders
having Revolving Exposure and unused Commitments representing more than 50% of
the sum of the total Revolving Exposure and unused Commitments at such time.

“Reserves” means any reserves against Eligible
Machinery and Equipment or Eligible Real Estate of any Loan Party or the
Availability Amount that the Administrative Agent may, in its reasonable credit
judgment, establish from time to time, including, without limitation, reserves
for the cost of enforcing the rights of the Secured Parties under the Security
Documents.

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“Restricted Payment” means any dividend or
other distribution (whether in cash, securities or other property) with respect
to any Equity Interests in the Parent or any Subsidiary, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests in the
Parent or any Subsidiary or any option, warrant or other right to acquire any
such Equity Interests in the Parent or any Subsidiary.

“Revolving Availability Period” means the
period from and including the Effective Date to but excluding the earlier of
the Maturity Date and the date of termination of the Commitments.

“Revolving Credit Note” means a revolving
credit note in substantially the form of Exhibit K hereto.

“Revolving Exposure” means, with respect to any
Lender at any time, the sum of the Australian Revolving Exposure, Canadian
Revolving Exposure, German Revolving Exposure and Mexican Revolving Exposure of
such Lender.

“Revolving Loan” means the Australian Revolving
Loans, Canadian Revolving Loans, German Revolving Loans and Mexican Revolving
Loans.

“S&P” means Standard & Poor’s
Ratings Group, a division of The McGraw-Hill Companies, Inc.

“SEC” means the Securities and Exchange
Commission.

“Secured Obligations Reserve” means, at any
time, any amount payable by a Loan Party that is secured by the Collateral and
ranks pari passu with or senior to the Obligations.

“Secured Parties” means (a) the Lenders, (b)
the Administrative Agent, (c) the beneficiaries of each indemnification
obligation undertaken by any Loan Party under any Loan Document and (d) the
permitted successors and assigns of each of the foregoing.

“Security Agreements” means the Australian
Security Agreement, Canadian Security Agreement, German Security Agreement and
Mexican Security Agreement.

“Security Documents” means the Security
Agreements, the Pledge Agreement, the Mortgages and each other security
agreement or other instrument or document executed and delivered by any Loan
Party to secure any of the Obligations.

“Senior First Lien Note Documents” means the
Senior First Lien Notes, the Senior First Lien Note Indenture, the Senior First
Lien Security Documents, the Intercreditor Agreement and all other instruments,
agreements and documents evidencing, guaranteeing or otherwise governing the
terms of the Senior First Lien Notes.

“Senior First Lien Note Indenture” means (a)
the amended and restated indenture dated as of May 6, 2005, between the Parent
and Wilmington Trust Company, as trustee, (b) the

 32
 

 

indenture dated as of February 17, 2004, between the
Parent and Wilmington Trust Company, as trustee, (c) the supplemental first
lien notes indenture, dated as of the Effective Date (the “Supplemental
First Lien Notes Indenture”), between the Parent Borrower and Wilmington
Trust Company, as trustee, and (d) any other indenture or similar agreement or
instrument, in each case pursuant to which any Senior First Lien Notes are
issued.

“Senior First Lien Notes” means (a) the
$298,200,000 principal amount at maturity of 11-5/8% senior secured notes due
2009 of the Parent outstanding on the Effective Date, (b) the $7,800,000
principal amount at maturity of 11-1/8% senior secured discount notes due 2009
of the Parent outstanding on the Effective Date and (c) any Permitted
Refinancing Indebtedness in respect thereof.

“Senior First Lien Note Trustee” means the
trustee under the Senior First Lien Note Indenture, or any successor thereto.

“Senior First Lien Security Documents” means
any and all security agreements, pledge agreements, mortgages and other
agreements and documents pursuant to which any Liens are granted to secure any
Indebtedness or other obligations in respect of the Senior First Lien Notes.

“Senior Second Lien Note Documents” means the
Senior Second Lien Notes, the Senior Second Lien Note Indenture, the Senior
Second Lien Security Documents, the Intercreditor Agreement and all other
instruments, agreements and documents evidencing, guaranteeing or otherwise
governing the terms of the Senior Second Lien Notes.

“Senior Second Lien Note Indenture” means the
indenture dated as of May 30, 2003, between the Parent and Wells Fargo Bank,
N.A. (as successor to Wilmington Trust Company), as trustee, or any other
indenture or similar agreement or instrument, in each case pursuant to which
any Senior Second Lien Notes are issued.

“Senior Second Lien Notes” means the
$250,000,000 aggregate principal amount of 11-1/8% senior secured notes due
2009 of the Parent outstanding on the Effective Date and any Permitted
Refinancing Indebtedness in respect thereof.

“Senior Second Lien Note Trustee” means the
trustee under the Senior Second Lien Note Indenture, or any successor thereto.

“Senior Second Lien Security Documents” means
any and all security agreements, pledge agreements, mortgages and other
agreements and documents pursuant to which any Liens are granted to secure any
Indebtedness or other obligations in respect of the Senior Second Lien Notes.

“Senior Subordinated Note Documents” means the
Senior Subordinated Notes, the Senior Subordinated Note Indenture and all other
instruments, agreements and documents evidencing, guaranteeing or otherwise
governing the terms of the Senior Subordinated Notes.

“Senior Subordinated Note Indenture” means
collectively, (a) the indenture dated as of July 18, 2006, between the
Parent and The Bank of New York Trust Company, N.A., as

 33
 

 

trustee, and (b) any other indenture or similar agreement
or instrument, in each case pursuant to which any Senior Subordinated Notes are
issued.

“Senior Subordinated Notes” means the
$35,000,000 aggregate principal amount of 13% senior subordinated notes due
2010 of the Parent outstanding on the Effective Date and any Permitted
Refinancing Indebtedness in respect thereof.

“Series AA Preferred Stock” means the Series AA
Preferred Stock of the Parent having the terms specified in the Parent’s
Amended and Restated Certificate of Incorporation dated July 18, 2006, as
such terms may be amended or modified from time to time pursuant to Section
6.12(a).

“Series M Preferred Stock” means the Series M
Preferred Stock of the Parent having the terms specified in the Parent’s
Amended and Restated Certificate of Incorporation dated July 18, 2006, as
such terms may be amended or modified from time to time pursuant to Section
6.12(a).

“Sponsor” means J.P. Morgan Partners, LLC.

“Statutory Reserve Rate” means a fraction
(expressed as a decimal), the numerator of which is the number one and the
denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board to which
the Administrative Agent is subject with respect to the LIBO Rate, for
eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in
Regulation D of the Board).  Such
reserve percentages shall include those imposed pursuant to such
Regulation D.  Eurodollar Loans
shall be deemed to constitute eurocurrency funding and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D or any comparable regulation. 
The Statutory Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.

“subsidiary” means, with respect to any Person
(the “parent”) at any date, any corporation, limited liability company,
partnership, association or other entity the accounts of which would be
consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP
as of such date, as well as any other corporation, limited liability company,
partnership, association or other entity of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held.

“Subsidiary” means any direct or indirect
subsidiary of the Parent.

“Swap Agreement” means any agreement with
respect to any swap, spot, forward, future or derivative transaction or option
or similar agreement involving, or settled by reference to, one or more rates,
currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk
or value or any similar transaction or any combination of these transactions; provided
that no phantom

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stock or similar plan providing for payments only on
account of services provided by current or former directors, officers,
employees or consultants of the Parent or the Subsidiaries shall be a Swap
Agreement.

“Taxes” means any and all present or future
taxes, levies, imposts, duties, deductions, charges or withholdings imposed by
any Governmental Authority.

“Transactions” means (a) the execution,
delivery and performance by each Loan Party of the Loan Documents to which it
is to be a party, the borrowing of Loans and the use of the proceeds thereof,
(b) the execution, delivery and performance by each Working Capital Loan Party
of the Working Capital Loan Documents to which it is to be a party, the
borrowing of loans thereunder, the use of the proceeds thereof and the issuance
of letters of credit thereunder, (c) the termination of the Pre-Petition Loan
Agreement, and the payment in full of all loans, interest and other amounts
accrued or owing thereunder (other than in respect of the Existing Letters of
Credit, which will be fully cash collateralized or backstopped with letters of
credit issued under the Working Capital Credit Agreement on or prior to the
Effective Date), (d) the termination of the DIP Credit Agreement, and the
payment in full of all loans, interest and other amounts accrued or owing
thereunder (other than in respect of the Existing Letters of Credit, which will
be fully cash collateralized or backstopped with letters of credit issued under
the Working Capital Credit Agreement on or prior to the Effective Date), and
(e) the payment of the Transaction Costs.

“Transaction Costs” means the fees and expenses
incurred by, or required to be reimbursed or paid by, the Parent and the
Subsidiaries in connection with the Transactions.

“Type”, when used in reference to any Loan or
Borrowing, refers to whether the rate of interest on such Loan, or on the Loans
comprising such Borrowing, is determined by reference to the LIBO Rate or the
Alternate Base Rate.

“USA Patriot Act” means the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA Patriot Act) Act of 2001.

“Wholly Owned Subsidiary” means a Subsidiary of
which securities (except for directors’ qualifying shares or other de minimus
shares) or other ownership interests representing 100% of the equity are at the
time owned, directly or indirectly, by the Parent.

“Withdrawal Liability” means liability of the
Parent or any ERISA Affiliate to a Multiemployer Plan as a result of a complete
or partial withdrawal from such Multiemployer Plan, as such terms are defined
in Part I of Subtitle E of Title IV of ERISA.

“Working Capital Available Commitments” shall
have the meaning assigned to the term “Available Commitments” in the Working
Capital Credit Agreement.

“Working Capital Borrowing Base” shall have the
meaning assigned to the term “Borrowing Base” in the Working Capital Credit
Agreement.

“Working Capital Credit Agreement” means the
Working Capital Credit Agreement, dated as of the date hereof, among Pliant
Corporation, the Subsidiary Borrowers (as

 35
 

 

defined therein) party thereto, the lenders party
thereto and Merrill Lynch Bank USA, as administrative agent thereunder.

“Working Capital Foreign Obligations” shall
have the meaning assigned to the terms “Foreign Obligations” in the Working
Capital Credit Agreement.

“Working Capital Loan Documents” shall have the
meaning assigned to the term “Loan Documents” in the Working Capital Credit
Agreement.

“Working Capital Loan Party” shall have the
meaning assigned to the term “Loan Party” in the Working Capital Credit
Agreement.

“Working Capital Revolving Exposure” shall have
the meaning assigned to the term “Revolving Exposure” in the Working Capital
Credit Agreement.

SECTION 1.02.  Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be
classified and referred to by Class (e.g., a “Revolving Loan”) or by
Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar
Revolving Loan”).  Borrowings also may be
classified and referred to by Class (e.g., a “Revolving Loan”) or by
Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g.,
a “Eurodollar Revolving Loan”).

SECTION 1.03.  Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns,
(c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not
to any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.

SECTION 1.04.  Accounting Terms; GAAP.  Except as otherwise expressly provided
herein, all terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if
the Administrative Borrower notifies the Administrative Agent that the
Administrative Borrower requests an amendment to any provision hereof to
eliminate the effect of any change occurring after the date hereof in GAAP or
in the application thereof on the operation of such provision (or if the
Administrative Agent notifies the Administrative Borrower that the Required
Lenders request an amendment to any

 36
 

 

provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in accordance herewith.

ARTICLE II

THE CREDITS

SECTION 2.01.  Commitments.  (a) 
[Intentionally Omitted].

(b)           Subject to the terms and conditions
set forth herein, each Australian Lender agrees to make loans in dollars to the
Australian Subsidiary Borrower from time to time during the Australian
Availability Period in an aggregate principal amount that will not result in
(i) such Lender’s Australian Revolving Exposure exceeding such Lender’s
Applicable Percentage of the Australian Sublimit, (ii) the total
Australian Revolving Exposure exceeding the lesser of (A) the Australian
Sublimit and (B) the Australian Borrowing Base then in effect,
(iii) the total Revolving Exposure exceeding the total amount of the
Commitments at such time or (iv) the total Revolving Exposure plus the total
Working Capital Revolving Exposure exceeding the total amount of the Overall
Commitments at such time. 
Notwithstanding anything herein to the contrary, the obligations of each
Australian Lender to make Australian Revolving Loans to the Australian
Subsidiary Borrower pursuant to this Agreement shall terminate if any Lender is
unable to designate an Affiliate reasonably satisfactory to it as the
Australian Lender hereunder.

(c)           Subject to the terms and conditions
set forth herein, each Canadian Lender agrees to make loans in dollars to the
Canadian Subsidiary Borrower from time to time during the Revolving
Availability Period in an aggregate principal amount that will not result in
(i) such Lender’s Canadian Revolving Exposure exceeding such Lender’s
Applicable Percentage of the Canadian Sublimit, (ii) the total Canadian
Revolving Exposure exceeding the lesser of (A) the Canadian Sublimit and
(B) the Canadian Borrowing Base then in effect, (iii) the total
Revolving Exposure exceeding the total amount of the Commitments at such time
or (iv) the total Revolving Exposure plus the total Working Capital Revolving
Exposure exceeding the total amount of the Overall Commitments at such time.

(d)           Subject to the terms and conditions
set forth herein, each German Lender agrees to make loans in dollars to the
German Subsidiary Borrower from time to time during the Revolving Availability
Period in an aggregate principal amount that will not result in (i) such Lender’s
German Revolving Exposure exceeding such Lender’s Applicable Percentage of the
German Sublimit, (ii) the total German Revolving Exposure exceeding the
lesser of (A) the German Sublimit and (B) the German Borrowing Base
then in effect, (iii) the total Revolving Exposure exceeding the total
amount of the Commitments at such time or (iv) the total Revolving Exposure
plus the total Working Capital Revolving Exposure exceeding the total amount of
the Overall Commitments at such time.

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(e)           Subject to the terms and conditions
set forth herein, each Mexican Lender agrees to make loans in dollars to the
Mexican Subsidiary Borrower from time to time during the Revolving Availability
Period in an aggregate principal amount that will not result in (i) such Lender’s
Mexican Revolving Exposure exceeding such Lender’s Applicable Percentage of the
Mexican Sublimit, (ii) the total Mexican Revolving Exposure exceeding the
lesser of (A) the Mexican Sublimit and (B) the Mexican Borrowing Base
then in effect, (iii) the total Revolving Exposure exceeding the total
amount of the Commitments at such time or (iv) the total Revolving Exposure
plus the total Working Capital Revolving Exposure exceeding the total amount of
the Overall Commitments at such time.

(f)            Within the foregoing limits and
subject to the terms and conditions set forth herein, (i) the Borrowers (other
than the Australian Subsidiary Borrower) may borrow, prepay and reborrow
Revolving Loans (other than Australian Revolving Loans) during the Revolving
Availability Period and (ii) the Australian Subsidiary Borrower may borrow,
prepay and reborrow Australian Revolving Loans during the Australian
Availability Period.

SECTION 2.02.  Loans and Borrowings.  (a) Each Australian Revolving Loan shall be
made as part of a Borrowing consisting of Australian Revolving Loans of the
same Type made by the Australian Lenders ratably in accordance with their
respective Applicable Percentage.  Each
Canadian Revolving Loan shall be made as part of a Borrowing consisting of
Canadian Revolving Loans of the same Type made by the Canadian Lenders ratably
in accordance with their respective Applicable Percentage.  Each German Revolving Loan shall be made as
part of a Borrowing consisting of German Revolving Loans of the same Type made
by the German Lenders ratably in accordance with their respective Applicable
Percentage.  Each Mexican Revolving Loan
shall be made as part of a Borrowing consisting of Mexican Revolving Loans of
the same Type made by the Mexican Lenders ratably in accordance with their
respective Applicable Percentage.  The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender’s failure to make Loans as required.

(b)           Subject to Section 2.13,
each Revolving Loan shall be comprised entirely of ABR Loans or Eurodollar
Loans as the applicable Borrower may request in accordance herewith.

(c)           At the commencement of each Interest
Period for any Eurodollar Revolving Loan, such Borrowing shall be in an
aggregate amount that is an integral multiple of $1,000,000 and not less than
$5,000,000 (or, with respect to Australian Revolving Loans, $2,000,000).  At the time that each ABR Revolving Loan is
made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $500,000 and not less than $1,000,000 (or, with respect to
Australian Revolving Loans, $2,000,000); provided that an ABR Revolving
Loan of any Class may be in an aggregate amount that is equal to the entire
unused balance of the total amount of the Commitments of such Class.  Borrowings of more than one Type and Class
may be outstanding at the same time; provided that there shall not at
any time be more than a total of eight Eurodollar Borrowings outstanding.

 38
 

 

(d)           Notwithstanding any other provision
of this Agreement, no Borrower shall be entitled to request, or to elect to
convert or continue, any Borrowing if the Interest Period requested with
respect thereto would end after the Maturity Date.

SECTION 2.03.  Requests for Borrowings.  To request a Revolving Loan, the
Administrative Borrower shall deliver a Borrowing Request to the Administrative
Agent (on behalf of itself or another Borrower) (a) in the case of a
Eurodollar Borrowing, not later than 12:00 noon, New York City time,
three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 4:00 p.m.,
New York City time, one Business Day before the date of the proposed
Borrowing.  Each such Borrowing Request
shall be irrevocable and shall be signed by the Administrative Borrower (on
behalf of itself or another Borrower). 
Each such Borrowing Request shall specify the following information in
compliance with Section 2.02:

(i)            whether the Administrative Borrower
is requesting such Borrowing on behalf of itself or for another Borrower (and,
if on behalf of another Borrower, the identity of such Borrower);

(ii)           whether the requested Borrowing is an
Australian Revolving Borrowing, Canadian Revolving Borrowing, German Revolving
Borrowing or Mexican Revolving Borrowing;

(iii)          the aggregate amount of such
Borrowing;

(iv)          the date of such Borrowing, which
shall be a Business Day; and

(v)           whether such Borrowing is to be an
ABR Borrowing or a Eurodollar Borrowing.

If no election as to the Type of Borrowing is
specified, then the requested Borrowing shall be an ABR Borrowing.  Promptly following receipt of a Borrowing
Request with respect to a Borrowing of any Class in accordance with this
Section, the Administrative Agent shall advise each Lender with respect to such
Class of the details thereof and of the amount of such Lender’s Loan to be made
as part of the requested Borrowing.  The
Australian Subsidiary Borrower may not request more than two Australian
Borrowings and Australian Borrowings (as defined in the Working Capital Credit
Agreement) in the aggregate per calendar month.

SECTION 2.04.  [Intentionally Omitted].

SECTION 2.05.  [Intentionally Omitted].

SECTION 2.06.  Funding of Borrowings.  (a) Each Lender shall make each Loan of any
Class to be made by it hereunder on the proposed date thereof by wire transfer
of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose for such Class by notice to the Lenders.  The Administrative Agent will make such Loans
available to the applicable Borrower by promptly transferring the amounts so
received, in like funds, to the applicable Borrower Account.

 39
 

 

(b)           Unless the Administrative Agent shall
have received notice from a Lender prior to the proposed date of any Borrowing
that such Lender will not make available to the Administrative Agent such
Lender’s share of such Borrowing, the Administrative Agent may, in its sole
discretion, assume that such Lender has made such share available on such date
in accordance with paragraph (a) of this Section and may, in reliance upon
such assumption, make available to the applicable Borrower a corresponding
amount.  In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and the applicable Borrower
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount with interest thereon, for each day from and including the
date such amount is made available to such Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender,
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of any Borrower, the interest rate
applicable to ABR Loans.  If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender’s Loan included in such Borrowing.

SECTION 2.07.  Interest Elections.  (a) Each Revolving Borrowing initially shall
be of the Type specified in the applicable Borrowing Request.  Thereafter, the Administrative Borrower may
elect (on behalf of itself or another Borrower) to convert such Borrowing to a
different Type or to continue such Borrowing, all as provided in this Section.  The Administrative Borrower (on behalf of
itself or another Borrower) may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.

(b)           To make an election pursuant to this
Section, the Administrative Borrower shall notify the Administrative Agent of
such election in writing by the time that a Borrowing Request would be required
under Section 2.03 if the Administrative Borrower were requesting a
Revolving Borrowing of the Class and Type resulting from such election to be
made on the effective date of such election. 
Each such Interest Election Request shall be irrevocable and shall be in
a form approved by the Administrative Agent and signed by the Administrative
Borrower.

(c)           Each Interest Election Request shall
specify the following information in compliance with Section 2.02:

(i)            the Borrowing (including the
identity of the applicable Borrower) to which such Interest Election Request
applies and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clause (iii) below shall be specified for each resulting Borrowing);

(ii)           the effective date of the election
made pursuant to such Interest Election Request, which shall be a Business Day;
and

(iii)          whether the resulting Borrowing is to
be an ABR Borrowing or a Eurodollar Borrowing.

 40
 

 

(d)           Promptly following receipt of an
Interest Election Request, the Administrative Agent shall advise each Lender of
the details thereof and of such Lender’s portion of each resulting Borrowing.

(e)           If the Administrative Borrower fails
to deliver a timely Interest Election Request with respect to a Eurodollar
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Administrative Borrower, then, so long as an Event of Default is continuing
(i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing
shall be converted to an ABR Borrowing at the end of the Interest Period
applicable thereto.

SECTION 2.08.  Termination and Reduction of Commitments.  (a) Unless previously terminated, the
Commitments shall terminate on the Maturity Date.

(b)           The Administrative Borrower may at
any time terminate, or from time to time reduce, the Commitments; provided
that (i) each reduction of the Commitments shall be in an amount that is
an integral multiple of $1,000,000 and not less than $5,000,000 and
(ii) the Administrative Borrower shall not terminate or reduce the
Commitments if (A) the total Revolving Exposure would exceed the total
amount of the Commitments or (B) after giving pro forma effect to such
reduction, the Facilities Availability Amount would be less than $10,000,000.  In connection with such termination or
reduction, the Borrowers shall pay the applicable Prepayment Fee; provided,
however, that no Prepayment Fee shall be payable on the Commitments in
the event this Agreement is terminated in connection with a refinancing of the
Obligations in a transaction in which the Initial Lender provides for the
Borrowers a credit facility in which the Initial Lender is the sole lead
arranger and book manager and the sole administrative agent.

