Document:

Exhibit 10.21

 

WAIVER AND AMENDMENT NO. 1

 

This WAIVER AND AMENDMENT NO. 1, dated as of May 19, 2011 (this “Waiver”), to the Credit and Guaranty Agreement, dated as of September 30, 2010 (the “Credit Agreement”), by and among ISOLA USA CORP., a Delaware corporation (“Borrower”), ISOLA GROUP, a Luxembourg limited liability company (“Lux 1”), HATTRICK LUX NO. 2 S.ÀR.L., a Luxembourg limited liability company, HATTRICK LUX NO. 4 S.ÀR.L., a Luxembourg limited liability company, HATTRICK HOLDINGS U.S. INC., a Delaware corporation, the other Guarantors party thereto, the Lenders party thereto from time to time, GOLDMAN SACHS LENDING PARTNERS LLC, as syndication agent, as Administrative Agent (“Administrative Agent”), as collateral agent, and as documentation agent. Capitalized terms used herein not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.

 

RECITALS:

 

WHEREAS, Borrower has requested that Requisite Lenders agree to waive certain provisions of the Credit Agreement and amend certain schedules thereto; and

 

WHEREAS, Administrative Agent and Requisite Lenders have agreed to waive certain provisions of the Credit Agreement and amend certain schedules thereto, in the manner, and on the terms and conditions, provided for herein.

 

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

 

SECTION I.                                                   WAIVER

 

(a)                                 Subject to clause (b) below and the conditions precedent set forth in Section III, the Requisite Lenders hereby (i) extend, from May 1, 2011 to June 30, 2011, the periods under Section 5.1(c) of the Credit Agreement for delivery by Lux 1 of the required annual financial statements for Fiscal Year 2010 (the “Annual Financials”) and under Section 5.1(m) for the Credit Agreement for delivery by Borrower of the required collateral verification (the “Annual Collateral Verification”), (ii) acknowledge and accept that the Annual Financials, when delivered, will be accompanied by a qualified report of Lux 1’s independent certified public accountants noting a material deficiency in Lux 1’s internal controls related to Lux 1’s anticipated functional currency change, as described in Part B of the disclosure schedule attached hereto as Exhibit A (the “Material Deficiency”), (iii) acknowledge and accept that, until such time as the Annual Financials are delivered by Lux 1, the monthly reports and quarterly financial statements required to be delivered by Lux 1 under Sections 5.1(a) and 5.1(b) of the Credit Agreement (the “Monthly and Quarterly Information”) will be prepared consistently with Lux 1’s historical accounting practices and subject to changes resulting from audit and normal year end adjustments, provided that all Monthly and Quarterly Information delivered for any period after the delivery of the Annual Financials shall be prepared in accordance with the requirements of the Credit Agreement and (iv) waive any Default or Event of Default (X) that may have arisen

 

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under Section 5.1(c) and 5.1(m) of the Credit Agreement prior to the Waiver Closing Date as a result of the failure of Lux 1 and Borrower to deliver to Administrative Agent the Annual Financials and the Annual Collateral Verification, respectively, on or before May 1, 2011, (Y) that would otherwise arise under Section 5.1(c) of the Credit Agreement prior to the Waiver Closing Date as a result of the Annual Financials being accompanied by a qualified report of Lux 1’s independent certified accountants due to the Material Deficiency and (Z) that would otherwise arise under Sections 5.1(a) and 5.1(b) of the Credit Agreement prior to the delivery of the Annual Financials as a result of Lux 1’s Monthly and Quarterly Information being prepared consistently with Lux 1’s historical accounting practices and subject to changes resulting from audit and normal year end adjustments.

 

(b)                             Notwithstanding the foregoing, the failure of either Lux 1 or Borrower to deliver the Annual Financials and the Annual Collateral Verification, respectively, to Administrative Agent before July 1, 2011 shall result in an immediate Event of Default.

 

SECTION II.                                              AMENDMENTS

 

(a)                                 Schedule 4.3 of the Credit Agreement is hereby amended and restated in it entirety as set forth in Part A of the Disclosure Schedule attached hereto as Exhibit A.

 

(b)                                 Schedule 4.13 of the Credit Agreement is hereby amended by designating the facility located at 100 Tillessen Blvd., Ridgeway, South Carolina as “Owned”.