(c)           The Administrative Borrower shall
notify the Administrative Agent of any election to terminate or reduce the
Commitments under paragraph (b) of this Section at least three Business
Days prior to the effective date of such termination or reduction, specifying
such election and the effective date thereof. 
Promptly following receipt of any notice, the Administrative Agent shall
advise the Lenders with respect to such Commitments of the contents
thereof.  Each notice delivered by the
Administrative Borrower pursuant to this Section shall be irrevocable; provided
that a notice of termination of the Commitments delivered by the Administrative
Borrower under paragraph (b) of this Section may state that such notice is
conditioned upon the effectiveness of other borrowings or the completion of the
sale or issuance of stock of the Parent or the sale of assets of the Parent, in
which case such notice may be revoked by the Administrative Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if
such condition is not satisfied.  Any
termination or reduction of the Commitments shall be permanent.  Each reduction of the Commitments shall be
made ratably among the Lenders in accordance with their respective Commitments.

SECTION 2.09.  Repayment of Loans; Evidence of Debt.  (a) The Australian Subsidiary Borrower hereby
unconditionally promises to pay to the Administrative Agent for the

 41
 

 

account of each Australian Lender the then unpaid
principal amount of each Australian Revolving Loan of such Australian Lender on
the Maturity Date.  The Canadian
Subsidiary Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Canadian Lender the then unpaid
principal amount of each Canadian Revolving Loan of such Canadian Lender made
to it on the Maturity Date.  The German
Subsidiary Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each German Lender the then unpaid
principal amount of each German Revolving Loan of such German Lender on the
Maturity Date.  The Mexican Subsidiary
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Mexican Lender the then unpaid principal amount of each
Mexican Revolving Loan of such Mexican Lender on the Maturity Date.

(b)           Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of each Borrower to such Lender resulting from each Loan made by
such Lender, including the amounts of principal and interest payable and paid to
such Lender from time to time hereunder.

(c)           The Administrative Agent shall
maintain accounts in which it shall record (i) the amount of each Loan
made hereunder, the Class and Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or
to become due and payable from each Borrower to each Lender hereunder and
(iii) the amount of any sum received by the Administrative Agent hereunder
for the account of the Lenders and each Lender’s share thereof.

(d)           The entries made in the accounts
maintained pursuant to paragraph (b) or (c) of this Section shall be
conclusive evidence (absent manifest error) of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of any Borrower to repay the Loans in
accordance with the terms of this Agreement.

(e)           Any Lender may request that Loans
made by it be evidenced by a Revolving Credit Note.  In such event, the applicable Borrower shall
prepare, execute and deliver to such Lender a Revolving Credit Note payable to
the order of such Lender (or, if requested by such Lender, to such Lender and
its registered assigns).  Thereafter, the
Loans evidenced by such Revolving Credit Note and interest thereon shall at all
times (including after assignment pursuant to Section 9.04) be
represented by one or more Revolving Credit Notes in such form payable to the
order of the payee named therein (or, if such Revolving Credit Note is a
registered note, to such payee and its registered assigns).

SECTION 2.10.  Prepayment of Loans.  (a) The Borrowers shall have the right at any
time and from time to time to prepay any Borrowing in whole or in part, subject
to the requirements of this Section.

(b)           (i)            [Intentionally
Omitted].

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(ii)           If at any time the total Australian
Revolving Exposure exceeds the lesser of (A) the Australian Sublimit at
such time and (B) the Australian Borrowing Base then in effect, then in
any such case the Australian Subsidiary Borrower shall immediately prepay the
Australian Revolving Loans, without demand or notice of any kind, to the extent
necessary to eliminate such excess.

(iii)          If at any time the total Canadian
Revolving Exposure exceeds the lesser of (A) the Canadian Sublimit at such
time and (B) the Canadian Borrowing Base then in effect, then in any such
case the Canadian Subsidiary Borrower shall immediately prepay the Canadian
Revolving Loans, without demand or notice of any kind, to the extent necessary
to eliminate such excess.

(iv)          If at any time the total German
Revolving Exposure exceeds the lesser of (A) the German Sublimit at such
time and (B) the German Borrowing Base then in effect, then in any such
case the German Subsidiary Borrower shall immediately prepay the German
Revolving Loans, without demand or notice of any kind, to the extent necessary
to eliminate such excess.

(v)           If at any time the total Mexican
Revolving Exposure exceeds the lesser of (A) the Mexican Sublimit at such
time and (B) the Mexican Borrowing Base then in effect, then in any such
case the Mexican Subsidiary Borrower shall immediately prepay the Mexican
Revolving Loans, without demand or notice of any kind, to the extent necessary
to eliminate such excess.

(vi)          If at any time the total Revolving
Exposure exceeds the total amount of the Commitments at such time, then in any
such case (A) the Australian Subsidiary Borrower shall immediately prepay
Australian Revolving Loans, (B) the Canadian Subsidiary Borrower shall
immediately prepay Canadian Revolving Loans, (C) the German Subsidiary Borrower
shall immediately prepay German Revolving Loans, and (D) the Mexican Subsidiary
Borrower shall immediately prepay Mexican Revolving Loans, in each case,
without demand or notice of any kind, to the extent necessary to eliminate such
excess.

(c)           Subject to Section 2.17(b) and (c) if
an Event of Default shall have occurred and be continuing, during a Cash
Collection Period, the Administrative Agent may, and at the request of the
Required Lenders shall, (i) apply cash deposited in the Collateral Proceeds
Account on each Business Day to prepay the Revolving Loans, and (ii) apply cash
deposited in the German Collateral Proceeds Account on each Business Day to
prepay German Revolving Loans; provided, however, that, in each
case, proceeds of Foreign Working Capital Collateral shall be applied first, to
the payment of the Working Capital Foreign Obligations to the extent required
by the Working Capital Credit Agreement and then, to the payment of the
Obligations.  To the extent the terms of
this clause (c) do not require any payment to be allocated to any specific
Class of Revolving Borrowings, the Administrative Agent will apply any
prepayment of Revolving Borrowings made pursuant to this clause (c) to
each Class of Revolving Borrowings on a pro rata basis, with each prepayment of
Revolving Borrowings within any Class applied to prepay ABR Borrowings before
any other Borrowings, with any excess prepayment amount applied to prepay
Eurodollar Borrowings in order of expiration of their respective Interest

 43
 

 

Periods (and applied on a pro rata basis in respect of
Eurodollar Borrowings with Interest Periods expiring on the same date).

(d)           (i)            Unless
a Reinvestment Notice shall be delivered in respect thereof, immediately upon
receipt by any Loan Party of cash proceeds of any Asset Disposition or Recovery
Event, the Borrowers shall prepay the Loans in an amount equal to all such
proceeds, net of (A) commissions and other reasonable and customary
transaction costs, fees and expenses properly attributable to such transaction
and payable by Borrowers in connection therewith (in each case, paid to
non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of senior
Liens on such asset (to the extent such Liens constitute Permitted Encumbrances
hereunder), if any, and (D) an appropriate reserve for income taxes in
accordance with GAAP in connection therewith; provided, however,
that, proceeds of Foreign Working Capital Collateral shall be applied first, to
the payment of the Working Capital Foreign Obligations to the extent required
by the Working Capital Credit Agreement and then, to the payment of the
Loans.  On each Reinvestment Prepayment
Date, the Loans shall be prepaid by an amount equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment Event.  Any such prepayment pursuant to this clause
(i) shall be applied in accordance with Section 2.17.

(ii)           If any Loan Party issues any Equity
Interests or any debt securities (other than (A) in connection with the Plan of
Reorganization, (B) Permitted Refinancing Indebtedness and Permitted Redemption
Indebtedness and (C) the Series M Preferred Stock to officers and employees of
the Parent and the Subsidiaries), no later than the Business Day following the
date of receipt of proceeds thereof in excess of $500,000, all Borrowers (in
the case of an issuance by a Loan Party that is not a Borrower) or the issuing
Borrower shall prepay first, the Revolving Loans (as defined in the Working
Capital Credit Agreement) (and cash collateralize Letter of Credit Obligations
(as defined in the Working Capital Credit Agreement)) to the extent required by
the Working Capital Credit Agreement and then, the Loans in an amount equal to
all such proceeds, net of underwriting discounts and commissions and other
reasonable costs paid to non-Affiliates in connection therewith.  Any such prepayment shall be applied in accordance
with Section 2.17.

(iii)          If at any time any Loan Party receives
any Extraordinary Receipts, the Borrowers shall prepay first, the Revolving
Loans (as defined in the Working Capital Credit Agreement) to the extent
required by the Working Capital Credit Agreement and then, the Loans in an amount
equal to all such Extraordinary Receipts no later than the Business Day
following the date of receipt thereof. 
Any such prepayment shall be applied in accordance with Section 2.17.

(e)           Prior to any optional or mandatory
prepayment of Borrowings hereunder (other than a mandatory prepayment made
pursuant to clause (c) above), the Administrative Borrower shall, subject to
the requirements of clause (b) above, select the Borrowing or Borrowings to be
prepaid and shall specify such selection in the notice of such prepayment
pursuant to paragraph (e) of this Section; provided that (i) the
Administrative Borrower may elect not to provide notice, or select the
Borrowing or Borrowings to be prepaid, in connection with a mandatory
prepayment pursuant to clause (b) above and, in such an event, (A), such
prepayment shall be applied to outstanding Borrowings in such manner as the
Administrative

 44
 

 

Agent deems appropriate to comply with the terms of
clause (b) above and (B) to the extent that the terms of clause (b) above and
subclause (A) of this clause (i) do not require any prepayment to be allocated
to any specific Class of Revolving Borrowings, the Administrative Agent shall
apply such prepayment to each Class of Revolving Borrowings on a pro rata
basis, and (ii) each prepayment of Revolving Borrowings within any Class
shall be applied to prepay ABR Borrowings before any other Borrowings, with any
excess prepayment amount applied to prepay Eurodollar Borrowings in order of
expiration of their respective Interest Periods (and applied on a pro rata
basis in respect of Eurodollar Borrowings with Interest Periods expiring on the
same date).

(f)            The Administrative Borrower shall
notify the Administrative Agent in writing of any prepayment hereunder
(i) in the case of prepayment of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date
of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not
later than 11:00 a.m., New York City time, one Business Day before
the date of prepayment.  Each such notice
shall be irrevocable and shall specify the prepayment date, the principal
amount of each Borrowing or portion thereof to be prepaid and, in the case of a
mandatory prepayment, a reasonably detailed calculation of the amount of such
prepayment; provided that (A) no notice shall be required in
respect of any mandatory prepayment made pursuant to clause (c) above,
(B) in the event the Administrative Borrower elects to provide notice of a
mandatory prepayment pursuant to clause (b) above to identify the
Borrowings to be prepaid in connection therewith, such notice shall be given to
the Administrative Agent on the same day that the applicable prepayment is
required to be made pursuant to such clause, it being understood that any
failure or delay on the part of the Administrative Borrower in providing such
notice to the Administrative Agent shall not affect the obligations of the
Administrative Borrower to make such prepayment, and (C) if a notice of
optional prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.08,
then such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.08.  Promptly following receipt of any such
notice, the Administrative Agent shall advise the Lenders of the contents
thereof.  Each partial prepayment of any
Borrowing shall be in an amount such that the remaining amount of such
Borrowing not so prepaid would be permitted in the case of an advance of a
Borrowing of the same Type as provided in Section 2.02, except as
necessary to apply fully the required amount of a mandatory prepayment.  Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.12.

(g)           If, at 3:00 p.m., New York City time,
on any Business Day the amount, determined reasonably and in good faith by the
Administrative Borrower (the “Cash Amount”), equal to (i) the aggregate
amount of “cash and cash equivalents” and “marketable securities” of the Loan
Parties, in each case that would be required to be reflected on a consolidated
balance sheet of the Parent Borrower and the Subsidiaries prepared as of such
time in accordance with GAAP (excluding any such “cash” that is “restricted”
cash, including, without limitation, any such cash subject to the Liens
permitted by Section 6.03(j)), minus (ii) the aggregate amount of payments in
such cash and cash equivalents that will be made (and will reduce such cash and
cash equivalents) on such Business Day is more than $11,000,000, then on such
Business Day (A) the Australian Subsidiary Borrower shall immediately prepay
Australian Revolving Loans, (B) the Canadian Subsidiary Borrower shall
immediately prepay Canadian Revolving Loans,

 45
 

 

(C) the German Subsidiary Borrower shall immediately
prepay German Revolving Loans, and (D) the Mexican Subsidiary Borrower shall
immediately prepay Mexican Revolving Loans, in each case to the extent
necessary so that, after giving effect to such prepayment and the receipt by
the applicable Borrower of the proceeds of any Revolving Loans made or to be
made on such Business Day, the Cash Amount will not exceed $11,000,000.  For purposes of any calculation required by
this clause (g), Section 4.02(e) and Section 6.14, the amount of any cash and
cash equivalents and marketable securities held by the Loan Parties at any time
and denominated in a currency other than dollars shall be deemed to be the
dollar equivalent thereof determined in good faith by the Administrative
Borrower based upon prevailing exchange rates at such time.

SECTION 2.11.  [Intentionally Omitted].

SECTION 2.12.  Interest.  (a) The Loans made by the Lenders comprising
each ABR Borrowing shall bear interest at the Alternate Base Rate plus
the Applicable Rate.

(b)           The Loans made by the Lenders
comprising each Eurodollar Borrowing shall bear interest at the LIBO Rate for
the Interest Period in effect for such Borrowing plus the Applicable
Rate.

(c)           [Intentionally Omitted].

(d)           Notwithstanding the foregoing, so
long as any Event of Default has occurred and is continuing under Article VII
(a), (b), (h) or (i), or so long as any other Event of Default has occurred and
is continuing and at the election of the Administrative Agent (or upon the
written request of the Required Lenders) confirmed by written notice to the
Administrative Borrower, the interest rates applicable to Loans and any fee or
other amount payable by any Borrower hereunder shall bear interest, after as
well as before judgment, at a rate per annum equal to (i) in the case of
overdue principal of any Loan, 2.50% plus the rate otherwise applicable
to such Loan as provided in the preceding paragraphs of this Section or
(ii) in the case of any other amount, 2.50% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this
Section.

(e)           Accrued interest on each Loan shall
be payable in arrears on each Interest Payment Date for such Loan and upon
termination of the Commitments; provided that (A) in the event of
any repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan (other than an Australian Revolving Loan) prior to the end of
the Revolving Availability Period or an ABR Australian Revolving Loan prior to
the end of the Australian Availability Period), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (B) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.

(f)            All interest hereunder shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last
day).  The applicable Alternate Base Rate
or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.  Solely for purposes of the Interest Act
(Canada), (i) whenever interest is to be computed or expressed at

 46
 

 

any rate (the “Specified Rate”), the annual
rate of interest to which each such Specified Rate is equal is such Specified
Rate multiplied  by a fraction, the numerator of which is the
actual number of days in the relevant year and the denominator of which is 360;
(ii) the principle of deemed reinvestment of interest shall not apply to any
interest calculation hereunder; and (iii) the rates of interest stipulated
herein are intended to be nominal rates and not effective rates or yields.

SECTION 2.13.  Alternate Rate of Interest.  If prior to the commencement of any Interest
Period for a Eurodollar Borrowing:

(a)           the Administrative Agent determines
(which determination shall be conclusive absent manifest error) that adequate
and reasonable means do not exist for ascertaining the LIBO Rate for such
Interest Period; or

(b)           the Administrative Agent is advised
by the Required Lenders or the Required Canadian Lenders that the LIBO Rate for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders (or Lender) of making or maintaining their Loans (or its Loan) included
in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice
thereof to the Administrative Borrower and the Lenders or the Canadian Lenders,
as applicable, by telephone or telecopy as promptly as practicable thereafter
and, until the Administrative Agent notifies the Administrative Borrower and
such Lenders that the circumstances giving rise to such notice no longer exist,
(i) any Interest Election Request that requests the conversion of any
Revolving Borrowing or Canadian Revolving Borrowing, as applicable, to, or
continuation of any such Borrowing as, a Eurodollar Borrowing shall be
ineffective and (ii) if any Borrowing Request with respect to any
Revolving Borrowing or Canadian Revolving Borrowing, as applicable, requests a
Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

SECTION 2.14.  Increased Costs.  (a) If any Change in Law shall:

(i)            impose, modify or deem applicable
any reserve, special deposit or similar requirement against assets of, deposits
with or for the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the LIBO Rate); or

(ii)           impose on any Lender or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender;

and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan
(or of maintaining its obligation to make any such Loan) or to reduce the
amount of any sum received or receivable by such Lender hereunder (whether of
principal, interest or otherwise), then the applicable Borrower(s) will pay to
such Lender such additional amount or amounts as will compensate (on an
after-tax basis) such Lender for such additional costs incurred or reduction
suffered.

 47
 

 

(b)           If any Lender determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender’s capital or on the capital of such
Lender’s holding company, if any, as a consequence of this Agreement or the
Loans made by such Lender to a level below that which such Lender or such
Lender’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s policies and the policies of such Lender’s
holding company with respect to capital adequacy), then from time to time the
applicable Borrower(s) will pay to such Lender following receipt by the
Administrative Borrower of the certificate referred to in clause (c)
below, such additional amount or amounts as will compensate such Lender or such
Lender’s holding company for any such reduction suffered.

(c)           A certificate of a Lender setting
forth the amount or amounts necessary to compensate such Lender or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section (and setting forth the underlying calculations) shall be delivered to
the Administrative Borrower and shall be conclusive absent manifest error.  The applicable Borrower(s) shall pay such
Lender the amount shown as due on any such certificate within 10 days
after receipt thereof.

(d)           Failure or delay on the part of any
Lender to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender’s right to demand such compensation; provided that
the Borrowers shall not be required to compensate a Lender pursuant to this
Section for any increased costs or reductions incurred more than 180 days
prior to the date that such Lender notifies the Administrative Borrower of the
Change in Law giving rise to such increased costs or reductions and of such
Lender’s intention to claim compensation therefor; provided  further
that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended
to include the period of retroactive effect thereof.

SECTION 2.15.  Break Funding Payments.  In the event of (a) the payment of any
principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.10(f) and is revoked in accordance
therewith), or (d) the assignment of any Eurodollar Loan other than on the
last day of the Interest Period applicable thereto as a result of a request by
the Administrative Borrower pursuant to Section 2.18, then, in any
such event, the applicable Borrower(s) shall compensate each Lender for the
loss, cost and expense attributable to such event.  In the case of a Eurodollar Loan, such loss,
cost or expense to any Lender shall be deemed to include an amount reasonably
determined by such Lender to be the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount of such Loan had such
event not occurred, at the LIBO Rate that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period
for such Loan), over (ii) the amount of interest that would accrue on such
principal amount for such period at the interest rate that such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of
a comparable amount and period from other banks in the

 48
 

 

eurodollar market. 
A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section (and setting forth
the underlying calculations) shall be delivered to the Administrative Borrower
and shall be conclusive absent manifest error. 
The applicable Borrower(s) shall pay such Lender the amount shown as due
on any such certificate within 10 days after receipt thereof.

SECTION 2.16.  Taxes. 
(a) Any and all payments by or on account of any obligation of the
Borrowers hereunder or under any other Loan Document shall be made free and
clear of and without deduction or withholding for any Indemnified Taxes or
Other Taxes; provided that if any Borrower shall be required to deduct
or withhold any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making
all required deductions or withholdings (including deductions or withholdings
applicable to additional sums payable under this Section) the Administrative
Agent or Lender (as the case may be) receives an amount equal to the sum it
would have received had no such deductions or withholdings been made,
(ii) such Borrower shall make such deductions or withholdings and
(iii) such Borrower shall pay the full amount deducted or withheld to the
relevant Governmental Authority in accordance with applicable law.

(b)           In addition, the Borrowers shall pay
any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.

(c)           The Borrowers shall indemnify the
Administrative Agent and each Lender, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent or such Lender, as the case may be, on or with respect
to any payment by or on account of any obligation of the Borrowers hereunder or
under any other Loan Document (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
 A certificate as to the amount of such
payment or liability (and setting forth the underlying calculations) delivered
to the Administrative Borrower by a Lender or by the Administrative Agent on
its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.

(d)           As soon as practicable after any
payment of Indemnified Taxes or Other Taxes by a Borrower to a Governmental
Authority, such Borrower shall deliver to the Administrative Agent the original
or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.

(e)           Any Foreign Lender that is entitled
to an exemption from or reduction of withholding Tax under the laws of the
jurisdiction in which a Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement made by
such Borrower, shall deliver to the Administrative Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Administrative Borrower as will permit such payments
to be made without withholding or at a reduced rate.

 49
 

 

Notwithstanding any other provision of this Section 2.16,
no such Foreign Lender shall be required to deliver any form pursuant to this Section 2.16(e)
that such Foreign Lender is not legally able to deliver or that, in the
reasonable judgment of such Foreign Lender could be disadvantageous to such
Foreign Lender.

(f)            If the Administrative Agent or a
Lender (or transferee) determines, in its reasonable discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been
indemnified by a Borrower or with respect to which a Borrower has paid
additional amounts pursuant to this Section 2.16, it shall pay over
such refund to such Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by such Borrower under this Section 2.16
with respect to the Taxes or Other Taxes giving rise to such refund), net of
all out-of-pocket expenses of the Administrative Agent or such Lender (or
transferee) and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, however,
that the Borrowers, upon the request of the Administrative Agent or such Lender
(or transferee), agree to repay the amount paid over to such Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority), to the Administrative Agent or such Lender (or transferee) in the
event the Administrative Agent or such Lender (or transferee) is required to
repay such refund to such Governmental Authority.  Nothing contained in this Section 2.16(f)
shall require the Administrative Agent or any Lender to make available its Tax
returns (or any other information relating to its Taxes which it deems
confidential) to any Borrower or any other Person.