 

SECTION III.                                         CONDITIONS PRECEDENT TO EFFECTIVENESS

 

The effectiveness of the waiver set forth at Section I and the amendments set forth in Section II hereto is subject to the satisfaction, or waiver, of the following conditions on or before the date hereof (the “Waiver Closing Date”) whereupon this Waiver shall be effective as of the Waiver Closing Date:

 

(a)                                 Borrowers, the other Credit Parties and Requisite Lenders shall have indicated their consent by the execution and delivery of the signature pages hereof to Administrative Agent.

 

(b)                                 Administrative Agent and Lenders shall have received such other documents and information regarding Credit Parties and the Credit Agreement as Administrative Agent or Lenders may reasonably request.

 

SECTION IV.                                          REPRESENTATIONS AND WARRANTIES

 

(a)                     Corporate Power and Authority.  Each Credit Party has all requisite corporate power and authority to enter into this Waiver and to carry out the transactions contemplated hereby.

 

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(b)                     Authorization of Agreements.  The execution and delivery of this Waiver have been duly authorized by all necessary corporate or partnership (as applicable) action on the part of each Credit Party.

 

(c)                      Governmental Consents.  No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is required in connection with the execution and delivery by each Credit Party of this Waiver.

 

(d)                     Binding Obligation.  This Waiver has been duly executed and delivered by each Credit Party and each constitutes a legal, valid and binding obligation of each Credit Party enforceable against each Credit Party in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors’ rights generally and except as enforceability may be limited by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

(e)                      Incorporation of Representations and Warranties From Credit Agreement. Except as set forth on Part B of the Disclosure Schedule attached hereto as Exhibit A, the representations and warranties contained in the Credit Agreement are and will be true, correct and complete in all material respects, after giving effect to the waivers and amendments contained herein, on and as of the Waiver Closing Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date.

 

(f)                       No Default.  After giving effect to this Waiver, no event will have occurred and be continuing that constitutes an Event of Default or a Default.

 

SECTION V.                                               MISCELLANEOUS

 

(a)                     Binding Effect.  This Waiver shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders.  No Credit Party’s rights or obligations hereunder or any interest therein may be assigned or delegated by any Credit Party without the prior written consent of all Lenders.

 

(b)                     Severability.  In case any provision in or obligation hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

(c)                      Effect on Credit Documents.  Except as specifically waived or amended by this Waiver, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed.

 

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(d)                     Expenses. Without limitation to the obligations of the Borrower under Section 10.2 of the Credit Agreement, Borrower agrees to promptly reimburse Administrative Agent for its reasonable and documented out-of-pocket expenses incurred in connection with this Waiver, including the reasonable fees, charges and disbursements of Skadden, Arps, Slate, Meagher & Flom LLP.

 

(e)                      Limitation.  The execution, delivery and performance of this Waiver shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of any Agent or Lender under, the Credit Agreement or any of the other Credit Documents and this Waiver shall be limited precisely as written.

 

(f)                       Headings.  Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

 

(g)                      APPLICABLE LAW.  THIS WAIVER, THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS WAIVER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

(h)                     Counterparts.  This Waiver may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.  As set forth herein, this Waiver shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof.

 

[SIGNATURE PAGES FOLLOW]

 

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

 

	
 
    	
ISOLA   USA CORP., as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond P. Sharpe
    
	
 
    	
 
    	
Name:   Raymond P. Sharpe
    
	
 
    	
 
    	
Title:   President and Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
ISOLA   GROUP
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond P. Sharpe
    
	
 
    	
 
    	
Name:   Raymond P. Sharpe
    
	
 
    	
 
    	
Title:   Manager
    
	
 
    	
 
    	
 
    
	
 
    	
HATTRICK   LUX NO. 2 S.ÀR.L.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond P. Sharpe
    
	
 
    	
 
    	
Name:   Raymond P. Sharpe
    
	
 
    	
 
    	
Title:   Sole Manager
    
	
 
    	
 
    	
 
    
	
 
    	
HATTRICK   LUX NO. 4 S.ÀR.L.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond P. Sharpe
    
	
 
    	
 
    	
Name:   Raymond P. Sharpe
    
	
 
    	
 
    	
Title:   Sole Manager
    
	
 
    	
 
    	
 
    
	
 
    	
HATTRICK   HOLDINGS U.S. INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond P. Sharpe
    
	
 
    	
 
    	
Name:   Raymond P. Sharpe
    
	
 
    	
 
    	
Title:   President and Chief Executive Officer
    

 

 

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

 

	
 
    	
GOLDMAN SACHS LENDING PARTNERS LLC, as   Administrative Agent and a Lender
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Shane David Deaton
    
	
 
    	
 