SECTION 2.17.  Payments Generally; Pro Rata Treatment;
Sharing of Setoffs.  (a) Each
Borrower shall make each payment required to be made by it hereunder or under
any other Loan Document (whether of principal, interest or fees, or of amounts
payable under Section 2.14, 2.15 or 2.16, or
otherwise) prior to 2:00 p.m., New York City time, on the date when
due, by wire transfer in immediately available funds, without setoff or
counterclaim.  Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes
of calculating interest thereon.  All
such payments shall be made to the Administrative Agent at its offices at 800
Scudders Mill Road, Plainsboro, NJ 08536, except (i) payments by the Canadian
Subsidiary Borrower shall be made directly to each Canadian Lender at its
Canadian Lending Office, (ii) payments pursuant to Sections 2.14, 2.15,
2.16 and 10.03 shall be made directly to the Persons entitled
thereto and (iii) payments pursuant to other Loan Documents shall be made to
the Persons specified therein.  The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof.  If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for
the period of such extension.  All
payments under each Loan Document shall be made in dollars.

(b)           Any proceeds of Collateral of the
Loan Parties (other than the German Loan Parties) received by the
Administrative Agent (i) not constituting either (A) a specific payment of
principal, interest, fees or other sum payable under the Loan Documents (which
shall be applied as specified therein), or (B) a mandatory prepayment pursuant
to Section 2.10(b) or (c) (which shall be applied in accordance
with Section 2.10) or (ii) after an Event of Default has

 50
 

 

occurred and is continuing and the Administrative
Agent so elects or the Required Lenders so direct, such funds shall be applied
ratably as follows:

first,
to pay any fees, indemnities, or expense reimbursements including amounts then
due to the Administrative Agent from the Borrowers;

second,
to pay any fees or expense reimbursements then due to the Lenders from the
Borrowers;

third,
to pay interest on the Revolving Loans;

fourth,
to pay the principal of the Revolving Loans;

fifth,
to the payment of any other Obligation due to the Administrative Agent or any
Lender by the Borrowers; and

sixth,
if all of the Obligations (other than contingent obligations for which no claim
has been made) have been indefeasibly paid and performed in full and the
Commitments have been terminated, to the Loan Parties;

provided, however, that
proceeds of Foreign Working Capital Collateral shall be applied first, to the
payment of the Working Capital Foreign Obligations to the extent required by
the Working Capital Credit Agreement and then, to the payment of the
Obligations.

To the extent that the terms of this clause (b) do not
require any payment to be allocated to any specific Class of Revolving
Borrowings, the Administrative Agent shall apply such prepayment to each Class
of Revolving Borrowings on a pro rata basis. 
The Administrative Agent and the Lenders shall have the continuing and
exclusive right to apply and reverse and reapply any and all such proceeds and
payments to any portion of the Obligations in accordance with the payment
priorities established hereby.

(c)           Any proceeds of Collateral of the
German Loan Parties received by the Administrative Agent (i) not constituting
either (A) a specific payment of principal, interest, fees or other sum payable
under the Loan Documents (which shall be applied as specified therein), or (B)
a mandatory prepayment pursuant to Section 2.10(b) or (c) (which
shall be applied in accordance with Section 2.10) or (ii) after an
Event of Default has occurred and is continuing and the Administrative Agent so
elects or the Required Lenders so direct, such funds shall be applied ratably
as follows:

first,
to pay any fees, indemnities, or expense reimbursements including amounts then
due to the Administrative Agent from the German Subsidiary Borrower;

second,
to pay any fees or expense reimbursements then due to the Lenders from the
German Subsidiary Borrower;

third,
to pay interest on the German Revolving Loans;

fourth,
to pay the principal of the German Revolving Loans;

 51
 

 

fifth,
to the payment of any other German Obligation due to the Administrative Agent
or any Lender by the German Subsidiary Borrower; and

sixth,
if all of the German Obligations (other than contingent obligations for which
no claim has been made) have been indefeasibly paid and performed in full and
the Commitments have been terminated, to the Loan Parties;

provided, however, that
proceeds of Foreign Working Capital Collateral shall be applied first, to the
payment of the Working Capital Foreign Obligations to the extent required by
the Working Capital Credit Agreement and then, to the payment of the German
Obligations.

To the extent that the terms of this clause (c) do not require any
payment to be allocated to any specific Class of Borrowings, the Administrative
Agent shall apply such prepayment to each Class of Borrowings on a pro rata
basis.  The Administrative Agent and the
Lenders shall have the continuing and exclusive right to apply and reverse and
reapply any and all such proceeds and payments to any portion of the German
Obligations in accordance with the payment priorities established hereby.

(d)           At the election of the Administrative
Agent, all payments of principal, interest, fees, premiums, reimbursable
expenses (including, without limitation, all reimbursement for fees and
expenses pursuant to Section 9.03), and other sums payable under the
Loan Documents, may be paid from the proceeds of Borrowings made hereunder
whether made following a request by the Administrative Borrower pursuant to Section
2.03 or a deemed request as provided in this Section or may be deducted
from any deposit account of the Borrowers maintained with the Administrative
Agent.  The Borrowers hereby irrevocably
authorize (i) the Administrative Agent to make a Borrowing for the purpose of
paying each payment of principal, interest and fees as it becomes due hereunder
or any other amount due under the Loan Documents and agrees that all such amounts
charged shall constitute Loans and that all such Borrowings shall be deemed to
have been requested pursuant to Section 2.03 and (ii) the Administrative
Agent to charge any deposit account of the Borrowers maintained with the
Administrative Agent for each payment of principal, interest and fees as it
becomes due hereunder or any other amount due under the Loan Documents.  If at any time insufficient funds are
received by and available to the Administrative Agent to pay fully all amounts
of principal, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, and (ii) second,
towards payment of principal then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal then due to such
parties.

(e)           If any Lender shall, by exercising
any right of set-off or counterclaim or otherwise, obtain payment in respect of
any principal of or interest on any of its Revolving Loans resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
Revolving Loans and accrued interest thereon than the proportion received by
any other Lender, then the Lender receiving such greater proportion shall
purchase (for cash at face value) participations in the Revolving Loans of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans; provided
that

 52
 

 

(i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this
paragraph shall not be construed to apply to any payment made by any Borrower
pursuant to and in accordance with the express terms of this Agreement or any
payment obtained by a Lender as consideration for the assignment of or sale of
a participation in any of its Revolving Loans to any assignee or participant,
other than to a Borrower or any Subsidiary or Affiliate thereof (as to which
the provisions of this paragraph shall apply). 
Each Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against any
Borrower rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Borrower in the
amount of such participation.

(f)            Unless the Administrative Agent
shall have received notice from the Administrative Borrower prior to the date
on which any payment is due to the Administrative Agent for the account of the
Lenders hereunder that the applicable Borrower will not make such payment, the
Administrative Agent may assume, in its sole discretion, that such Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders the amount due.  In such event, if no Borrower has in fact
made such payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.

(g)           If any Lender shall fail to make any
payment required to be made by it pursuant to Section 2.06(b), 2.17(f)
or 10.03(c), then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid.

SECTION 2.18.  Mitigation
Obligations.  (a) If any Lender
requests compensation under Section 2.14, or if any Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.16,
then, upon the Administrative Borrower’s written request, such Lender shall use
commercially reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates (provided
that, if such compensation or additional amounts relate to a particular Class
of Loans, such designation or assignment may relate only to such Class of
Loans), if, in the reasonable judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14
or 2.16, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender.  Each
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.

 53

 

(b)           If any Lender (other than the Initial
Lender) requests compensation under Section 2.14, or if any
Borrower is required to pay any additional amount to any Lender (other than the
Initial Lender) or any Governmental Authority for the account of such Lender
pursuant to Section 2.16, or if any Lender (other than the Initial
Lender) defaults in its obligation to fund Loans hereunder, then the
Administrative Borrower may, at its sole expense and effort, upon notice to
such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Administrative Borrower shall
have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrowers (in the case of all other amounts),
(iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.14 or payments required to be made
pursuant to Section 2.16, such assignment will result in a
reduction in such compensation or payments and (iv) with respect to
compensation or additional amounts (but not defaults) in respect of a
particular Class of Loans, such assignment may be limited to such Class of
Loans.  A Lender shall not be required to
make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the
Administrative Borrower to require such 
assignment and delegation cease to apply.

SECTION 2.19.  [Intentionally Omitted].

SECTION 2.20.  The Administrative Borrower.  Each Borrower hereby appoints the Canadian
Subsidiary Borrower as the Administrative Borrower hereunder (in such capacity,
the “Administrative Borrower”), and the Administrative Borrower shall
act under this Agreement as the agent, attorney-in-fact and legal
representative of each Borrower for all purposes, including requesting Loans
and receiving account statements and other notices and communications to the
Borrowers (or any of them) from the Administrative Agent or any Lender.  The Administrative Agent and the Lenders may
rely, and shall be fully protected in relying, on any Borrowing Request,
disbursement instruction, report, information or any notice or communication
made or given by the Administrative Borrower, whether in its own name, as
Borrowers’ agent, or on behalf of the Borrowers, and neither the Administrative
Agent nor any Lender shall have any obligation to make any inquiry or request
any confirmation from or on behalf of any other Borrower as to the binding
effect on it of any such notice or request.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Each Borrower represents and warrants to the
Administrative Agent and the Lenders that:

SECTION 3.01.  Organization; Powers.  Each of the Parent and the Subsidiaries is
duly organized, validly existing and, where applicable, in good standing under
the laws of the

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jurisdiction of its organization, has all requisite
power and authority to carry on its business as now conducted and, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.

SECTION 3.02.  Authorization; Enforceability.  The Transactions entered into and to be
entered into by each Loan Party are within such Loan Party’s corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action.  This Agreement has
been duly executed and delivered by each Borrower and constitutes, and each
other Loan Document to which any Loan Party is to be a party, when executed and
delivered by such Loan Party, will constitute, a legal, valid and binding
obligation of such Borrower or such Loan Party (as the case may be),
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’
rights generally and subject to general principles of equity, regardless of
whether considered in a proceeding in equity or at law.

SECTION 3.03.  Governmental Approvals; No Conflicts.  The Transactions (a) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority or any other Person, except such as have been obtained
or made and are in full force and effect and except filings necessary to
perfect Liens created under the Loan Documents, (b) will not violate any
applicable law or regulation or the charter, by-laws or other
organizational documents of the Parent or any of the Subsidiaries or any order
of any Governmental Authority, except, with respect to any violation of
applicable law or regulation, to the extent any such violation would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect, (c) will not violate or result in a default under any
material indenture, agreement or other instrument binding upon the Parent or
any of the Subsidiaries or its assets, or give rise to a right thereunder to
require any payment to be made by the Parent or any of the Subsidiaries, and
(d) will not result in the creation or imposition of any Lien on any asset
of the Parent or any of the Subsidiaries, except Liens created under the Loan
Documents and the Working Capital Loan Documents.

SECTION 3.04.  Financial Condition; No Material Adverse
Change.  (a) The Parent has
heretofore furnished to the Lenders (i) its consolidated balance sheet and
statements of income, stockholders’ equity and cash flows (A) as of and for the
fiscal year ended December 31, 2005, reported on by Ernst & Young
LLP, independent public accountants and (B) as of and for the fiscal
quarter ended March 31, 2006, certified by its chief financial officer and (ii)
its consolidated balance sheet and statements of income and stockholders’
equity as of and for the fiscal month ended May 31, 2006, certified by its
chief financial officer.  Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of the Parent and its consolidated
Subsidiaries, as of such dates and for such periods in accordance with GAAP and
in the case of clauses (i)(B) and (ii) above, subject to normal year-end audit adjustments
and the absence of footnotes.

(b)           The Parent has heretofore made
available to the Lenders its pro forma consolidated balance sheet as of March
31, 2006, prepared giving effect to the Transactions as if the Transactions had
occurred on such date.  Such pro forma
consolidated balance sheet (i) has been prepared in good faith based on
the same assumptions used to prepare the applicable pro

 55
 

 

forma financial statements, which were simultaneously
made available to the Lenders (which assumptions are believed by the Parent to
be reasonable), (ii) is based on the best information available to the
Parent after due inquiry, (iii) accurately reflects all material
adjustments necessary to give effect to the Transactions and (iv) presents
fairly, in all material respects, the pro forma financial position of the
Parent and its consolidated Subsidiaries as of March 31, 2006, as if the
Transactions had occurred on such date.

(c)           Except as disclosed in the financial
statements referred to above or the notes thereto, after giving effect to the
Transactions, none of the Parent or any of the Subsidiaries has, as of the
Effective Date, any material contingent liabilities, unusual long-term
commitments or unrealized losses.

(d)           Since December 31, 2005, there has
been no material adverse change in the business, operations, properties,
assets, performance, condition (financial or otherwise) or contingent or other
liabilities of the Parent and the Subsidiaries, taken as a whole, other than
the commencement of the Chapter 11 Cases.

SECTION 3.05.  Properties.  (a) Each of the Parent and the Subsidiaries
has good title to, or valid leasehold interests in, all its real and personal
property material to its business (including its Mortgaged Properties), except
for minor defects in title that do not interfere with its ability to conduct
its business as currently conducted or to utilize such properties for their
intended purposes and other Permitted Encumbrances.

(b)           Each of the Parent and the
Subsidiaries owns, or is licensed or otherwise permitted to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to the business of the Parent and the Subsidiaries, taken as a whole,
and the use thereof by the Parent and the Subsidiaries does not infringe upon
the rights of any other Person, except for any such infringements that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

(c)           Schedule 3.05 sets forth
the address of each parcel of real property that is owned or leased (the “Real
Estate”) by the Parent or any of the Subsidiaries as of the Effective Date.

(d)           As of the Effective Date, neither the
Parent nor any of the Subsidiaries has received notice of, or has knowledge of,
any pending or contemplated condemnation proceeding affecting any Mortgaged
Property or any sale or disposition thereof in lieu of condemnation.  Neither any Mortgaged Property nor any
interest therein is subject to any right of first refusal, option or other
contractual right to purchase such Mortgaged Property or interest therein held
by any Person, other than any Loan Party.

SECTION 3.06.  Litigation and Environmental Matters.  (a) There are no actions, suits or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Parent, threatened against or affecting the
Parent or any of the Subsidiaries (i) as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined,
could reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect or (ii) that involve any of the Loan Documents or
the Transactions.

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(b)           Except with respect to any matters
that, individually or in the aggregate, would not be reasonably likely to
result in a Material Adverse Effect, neither the Parent nor any of the
Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.

SECTION 3.07.  Compliance with Laws and Agreements.  Each of the Parent and the Subsidiaries is in
compliance with all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, agreements and other
instruments binding upon it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.  No Default
has occurred and is continuing.

SECTION 3.08.  Investment Company Status.  Neither the Parent nor any of the Subsidiaries
is an “investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940.

SECTION 3.09.  Taxes. 
Each of the Parent and the Subsidiaries has timely filed or caused to be
filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate
proceedings and for which the Parent or such Subsidiary, as applicable, has set
aside on its books adequate reserves to the extent required by GAAP or
(b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.  There is no proposed tax assessment against
any Loan Party that would, if made, have a Material Adverse Effect.  No Loan Party or their subsidiaries is party
to any tax sharing agreement with any other Person pursuant to which it is
liable for any Taxes of any Person that could be reasonably expected to have a
Material Adverse Effect.

SECTION 3.10.  ERISA. 
No ERISA Event has occurred or is reasonably expected to occur that,
when taken together with all other such ERISA Events for which liability is
reasonably expected to occur, could reasonably be expected to result in a
Material Adverse Effect.  The present
value of all accumulated benefit obligations under each Plan individually
(based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
audited financial statements reflecting such amounts, exceed by more than
$30,000,000 the fair market value of the assets of such Plan individually, and
the present value of all accumulated benefit obligations of all underfunded
Plans (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
audited financial statements reflecting such amounts, exceed by more than
$30,000,000 the fair market value of the assets of all such underfunded Plans.

SECTION 3.11.  Disclosure.  The Parent has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which the Parent
or any of the Subsidiaries is subject, and all other matters known to any of
them, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.  The
reports,

 57
 

 

financial statements, certificates and other written
information furnished by or on behalf of any Loan Party to the Administrative
Agent, the Arranger or any Lender in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or thereunder (as
modified or supplemented by other information so furnished), when made or
delivered, did not contain any material misstatement of fact or omit to state
any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Parent represents only
that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.

SECTION 3.12.  Subsidiaries; Loan Party Information.  (a) Schedule 3.12(a) sets forth
the name of, the jurisdiction of organization of, and the direct or indirect
ownership interest of the Parent in, each Subsidiary of the Parent, in each
case as of the Effective Date.

(b)           Schedule 3.12(b) sets forth as
of the Effective Date the name, address of principal place of business and the
federal tax identification number (if any) of each Loan Party.

SECTION 3.13.  Insurance.  Schedule 3.13 sets forth a
description of all insurance maintained by or on behalf of the Parent and the
Subsidiaries as of the Effective Date. 
As of the Effective Date, all premiums that are due and payable in
respect of such insurance have been paid. 
The Parent believes that the insurance maintained by or on behalf of the
Parent and the Subsidiaries is adequate.

SECTION 3.14.  Labor Matters.  As of the Effective Date, there are no
strikes, lockouts or slowdowns against the Parent or any Subsidiary pending or,
to the knowledge of the Parent, threatened that could reasonably be expected to
result in a Material Adverse Effect.  All
material payments due from the Parent or any Subsidiary, or for which any claim
may be made against the Parent or any Subsidiary, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Parent or such Subsidiary.  The consummation of the Transactions will not
give rise to any right of termination or right of renegotiation on the part of
any union under any collective bargaining agreement to which the Parent or any
Subsidiary is bound.

SECTION 3.15.  Solvency.  Immediately after the consummation of the
Transactions to occur on the Effective Date and immediately following the
making of each Loan (if any) on the Effective Date or such other date as Loans
requested hereunder are made, and after giving effect to the application of the
proceeds of such Loans, (a) the fair value of the assets of the Loan
Parties taken as a whole, at a fair valuation, will exceed their debts and
liabilities, subordinated, contingent or otherwise; (b) the present fair
saleable value of the property of the Loan Parties taken as a whole will be
greater than the amount that will be required to pay the probable liability of
their debts and other liabilities, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured; (c) the Loan
Parties taken as a whole will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; (d) the Loan Parties taken as a whole will not have
unreasonably small capital with which to conduct the business in which they are
engaged as such business is now conducted and is proposed to be conducted
following the Effective Date; and (e) the Loan Parties taken as a whole will
not be deemed insolvent or

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bankrupt under any applicable bankruptcy or insolvency
legislation under the laws of Australia, Canada, Germany or Mexico.

SECTION 3.16.  Security Documents.  (a) The Pledge Agreement is effective to
create in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral described therein (and the proceeds thereof) and, when such
Collateral is delivered to the Administrative Agent and any other requirements
set forth therein are completed, the Administrative Agent shall have a fully
perfected second-priority Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Collateral and the proceeds thereof as
security for the Obligations, as applicable, in each case prior and superior in
right to any other Person, other than with respect to Liens securing the
Working Capital Foreign Obligations.

(b)           The Security Agreements are
effective  (with respect to the
Australian Security Agreement, on and after the Australian Effective Date) to
create in favor of the Administrative Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest in the
Collateral described therein (and the proceeds thereof) and, when financing
statements, and/or other filings, notices and registrations, in the case of
Collateral under the Security Documents in appropriate form are filed, given or
obtained with, to or from the appropriate offices in each relevant jurisdiction
(including those specified on Schedule 6 to the Perfection Certificate),
the Administrative Agent shall have a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and, subject to Section 9-315 of the New York
Uniform Commercial Code and the legislation in other jurisdictions, the
proceeds thereof, as security for the Obligations, in each case prior and
superior in right to any other Person, other than with respect to Liens
expressly permitted by Section 6.03.

(c)           [Intentionally Omitted].

(d)           The Mortgages are effective to
create, subject to the exceptions listed in each title insurance policy
covering such Mortgage, in favor of the Administrative Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable Lien on all of
the Loan Parties’ right, title and interest in and to the Mortgaged Properties
thereunder and the proceeds thereof, and when the Mortgages are filed in the
offices specified on Schedule 3.16(d), the Administrative Agent
shall have a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Mortgaged Properties and, to the
extent applicable, subject to Section 9-315 of the New York
Uniform Commercial Code (and the equivalent legislation in other
jurisdictions), the proceeds thereof, in each case prior and superior in right
to any other Person, other than with respect to the rights of Persons pursuant
to Liens expressly permitted by Section 6.03.

SECTION 3.17.  Federal Reserve Regulations.  (a) Neither the Parent nor any of the
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of buying or carrying Margin
Stock.

(b)           No part of the proceeds of any Loan
will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to purchase or carry Margin

 59
 

 

Stock or any security convertible into or exchangeable
for Margin Stock, or extend credit to others for the purpose of purchasing or
carrying Margin Stock or any security convertible into or exchangeable for
Margin Stock, or to refund Indebtedness originally incurred for such purpose,
or (ii) for any purpose that entails a violation of the provisions of the
Regulations of the Board, including Regulation U or Regulation X.

SECTION 3.18.  Senior Secured Obligations.  All the Obligations of the Loan Parties
constitute “Senior Indebtedness” and “Designated Senior Indebtedness” under and
as defined in the Senior Subordinated Note Indenture.

SECTION 3.19.  Related Names.  None of Huntsman Corporation Canada
Inc.,  Huntsman Chemical Company of
Canada Inc., Tioxide Canada Inc., Huntsman ICI (Canada) Corp., La Corporation
Huntsman Canada Inc., Huntsman Corporation Canada Inc./La Corporation Huntsman
Canada Inc., La Corporation Huntsman Canada Inc./Huntsman Corporation Canada
Inc.  or Huntsman - Tioxide Canada Inc.
are subsidiaries of  any Loan Party.

SECTION 3.20.  Permanent Establishment in Canada.  Neither the Parent nor Pliant Solutions
Corporation (a) maintains any location in Canada, (b) has any income
attributable to a permanent establishment in Canada or (c) is required to pay
any income taxes in Canada.