    	
Authorized   Signatory
    

 

 

WAIVER TO THE CREDIT AND GUARANTY AGREEMENT

 

 

	
 
    	
To   approve the Waiver:
    
	
 
    	
 
    
	
 
    	
Name   of Institution:
    
	
 
    	
 
    
	
 
    	
Chelsey   Capital Profit Sharing Plan
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William Wachtel
    
	
 
    	
 
    	
Name:
    	
William   Wachtel
    
	
 
    	
 
    	
Title:
    	
Manager
    

 

 

EXHIBIT A

 

Disclosure Schedule

 

	
PART A:
    	
Schedule 4.3
    	
 
    
	
 
    	
Existing Intercompany Notes
    	
 
    

 

1.              Amended and Restated Unsecured Promissory Note, dated September 9, 2010, by Hattrick Lux No. 3 S.à r.l. in favor of ISOLA USA Corp., evidencing loans in an original principal amount equal to $170,816,593.32 (USD) and in an aggregate principal amount equal to approximately $174,387,929.65 (USD) as of April 2, 2011.

 

2.              Amended and Restated Unsecured Promissory Note, dated September 9, 2010, by Opal 11 in favor of ISOLA USA Corp., evidencing loans in an original principal amount equal to $18,547,299.29 (USD) and in an aggregate principal amount equal to approximately $13,345,280.19 (USD) as of April 2, 2011.

 

3.              Unsecured Promissory Note, dated August 22, 2010, by Isola Asia Pacific (Philippines) Inc. in favor of Hattrick Holdings U.S. Inc., evidencing loans in an original principal amount equal to $12,369,308 (USD) and in an aggregate principal amount equal to approximately $5,826,495.14 (USD) as of April 2, 2011.

 

4.              Unsecured Promissory Note, dated August 22, 2010, by Hattrick Lux No. 3 S.à r.l. in favor of ISOLA USA Corp, evidencing loans in an original principal amount equal to $9,066,098.34 (USD) and in an aggregate principal amount equal to approximately $9,600,352.78 (USD) as of April 2, 2011.

 

5.              Unsecured Promissory Note, dated August 22, 2010, by Hattrick Lux No. 3 S.à r.l. in favor of Hattrick Holdings U.S. Inc., evidencing loans in an original principal amount equal to $2,409,349.38 (USD) and in an aggregate principal amount equal to approximately $2,551,329.48 (USD) as of April 2, 2011.

 

6.              Unsecured Promissory Note, dated August 22, 2010, by Opal 11 in favor of ISOLA USA Corp., evidencing loans in an original principal amount equal to $1,000,000 (USD) and in an aggregate principal amount equal to approximately $1,046,816.29 (USD) as of April 2, 2011.

 

7.              Unsecured Promissory Note, dated August 22, 2010, by Isola GmbH in favor of ISOLA USA Corp., evidencing loans in an original principal amount equal to €1,000,000 (EUR) and in an aggregate principal amount equal to approximately €1,043,006.87 (EUR) as of April 2, 2011.

 

8.              Unsecured Promissory Note, dated August 22, 2010, by Isola GmbH in favor of ISOLA USA Corp., evidencing loans in an original principal amount equal to €1,000,000 (EUR) and in an aggregate principal amount equal to approximately €1,042,342.90 (EUR) as of April 2, 2011.

 

 

9.              Unsecured Promissory Note, dated August 22, 2010, by Hattrick Lux No. 3 S.à r.l. in favor of ISOLA USA Corp., evidencing loans in an original principal amount equal to €2,500,000 (EUR) and in an aggregate principal amount equal to approximately €2,603,318.05 (EUR) as of April 2, 2011.

 

10.       Unsecured Promissory Note, dated August 22, 2010, by Hattrick Lux No. 3 S.à r.l. in favor of ISOLA USA Corp., evidencing loans in an original principal amount equal to €1,700,000 (EUR) and in an aggregate principal amount equal to approximately €1,768,686.57 (EUR) as of April 2, 2011.

 

11.       Unsecured Promissory Note, dated August 22, 2010, by Hattrick Lux No. 3 S.à r.l. in favor of ISOLA USA Corp., evidencing loans in an original principal amount equal to €810,000 (EUR) and in an aggregate principal amount equal to approximately €835,675.53 (EUR) as of April 2, 2011.

 

12.       Unsecured Promissory Note, dated August 22, 2010, by Hattrick Lux No. 3 S.à r.l. in favor of ISOLA USA Corp., evidencing loans in an original principal amount equal to €500,000 (EUR) and in an aggregate principal amount equal to approximately €515,398.32 (EUR) as of April 2, 2011.

 

13.       Unsecured Promissory Note, dated August 22, 2010, by Hattrick Lux No. 3 S.à r.l. in favor of ISOLA USA Corp., evidencing loans in an original principal amount equal to €915,000 (EUR) and in an aggregate principal amount equal to approximately €940,550.42 (EUR) as of April 2, 2011.

 

14.       Unsecured Promissory Note, dated August 22, 2010, by Hattrick Lux No. 3 S.à r.l. in favor of ISOLA USA Corp., evidencing loans in an original principal amount equal to €750,000 (EUR) and in an aggregate principal amount equal to approximately €764,036.64 (EUR) as of April 2, 2011.

 

PART B:                                             Section 4.8 (Historical Financial Statements):

 

Lux 1’s outside auditors’ review of its financial statements uncovered an error in the accounting for foreign exchange under ASC 830 during the 2010 audit.  Lux 1 had been using the euro as its functional currency, but it should have been using the U.S. dollar as the functional currency after Lux 1’s leveraged recapitalization in December, 2006, which changed the principal currency in which the company was financed from the euro to the U.S. dollar.  Further review of the Lux 1’s accounting under ASC 830 uncovered that certain subsidiaries in China and Taiwan had been incorrectly using their local currencies, rather than the U.S. dollar, as their functional currencies.  Lux 1 is in the process of restating its historical financials statements.  The restatements are not expected to have a material impact on Consolidated Adjusted EBITDA. The major impact on the income statement will be related to Foreign Exchange Gains/(Losses), which is a permitted adjustment to EBITDA.  The impact on the balance sheet will not affect debt.Exhibit 10.22

 

WAIVER AND AMENDMENT NO. 2

 

This WAIVER AND AMENDMENT NO. 2, dated as of June 30, 2011 (this “Waiver No. 2”),  to the Credit and Guaranty Agreement, dated as of September 30, 2010 (as amended by Waiver No. 1 (as defined below), further amended, supplemented, restated or otherwise modified from time to time, the “Credit Agreement”),  by and among ISOLA USA CORP.,  a Delaware corporation (“Borrower”), ISOLA GROUP,  a Luxembourg limited liability company (“Lux 1”), HATTRICK LUX NO. 2 S.À.R.L. (“LUX 2”),  a Luxembourg limited liability company, HATTRICK LUX NO. 4 S.À.R.L.,  a Luxembourg limited liability company, HATTRICK HOLDINGS U.S. INC.,  a Delaware corporation, the other Guarantors party thereto, the Lenders party thereto from time to time, GOLDMAN SACHS LENDING PARTNERS LLC,  as syndication agent, as Administrative Agent (“Administrative Agent”),  as collateral agent, and as documentation agent. Capitalized terms used herein not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.

 

RECITALS:

 

WHEREAS,  pursuant to that certain Waiver and Amendment No. 1, dated as of May 19, 2011 (“Waiver No. 1”),  to the Credit Agreement, the Requisite Lenders waived certain provisions of the Credit Agreement and amended certain schedules thereto;

 

WHEREAS, Borrower has requested that the Requisite Lenders agree to further waive certain provisions of the Credit Agreement and amend certain schedules thereto; and

 

WHEREAS, the Administrative Agent and the Requisite Lenders have agreed to waive certain provisions of the Credit Agreement and amend certain schedules thereto, in the manner, and on the terms and conditions, provided for herein.

 

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

 

SECTION I.                                                  WAIVER

 

(a)                                  Subject to clause (b) below and the conditions precedent set forth in Section III, the Requisite Lenders hereby (i) extend, from June 30, 2011 (as previously extended by Waiver No. 1) to September 30, 2011, the periods under Section 5.1(c) of the Credit Agreement for delivery by Lux 1 of the required annual financial statements for Fiscal Year 2010 (the “Annual Financials”)  and under Section 5.1(m) for the Credit Agreement for delivery by Borrower of the required collateral verification (the “Annual Collateral Verification”),  (ii) acknowledge and accept that the Annual Financials, when delivered, will be accompanied by a qualified report of Lux 1’s independent certified public accountants noting a material deficiency in Lux l’s internal controls related to Lux 1’s anticipated functional currency change, as described in Part B of the Disclosure Schedule attached as Exhibit A to Waiver No. 1 (the “Material Deficiency”),  (iii) acknowledge and accept that, until such time as the Annual Financials are delivered by Lux 1, the monthly reports and quarterly financial statements