SECTION 3.21. Canadian
Pension Plans.   The Canadian Pension
Plans are duly registered under the Income Tax Act (Canada) and any other
applicable laws which require registration, have been administered in
accordance with the Income Tax Act (Canada) and such other applicable laws and
no event has occurred which could reasonably be expected to cause the loss of
such registered status, except to the extent that any failure to do so could
not reasonably be expected to have a Material Adverse Effect.  All material obligations of each of the Loan
Parties (including fiduciary, funding, investment and administration
obligations) required to be performed in connection with the Canadian Pension
Plans and the funding agreements therefor have been performed on a timely
basis, except to the extent that any failure to do so could not reasonably be
expected to have a Material Adverse Effect. 
There are no outstanding disputes concerning the assets of the Canadian
Pension Plans.  No promises of benefit
improvements under the Canadian Pension Plans have been made except where such
improvement could not reasonably be expected to have a Material Adverse
Effect.  All contributions or premiums
required to be made or paid by each of the Loan Parties to the Canadian Pension
Plans have been made on a timely basis in accordance with the terms of such
plans and all applicable laws.  There
have been no improper withdrawals or applications of the assets of the Canadian
Pension Plans.  Each of the Canadian
Pension Plans is fully funded on a solvency basis and going concern basis
(using actuarial methods and assumptions which are consistent with the
valuations last filed with the applicable Governmental Authorities and which
are consistent with GAAP).   No Canadian
Pension Plan or fund maintained by or on behalf of any Loan Party for the
benefit of any officer, director or employee of such Loan Party is a so-called
defined benefit plan.  For any Canadian
Pension Plan or fund, and for any other employee benefit plan, which is a
defined contribution plan requiring any Loan Party to contribute thereto, or to
deduct from payments to any individual and pay such deductions into or to the
credit of such Canadian Pension Plan or fund, all required employer
contributions have been properly withheld by such Loan Party and fully paid
into the funding arrangements for the applicable Pension Plan or fund.  Any assessments owed to the

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Pension Benefits Guarantee Fund established under the
Pension Benefits Act (Ontario), or other assessments or payments required under
similar legislation in any other jurisdiction, have been paid when due.

ARTICLE IV

CONDITIONS

SECTION 4.01.  Effective Date.  The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):

(a)           The Administrative Agent (or its
counsel) shall have received from the Borrowers and each Lender, a counterpart
of this Agreement signed on behalf of such party.

(b)           (i) The Bankruptcy Court shall have
entered an order (the “Confirmation Order”), in form and substance
reasonably satisfactory to the Administrative Agent, confirming the Plan of
Reorganization and approving and authorizing the transactions contemplated
thereby; (ii) the Plan of Reorganization shall not have been modified, altered,
amended or otherwise changed or supplemented without the prior written consent
of the Administrative Agent; (iii) all material conditions precedent to the
effectiveness of the Plan of Reorganization shall have been satisfied (or
waived with the prior written consent of the Administrative Agent) and the
Effective Date (as defined in the Plan of Reorganization) shall have occurred
(other than the extension of credit under this Agreement); (iv) unless
otherwise agreed by the Administrative Agent, ten days shall have passed since
the entry of the Confirmation Order and the Confirmation Order shall not be
subject to any stay; (v) the Administrative Agent shall be reasonably satisfied
that, except as otherwise consented to by it, the Bankruptcy Court’s retention
of jurisdiction under the Confirmation Order will not govern the enforcement of
the Loan Documents; (vi) the transactions set forth in the Plan of
Reorganization shall have been consummated in accordance with all applicable
Requirements of Law and otherwise to the reasonable satisfaction of the
Administrative Agent; and (vii) the Administrative Agent shall have received a
copy of the Confirmation Order, certified by a Financial Officer of the Parent
as complete and correct.

(c)           (i) The Canadian Court shall have
issued and entered the Canadian Confirmation Order, in form and substance
reasonably satisfactory to the Administrative Agent made on notice (the length
of which is reasonably satisfactory to the Administrative Agent) to the service
list and such other parties as the Administrative Agent may designate, acting
reasonably; (ii) the Canadian Confirmation Order shall be in full force and
effect and not be subject to any stay; and (iii) the Administrative Agent shall
have received a copy of the Canadian Confirmation Order, certified by a
Financial Officer of the Parent as complete and correct.

(d)           The Administrative Agent shall have
received a certificate of the Secretary of each Loan Party certifying (i) the
names and true signatures of each officer of such

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Loan Party that has been
authorized to execute and deliver any Loan Document or other document required
hereunder to be executed and delivered by or on behalf of such Loan Party, (ii)
a copy of the certificate of incorporation (or equivalent organizational
document) of such Loan Party, certified as of a recent date by the Secretary of
State of the state of organization of such Loan Party (other than the Mexican
Loan Parties), together with certificates of such official attesting to the
good standing of such Loan Party, (iii) the by-laws (or equivalent
organizational document) of such Loan Party as in effect on the date of such
certification, and (iv) the resolutions of such Loan Party’s Board of Directors
(or equivalent governing body) approving and authorizing the execution,
delivery and performance of the Loan Documents to which it is a party, all in
form and substance reasonably satisfactory to the Administrative Agent and its
counsel.

(e)           The Administrative Agent shall have
received a certificate, dated the Effective Date and signed by the President, a
Vice President or a Financial Officer of the Administrative Borrower, (i)
confirming compliance with the conditions set forth in paragraphs (a) and
(b) of Section 4.02, (ii) certifying that the conditions set forth in
paragraphs (b) (other than clauses (v) and (vii) thereof), (c) (other than
clause (iii) thereof) and (q) of this Section 4.01 have been satisfied and
(iii) certifying that the liens registered in favor of Bancomer (now known as
BBVA Bancomer) against any Mexican Loan Party do not secure any Indebtedness or
other obligation of such Mexican Loan Party.

(f)            The Administrative Agent shall have
received all fees and other amounts due and payable on or prior to the
Effective Date, including, to the extent invoiced, reimbursement or payment of
all reasonable out-of-pocket expenses required to be reimbursed or paid by any
Loan Party hereunder or under any other Loan Document.

(g)           The Administrative Agent shall have
received counterparts of the Pledge Agreement signed on behalf of each Loan
Party party thereto.

(h)           The Administrative Agent shall have
received counterparts of each Security Agreement (other than the Australian
Security Agreement) signed on behalf of each Loan Party party thereto, together
with the following:

(i)            all documents and instruments,
including Uniform Commercial Code (or equivalent) financing statements,
required by the Security Agreements or by law or reasonably requested by the
Administrative Agent to be filed, registered or recorded to create or perfect
the Liens intended to be created under the Security Agreements, in proper form
for filing, registration or recordation;

(ii)           a completed Perfection Certificate
dated the Effective Date and signed by an executive officer of each Loan Party,
together with all attachments contemplated thereby, including the results of a
search of the Uniform Commercial Code filings or other filings, notices or
registrations made with respect to the Loan Parties in the jurisdictions
contemplated by the Perfection Certificate and copies of the financing
statements (or similar documents) disclosed by such search and evidence
reasonably

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satisfactory to the
Administrative Agent that the Liens indicated by such financing statements (or
similar documents) are permitted by Section 6.03 or have been
released;

(iii)          counterparts of a Mortgage with
respect to each Mortgaged Property signed on behalf of the record owner of such
Mortgaged Property;

(iv)          [intentionally omitted];

(v)           policy or policies of title insurance
issued by a nationally recognized title insurance company, insuring the Lien of
each such Mortgage as a valid first Lien on the Mortgaged Property described
therein, free of any other Liens except as permitted by Section 6.03, in form
and substance reasonably acceptable to the Administrative Agent, together with
such endorsements, coinsurance and reinsurance as the Administrative Agent may
reasonably request;

(vi)          copies of all existing surveys and
such other information and documents with respect to the Mortgaged Properties
as shall be necessary for the aforesaid title insurance policies to be issued
without a survey exception; and

(vii)         such other customary documentation with
respect to the Mortgaged Properties as the Administrative Agent may reasonably
require.

(i)            The Administrative Agent shall have
received counterparts of the Foreign Guarantee Agreement signed on behalf of
each Loan Party party thereto.

(j)            The Administrative Agent shall have
received a favorable written opinion (addressed to the Administrative Agent and
the Lenders and dated the Effective Date) of each of (i) Sidley Austin
LLP, counsel for the Borrowers and the other Loan Parties, (ii) General
Counsel of the Borrowers and the other Loan Parties, (iii) Ontario counsel
for the Canadian Loan Parties acceptable to the Administrative Agent, (iv)
German counsel for the German Loan Parties acceptable to the Administrative
Agent and (v) Mexican counsel for the Mexican Loan Parties acceptable to the
Administrative Agent and, in the case of each such opinion required by this
paragraph, covering such other matters relating to the Loan Parties, the Loan
Documents or the Transactions as the Administrative Agent shall reasonably
request and otherwise in form and substance reasonably satisfactory to the
Administrative Agent.  Each Borrower
hereby requests such counsel to deliver such opinions.

(k)           The Lenders shall have received the
financial statements described in Section 3.04, which financial statements
shall not be materially inconsistent with the financial statements or forecasts
previously provided to the Lenders.

(l)            The Lenders shall have received
projections of the Parent and the Subsidiaries through the fiscal year ending
December 31, 2009, presented on a monthly basis through December 31, 2006
and on an annual basis thereafter (the “Projections”), which Projections
shall not be materially inconsistent with the projections previously provided
to the Administrative Agent and the Arranger.

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(m)          The Administrative Agent shall have
received evidence reasonably satisfactory to it that the insurance required by Section 5.07
is in effect, together with insurance certificates naming the Administrative
Agent as additional insured and/or loss payee to the extent required by Section
5.07.

(n)           [Intentionally Omitted].

(o)           Each of the Pre-Petition Loan
Agreement and the DIP Credit Agreement shall have been terminated, and all
loans, interest and other amounts accrued or owing thereunder shall have been
paid in full (other than the Existing Letters of Credit, which shall have been
fully cash collateralized or backstopped with letters of credit issued under
the Working Capital Credit Agreement on or prior to the Effective Date) and all
Liens granted in respect thereof shall have been released and the terms and
conditions of any such release shall be reasonably satisfactory to the
Administrative Agent.  The Administrative
Agent shall have received payoff letters in form and substance reasonably
satisfactory to the Administrative Agent from General Electric Capital
Corporation with respect to the Pre-Petition Loan Agreement and the DIP Credit
Agreement.

(p)           The Working Capital Credit Agreement
shall have been duly and properly authorized, executed and delivered by the
respective parties thereto on terms and conditions reasonably satisfactory to
the Administrative Agent, consummated pursuant to the terms thereof and shall
be in full force and effect as of the Effective Date.

(q)           After giving effect to the
Transactions, the Parent and the Subsidiaries shall not have any outstanding
Indebtedness or preferred stock other than (i) Indebtedness incurred under
the Loan Documents and the Working Capital Loan Documents, (ii) the Senior
First Lien Notes, (iii) the Senior Second Lien Notes, (iv) the Senior
Subordinated Notes, (v) the Preferred Stock, and (vi) the
Indebtedness permitted pursuant to Section 6.01(ii).

(r)            The Administrative Agent shall have
received all documentation and other information requested by it to satisfy the
requirements of bank regulatory authorities under applicable “know your
customer” and anti-money laundering rules and regulations, including the USA
Patriot Act.

(s)           The Administrative Agent shall have
received a completed Borrowing Base Certificate that sets forth the Pro Forma
Opening Borrowing Base.

(t)            The Administrative Agent shall have
received Control Agreements with respect to each of the accounts set forth on Schedule
5.17 to the extent required by Section 5.17.

(u)           The Administrative Agent shall have
received a certificate, dated the Effective Date and signed by the President of
the Administrative Borrower, to the effect that immediately after the
consummation of the Transactions to occur on the Effective Date and immediately
following the making of each Loan on the Effective Date and after giving effect
to the application of the proceeds of such Loans, (i) the fair value of
the assets of the Loan Parties taken as a whole, at a fair valuation, will
exceed their debts and

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liabilities,
subordinated, contingent or otherwise; (ii) the present fair saleable
value of the property of the Loan Parties taken as a whole will be greater than
the amount that will be required to pay the probable liability of their debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (iii) the Loan Parties
taken as a whole will be able to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; (iv) the Loan Parties taken as a whole will not have unreasonably
small capital with which to conduct the business in which they are engaged as
such business is now conducted and is proposed to be conducted following the
Effective Date; and (v) the Loan Parties taken as a whole will not be deemed
insolvent or bankrupt under any applicable bankruptcy or insolvency legislation
under the laws of Australia, Canada, Germany or Mexico.

(v)           The Administrative Agent shall have
received evidence reasonably satisfactory to it of the merger of Old Pliant
with and into the Parent, with the Parent as the surviving corporation.

(w)          The Administrative Agent shall have
received a Compliance Certificate signed by a Financial Officer and the chief
legal officer of the Administrative Borrower, dated the Effective Date
(delivered, and containing a statement that it was delivered, in good faith
after reasonable investigation) to the effect that the Loans (if any) made on
the Effective Date do not violate the provisions of the Senior First Lien Note
Indenture, the Senior Second Lien Note Indenture and the Senior Subordinated
Note Indenture (including a reasonably detailed summary as to the calculations
necessary to determine the absence of any such violation).

(x)            The Administrative Agent shall have
received evidence reasonably satisfactory to it that the Process Agent required
by Section 9.09(d) shall have been duly appointed by the Borrowers.

(y)           The Administrative Agent shall have
received such other documents as the Administrative Agent, any Lender or their
respective counsel may have reasonably requested.

The Administrative Agent shall notify the
Administrative Borrower and the Lenders of the Effective Date, and such notice
shall be conclusive and binding.

SECTION 4.02.  Each Credit Event.  The obligation of each Lender to make a Loan
on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:

(a)           The representations and warranties of
each Loan Party set forth in the Loan Documents qualified as to materiality
shall be true and correct and those not so qualified shall be true and correct
in all material respects on and as of the date of such Borrowing, except to the
extent such representations and warranties expressly relate to an earlier date
in which case such representations and warranties shall be true and correct as
of such earlier date.

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(b)           At the time of and immediately after
giving effect to such Borrowing, no Default shall have occurred and be
continuing.

(c)           At the time of, and after giving
effect to, such Borrowing, (i) the total Australian Revolving Exposure
shall not exceed the lesser of (A) the Australian Sublimit and
(B) the Australian Borrowing Base then in effect, (ii) the total
Canadian Revolving Exposure shall not exceed the lesser of (A) the
Canadian Sublimit and (B) the Canadian Borrowing Base then in effect,
(iii) the total German Revolving Exposure shall not exceed the lesser of
(A) the German Sublimit and (B) the German Borrowing Base then in
effect, (iv) the total Mexican Revolving Exposure shall not exceed the
lesser of (A) the Mexican Sublimit and (B) the Mexican Borrowing Base
then in effect, (v) the total Revolving Exposure shall not exceed the total
amount of the Commitments then in effect and (vi) the total Revolving Exposure
plus the total Working Capital Revolving Exposure shall not exceed the total
amount of the Overall Commitments then in effect.

(d)           If at the time of, and after giving
effect to, such Borrowing, the total Revolving Exposure and Working Capital
Revolving Exposure exceeds 85% of the maximum amount of Indebtedness permitted
to be incurred under this Agreement and the Working Capital Credit Agreement
pursuant to the Senior First Lien Indenture, the Senior Second Lien Note
Indenture and the Senior Subordinated Note Indenture, the Administrative Agent
shall have received a Compliance Certificate signed by a Financial Officer and
the chief legal officer of the Administrative Borrower, dated the date of such
Borrowing (delivered, and containing a statement that it was delivered, in good
faith after reasonable investigation) to the effect that such Borrowing does
not violate the provisions of the Senior First Lien Note Indenture, the Senior
Second Lien Note Indenture and the Senior Subordinated Note Indenture
(including a reasonably detailed summary as to the calculations necessary to
determine the absence of any such violation).

(e)           At the time of the Borrowing Request
with respect to such Borrowing, the amount that the Administrative Borrower
reasonably and in good faith estimates will be the Cash Amount at
3:00 p.m., New York City time, on the requested date of such
Borrowing (after giving effect to such Borrowing) shall not exceed $11,000,000,
and such Borrowing Request shall contain a statement to that effect and that
the Administrative Borrower reasonably and in good faith expects to be in
compliance with Section 6.14 as of the date of such Borrowing.

(f)            The making of such Loan does not
violate any applicable law or regulation and is not enjoined, temporarily,
preliminarily or permanently.

The making of any Loan on the occasion of each
Borrowing shall be deemed to constitute a representation and warranty by each
Borrower on the date thereof as to the matters specified in this Section.

SECTION 4.03.  Australian Effective Date.  The obligations of the Australian Lenders to
make Australian Revolving Loans hereunder shall not become effective until the
date on which each of the following conditions is satisfied:

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(a)           [Intentionally Omitted.]

(b)           The Administrative Agent shall have
received a counterpart of the Australian Security Agreement signed on behalf of
the Australian Subsidiary Borrower, together with all documents and
instruments, including Uniform Commercial Code (or equivalent) financing
statements, required by the Australian Security Agreement or by law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded to create or perfect the Liens intended to be created under the
Australian Security Agreement, in proper form for filing, registration or recordation.

(c)           The Administrative Agent shall have
received a favorable written opinion (addressed to the Administrative Agent and
the Lenders and dated the Australian Effective Date) of Australian counsel for
the Australian Loan Parties acceptable to the Administrative Agent, covering
such other matters relating to the Australian Loan Parties, the Loan Documents
or the Transactions as the Administrative Agent shall reasonably request and
otherwise in form and substance reasonably satisfactory to the Administrative
Agent.  The Australian Subsidiary
Borrower hereby requests such counsel to deliver such opinions.

(d)           The Administrative Agent shall have
received a certificate of the Secretary of the Australian Subsidiary Borrower
certifying (i) the names and true signatures of each officer of the Australian
Subsidiary Borrower that has been authorized to execute and deliver any Loan
Document or other document required hereunder to be executed and delivered by
or on behalf of the Australian Subsidiary Borrower, (ii) that there have been
no changes to the certificate of incorporation (or equivalent organizational
document) of the Australian Subsidiary Borrower from the certificate of
incorporation (or equivalent organizational document) delivered to the
Administrative Agent on the Effective Date, and attaching a good standing
certificate of the Australian Subsidiary Borrower dated as of a recent date
from its jurisdiction of organization, (iii) that there have been no changes to
the by-laws (or equivalent organizational document) of the Australian
Subsidiary Borrower from the by-laws (or equivalent organizational document)
delivered to the Administrative Agent on the Effective Date, and (iv) the
resolutions of the Australian Subsidiary Borrower’s Board of Directors (or equivalent
governing body) approving and authorizing the execution, delivery and
performance of the Loan Documents to which it is a party, all in form and
substance reasonably satisfactory to the Administrative Agent and its counsel.

(e)           The Administrative Agent shall have
received a certificate, dated the Australian Effective Date and signed by the
President, a Vice President or a Financial Officer of the Administrative
Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.

(f)            The Administrative Agent shall have
received a completed Borrowing Base Certificate, dated the Australian Effective
Date, that sets forth the Australian Borrowing Base.

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(g)           The Administrative Agent shall have
received such other documents as the Administrative Agent, any Australian
Lender or their respective counsel may have reasonably requested.

ARTICLE V

AFFIRMATIVE COVENANTS

Until the Commitments have expired or been terminated
and the principal of and interest on each Loan and all fees and other
Obligations payable hereunder shall have been paid in full, each Borrower
covenants and agrees with the Administrative Agent and the Lenders that:

SECTION 5.01.  Financial Statements and Other Information.  The Administrative Borrower will furnish to
the Administrative Agent, which will deliver to each Lender:

(a)           within 90 days after the end of
each fiscal year of the Parent, its audited consolidated balance sheet and
related statements of operations, stockholders’ equity and cash flows as of the
end of and for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by Ernst & Young
LLP or other independent public accountants of recognized national standing
(without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Parent and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;

(b)           within 45 days after the end of
each of the first three fiscal quarters of each fiscal year of the Parent, its
consolidated and consolidating balance sheet and related statements of
operations, stockholders’ equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth
in each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of the Parent’s Financial Officers
as presenting fairly in all material respects the financial condition and results
of operations of the Parent and its consolidated Subsidiaries on a consolidated
and consolidating basis in accordance with GAAP consistently applied, subject
to normal year-end audit adjustments and the absence of footnotes;

(c)           within 30 days after the end of
each fiscal month of each fiscal year (other than the final fiscal month of
each fiscal quarter) of the Parent, its consolidated and consolidating balance
sheet and related statements of operations as of the end of and for such fiscal
month and the then elapsed portion of the fiscal year, setting forth in each
case in comparative form the figures for the corresponding period or periods of
(or, in the case of the balance sheet, as of the end of) (i) the previous
fiscal year and (ii) the Projections or the most recent forecasts delivered to
the Administrative Agent pursuant to Section 5.01(i) below, all certified by
one of the Parent’s Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Parent and
its

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consolidated Subsidiaries
on a consolidated and consolidating basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;

(d)           concurrently with any delivery of
financial statements under clause (a), (b) or (c) above, a certificate of
a Financial Officer of the Administrative Borrower (i) certifying as to
whether a Default has occurred and, if a Default has occurred, specifying the
details thereof and any action taken or proposed to be taken with respect
thereto, (ii) during any FCCR Period, setting forth reasonably detailed
calculations of the Fixed Charge Coverage Ratio as of the last day of the last
fiscal period covered by such financial statements and (iii) stating whether
any change in GAAP or in the application thereof has occurred since the date of
the Parent’s audited financial statements referred to in Section 3.04
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate;

(e)           concurrently with any delivery of
financial statements under clause (a) or (b) above, a Compliance
Certificate signed by a Financial Officer and the chief legal officer of the
Administrative Borrower (delivered, and containing a statement that it was
delivered, in good faith after reasonable investigation) to the effect that the
then outstanding Revolving Exposure and Working Capital Revolving Exposure do
not violate the provisions of the Senior First Lien Note Indenture, the Senior
Second Lien Note Indenture and the Senior Subordinated Note Indenture
(including a reasonably detailed summary as to the calculations necessary to
determine the absence of any such violation);

(f)            no later than 12:00 noon,
New York City time, on Wednesday of each week, and at any time an Event of
Default has occurred and is continuing, at such other times as may be requested
by the Administrative Agent, a completed Borrowing Base Certificate calculating
and certifying the Borrowing Base as of the last day of the prior week and
accompanied by such supporting detail and documentation as shall be reasonably
requested by the Administrative Agent;

(g)           to the extent requested by the
Administrative Agent at any time when it reasonably believes that the
then-existing Borrowing Base Certificate is materially inaccurate or that the
Borrowing Base at such time would, if calculated at such time, be materially
different than such Borrowing Base reflected in such then-existing Borrowing
Base Certificate, within 10 Business Days of such request, a completed
Borrowing Base Certificate that satisfies the requirements of Section 5.01(f)
showing such Borrowing Base as of the date so requested, accompanied by the
reports and supporting information contemplated thereby or otherwise requested
by the Administrative Agent;

(h)           within two Business Days of any
request therefor, such other information concerning the amount, composition and
manner of computation of the Borrowing Base as the Administrative Agent may
reasonably request (in such detail as may reasonably be requested by the
Administrative Agent);

(i)            not later than 30 days following the
commencement of each fiscal year, (i) the annual business plan of the Parent
and its Subsidiaries for such fiscal year approved

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by the Board of Directors
of the Parent, and (ii) forecasts 
prepared by management of the Parent for such fiscal year and each of
the succeeding fiscal years through the fiscal year in which the Maturity Date
is scheduled to occur (including a projected consolidated balance sheet and
related statements of projected operations and cash flow as of the end of and
for each such fiscal year), presented on a monthly basis for such fiscal year
and on an annual basis thereafter, and, promptly when available, any significant
revisions of such business plan and forecasts;

(j)            promptly after the same become
publicly available, copies of all periodic and other reports, proxy statements
and other materials filed by the Parent or any Subsidiary with the SEC, or any
Governmental Authority succeeding to any or all of the functions of the SEC, or
with any national securities exchange, as the case may be;

(k)           promptly following any request
therefor, such other information regarding the operations, business affairs and
financial condition of the Parent or any Subsidiary, or compliance with the
terms of any Loan Document, as the Administrative Agent, the Administrative
Agent or any Lender may reasonably request;

(l)            [Intentionally Omitted];

(m)          [Intentionally Omitted]; and

(n)           promptly after the Administrative
Borrower obtains knowledge thereof, notice of the occurrence of any FCCR Period
or Cash Collection Triggering Event.

SECTION 5.02.  Notices of Material Events.  The Administrative Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the
following:

(a)           the occurrence of any Default;

(b)           the filing or commencement of any
action, suit or proceeding by or before any arbitrator or Governmental
Authority against or, to the knowledge of an executive officer or a Financial
Officer of the Administrative Borrower, affecting the Parent or any Affiliate
thereof that would reasonably be expected to result in a Material Adverse
Effect;

(c)           any downgrade of the ratings of the
Parent’s senior secured indebtedness for borrowed money by S&P, Moody’s or
any other rating agency;

(d)           the occurrence of any ERISA Event
that, alone or together with any other ERISA Events that have occurred, would
reasonably be expected to result in liability of the Parent and the
Subsidiaries in an aggregate amount exceeding $5,000,000; and

(e)           any other development that results
in, or would reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be
accompanied by a statement of a Financial Officer or other executive officer of
the Administrative Borrower setting forth the details of the

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event or development requiring such notice and any
action taken or proposed to be taken with respect thereto.

SECTION 5.03.  Information Regarding Collateral.  (a) The Administrative Borrower will furnish
to the Administrative Agent 10 day’s prior written notice of any change
(i) in any Loan Party’s corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its
properties, (ii) in the location of any Loan Party’s chief executive
office, its principal place of business, any office in which it maintains books
or records relating to Collateral owned by it or any office or facility at
which Collateral owned by it having an aggregate fair value in excess of
$250,000 with respect to Foreign Fixed Asset Collateral and $1,000,000 with
respect to Foreign Working Capital Collateral is located (including the
establishment of any such new office or facility), (iii) in any Loan Party’s
identity or corporate structure, (iv) in any Loan Party’s Federal Taxpayer
Identification Number or other organizational identification number (or, with
respect to each Foreign Subsidiary, any comparable identification numbers issued
by any Governmental Authority) or (v) in any Loan Party’s jurisdiction of
incorporation or organization.  The
Administrative Borrower agrees not to effect or permit any change referred to
in the preceding sentence unless all filings have been made under the Uniform
Commercial Code or the applicable legislation of other jurisdictions or
otherwise that are required in order for the Administrative Agent to continue
at all times following such change to have a valid, legal and perfected
security interest in all the Collateral.

(b)           At the time of delivery of the annual
financial statements with respect to the preceding fiscal year pursuant to
clause (a) of Section 5.01, the Administrative Borrower shall
deliver to the Administrative Agent a certificate of a Financial Officer and
the chief legal officer of the Administrative Borrower, (i) setting forth
the information required pursuant to Section 2 of the Perfection
Certificate or confirming that there has been no change in such information
since the date of the Perfection Certificate delivered on the Effective Date or
the date of the most recent certificate delivered pursuant to this Section and
(ii) certifying that all Uniform Commercial Code financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each jurisdiction
identified pursuant to clause (i) above to the extent necessary to protect
and perfect the security interests under the Security Agreements for a period
of not less than 18 months after the date of such certificate (except as
noted therein with respect to any continuation statements to be filed within
such period).

SECTION 5.04.  Existence; Conduct of Business.  Each Borrower will, and will cause each of
the Parent and the Subsidiaries to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and
the rights, licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of the business of the
Parent and the Subsidiaries, taken as a whole; provided that the
foregoing shall not prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 6.04.

SECTION 5.05.  Payment of Obligations; Compliance with
Leases.  (a) Each Borrower will, and
will cause each of the Parent and the Subsidiaries to, pay (i) all Taxes
and

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other charges of any Governmental Authority imposed on
it or any of its properties or assets or in respect of any of its franchises,
business, income or property before any penalty or interest accrues thereon and
(ii) all claims (including claims for labor, services, materials and
supplies) for sums that have become due and payable and that by law have or may
become a Lien (other than a Lien permitted under Section 6.03) upon
any of the property or assets of the Parent or any of the Subsidiaries, prior
to the time when any penalty or fine shall be incurred with respect thereto,
except with respect to subsections (i) and (ii) of this Section 5.05 where
(A) the validity or amount thereof is being contested in good faith by
appropriate procedures or proceedings, (B) the Parent or such Subsidiary
has set aside on its books adequate reserves with respect thereto in accordance
with GAAP, (C) such contest effectively suspends collection of the
contested obligation and the enforcement of any Lien securing such obligation
and (D) the failure to make payment pending such contest would not
reasonably be expected to result in a Material Adverse Effect.

(b)           Each Borrower will, and will cause
each of the Parent and the Subsidiaries to, comply with all material terms of
each lease under which the Parent or any Subsidiary leases any property, as
lessee, and at which Equipment that has an aggregate fair value in excess of
$250,000 and is included in the calculation of the Borrowing Base is located.

SECTION 5.06.  Maintenance of Properties.  Each Borrower will, and will cause each of
the Parent and the Subsidiaries to, keep and maintain all property material to
the conduct of the business of the Parent and the Subsidiaries taken as a whole
in good working order and condition, ordinary wear and tear excepted.

SECTION 5.07.  Insurance.  Each Borrower will, and will cause each of
the Parent and the Subsidiaries to, maintain insurance with respect to its
material properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons. 
Such insurance shall be maintained with financially sound and reputable
insurers, except that a portion of such insurance program (not to exceed that
which is customary in the case of companies engaged in the same or similar
business or having similar properties similarly situated) may be effected
through self-insurance, provided adequate reserves therefor, in accordance with
GAAP, are maintained.  All insurance
policies or certificates (or certified copies thereof) with respect to such
insurance (A) shall be endorsed to the Administrative Agent’s reasonable
satisfaction for the benefit of the Lenders (including by naming the
Administrative Agent as loss payee or additional insured, as appropriate); and
(B) shall state that such insurance policy shall not be canceled without
30 days’ prior written notice thereof (or, in connection with any
cancellation resulting from the non-payment of premiums, 10 days’ prior
written notice thereof).  The
Administrative Borrower shall promptly notify the Administrative Agent of any
material change or revision, or notice of expiration or non-renewal, with
respect to any such insurance policy. 
The Administrative Borrower shall furnish to the Administrative Agent,
on the Effective Date and on the date of delivery of each annual financial
statement, full information as to the insurance carried.  At any time that insurance at levels
described in Schedule 5.07 is not being maintained by or on behalf
of the Parent or any of the Subsidiaries, the Administrative Borrower will
notify the Administrative Agent in writing within two Business Days thereof
and, if thereafter notified by the Administrative Agent or the Required Lenders
to do so, the Administrative Borrower or any such

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Subsidiary, as the case may be, shall obtain insurance
at such levels at least equal to those set forth on Schedule 5.07; provided
that such insurance can be obtained at commercially reasonable rates.

SECTION 5.08.  Casualty and Condemnation.  The Administrative Borrower will furnish to
the Administrative Agent and the Lenders prompt written notice of any casualty
or other insured damage to any portion of any Collateral or the commencement of
any action or proceeding for the taking of any Collateral or any part thereof
or interest therein under power of eminent domain or by condemnation or similar
proceeding, where the reduction in the fair market value of the Collateral so
affected in connection with any such casualty event or condemnation is at least
$2,500,000.

SECTION 5.09.  Books and Records; Inspection and Audit
Rights.  (a) Each Borrower will, and
will cause each of the Parent and the Subsidiaries to, keep proper books of
record and account in which full, true and correct entries are made in all
material respects of all dealings and transactions in relation to its business
and activities.  Each Borrower will, and
will cause each of its subsidiaries to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants (and the Borrowers shall be provided the
opportunity to participate in any such discussions with such independent
accountants), all at such reasonable times and as often as reasonably
requested.  The Borrowers shall pay the
reasonable fees and expenses of any representatives retained by the
Administrative Agent to conduct any such inspection; provided, however
that so long as no Event of Default shall have occurred and be continuing, the
Borrowers shall only be required to pay for one such inspection per fiscal year
of the Parent.

(b)           Each Borrower will, and will cause
each of the other Loan Parties to, upon reasonable prior notice, permit any
representatives designated by the Administrative Agent (including any
consultants, accountants, lawyers and appraisers retained by the Administrative
Agent) to conduct evaluations and appraisals of the Administrative Borrower’s
computation of the Borrowing Base and the assets included in the Borrowing
Base, all at such reasonable times and as often as reasonably requested.  The Borrowers shall pay the reasonable fees
and expenses of any representatives retained by the Administrative Agent to
conduct any such evaluation or appraisal; provided, however that
so long as no Event of Default shall have occurred and be continuing, the
Borrowers shall only be required to pay for one such evaluation or appraisal
pursuant to this clause (b) per calendar year for each category of Collateral
included in each Borrowing Base.  The
Borrowers also agree to modify or adjust the computation of the Borrowing Base
(which may include maintaining additional reserves or modifying the eligibility
criteria for the components of the Borrowing Base) to the extent required by
the Administrative Agent or the Required Lenders as a result of any such
evaluation or appraisal or otherwise.

(c)           In the event that historical
accounting practices, systems or reserves relating to the components of the
Borrowing Base are modified in a manner that is adverse to the Lenders in any
material respect, the Borrowers will agree to maintain such additional reserves
(for purposes of computing the Borrowing Base) in respect of the components of
the Borrowing Base and make such other adjustments to its parameters for
including the components of the

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Borrowing Base as the Administrative Agent or the
Required Lenders in their commercially reasonable discretion shall require
based upon such modifications.

SECTION 5.10.  Compliance with Laws.  Each Borrower will, and will cause each of
the Parent and the Subsidiaries to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its property,
including Environmental Laws except where the failure to do so, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.

SECTION 5.11.  Use of Proceeds.  (a) [Intentionally Omitted].

(b)           The proceeds of the Revolving Loans
will be used solely (i) to refinance the Pre-Petition Loan Agreement and the
DIP Credit Agreement, (ii) to pay Transaction Costs and (iii) for ordinary
working capital and general corporate purposes of the applicable Borrower and
its Subsidiaries, including, without limitation, the payment of amounts payable
pursuant to the Plan of Reorganization on the Effective Date.

(c)           No part of the proceeds of any Loan
will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, (i) to purchase or carry Margin Stock or any
security convertible into or exchangeable for Margin Stock, or extend credit to
others for the purpose of purchasing or carrying Margin Stock or any security
convertible into or exchangeable for Margin Stock, or to refund Indebtedness
originally incurred for such purpose, or (ii) for any purpose that entails
a violation of any of the Regulations of the Board, including Regulation U
and Regulation X.

(d)           [Intentionally Omitted].

SECTION 5.12.  Additional Subsidiaries.  If any additional subsidiary is formed or
acquired by a Loan Party after the Effective Date, the Administrative Borrower
will notify the Administrative Agent and the Lenders thereof and (i) the
Administrative Borrower will cause such subsidiary to become a party to the
applicable Security Documents in the manner provided therein and such other
mortgages and security, pledge, guarantee and subordination agreements as
reasonably requested by the Administrative Agent to guarantee and secure the
Obligations, in each case within three Business Days after such subsidiary is
formed or acquired and promptly take such actions to create and perfect Liens
on such subsidiary’s assets to secure the Obligations as the Administrative
Agent or the Required Lenders shall reasonably request and (ii) if any
Equity Interests or Indebtedness of such subsidiary are owned by or on behalf
of any Loan Party, the Administrative Borrower will cause certificates and
promissory notes evidencing such Equity Interests and Indebtedness to be pledged
to secure the Obligations within three Business Days after such Subsidiary is
formed or acquired.

SECTION 5.13.  Further Assurances.  (a) Each Borrower will, and will cause each
other Loan Party to, execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions (including the
filing and recording of financing statements, fixture filings, mortgages, deeds
of trust and other documents), that may be required under any applicable law,
or which the Administrative Agent or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan

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Documents or to grant, preserve, protect or perfect
the Liens created or intended to be created by the Security Documents or the
validity or priority of any such Lien, all at the expense of the Loan
Parties.  Each Borrower also agrees to
provide to the Administrative Agent, from time to time upon request, evidence
reasonably satisfactory to the Administrative Agent as to the perfection and
priority of the Liens created or intended to be created by the Security
Documents.

(b)           If any material assets (including any
real property or improvements thereto or any interest therein) are acquired by
the Borrowers or any other Loan Party after the Effective Date (other than
assets constituting Collateral that become subject to the Lien of the
appropriate Security Agreements upon acquisition thereof), the Administrative
Borrower will notify the Administrative Agent and the Lenders thereof, and, if
requested by the Administrative Agent or the Required Lenders, the Borrowers
will cause such assets to be subjected to a Lien securing the Obligations and
will take, and cause the other Loan Parties to take, such actions as shall be
necessary or reasonably requested by the Administrative Agent to grant and
perfect such Liens, including actions described in paragraph (a) of this
Section, all at the expense of the Loan Parties; provided that the
following property shall not be covered by this Section 5.13(b):  (i) owned real estate or leasehold
interests with an aggregate fair market value of less than $5,000,000,
(ii) any other items of tangible personal property with, in each case, a
fair market value of less than $500,000 and (iii) items explicitly
excluded by exceptions in any Security Agreement, Pledge Agreement or other
Security Document.

SECTION 5.14.  Supplemental Disclosure.  From time to time as may be reasonably
requested by the Administrative Agent (which request will not be made more
frequently than once each year absent the occurrence and continuance of an
Event of Default) or at the Loan Parties’ election, the Administrative Borrower
shall supplement each Schedule, or any representation herein or in any other
Loan Document, with respect to any matter hereafter arising that, if existing
or occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedule or as an exception to such representation
or that is necessary to correct any information in such Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Schedule, such Schedule shall be appropriately marked to
show the changes made therein); provided that (a) no such supplement to
any such Schedule or representation shall amend, supplement or otherwise modify
any Schedule or representation, or be or be deemed a waiver of any Default or
Event of Default resulting from the matters disclosed therein, except as
consented to by the Administrative Agent and the Required Lenders in writing,
and (b) no supplement shall be required or permitted as to representations and
warranties that relate solely to the Closing Date.

SECTION 5.15.  Intellectual Property.  Each Borrower will, and will cause each of
the Parent and the Subsidiaries to, conduct its business and affairs without
infringement of or interference with any Intellectual Property of any other
Person in any material respect and shall comply in all material respects with
the terms of its Intellectual Property licenses.

SECTION 5.16.  Landlord Lien Waivers, Mortgagee
Agreements and Bailee Letters.  As
reasonably requested by the Administrative Agent, each Borrower will, and will
cause each of the other Loan Parties to, use commercially reasonable efforts to
obtain a Landlord Lien Waiver, mortgagee agreement or Bailee Letter, as
applicable, from the lessor of each leased property, mortgagee of owned
property or bailee with respect to any warehouse, processor or

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converter facility or other location where Foreign
Fixed Asset Collateral having an aggregate fair value in excess of $250,000 is
stored or located or Foreign Working Capital Collateral having an aggregate
fair value in excess of $1,000,000 is stored or located, which agreement or
letter shall contain a waiver or subordination of all Liens or claims that the
landlord, mortgagee or bailee may assert against the Foreign Fixed Asset
Collateral or Foreign Working Capital Collateral at that location, and shall
otherwise be reasonably satisfactory in form and substance to the
Administrative Agent.  Each Loan Party
shall timely and fully pay and perform its obligations under all leases and
other agreements with respect to each leased location or public warehouse where
any Collateral is or may be located.

SECTION 5.17. Depository
Banks. (a) Each Borrower will, and will cause each of the other Loan
Parties to, maintain a bank reasonably acceptable to the Administrative Agent
as its principal depository bank, including for the maintenance of operating,
administrative, cash management, collection activity, and other deposit
accounts for the conduct of its business. 
Schedule 5.17 sets forth as of the Effective Date all deposit accounts,
securities accounts and commodities accounts of each Borrower and the other
Loan Parties.

(b)           Each Borrower shall, and shall cause
each other Loan Party to, (i) deposit all of its cash in deposit accounts that
are Controlled Deposit Accounts, (ii) not establish or maintain any securities
account or commodity account that is not a Controlled Securities Account and
(iii) not establish or maintain any deposit account that is not a Controlled
Deposit Account; provided, however, that the Loan Parties may
maintain (A) payroll, withholding tax and other fiduciary or zero balance
accounts and (B) prior to September 30, 2006, cash in deposit accounts with
Bank of Montreal in an aggregate amount not to exceed $1,000,000 at any time; provided,
further, that the Borrowers shall cause all balances in the accounts
referred to in clause (B) above to be transferred into a Controlled Deposit
Account on a weekly basis.

(c)           Each Borrower shall, and shall cause
each other Loan Party to, notify and direct each Account debtor and every other
Person obligated to make payments with respect to any Accounts, Inventory or
other Collateral to make all such payments directly to a Controlled Deposit
Account.  Each Borrower shall, and shall
cause each other Loan Party to, use all reasonable efforts to cause each
Account debtor and every other Person identified in the preceding sentence to
make all payments with respect to any Accounts, Inventory or other Collateral
directly to a Controlled Deposit Account. 
In the event that a Loan Party directly receives any cash or other
funds, notwithstanding the arrangements for payment directly into the
Controlled Deposit Accounts, such remittances shall be held for the benefit of
the Administrative Agent and the Secured Parties and shall be segregated from
other funds of such Loan Party, and each Borrower shall, or shall cause each
other Loan Party to, cause such remittances and payments to be deposited into a
Controlled Deposit Account as soon as practicable after such Loan Party’s
receipt thereof.  Without the prior
written consent of the Administrative Agent, no Loan Party shall, under any
circumstances whatsoever, change the general instructions given to Account
debtors and other Persons obligated to make payments with respect to any
Accounts, Inventory or other Collateral regarding the deposit of payments with
respect thereto in a Controlled Deposit Account.

(d)           Each Borrower shall, and shall cause
each other Loan Party to, use all reasonable efforts to prevent (i) any funds
that are proceeds of Foreign Fixed Asset Collateral

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from being deposited or otherwise commingled with proceeds
of Foreign Working Capital Collateral and (ii) any funds that are proceeds of
Collateral from being deposited or otherwise commingled with proceeds of assets
that do not constitute Collateral.

(e)           During a Cash Collection Period, the
Administrative Agent may, and at the request of the Required Lenders shall,
transfer any funds held in a Controlled Deposit Account or Controlled
Securities Account on each Business Day to a Collateral Proceeds Account or
German Collateral Proceeds Account, as applicable.  With respect to any Controlled Deposit
Account or Controlled Securities Account that is not the subject of a Control
Agreement, during a Cash Collection Period, at the request of the
Administrative Agent, each Borrower shall, and shall cause each Loan Party to,
transfer any funds held in such Controlled Deposit Account or Controlled
Securities Account on each Business Day to a 
Collateral Proceeds Account or German Collateral Proceeds Account, as
applicable.  The Administrative Agent
shall not have any responsibility for, or bear any risk of loss of, any
investment or income of any funds in any Collateral Proceeds Account or German
Collateral Proceeds Account.  From time
to time after funds are deposited in any Collateral Proceeds Account or German
Collateral Proceeds Account, the Administrative Agent may apply funds then held
in such Collateral Proceeds Account or German Collateral Proceeds Account to
the payment of Obligations in accordance with Section 2.10(c).  No Loan Party and no Person claiming on behalf
of or through any Loan Party shall have any right to demand payment of any
funds held in any Collateral Proceeds Account or German Collateral Proceeds
Account at any time prior to the termination of all Commitments and the payment
in full of all Obligations.

SECTION 5.18.  ERISA. 
Each Borrower will, and will cause each of the Parent and the
Subsidiaries to, establish, maintain and operate all Plans to comply in all
material respects with the provisions of ERISA, the Code, and all other applicable
laws, and the regulations and interpretations thereunder other than to the
extent that the Loan Parties are in good faith contesting by appropriate
proceedings the validity or implication of any such provision, law, rule,
regulation or interpretation.

SECTION 5.19.  Post-Closing Conditions.  Each Borrower will, and will cause each of
the Parent and the Subsidiaries to, deliver each of the documents, instruments
and agreements, and take each of the actions, set forth on Schedule 5.19 within
the time periods set forth on such Schedule.