 

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required to be delivered by Lux 1 under Sections 5.1(a) and 5.1(b) of the Credit Agreement (the “Monthly and Quarterly Information”)  will be prepared consistently with Lux l’s historical accounting practices and subject to changes resulting from audit and normal year end adjustments, provided that all Monthly and Quarterly Information delivered for any period after the delivery of the Annual Financials shall be prepared in accordance with the requirements of the Credit Agreement and (iv) waive any Default or Event of Default (X) that may have arisen under Section 5.1(c) and 5.1(m) of the Credit Agreement prior to the Waiver Closing Date as a result of the failure of Lux 1 and Borrower to deliver to Administrative Agent the Annual Financials and the Annual Collateral Verification, respectively, on or before May 1, 2011, (Y) that would otherwise arise under Section 5.1(c) of the Credit Agreement prior to the Waiver Closing Date as a result of the Annual Financials being accompanied by a qualified report of Lux l’s independent certified accountants due to the Material Deficiency and (Z) that would otherwise arise under Sections 5.1(a) and 5.1(b) of the Credit Agreement prior to the delivery of the Annual Financials as a result of Lux l’s Monthly and Quarterly Information being prepared consistently with Lux l’s historical accounting practices and subject to changes resulting from audit and normal year end adjustments.

 

(b)                            Notwithstanding the foregoing, but subject to clause (c) below, the failure of either Lux 1 or Borrower to deliver the Annual Financials and the Annual Collateral Verification, respectively, to Administrative Agent before October 1, 2011 shall result in an immediate Event of Default.

 

(c)                                 The parties acknowledge that Lux 1 or a holding company intends to file a registration statement with the Securities and Exchange Commission (the “SEC”) for an initial public offering and as a part of the initial public offering process, the Annual Financials will be subject to review by the SEC which could lead to changes to the Annual Financials (the “Revised Financials”).  Lux 1  will provide to the Administrative Agent copies of any Revised Financials within ten days of the finalization and acceptance of such Revised Financials by the SEC. Provided the Revised Financials do not reflect an Event of Default in respect of the financial covenants contained in Section 6.7 of the Credit Agreement, the Revised Financials will be deemed timely if delivered to the Administrative Agent within the ten day period described above.

 

SECTION II.                                             AMENDMENTS

 

(a) Section 1.01 of the Credit Agreement is hereby amended by adding the following new definition in the appropriate alphabetical order:

 

“CPEC”  means Convertible Preferred Equity Certificates issued by any Lux Party.

 

“Waiver No. 2”  means that certain Waiver and Amendment No. 2, dated as of June 30, 2011 (“Waiver No. 1”),  to this Agreement, among the Borrower, the Guarantors, the Lenders party thereto and the Administrative Agent.

 

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(b)                               The definition of “Consolidated Adjusted EBITDA” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

“Consolidated Adjusted EBITDA”  means, for any period, an amount determined for Lux 1 and its Subsidiaries on a consolidated basis equal to (i) Consolidated Net Income, plus, to the extent reducing Consolidated Net Income, the sum, without duplication, of amounts for (a) Consolidated Interest Expense, (b) provision for taxes based on income or profits or capital, including, without limitation, state, franchise and similar taxes, property taxes, foreign withholding taxes and foreign unreimbursed value added taxes of Lux 1 and its Subsidiaries paid or accrued during such period, including amounts described in the definition of “Permitted Tax Distributions” to be made with respect to such period; provided, however, that any taxes paid or payable during such period on account of the characterization of the CPECs as Indebtedness shall not be included in this clause (b) or any other add-back set forth in this clause (i), (c) total depreciation expense, (d) total amortization expense, including the amortization of deferred financing fees, (e) the accrual of any non-Cash interest expense related to the CPECs or any other Securities held by Lux 1 or any of its Subsidiaries, (f) at any time prior to an Qualified Public Offering, charges directly incurred in contemplation of a Qualified Public Offering, not to exceed $8,000,000 in the aggregate after the Closing Date, including, without limitation, charges for establishing compliance with public company reporting requirements (including the Sarbanes-Oxley Act), charges for any corporate or tax restructuring or reorganization, charges for any valuations required for Securities held by Lux 1 or any of its Subsidiaries, charges for any financing or refinancing (including a refinancing of Indebtedness), (g) charges or expenses to fund underfunded pension obligations of Lux 1 and its Subsidiaries as of the Closing Date, not to exceed $6,000,000 in any Fiscal Year, (h)(i) expenses incurred in such period with respect to Casualty Events and (ii) proceeds from business interruption insurance in an amount not to exceed the earnings for such period that such proceeds were intended to replace, (i) expenses incurred in such period to the extent reimbursed in such period by third parties pursuant to indemnification provisions, (j) non-recurring losses of Lux 1 and its Subsidiaries of not more than $500,000 in any Fiscal Year, (k) charges or expenses incurred in connection with the winding up, dissolution or liquidation of the Dalian Joint Venture, not to exceed $3,000,000 in the aggregate after the Closing Date, (1) Transaction Costs, (m) expenses or charges relating to payment or settlement of that certain hedging agreement by and between Borrower and UBS AG, not to exceed $7,000,000 in the aggregate, (n) management fees paid in accordance with clauses (i) and (j) of Section 6.11 and (o) any other non-cash charges, including any write-offs or write-downs (other than a write-off or write-down of a right to payment) and any non-Cash losses resulting from the valuation from time to time of any derivative deemed embedded in the