SECTION 5.20.  Canadian Pension Plans.  No Loan Party will (a) terminate any Canadian
Pension Plan in a manner, or take any other action with respect to any Canadian
Pension Plan, which could reasonably be expected to result in any material
liability of a Loan Party, (b) fail to make full payment when due of all
amounts which, under the provisions of any Canadian Pension Plan, agreement
relating thereto or applicable law, such Loan Party is required to pay as
contributions thereto, except where the failure to make such payments could not
reasonably be expected to have a Material Adverse Effect, (c) permit to exist
any accumulated funding deficiency, whether or not waived, with respect to any
Canadian Pension Plan in an amount which could reasonably be expected to cause
a Material Adverse Effect, (d) contribute to or assume an obligation to
contribute to any “multi-employer pension plan” as such term is defined in the
Pension Benefits Act (Ontario), (e) acquire an interest in any Person if such
Person sponsors, maintains or contributes to, or at any time in the six-year
period preceding such

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acquisition has sponsored, maintained, or contributed
to any “multi-employer pension plan” as such term is defined in the Pension
Benefits Act (Ontario), or (f) permit the actuarial present value of the
benefit liabilities (computed on an accumulated benefit obligation basis in
accordance with GAAP) under all Canadian Pension Plans in the aggregate to
exceed the current value of the assets of all Canadian Pension Plans in the
aggregate that are allocable to such benefit liabilities, in each case only to
the extent such liabilities and assets relate to benefits to be paid to
employees of the Loan Parties, by an amount that could reasonably be expected to
cause a Material Adverse Effect.

ARTICLE VI

NEGATIVE COVENANTS

Until the Commitments have expired or terminated and
the principal of and interest on each Loan and all fees and other Obligations
payable hereunder have been paid in full, each Borrower covenants and agrees
with the Administrative Agent and the Lenders that:

SECTION 6.01.  Indebtedness.  The Borrowers will not, and will not permit
the Parent or any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:

(i)            Indebtedness created under the Loan
Documents and the Working Capital Loan Documents;

(ii)           Indebtedness existing on the
Effective Date and set forth in Schedule 6.01 and extensions,
renewals and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof;

(iii)          Indebtedness of the Parent to any
Subsidiary and of any Subsidiary to the Parent or any other Subsidiary; provided,
that (A) any such loans and advances made by a Loan Party shall be evidenced by
a promissory note pledged to secure the Obligations and (B) the aggregate
principal amount of loans and advances made by any German Loan Party to any
other Loan Party shall not exceed the amount of free reserves of such German
Loan Party;

(iv)          Guarantees by the Parent of Indebtedness
of any Subsidiary and by any Subsidiary of Indebtedness of the Parent or any
other Subsidiary; provided that (A)  any Guarantee of the Senior
Subordinated Notes by a Subsidiary shall be subordinated on the same terms as
the Senior Subordinated Notes and (B) any Guarantee of the Senior Subordinated
Notes, the Senior First Lien Notes or the Senior Second Lien Notes shall be
given only by a Domestic Subsidiary that is a Working Capital Loan Party and
Uniplast Industries Co.;

(v)           Indebtedness of the Parent or any
Subsidiary incurred to finance the acquisition, construction or improvement of
any fixed or capital assets, including Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such assets or
secured by a Lien on any such assets prior to the acquisition thereof,
including Capital Lease Obligations incurred pursuant to transactions permitted
by Section 6.07, and extensions, renewals and replacements of any
such

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Indebtedness that do not
increase the outstanding principal amount thereof; provided that
(A) such Indebtedness is incurred prior to or within 20 days after
such acquisition or the completion of such construction or improvement and
(B) the aggregate principal amount of Indebtedness permitted by this clause (v)
shall not exceed $25,000,000 at any time outstanding;

(vi)          the Senior First Lien Notes in an
aggregate principal amount at maturity not exceeding $306,000,000 plus
the amount of additional Permitted Refinancing Indebtedness in respect thereof
incurred in respect of unpaid accrued interest (not included in the accreted
value) and premium thereon;

(vii)         Indebtedness with respect to surety,
appeal and performance bonds obtained by the Parent or any of the Subsidiaries
in the ordinary course of business;

(viii)        the Senior Second Lien Notes in an
aggregate principal amount not exceeding $250,000,000 plus the amount of
additional Permitted Refinancing Indebtedness in respect thereof incurred in
respect of unpaid accrued interest and premium thereon;

(ix)           the Senior Subordinated Notes in an
aggregate principal amount not exceeding $35,000,000 plus the amount of
additional Permitted Refinancing Indebtedness in respect thereof incurred in
respect of unpaid accrued interest and premium thereon;

(x)            any Permitted Redemption
Indebtedness in respect of the Series AA Preferred Stock;

(xi)           the Existing Letters of Credit;

(xii)          Indebtedness in respect of any letters
of credit entered into in the ordinary course of business in an aggregate face
amount not to exceed $5,000,000; and

(xiii)         unsecured Indebtedness of the Parent in
an aggregate principal amount not exceeding $10,000,000 pursuant to an
overdraft line of credit in form and substance reasonably satisfactory to the
Administrative Agent; provided, however, that to the extent a
legal opinion is delivered by counsel to the Parent in connection with such
overdraft line of credit, the Administrative Agent shall receive concurrently
therewith a reliance letter in favor of the Administrative Agent and the
Lenders.

SECTION 6.02.  Certain Equity Securities.  The Borrowers will not, nor will it permit
the Parent or any Subsidiary to, issue any preferred stock (other than (a)
Qualified Preferred Stock of the Parent and (b) the Preferred Stock issued
pursuant to the Plan of Reorganization) or be or become liable in respect of
any obligation (contingent or otherwise) to purchase, redeem, retire, acquire
or make any other payment in respect of any Equity Interests of the Parent or
any Subsidiary.

SECTION 6.03.  Liens. 
The Borrowers will not, and will not permit the Parent or any Subsidiary
to, create, incur, assume or permit to exist any Lien on any property or asset
now

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owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:

(a)           Liens created under the Loan
Documents and the Working Capital Loan Documents;

(b)           Permitted Encumbrances;

(c)           any Lien on any property or asset of
the Parent or any Subsidiary existing on the Effective Date and set forth in Schedule 6.03;
provided that (i) such Lien shall not apply to any other property
or asset of the Parent or any Subsidiary and (ii) such Lien shall secure
only those obligations that it secures on the Effective Date and extensions,
renewals and replacements thereof that do not increase the outstanding
principal amount thereof;

(d)           any Lien existing on any property or
asset prior to the acquisition thereof by the Parent or any Subsidiary or
existing on any property or asset of any Person that becomes a Subsidiary after
the Effective Date prior to the time such Person becomes a Subsidiary; provided
that (i) such Lien is not created in contemplation of or in connection
with such acquisition or such Person becoming a Subsidiary, as the case may be,
(ii) such Lien shall not apply to any other property or assets of the
Parent or any Subsidiary and (iii) such Lien shall secure only those
obligations that it secures on the date of such acquisition or the date such
Person becomes a Subsidiary, as the case may be and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof;

(e)           Liens on fixed or capital assets
acquired, constructed or improved by the Parent or any Subsidiary; provided
that (i) such Liens secure Indebtedness permitted by clause (v) of Section 6.01,
(ii) such Liens and the Indebtedness secured thereby are incurred prior to
or within 120 days after such acquisition or the completion of such
construction or improvement, (iii) the Indebtedness secured thereby does
not exceed 100% of the cost of acquiring, constructing or improving such fixed
or capital assets and (iv) such security interests shall not apply to any
other property or assets of the Parent or any Subsidiary other than property
directly related to such fixed or capital assets and of a type customarily
covered by such Liens, except that such security interests may not apply to any
accounts receivable or inventory;

(f)            leases and subleases of real
property and tangible personal property and licenses and sublicenses of
intellectual property rights, in each case granted in the ordinary course of
business and not interfering individually or in the aggregate (with all such
licenses and subleases being taken as a whole) in any material respect with the
conduct of the business of the Parent and the Subsidiaries;

(g)           Liens granted under the Senior First
Lien Security Documents or the Senior Second Lien Security Documents; provided
that (i) such Liens secure only obligations under the Senior First Lien
Note Documents and the Senior Second Lien Note Documents, respectively, except
that such obligations shall not include obligations under

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any Indebtedness (or
obligations under any Swap Agreements) except to the extent incurred pursuant
to Section 6.01(viii), with respect to the Senior Second Lien Notes, or
Section 6.01(vi), with respect to the Senior First Lien Notes, and
(ii)  such Liens do not apply to any asset that is subject to a Lien
granted under a Security Document to secure the Obligations;

(h)           Liens on cash deposited with the
issuing bank for any Existing Letter of Credit to cash collateralize such
Existing Letter of Credit (including with respect to interest, fees and
expenses associated therewith); provided that (i) the amount of
such cash subject to such Lien at any time shall not exceed 105% of the face
amount of such Existing Letter of Credit and (ii) upon the termination or
expiration of such Existing Letter of Credit, to the extent there has been no
drawing under such Existing Letter of Credit that has not been reimbursed at
such time, an amount of cash equal to 105% of the face amount of such Existing
Letter of Credit (less any amounts retained to pay interest, fees and expenses
associated therewith) shall be promptly released from such Lien; provided,
further, that such Existing Letters of Credit have not been backstopped
with letters of credit issued under the Working Capital Credit Agreement;

(i)            Liens on cash deposited with the
issuing bank for any letter of credit permitted by clause (xii) of Section 6.01
to cash collateralize such letter of credit (including with respect to
interest, fees and expenses associated therewith); provided that
(i) the amount of such cash subject to such Lien at any time shall not
exceed 105% of the face amount of such letter of credit and (ii) upon the
termination or expiration of such letter of credit, to the extent there has
been no drawing under such letter of credit that has not been reimbursed at
such time, an amount of cash equal to 105% of the face amount of such letter of
credit (less any amounts retained to pay interest, fees and expenses associated
therewith) shall be promptly released from such Lien;

(j)            Liens on cash deposited in trust for
the benefit of the employees of the Australian Loan Parties; provided
that the amount of such cash subject to such Lien at any time shall not exceed
the lesser of (i) 25% of the outstanding principal amount the Australian
Revolving Loans under this Agreement and the Australian Revolving Loans under
and as defined in the Working Capital Credit Agreement, the proceeds of which
have been distributed by the Australian Subsidiary Borrower to the Parent and
its Subsidiaries, and (ii) $1,750,000; and

(k)           Liens on cash deposited with National
Australia Bank to cash collateralize obligations of the Australian Loan Parties
to National Australia Bank with respect to a landlord guarantee and payroll
facilities; provided that the amount of such cash subject to such Lien
at any time shall not exceed $210,000.

SECTION 6.04.  Fundamental Changes.  (a) The Borrowers will not and will not
permit the Parent or any Subsidiary to, merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with it,
or liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be continuing
(i) any Subsidiary may merge into the Parent; provided that if any
Subsidiary that is party to such transaction is (A) a Loan Party, the surviving
entity must be a Loan Party, or

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(B) a Borrower, the surviving entity must be a
Borrower, (ii) any Subsidiary may merge into any Subsidiary that is a Loan
Party; provided that if any Subsidiary that is party to such transaction
is (A) a Loan Party, the surviving entity must be a Loan Party, or
(B) a Borrower, the surviving entity must be a Borrower, (iii) any
Subsidiary that is not a Loan Party may merge into any Subsidiary that is not a
Loan Party; provided that any such merger involving a Person that is not
a Wholly Owned Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 6.05, and (iv)  any
Subsidiary (other than any Borrower) may liquidate or dissolve if the Parent
determines in good faith that such liquidation or dissolution is in the best
interests of the Parent and is not materially disadvantageous to the Lenders.

(b)           The Borrowers will not, and will not
permit the Parent or any of the Subsidiaries to, engage to any material extent
in any business other than businesses of the type conducted by the Parent and
the Subsidiaries on the Effective Date and businesses reasonably related,
ancillary or complementary thereto.

SECTION 6.05.  Investments, Loans, Advances, Guarantees
and Acquisitions.  The Borrowers will
not, and will not permit the Parent or any of the Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not
a Wholly Owned Subsidiary prior to such merger) any Equity Interests, evidences
of indebtedness or other securities (including any option, warrant or other
right to acquire any of the forgoing) of, make or permit to exist any loans or
advances to, Guarantee any obligations of, or make or permit to exist any
investment or other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any
other Person constituting a business unit, except:

(a)           Permitted Investments;

(b)           investments existing on the date
hereof and set forth on Schedule 6.05(b), to the extent such
investments would not be permitted under any other clause of this Section 6.05;

(c)           investments by the Parent and the
Subsidiaries in the Equity Interests of their respective subsidiaries (that are
Subsidiaries prior to such Investment);

(d)           loans or advances made by the Parent
to any Subsidiary and made by any Subsidiary to the Parent or any other
Subsidiary; provided that (i) any such loans and advances made by a Loan
Party shall be evidenced by a promissory note pledged to secure the Obligations
and (ii) the aggregate principal amount of loans and advances made by any
German Loan Party to any other Loan Party shall not exceed the amount of free
reserves of such German Loan Party;

(e)           Guarantees by the Parent of Indebtedness
and other obligations of any Subsidiary and Guarantees by any Subsidiary of
Indebtedness or other obligations of the Parent or any other Subsidiary; provided
that (i) no Subsidiary shall Guarantee the Senior First Lien Notes, Senior
Second Lien Notes or Senior Subordinated Notes unless (A) such Subsidiary
also has Guaranteed the Domestic Obligations (as defined in the Working Capital
Credit Agreement), and (B) with respect to any Guarantee of the Senior

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Subordinated Notes, such
Guarantee is subordinated to such Guarantee of the Domestic Obligations (as
defined in the Working Capital Credit Agreement) on terms no less favorable to
the Lenders than the subordination provisions of the Senior Subordinated Notes
and (ii) any such Guarantee constituting Indebtedness is permitted by Section 6.01;

(f)            investments received in connection
with the bankruptcy or reorganization of, or settlement of delinquent accounts
and disputes with, customers and suppliers, in each case in the ordinary course
of business;

(g)           payroll, travel and similar advances
to cover matters that are expected at the time of such advances ultimately to
be treated as expenses for accounting purposes and that are made in the
ordinary course of business;

(h)           investments of any Person existing at
the time such Person becomes a Subsidiary or at the time such Person merges or
consolidates with the Parent or any of the Subsidiaries, in either case in
compliance with the terms of this Agreement; provided that such
investments were not made by such Person in connection with, or in anticipation
or contemplation of, such Person becoming a Subsidiary or such merger or
consolidation;

(i)            Swap Agreements entered into in
compliance with Section 6.08;

(j)            other loans, advances and
investments; provided that the amount of any such loan, advance or
investment made pursuant to this clause (j) together with all amounts payable
in connection with Permitted Acquisitions pursuant to Section 6.05(l)
shall not exceed $50,000,000 in the aggregate during the term of this Agreement;

(k)           notes or other evidences of
Indebtedness acquired as consideration in connection with a sale, transfer,
lease or other disposition of any asset by the Parent or any of the
Subsidiaries; and

(l)            Permitted Acquisitions.

SECTION 6.06.  Asset Sales.  The Borrowers will not, and will not permit
the Parent or any of the Subsidiaries to, sell, transfer, lease or otherwise
dispose of any asset, including any Equity Interest owned by it (other than any
such sale, transfer, lease or other disposition resulting from any casualty or
condemnation of any assets of the Parent or any of the Subsidiaries), nor will
the Borrowers permit the Parent or any of the Subsidiaries to issue any
additional Equity Interest in such Subsidiary, except:

(a)           sales of inventory, used or surplus
tangible property and Permitted Investments in the ordinary course of business;

(b)           sales, transfers, issuances and
dispositions to the Parent or a Subsidiary; provided that any such
sales, transfers or dispositions involving a Subsidiary that is not a Loan
Party shall be made in compliance with Section 6.10;

(c)           leases and licenses entered into in
the ordinary course of business;

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(d)           sales in connection with
sale-leasebacks permitted under Section 6.07;

(e)           sales of investments referred to in
clauses (b), (f), (j) and (k) of Section 6.05;

(f)            sales, transfers and dispositions of
assets (other than Equity Interests of a Subsidiary) that are not permitted by
any other clause of this Section; provided that the aggregate fair
market value of all assets sold, transferred or otherwise disposed of in
reliance upon this clause (f) shall not exceed (i) $10,000,000 in the
aggregate in any fiscal year of the Parent or (ii) $50,000,000 in the aggregate
during the term of this Agreement;

(g)           transfers and dispositions
constituting investments permitted under Section 6.05; and

(h)           sales, transfers and dispositions of
the assets set forth in Schedule 6.06; provided that the
Administrative Borrower provides the Administrative Agent with written notice
of any such sale, transfer or disposition not less than five Business Days
prior to the consummation thereof;

provided that all sales, transfers,
leases and other dispositions permitted hereby shall be made for an amount not
less than fair value (as determined in good faith by the Board of Directors of
the Parent), or, in the case of clause (d) above, for an amount, if less,
equal to the aggregate cost expended for the property that is the subject of
such sale-leaseback (except that those permitted by clause (a) above shall
be made on terms that are customary in the ordinary course) and for
consideration in cash.  For purposes of
this Section 6.06, the following shall be deemed to be cash:
securities received by the Parent or any Subsidiary from the transferee that
are immediately convertible into cash without breach of their terms or the
agreement pursuant to which they were purchased and that are promptly converted
by the Parent or such Subsidiary into cash.

SECTION 6.07.  Sale and Lease-Back Transactions.  The Borrowers will not, and will not permit
the Parent or any Subsidiary to, enter into any arrangement, directly or
indirectly, with any Person whereby it shall sell or transfer any property,
real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other
property that it intends to use for substantially the same purpose or purposes
as the property being sold or transferred, except for any such sale of fixed or
capital assets that is consummated within 120 days after the date the
Parent or such Subsidiary acquires or finishes construction of such fixed or
capital asset.

SECTION 6.08.  Swap
Agreements.  The Borrowers will not,
and will not permit the Parent or any of the Subsidiaries to, enter into any
Swap Agreement, except (a) Swap Agreements entered into to hedge or
mitigate risks to which the Parent or any Subsidiary has actual exposure (other
than those in respect of Equity Interests of the Parent or any of the
Subsidiaries) and (b) Swap Agreements entered into in order to effectively
cap, collar or exchange interest rates (from fixed to floating rates, from one
floating rate to another floating rate, to a fixed rate or otherwise) with
respect to any interest-bearing liability or investment of the Parent or any
Subsidiary.

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SECTION 6.09.  Restricted Payments; Certain Payments of
Indebtedness.  (a) The Borrowers will
not, and will not permit the Parent or any Subsidiary to, declare or make, or
agree to pay or make, directly or indirectly, any Restricted Payment, or incur
any obligation (contingent or otherwise) to do so, except (i) Wholly Owned
Subsidiaries may declare and pay dividends with respect to their Equity
Interests and Subsidiaries that are not Wholly Owned Subsidiaries may declare
and pay dividends ratably with respect to their Equity Interests, (ii) the
Parent may, subject to Section 6.02, make dividends with respect to
its Equity Interests consisting solely of additional Equity Interests permitted
hereunder, (iii) the Parent may purchase the Parent’s Equity Interests from
present or former officers or employees of the Parent or any Subsidiary upon
the death, disability or termination of employment of such officer or employee
in an aggregate amount for all payments under this clause (iii) not to exceed
$1,000,000 per fiscal year of the Parent; provided, that any such amount
not so expended in the fiscal year for which it is permitted may be carried
over for expenditure in succeeding fiscal years, (iv) the Parent may make a
payment in connection with the settlement of the claims of Richard P. Durham
and Durham Capital, L.L.C. in connection with the alleged “put” rights of such
parties with respect to certain capital stock and warrants issued by Old Pliant
in an aggregate amount not to exceed the lesser of (A) the actual amount of
such settlement and (B) $12,000,000 and (v) the Parent may redeem the Series AA
Preferred Stock with proceeds of Permitted Redemption Indebtedness; provided
that in each case, no Default has occurred and is continuing or would result
therefrom.

(b)           The Borrowers will not, and will not
permit the Parent or any Subsidiary to, make or agree to pay or make, directly
or indirectly, any payment or other distribution (whether in cash, securities
or other property) of or in respect of principal of or interest on any Senior
First Lien Note, Senior Second Lien Note or Senior Subordinated Note, or any
payment or other distribution (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any Senior First Lien
Note, Senior Second Lien Note or Senior Subordinated Note, except
(i) payment of regularly scheduled interest payments as and when due in
respect of the Senior First Lien Notes; provided that, (A) the Parent
shall not be permitted to make cash interest payments in respect of the Senior
First Lien Notes referred to in clause (a) of the definition thereof or the
interest payable pursuant to the Supplemental First Lien Notes Indenture and
(B) on and prior to June 15, 2007, the Parent shall not be permitted to
make cash interest payments in respect of the Senior First Lien Notes referred
to in clause (b) of the definition thereof, (ii) payment of regularly
scheduled interest payments as and when due in respect of the Senior Second
Lien Notes and (iii) payment of regularly scheduled interest payments as and
when due in respect of the Senior Subordinated Notes; provided, however,
that on and prior to July 15, 2007, the Parent shall not be permitted to make
cash interest payments in respect of the Senior Subordinated Notes.

SECTION 6.10.  Transactions with Affiliates.  The Borrowers will not, and will not permit
the Parent or any Subsidiary to, sell, lease or otherwise transfer any property
or assets to, or purchase, lease or otherwise acquire any property or assets
from, or otherwise engage in any other transactions with, any of its Affiliates
(including any Subsidiary), except (a) transactions in the ordinary course
of business that are at prices and on terms and conditions not less favorable
to the Parent or such Subsidiary than could be obtained on an arm’s-length
basis from unrelated third parties (as determined in good faith by members of
the board of

 85
 

 

directors of the Parent having a majority of the
voting power held by all disinterested members of the board of directors of the
Parent), (b) transactions between or among the Parent and the Subsidiaries
and not involving any other Affiliate (except to the extent the involvement
with the other Affiliate otherwise complies with this Section 6.10),
(c) any Restricted Payment permitted by Section 6.09, and (d)
transactions expressly contemplated by Schedule 6.10.

SECTION 6.11.  Restrictive Agreements.  The Borrowers will not and will not permit
the Parent or any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Parent or any Subsidiary
to create, incur or permit to exist any Lien upon any of its property or assets
or (b) the ability of any Subsidiary to pay dividends or other
distributions with respect to any of its Equity Interests (it being understood
that the priority of any preferred stock in receiving dividends or liquidating
distributions prior to dividends or liquidating distributions being paid on
common stock shall not be deemed a restriction on the ability to make
distributions on capital stock) or to make or repay loans or advances to the Parent
or any other Subsidiary (it being understood that the subordination of loans or
advances made to the Parent or any Subsidiary to other Indebtedness incurred by
the Parent or such Subsidiary shall not be deemed a restriction on the ability
to make loans or advances) or to Guarantee Indebtedness of the Parent or any
other Subsidiary; provided that (i) the foregoing shall not apply
to restrictions and conditions imposed by law or by any Loan Document or any
Working Capital Loan Document, (ii) the foregoing shall not apply to
restrictions and conditions existing on the Effective Date identified on Schedule 6.11,
(iii) the foregoing shall not apply to any restriction or condition with
respect to a Subsidiary pursuant to an agreement relating to any Equity Interests
or Indebtedness of such Subsidiary, in each case incurred by such Subsidiary
prior to the date on which such Subsidiary was acquired by the Parent (other
than Equity Interests or Indebtedness incurred as consideration in, in
contemplation of, or to provide all or any portion of the funds or credit
support utilized to consummate the transaction or series of related
transactions pursuant to which such Subsidiary became a Subsidiary or was
otherwise acquired by the Parent) and outstanding on such date; (iv) the
foregoing shall not apply to any restriction or condition pursuant to an
agreement refinancing an agreement referred to in clause (i), (ii) or
(iii) or this clause (iv) or contained in any amendment to an agreement
referred to in clause (i), (ii) or (iii) or this clause (iv); provided,
however, that the conditions and restrictions contained in any such
refinancing agreement or amendment are no more restrictive, taken as a whole,
than the encumbrances and restrictions contained in the applicable predecessor
agreement; (v) the foregoing shall not apply to customary restrictions and
conditions contained in agreements relating to the sale of a Subsidiary or
assets pending such sale; provided such restrictions and conditions
apply only to the Subsidiary or assets that are to be sold and such sale is
permitted hereunder, (vi) clause (a) of the foregoing shall not apply
to restrictions or conditions imposed by any agreement relating to secured
Indebtedness or other secured obligations permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness or other obligations, (vii) clause (a) of the foregoing
shall not apply to customary provisions in contracts restricting the assignment
thereof, or the subletting, assignment or transfer of any property or asset
that is subject to a lease, license or similar contract; (viii)  the
foregoing shall not apply to net worth provisions in lease and other agreements
entered into by the Parent or any Subsidiary in the ordinary course of
business; and (ix) the foregoing shall not apply to restrictions imposed
by the Senior First Lien Note Documents, the Senior Second Lien Note Documents
and the Senior Subordinated Note Documents.

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SECTION 6.12.  Amendment of Material Documents.  The Borrowers will not, and will not permit
the Parent or any Subsidiary to, amend, modify or waive any of its rights under
(a) its certificate of incorporation, by-laws or other
organizational documents, including the terms related to the Preferred Stock
(other than amendments and modifications that are not adverse to the interests
of the Lenders and do not impair the exercise of remedies under any Security
Document) or (b) the Senior First Lien Note Documents, the Senior Second
Lien Note Documents or the Senior Subordinated Note Documents (other than
amendments to the Senior First Lien Security Documents or the Senior Second
Lien Security Documents permitted by the Intercreditor Agreement and other
amendments and modifications that are not adverse to the interests of the
Lenders and do not impair the exercise of remedies under any Security
Document).

SECTION 6.13.  Designated Senior Debt.  The Borrowers shall not permit Parent to
designate any Indebtedness (other than indebtedness under the Loan Documents
and the Working Capital Loan Documents, indebtedness in respect of the Senior
First Lien Notes incurred in compliance with Section 6.01(vi) and indebtedness
in respect of the Senior Second Lien Notes incurred in compliance with Section
6.01(viii)) as “Designated Senior Debt” for purposes of and as defined in the
Senior Subordinated Note Documents.

SECTION 6.14.  Cash Held by Loan Parties.  The Borrowers will not permit at any time on
any day (a) the aggregate amount of “cash and cash equivalents” and “marketable
securities” of the Loan Parties, in each case that would be required to be
reflected on a consolidated balance sheet of the Parent Borrower and the
Subsidiaries prepared as of such time in accordance with GAAP (excluding any
such “cash” that is “restricted” cash, including, without limitation, any such
cash subject to the Liens permitted by Section 6.03(j)), minus (b) the
aggregate amount of payments in such cash and cash equivalents that the
Borrowers reasonably and in good faith determine will be made by the Loan
Parties (and will reduce such cash and cash equivalents) within the next 30
days to exceed $15,000,000.

SECTION 6.15.  ERISA. 
The Borrowers will not, and will not permit the Parent or any Subsidiary
to, cause or permit any ERISA Affiliate to, cause or permit to occur (i) an
event that could result in the imposition of a Lien under Section 412 of the
Code or Section 302 or 4068 of ERISA or (ii) an ERISA Event to the extent such
ERISA Event would reasonably be expected to result in taxes, penalties and
other liabilities in an aggregate amount in excess of $250,000 in the
aggregate.

SECTION 6.16.  Cancellation of Indebtedness.  The Borrowers will not, and will not permit
the Parent or any Subsidiary to, cancel any claim or debt owing to it, except
(a) for reasonable consideration negotiated on an arm’s length basis and in the
ordinary course of its business consistent with past practices and (b) pursuant
to the Plan of Reorganization.

SECTION 6.17.  Change in Fiscal Year; Accounting Policies.  The Borrowers will not, and will not permit
the Parent or any Subsidiary to, change its fiscal year from a year ending
December 31 unless required by law, in which case such Loan Party will give the
Administrative Agent at least thirty (30) days prior written notice
thereof.  Subject to Section 1.04,
the Borrowers will not, and will not permit the Parent or any Subsidiary to,
change

 87
 

 

its accounting policies from those used to prepare the
financial statements delivered pursuant to Section 4.01(i) without the
prior written consent of the Administrative Agent.

SECTION 6.18.  Financial Covenants.

(a)           The Borrowers shall cause the Parent
to have at the end of each fiscal month ending immediately prior to or during
any FCCR Period, a Fixed Charge Coverage Ratio for the 12-month period then
ended of not less than the amount set forth below:

	
  Fiscal Month Ending

  	
   

  	
  Minimum Fixed Charge Coverage Ratio

  
	
   

  	
   

  	
   

  
	
  On or prior to
  July 18, 2007

  	
   

  	
  1.00 to 1.00

  
	
   

  	
   

  	
   

  
	
  Each fiscal
  month thereafter

  	
   

  	
  1.10 to 1.00

  

 

(b)           The Borrowers shall not permit the
Facilities Availability Amount to be less than $10,000,000 at any time.

SECTION 6.19. [Intentionally
Omitted].

SECTION 6.20.  [Intentionally Omitted].

ARTICLE VII

EVENTS OF DEFAULT

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

(a)           any Borrower shall fail to pay any
principal of any Loan when and as the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment thereof or
otherwise;

(b)           any Borrower shall fail to
(i) pay any interest on any Loan or any fee or any other amount (other
than an amount referred to in clause (a) of this Article) payable under
this Agreement or any other Loan Document, when and as the same shall become
due and payable, or (ii) fail to deliver any Borrowing Base Certificate
required to be delivered pursuant to the terms of this Agreement, and, in the
case of clause (ii), such failure shall continue unremedied for a period of
three Business Days;

(c)           any representation or warranty made
or deemed made by or on behalf of any Borrower, the Parent or any Subsidiary in
or in connection with any Loan Document or any amendment or modification
thereof or waiver thereunder, or in any report, certificate, financial statement
or other document furnished pursuant to or in connection with any Loan Document
or any amendment or modification thereof or waiver thereunder, shall have been
incorrect in any material respect when made or deemed made;

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(d)           any Borrower shall fail to observe or
perform any covenant, condition or agreement contained in Section 5.02,
5.04 (with respect to the existence of such Borrower), 5.11, 5.17
or 5.19 or in Article VI;

(e)           any Loan Party shall fail to observe
or perform any covenant, condition or agreement contained in any Loan Document
(other than those specified in clause (a), (b) or (d) of this Article),
and if such failure is capable of being cured, such failure shall continue
unremedied for a period of 30 days after notice thereof from the Administrative
Agent to the Administrative Borrower (which notice will be given at the request
of any Lender);

(f)            the Parent or any Subsidiary shall
fail to make any payment (whether of principal or interest and regardless of
amount) in respect of any Material Indebtedness, when and as the same shall
become due and payable, including any applicable grace period;

(g)           any event or condition occurs that
results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice) the
holder or holders of any Material Indebtedness or any trustee or agent on its
or their behalf to cause any Material Indebtedness to become due, or to require
the prepayment, repurchase, redemption or defeasance thereof, prior to its
scheduled maturity; provided that this clause (g) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale,
transfer or other disposition (including as a result of a casualty or
condemnation event) of the property or assets securing such Indebtedness in a
manner not prohibited by this Agreement;

(h)           an involuntary proceeding shall be
commenced or an involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of any Borrower, the Parent or any
Subsidiary or its debts, or of a substantial part of its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law
now or hereafter in effect or (ii) the appointment of a receiver, interim receiver,
administrator, trustee, custodian, sequestrator, conservator or similar
official for any Borrower, the Parent or any Subsidiary or for a substantial
part of its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 30 days or an order or decree approving or ordering
any of the foregoing shall be entered;

(i)            any Borrower, the Parent or any
Subsidiary shall (i) voluntarily commence any proceeding or file any petition
seeking liquidation, reorganization or other relief under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment of a receiver, interim
receiver, trustee, custodian, sequestrator, conservator or similar official for
any Borrower, the Parent or any Subsidiary or for a substantial part of its
assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any proceeding described in clause (h) of this Article, (v)
make a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing;

 89
 

 

(j)            any Borrower, the Parent or any
Subsidiary shall admit in writing its inability or fail generally to pay its
debts as they become due;

(k)           one or more judgments for the payment
of money in an aggregate amount in excess of $5,000,000 (net of amounts covered
by insurance as to which the insurer has not denied liability) shall be
rendered against any Borrower, the Parent, any Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 30 consecutive
days during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to attach or levy upon any assets
of any Borrower, the Parent or any Subsidiary to enforce any such judgment;

(l)            an ERISA Event shall have occurred
that, in the reasonable opinion of the Required Lenders, when taken together
with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Parent and the Subsidiaries in an aggregate amount
exceeding (i) $7,000,000 in any year or (ii) $15,000,000 during the
term of this Agreement;

(m)          (i) any Loan Document shall for any
reason be asserted by any Borrower, the Parent or any of the Subsidiaries not
to be a legal, valid and binding obligation of any party thereto, (ii) any Lien
purported to be created under any Security Document shall cease to be, or shall
be asserted by any Borrower, the Parent or any of the Subsidiaries not to be, a
valid and perfected Lien on any Collateral, with the priority required by the
Loan Documents, except (A) as a result of the sale or other disposition of the
applicable Collateral in a transaction permitted under the Loan Documents, (B)
as a result of (1) the Administrative Agent’s failure to take any action
reasonably requested by the Administrative Borrower in order to maintain a
valid and perfected Lien on any Collateral or (2) any action taken by the
Administrative Agent to release any Lien on any Collateral or (C) Liens on
Collateral with a fair market value not exceeding $500,000 in the aggregate,
(iii) the Guarantees pursuant to the Foreign Guarantee Agreement by the Loan
Parties of any of the Obligations shall cease to be in full force and effect
(other than in accordance with the terms thereof), or shall be asserted by any
Borrower, the Parent or any of the Subsidiaries not to be in effect or not to
be legal, valid and binding obligations or (iv) the Obligations of any Borrower
or the Guarantees thereof by the Loan Parties pursuant to the Security
Documents, shall cease to constitute “Senior Indebtedness” under the
subordination provisions of the Senior Subordinated Note Documents, or such
subordination provisions shall be invalidated or otherwise cease, or shall be
asserted by Parent or any of the Subsidiaries to be invalid or to cease, to be
legal, valid and binding obligations of the parties thereto;

(n)           a Change in Control shall occur;

(o)           any information contained in any
Borrowing Base Certificate is untrue or incorrect in any respect (other than
(i) inadvertent, immaterial errors not exceeding $250,000 in the aggregate in
any Borrowing Base Certificate and (ii) errors understating the Borrowing
Base); or

 90
 

 

(p)           an Event of Default under and as
defined in the Working Capital Credit Agreement shall occur;

then, and in every such event (other than an event
with respect to any Borrower described in clause (h) or (i) of this
Article), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders shall, by
notice to the Administrative Borrower, take either or both of the following
actions, at the same or different times: 
(i) terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable (the “remaining Loans”) may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations (other than any remaining Loans) of each Borrower
accrued hereunder, shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Borrower; and in case of any event with respect to any
Borrower described in clause (h) or (i) of this Article, the Commitments
shall automatically terminate and the principal of the Loans then outstanding, together
with accrued interest thereon and all fees and other obligations of each
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Borrower.  In
addition to the remedies set forth above, in every such event, the
Administrative Agent may exercise any remedies under the other Loan Documents
or at law or equity.

ARTICLE VIII

THE ADMINISTRATIVE AGENT

SECTION 8.01. Authorization,
Action, Etc.  Each of the Lenders
hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
of the Loan Documents, together with such actions and powers as are reasonably
incidental thereto.

The bank serving as the Administrative Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not the Administrative
Agent, and such bank and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of business with the Parent or any Subsidiary
or other Affiliate thereof as if it were not the Administrative Agent
hereunder.

The Administrative Agent shall not have any duties or
obligations except those expressly set forth in the Loan Documents.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated by the Loan Documents
that the Administrative Agent is required to exercise in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided

 91
 

 

in Section 9.02), and (c) except as
expressly set forth in the Loan Documents, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to any Borrower, the Parent or any of the Subsidiaries
that is communicated to or obtained by the bank serving as Administrative Agent
or any of its Affiliates in any capacity. 
The Administrative Agent shall not be liable for any action taken or not
taken by it with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own
gross negligence or willful misconduct. 
The Administrative Agent shall not be deemed to have knowledge of any
Default unless and until written notice thereof is given to the Administrative
Agent by the Administrative Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection
with any Loan Document, (ii) the contents of any certificate, report or
other document delivered thereunder or in connection therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Loan Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Loan Document or any other
agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.

The Administrative Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and believed by it to be made
by the proper Person, and shall not incur any liability for relying
thereon.  The Administrative Agent may
consult with legal counsel (who may be counsel for any of the Borrowers), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

The Administrative Agent may perform any and all its
duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. 
The exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent and to the Related Parties of the Administrative Agent and
any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

The Administrative Agent may resign at any time by
notifying the Lenders and the Administrative Borrower.  Upon any such resignation, the Required
Lenders shall have the right, with the consent of the Administrative Borrower
(such consent not to be unreasonably withheld and which shall not be required
during the continuance of an Event of Default), to appoint a successor.  If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within
30 days after the retiring Administrative Agent gives notice of its
resignation, then the retiring Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent selected from among the
Lenders or that shall be a bank with an office in New York, New York, or an
Affiliate of any such bank.  Upon the

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acceptance of its appointment as Administrative Agent
hereunder by a successor, such successor shall succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. 
The fees payable by the Borrowers to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrowers and such successor. 
After the Administrative Agent’s resignation hereunder, the provisions
of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall from time to
time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document or
related agreement or any document furnished hereunder or thereunder.

Notwithstanding any other provision contained herein,
the Arranger shall not, in its capacity as such, have any responsibilities
under this Agreement or the other Loan Documents.

SECTION 8.02.  Declaration of Trust (Treuhand) and
Appointment as Administrator.  The
Administrative Agent shall: (a) hold any Lien or security interest which is
governed by German law and is assigned (Sicherungseigentum/Sicherungsabtretung)
or otherwise transferred to it under a non-accessory security right (nicht
akzessorische Sicherheit) pursuant to any of the German Security Agreements or
otherwise for the purpose of securing any of the Obligations secured thereunder
as trustee (Treuhänder) for the benefit of the Secured Parties; (b) hold any
abstract acknowledgement of indebtedness (abstraktes Schuldanerkenntnis) which
is governed by German law and under which certain Loan Parties have
acknowledged to owe to the Administrative Agent certain Obligations as trustee
(Treuhänder) for the benefit of the Secured Parties; and (c) administer any
Lien or security interest (if any) which is pledged (Verpfändung) or otherwise
transferred under an accessory security right (akzessorische Sicherheit) to it
and/or the Secured Parties pursuant to any of the German Security Agreements or
otherwise for the purpose of securing any of the Obligations secured thereunder
and each Secured Party authorizes the Administrative Agent to accept as its
representative (Stellvertreter) any pledge or other creation of any other
accessory right made to such Secured Party, and shall act in relation to the
Lien and security interests in accordance with the terms and subject to the
conditions of this Agreement and the other Loan Documents.  Each Secured Party hereby ratifies and
approves all acts done by the Administrative Agent on such Secured Party’s
behalf.

It is hereby agreed that, in relation to any
jurisdiction the courts of which would not recognize or give effect to the
trust (Treuhand) expressed to be created by this Section 8.02, the
relationship of the Secured Party to the Administrative Agent in relation to
any Lien or security interest governed by German law shall be construed as one
of principal and agent but, to

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the extent permissible under the laws of such
jurisdiction, all the other provisions of this Section 8.02 shall have
full force and effect between the parties hereto.

Each Secured Party (with the exception of the
Administrative Agent) hereby releases the Administrative Agent acting on its
behalf pursuant to the terms of this Agreement or any other Loan Document from
the restrictions of Section 181 of the German Civil Code (Bürgerliches
Gesetzbuch) (restriction of self-dealing).

SECTION 8.03.  Quebec Security.  For greater certainty, and without limiting
the powers of the Administrative Agent, or any other Person acting as an agent
or mandatory for the Administrative Agent hereunder or under any of the other
Loan Documents, each Loan Party hereby acknowledges that, for purposes of
holding any security granted by any Loan Party on property pursuant to the laws
of the Province of Quebec to secure obligations of such Loan Party under any
bond, the Administrative Agent shall be the holder of an irrevocable power of
attorney (fondé de pouvoir) (within the meaning of the Civil Code of Québec)
for all present and future Lenders and in particular for all present and future
holders of any such bond.  Each Lender
hereby irrevocably constitutes, to the extent necessary, the Administrative
Agent as the holder of an irrevocable power of attorney (fondé de pouvoir)
(within the meaning of Article 2692 of the Civil Code of Québec) in order to
hold security granted by any Loan Party in the Province of Quebec to secure the
obligations of such Loan Party under any bond. 
Each assignee of a Lender shall be deemed to have confirmed and ratified
the constitution of the Administrative Agent as the holders of such irrevocable
power of attorney (fondé de pouvoir) by execution of an Assignment and
Assumption.  Notwithstanding the
provisions of section 32 of An Act respecting the special powers of legal
persons (Québec), the Administrative Agent may acquire and be the holder of any
bond.  The Borrowers hereby acknowledge
that such bond constitutes a title of indebtedness, as such term is used in
Article 2692 of the Civil Code of Québec.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01.  Notices.  (a) Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:

(i)            if to any Borrower, to the
Administrative Borrower at 1475 Woodfield Road, Suite 700, Schaumberg, Illinois
60173, Attention: Chief Financial Officer (Telecopy No. (847) 969-3338),
with a copy to Sidley Austin LLP, One South Dearborn Street, Chicago, Illinois
60603, Attention: Michael L. Gold (Telecopy No. (312) 853-7036);

(ii)           if to the Administrative Agent, to
Merrill Lynch Bank USA, 4 World Financial Center, Floor 10, New York, New York
10080, Attention: Ryan D. Bell (Telecopy No. (212) 449-6673), with a copy for
notices related to borrowings and payments to Merrill Lynch Bank USA, 800
Scudders Mill Road, Plainsboro, New Jersey 08536, Attention: Joseph Sandford
(Telecopy No. (609) 282-3809), and with further

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copies (other than for
notices related to borrowings and payments) to Merrill Lynch Bank USA, 4 World
Financial Center, Floor 10, New York, New York 10080, Attention: Paul Tufaro
(Telecopy No.(212) 738-1070), and Weil, Gotshal & Manges LLP, 767 Fifth
Avenue, New York, New York 10153, Attention: Douglas R. Urquhart (Telecopy No.
(212) 310-8007);

(iii)          [Intentionally Omitted]; and

(iv)          if to any other Lender, to it at its
address (or telecopy number) set forth in its Administrative Questionnaire.

(b)           Notices and other communications to
the Lenders hereunder may be delivered or furnished by electronic
communications pursuant to procedures approved by the Administrative Agent; provided
that the foregoing shall not apply to notices pursuant to Article II
unless otherwise agreed by the Administrative Agent and the applicable
Lender.  The Administrative Agent or the
Administrative 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.

(c)           Any party hereto may change its
address or telecopy number for notices and other communications hereunder by
notice to the other parties hereto.  All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.

SECTION 9.02.  Waivers; Amendments.  (a) No failure or delay by the Administrative
Agent or any Lender in exercising any right or power hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative
Agent and the Lenders hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise
have.  No waiver of any provision of any
Loan Document or consent to any departure by any Loan Party therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b)
of this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting the generality of the
foregoing, the making of a Loan shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent or any Lender may have
had notice or knowledge of such Default at the time.

(b)           Neither this Agreement nor any other
Loan Document nor any provision hereof or thereof may be waived, amended or
modified except, in the case of this Agreement, pursuant to an agreement or
agreements in writing entered into by the Borrowers and the Required Lenders
or, in the case of any other Loan Document, pursuant to an agreement or
agreements in writing entered into by the Administrative Agent and the Loan
Party or Loan Parties that are parties thereto, in each case with the consent
of the Required Lenders; provided that no such agreement shall have the
effect of:

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(i)            increasing the Commitment of any
Lender without the consent of each Lender;

(ii)           reducing the principal amount of any
Loan or reducing the rate of interest thereon, or reducing any fees payable
hereunder, without the written consent of each Lender affected thereby and the
Administrative Agent;

(iii)          postponing the maturity of any Loan,
or any scheduled date of payment of the principal amount of any Loan, or any
date for the payment of any interest thereon, or any fees payable hereunder, or
reducing the amount of, waiving or excusing any such payment, or postponing the
scheduled date of expiration of any Commitment, without the written consent of
each Lender affected thereby and the Administrative Agent;

(iv)          changing Section 2.17(b), (c),
(d) or (e) in a manner that would alter the way that payments are
shared, without the written consent of each Lender affected thereby;

(v)           changing any of the provisions of
this Section or the definition of “Required Lenders” or any other provision of
any Loan Document specifying the number or percentage of Lenders (or Lenders of
any Class, including as contemplated by the term “Required Canadian Lenders”)
required to waive, amend or modify any rights thereunder or make any
determination or grant any consent thereunder, without the written consent of
each Lender (or each Lender of such Class, as the case may be);

(vi)          releasing any Loan Party from its
Guarantee under the Foreign Guarantee Agreement (except with respect to the
dissolution, consolidation or merger of such Loan Party in accordance with the
terms of Section 6.04 or as expressly provided in the Foreign Guarantee
Agreement), or limiting its liability in respect of such Guarantee, without the
written consent of each Lender; provided, however, that if the
Required Lenders have approved the sale of the Equity Interests of such Loan
Party, the consent of the Required Lenders (and not each Lender) shall be
required for such release;

(vii)         releasing all or substantially all the
Collateral from the Liens of the Security Documents (except as expressly
provided therein), without the written consent of each Lender;

(viii)        changing any provision of any Loan
Document to permit the Parent or any of the Subsidiaries to enter into any
accounts receivable or inventory securitization transaction or other similar
financing arrangement, including any sale of, or any grant of a security
interest in, accounts receivable or inventory in connection with any asset
securitization or other similar financing arrangement, without the written
consent of Lenders having Commitments representing in the aggregate more than
66-2/3% of the total amount of the
Commitments at such time;

(ix)           changing any provision of any Loan
Document in a manner that by its terms adversely affects the rights in respect
of payments due to Lenders holding Loans of any Class differently than those
holding Loans of any other Class without the written

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consent of Lenders
holding a majority in interest of the outstanding Loans and unused Commitments
of each affected Class; or

(x)            increasing the Australian Sublimit,
Canadian Sublimit, German Sublimit or Mexican Sublimit, without the written
consent of each Australian Lender, Canadian Lender, German Lender or Mexican
Lender, as applicable, and the Administrative Agent; and

provided  further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent without the prior written consent of the Administrative
Agent.

(c)           If, in connection with any proposed
amendment, waiver or consent  requiring
the consent of “each Lender” or “each Lender affected thereby,” the consent of
the Required Lenders is obtained, but the consent of other necessary Lenders is
not obtained (any such Lender whose consent is necessary but not obtained being
referred to herein as a “Non-Consenting Lender”), then so long as the
Administrative Agent is not a Non-Consenting Lender, the Administrative Agent
may elect to replace a Non-Consenting Lender as a Lender party to this
Agreement, provided that, concurrently with such replacement, (i) another bank
or other entity which is reasonably satisfactory to the Administrative Borrower
and the Administrative Agent shall agree, as of such date, to purchase for cash
the Loans and other Obligations due to the Non-Consenting Lender pursuant to an
Assignment and Assumption and to become a Lender for all purposes under this
Agreement and to assume all obligations of the Non-Consenting Lender to be
terminated as of such date and to comply with the requirements of clause (b) of
Section 9.04, and (ii) the Borrowers shall pay to such Non-Consenting
Lender in same day funds on the day of such replacement (1) all interest, fees
and other amounts then accrued but unpaid to such Non-Consenting Lender
by the Borrowers hereunder to and including the date of termination, including
without limitation payments due to such Non-Consenting Lender under Sections
2.14 and 2.16, and (2) an amount, if any, equal to the payment which
would have been due to such Lender on the day of such replacement under Section
2.15 had the Loans of such Non-Consenting Lender been prepaid on such date
rather than sold to the replacement Lender.

SECTION 9.03.  Expenses; Indemnity; Damage Waiver; Joint
and Several Obligations.  (a) The
Borrowers jointly and severally shall pay (i) all reasonable out-of-pocket
expenses incurred by the Administrative Agent, the Arranger and their
respective Affiliates, including the reasonable fees, charges and disbursements
of outside counsel for the Administrative Agent and the Arranger, in connection
with the preparation and administration of the Loan Documents or any
amendments, modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be consummated) and
(ii) all reasonable out-of-pocket expenses incurred by the Administrative
Agent, the Arranger or any Lender, including the reasonable fees, charges and
disbursements of any outside counsel for the Administrative Agent, the Arranger
or any Lender, in connection with the enforcement or protection of its rights
in connection with the Loan Documents, including its rights under this Section,
or in connection with the Loans made hereunder, including all such reasonable
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans.

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(b)           The Borrowers jointly and severally
shall indemnify the Administrative Agent, the Arranger and each Lender, and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of any
Loan Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective
obligations thereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or Release of Hazardous
Materials on or from any Mortgaged Property or any other property currently or
formerly owned or operated by the Parent or any of the Subsidiaries, or any
Environmental Liability related in any way to the Parent or any of the
Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is
a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee or any Affiliate of
such Indemnitee (or of any officer, director, employee, advisor or agent of
such Indemnitee or any such Indemnitee’s Affiliates) or to the extent such
damages constitute special, indirect or consequential damages (as opposed to
direct or actual damages).

(c)           To the extent that the Borrowers fail
to pay any amount required to be paid by it to the Administrative Agent or the
Arranger under paragraph (a) or (b) of this Section, each Lender severally
agrees to pay to the Administrative Agent or the Arranger, as the case may be,
such Lender’s pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent in its capacity as such. 
For purposes hereof, a Lender’s “pro rata share” shall be determined
based upon its share of the sum of the total Revolving Exposure and unused
Commitments at the time.

(d)           To the extent permitted by applicable
law, the Borrowers shall not assert, and each of them hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising
out of, in connection with, or as a result of, this Agreement or any agreement
or instrument contemplated hereby, the Transactions, any Loan or the use of the
proceeds thereof.

(e)           All amounts due under this Section
shall be payable promptly after written demand therefor.  Notwithstanding anything herein to the
contrary, the maximum liability of the German Subsidiary Borrower with respect
to the expense reimbursement and indemnification obligations under this Section
9.03 shall not exceed the amount of free reserves of the German Subsidiary
Borrower.

SECTION 9.04.  Successors and Assigns.  (a) The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors

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and assigns permitted hereby, except that (i) no
Borrower may assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by any Borrower without such consent shall be null and
void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
(to the extent provided in paragraph (c) of this Section) and, to the extent
expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Arranger and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

(b)           (i)            Subject to the conditions set forth in
paragraph (b)(ii) below, any Lender may assign to one or more assignees
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans at the time owing to it) with
the prior written consent (such consent not to be unreasonably withheld or
delayed) of:

(A)          the Administrative Borrower; provided
that no consent of the Administrative Borrower shall be required (1) for an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund or (2) if
an Event of Default has occurred and is continuing; and

(B)           the Administrative Agent.

(ii)           Assignments shall be subject to the
following additional conditions:

(A)          except in the case of an assignment to
a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the
entire remaining amount of the assigning Lender’s Commitment or Loans of any
Class, the amount of the Commitment or Loans of the assigning Lender subject to
each such assignment (determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $1,000,000 unless each of the Administrative Borrower and the
Administrative Agent otherwise consents;

(B)           each partial assignment shall be made
as an assignment of a proportionate part of all the assigning Lender’s rights
and obligations under this Agreement, except that this clause (B) shall not be
construed to prohibit the assignment of a proportionate part of all the
assigning Lender’s rights and obligations in respect of one Class of
Commitments or Loans;

(C)           the parties to each such assignment
relating to the assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500; and

(D)          the assignee, if it shall not be a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire and all applicable tax documentation.

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(iii)          Subject to acceptance and recording
thereof pursuant to paragraph (b)(iv) of this Section, from and after the
effective date specified in each Assignment and Assumption the assignee thereunder
shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under
this Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.14, 2.15, 2.16
and 10.03).  Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does
not comply with this Section 9.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.

(iv)          The Administrative Agent, acting for
this purpose as an agent of the Borrowers, shall maintain at one of its offices
a copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). 
The entries in the Register shall be conclusive, and the Administrative
Borrower, each other Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by the Administrative
Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.  Each Lender
selling a participation to a Participant shall, as a non-fiduciary agent of the
Borrowers, keep a register (substantially similar in form to the Register) of
each such Participant, specifying such Participant’s entitlement to payments of
principal and interest with respect to such Participation.  The entries in such register shall be
conclusive, and each Lender shall treat each Person whose name is recorded in
such Lender’s register as the Participant, notwithstanding any notice to the
contrary.

(v)           Upon its receipt of a duly completed
Assignment and Assumption and all applicable tax documentation executed by an
assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in this Section and any written
consent to such assignment required by this Section, the Administrative Agent
shall accept such Assignment and Assumption and record the information
contained therein in the Register.  No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.

(c)           (i)            Any
Lender may, without the consent of any Borrower or the Administrative Agent,
sell participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely

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responsible to the other parties hereto for the
performance of such obligations and (C) each Borrower, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this
Agreement.  Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce the Loan Documents and to approve
any amendment, modification or waiver of any provision of the Loan Documents; provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver described in clauses (ii), (iii) or (vii) of the first proviso to Section
9.02(b) that affects such Participant. 
Subject to paragraph (c)(ii) of this Section, the Borrowers agree
that each Participant shall be entitled to the benefits of Sections 2.14,
2.15 and 2.16 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this
Section; provided such Participant agrees to be subject to Section 2.18(a)
as though it were a Lender.  To the
extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender; provided
such Participant agrees to be subject to Section 2.17(f) as though
it were a Lender.

(ii)           A Participant shall be entitled to
receive greater payment under Section 2.14 or 2.16 than the
applicable Lender would have been entitled to receive with respect to the
participation sold to such Participant; provided, however, that
if (A) the aggregate amount of participations sold by the Initial Lender under
this Agreement and the Working Capital Credit Agreement exceeds $50,000,000
(the “Participation Amount”) or (B) the aggregate payments to a
Participant under Section 2.14 or 2.16 of this Agreement and
Section 2.14 or 2.16 of the Working Capital Credit Agreement
in excess of the payments the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant is greater
than $500,000 per year (the “Additional Payment Amount”), a Participant
with respect to any amount in excess of the Participation Amount or any payment
in excess of the Additional Payment Amount shall not be entitled to receive
greater payment under Section 2.14 or 2.16 than the Initial
Lender would have been entitled to receive with respect to the participation
sold to such Participant unless the Administrative Borrower consents to such
participation in excess of the Participation Amount or payment in excess of the
Additional Payment Amount (which consent shall not be unreasonably
withheld).  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16
unless such Participant agrees, for the benefit of the Borrowers, to comply
with Section 2.16(e) as though it were a Lender.

(d)           Any Lender may at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section
shall not apply to any such pledge or assignment of a security interest; provided
that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

(e)           Notwithstanding anything to the
contrary contained herein, any Lender (a “Granting Lender”) may grant to
a special purpose funding vehicle (an “SPC”), identified as such in
writing from time to time by the Granting Lender to the Administrative Agent
and the

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Administrative Borrower, the option to provide to the
Borrowers all or any part of any Loan that such Granting Lender would otherwise
be obligated to make to the Borrowers pursuant to this Agreement; provided,
however, that (i) nothing herein shall constitute a commitment by any
SPC to make any Loan and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant to the terms hereof.  The making of a Loan by an SPC hereunder
shall utilize the applicable Commitment of the Granting Lender to the same extent,
and as if, such Loan were made by such Granting Lender.  Each party hereto hereby agrees that no SPC
shall be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting Lender).  In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior
indebtedness of any SPC, it will not institute against, or join any other
person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any State thereof, or the laws of Canada or any province or territory
thereof.  In addition, notwithstanding
anything to the contrary contained in this Section 9.04, any SPC may (i)
with notice to, but without the prior written consent of, the Administrative
Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions (consented to by the Administrative
Borrower and the Administrative Agent) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans and (ii) disclose on a confidential basis any non-public information
relating to its Loans to any rating agency, commercial paper dealer or provider
of any surety, guarantee or credit or liquidity enhancement to such SPC.

SECTION 9.05.  Survival.  All covenants, agreements, representations
and warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and so long as the Commitments have
not expired or terminated.  The
provisions of Sections 2.14, 2.15, 2.16, 10.03
and 10.13 and Article VIII shall survive and remain in full
force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Commitments or the termination of this Agreement or any provision
hereof.

SECTION 9.06.  Counterparts; Integration; Effectiveness.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract.  This
Agreement, the other Loan Document and any separate letter agreements with
respect to fees payable to the Administrative Agent or the Arranger constitute the
entire contract among the parties relating to the subject matter hereof and
supersede any and all previous

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agreements and understandings, oral or written,
relating to the subject matter hereof. 
Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof that,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy or other electronic transmission
shall be effective as delivery of a manually executed counterpart of this
Agreement.

SECTION 9.07.  Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

SECTION 9.08.  Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates 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 obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of any Borrower
against any of and all the obligations of the Borrowers now or hereafter
existing under this Agreement or any other Loan Document held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured.  The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
that such Lender may have.

SECTION 9.09.  Governing Law; Jurisdiction; Consent to
Service of Process.  (a) This
Agreement shall be construed in accordance with and governed by the law of the
State of New York.

(b)           Each of the Borrowers hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New York
sitting in New York County and of the United States District Court of the
Southern District of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to any Loan Document, or for
recognition or enforcement of any judgment, and each of parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this Agreement
or any other Loan Document shall affect any right that the Administrative Agent
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or any other Loan Document against any Borrower or its
properties in the courts of any jurisdiction.

(c)           Each of the Borrowers hereby
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection that it may now or hereafter

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have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

(d)           Each of the Borrowers hereby
irrevocably designates, appoints and empowers CT Corporation System, 111 Eighth
Avenue, New York, NY 10011 (telephone: (212) 894-8800) (the “Process Agent”),
in the case of any suit, action or proceeding brought in the United States of
America as its designee, appointee and agent to receive, accept and acknowledge
for and on its behalf, and in respect of its property, service of any and all legal
process, summons, notices and documents that may be served in any action or
proceeding arising out of or in connection with this Agreement or any Loan
Document.  Such service may be made by
mailing (by registered or certified mail, postage prepaid) or delivering a copy
of such process to such Borrower in care of the Process Agent at the Process
Agent’s above address, and each Borrower hereby irrevocably authorizes and
directs the Process Agent to accept such service on its behalf.  As an alternative method of service, each of
the Borrowers irrevocably consents to service of process in the manner provided
for notices in Section 9.01. 
Nothing in this Agreement or any other Loan Document will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law.  Each of the Borrowers
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.

SECTION 9.10.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11.  Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

SECTION 9.12.  Confidentiality.  Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates’
investment advisors, directors, officers, employees and agents, including
accountants, legal counsel and other advisors (the “Representatives”)
and any direct or indirect contractual counterparty in swap agreements entered
into in connection with a Lender’s outstanding Loans from time to time or to
such

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contractual counterparty’s professional advisor (it
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential and, in the case of any such contractual
counterparty or its professional advisor, such persons shall agree in writing
to be bound by the provisions of this Section 9.12), (b) to the
extent requested or demanded by any Governmental Authority or any
self-regulatory organization (including the National Association of Insurance
Commissioners or other similar organization), (c) to the extent required
by applicable laws or regulations or by any subpoena, order or similar legal
process; provided that, to the extent reasonably practicable and not
prohibited by applicable laws or regulations or by any judicial or
administrative order, such Person will provide the Administrative Borrower with
prior notice of such disclosure, (d) any nationally recognized rating
agency that requires access to information about a Lender’s investment
portfolio in connection with ratings issued with respect to such Lender,
(e) to any other party to this Agreement, (f) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (g) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to any Borrower and its obligations, (h) with the consent of the
Administrative Borrower or (i) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent or any
Lender on a nonconfidential basis from a source other than any Borrower, the
Parent, any Subsidiary or any of their Representatives that is not known to
such Person to be subject to any obligation of confidentiality to any Borrower,
the Parent or any Subsidiary.  For the
purposes of this Section, “Information” means all information received
from any Borrower, the Parent, any Subsidiary or any of their Representatives
relating to any Borrower, the Parent, the Subsidiaries or their businesses,
other than any such information that is available to the Administrative Agent
or any Lender on a nonconfidential basis prior to disclosure by the Parent or
any Subsidiary.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

SECTION 9.13.  Conversion of Currencies.  (a) If, for the purpose of obtaining judgment
in any court, it is necessary to convert a sum owing hereunder in one currency
into another currency, each party hereto agrees, to the fullest extent that it
may effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures in the relevant jurisdiction the
first currency could be purchased with such other currency on the Business Day
immediately preceding the day on which final judgment is given.

(b)           The obligations of the Borrowers in
respect of any sum due to any party hereto or any holder of the obligations
owing hereunder (the “Applicable Creditor”) shall, notwithstanding any
judgment in a currency (the “Judgment Currency”) other than the currency
in which such sum is stated to be due hereunder (the “Agreement Currency”),
be discharged only to the extent that, on the Business Day following receipt by
the Applicable Creditor of any sum adjudged to be so due in the Judgment
Currency, the Applicable Creditor may in accordance

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with normal banking procedures in the relevant
jurisdiction purchase the Agreement Currency with the Judgment Currency; if the
amount of the Agreement Currency so purchased is less than the sum originally
due to the Applicable Creditor in the Agreement Currency, each of the Borrowers
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify the Applicable Creditor against such loss.  The obligations of the Borrowers contained in
this Section 9.13 shall survive the termination of this Agreement and
the payment of all other amounts owing hereunder.

SECTION 9.14.  Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts that are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would
have been payable in respect of such Loan but were not payable as a result of
the operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.

SECTION 9.15. Parallel
Obligations.  For the purposes of
taking and ensuring the continuing validity of security (the “Parallel Debt
Security”) under the Security Documents subject to the laws of (or to the
extent affecting assets situated in) Germany and such other jurisdictions as
the Administrative Agent and the Administrative Borrower (each acting
reasonably) agree, notwithstanding any contrary provision in any Loan Document:

(a)           Abstract Acknowledgement of
Indebtedness.

(i)            Each Borrower undertakes (such undertakings,
the “Parallel Obligations”) to pay to the Administrative Agent amounts
equal to all present and future amounts (the “Original Obligations”)
owing by it to a Secured Party under any Loan Document;

(ii)           the Administrative Agent shall have
its own independent right to demand payment of the Parallel Obligations;

(iii)          the Parallel Obligations shall not
limit or affect the existence of the Original Obligations for which the Secured
Parties shall have an independent right to demand payment;

(iv)          notwithstanding paragraphs (ii) and
(iii), payment by a Borrower of its Parallel Obligations shall to the same
extent decrease and be a good discharge of the corresponding Original
Obligations owing to the relevant Secured Parties and payment by a Borrower of its
Original Obligations to the relevant Secured Parties shall to

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the same extent decrease
and be a good discharge of the Parallel Obligations owing by it to the
Administrative Agent;

(v)           the Parallel Obligations are owed to
the Administrative Agent in its own name and the Parallel Debt Security shall
secure the Parallel Obligations so owing;

(vi)          without limiting or affecting the
Administrative Agent’s right to protect, preserve or enforce its rights under
any Security Agreement, the Administrative Agent undertakes to each Secured
Party not to exercise its rights in respect of the Parallel Obligations without
the consent of the relevant Secured Party; and

(vii)         the Administrative Agent undertakes to
distribute to the Secured Parties an amount equal to any amounts collected or
received by the Administrative Agent which it has applied in reduction of the
Parallel Obligations in accordance with the terms of this Agreement as if the
terms of this Agreement as if the Original Obligations had not been discharged.

(b)           Joint and Several Creditor.

(i)            Each Borrower and each of the
Secured Parties (other than the Administrative Agent) agrees that the
Administrative Agent shall be the joint creditor (together with the relevant
Secured Parties) of each and every obligation of any Borrower towards each of
the Secured Parties (other than the Administrative Agent) under the Loan
Documents. Accordingly the Administrative Agent will have its own independent
right to demand performance by the relevant Borrower of those obligations.
However, any discharge of any such obligation to either the Administrative
Agent or a Secured Party (other than the Administrative Agent) shall, to that
extent, discharge the corresponding obligation owing to the other; and

(ii)           without limiting or affecting the
Administrative Agent’s rights against any Borrower (whether under this Section
9.15 or under any other provision of the Loan Documents), the
Administrative Agent agrees with each other Secured Party (on a several and
divided basis) that, subject as set out in the next sentence, it will not
exercise its rights as a joint creditor with a Secured Party (other than the
Administrative Agent) except with the consent of the relevant Secured Party.
However, for the avoidance of doubt, nothing in the previous sentence shall in
any way limit the Administrative Agent’s right to act in the protection or
preservation of rights under, or to enforce any Security Agreement as
contemplated by, this Agreement and/or the relevant Security Agreement (or to
do any act reasonably incidental to any of the foregoing).

[remainder of page
intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective authorized officers as
of the day and year first above written.

	
   

  	
  PLIANT CORPORATION PTY LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
  PLIANT CORPORATION OF CANADA

  LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
  PLIANT FILM PRODUCTS GMBH

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
   

  	
  ASPEN INDUSTRIAL, S.A. DE C.V.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title

  

 

	
  ACKNOWLEDGED AND AGREED

  
	
  with respect to Article III:

  
	
   

  
	
  PLIANT CORPORATION

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title

  

 

 

[SIGNATURE PAGE TO FIXED
ASSET CREDIT AGREEMENT]

 

 

	
  

  	
  MERRILL LYNCH BANK USA, as

  Administrative Agent and Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  MERRILL LYNCH INTERNATIONAL

  (AUSTRALIA) LIMITED, as Australian

  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  MERRILL LYNCH CAPITAL CANADA

  INC., as Canadian Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MERRILL LYNCH CAPITAL MARKETS

  BANK LIMITED, as German Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MERRILL LYNCH MORTGAGE

  CAPITAL INC., as Mexican Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

[SIGNATURE PAGE TO FIXED
ASSET CREDIT AGREEMENT]

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