 

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CPECs or any other Securities held by Lux 1 or any of its Subsidiaries, reducing Consolidated Net Income for such period (excluding the accrual of expenses in the ordinary course of business and any non-Cash charge that represents an accrual of a reserve for potential cash charges in any future period) minus (ii) (a) any non-Cash gains increasing Consolidated Net Income for such period (excluding any such non-Cash gain to the extent it represents the reversal of an accrual or reserve for a potential Cash item in any prior period), including any non-Cash gains resulting from the valuation from time to time of any derivative deemed embedded in the CPECs or any other Securities held by Lux 1 or any of its Subsidiaries, increasing Consolidated Net Income for such period and (b) to the extent included in determining Consolidated Net Income, any cancellation of indebtedness income as a result of the contribution or assignment of Term Loans by the Restricted Affiliate Lender as contemplated by Section 10.6(i)(v). Notwithstanding the foregoing, (i) Consolidated Adjusted EBITDA for the Fiscal Quarter ended December 26, 2009 shall be deemed to be $14,011,000, (ii) Consolidated Adjusted EBITDA for the Fiscal Quarter ended March 27, 2010 shall be deemed to be $24,904,000, and (iii) Consolidated Adjusted EBITDA for the Fiscal Quarter ended June 26, 2010 shall be deemed to be $28,827,000.

 

(c)                                  The definition of “Consolidated Interest Expense” in Section 1.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:

 

“Consolidated Interest Expense” means, for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of Lux 1 and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Lux 1 and its Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and net costs under Interest Rate Agreements, but excluding, however, (i) any amount not payable in Cash including, without limitation, any interest expense accrued but not currently payable on the CPECs, (ii) any amounts referred to in Section 2.8 payable on or before the Closing Date, (iii) amortization of debt issuance costs and (iv) upfront fees related to Hedge Agreements permitted under this Agreement; provided that, solely for the purposes of determining compliance with clause (a) of Section 6.7, (i) Consolidated Interest Expense for the four-Fiscal Quarter period ended September 25, 2010 shall be deemed to be $36,000,000, (ii) Consolidated Interest Expense for the four-Fiscal Quarter period ended January 1, 2011 shall be deemed to be the sum of (x)(l) one-quarter of the amount set forth in clause (i) hereof plus (2) Consolidated Interest Expense for the Fiscal Quarter ending January 1, 2011 multiplied by (y) two, (iii) Consolidated Interest Expense for the four-Fiscal Quarter period ended April 2, 2011 shall be deemed to be the sum of (x)(l) one-quarter of the amount set forth in clause (i) hereof plus (2) Consolidated Interest Expense for the Fiscal

 

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Quarter ending January 1, 2011 plus (3) Consolidated Interest Expense for the Fiscal Quarter ending April 2, 2011 multiplied by (y) 1.33, and (iv) Consolidated Interest Expense for the four-Fiscal Quarter period ended July 2, 2011 shall be deemed to be the sum of (x)(l) one-quarter of the amount set forth in clause (i) hereof plus (2) Consolidated Interest Expense for the Fiscal Quarter ending January 1, 2011 plus (3) Consolidated Interest Expense for the Fiscal Quarter ending April 2, 2011 plus (4) Consolidated Interest Expense for the Fiscal Quarter ending July 2, 2011.

 

(d)                                 Section 6 of the Credit Agreement is hereby amended by adding the following new Section 6.18:

 

6.18 Issuance and Amendments and Waivers of CPECs. After the Waiver Closing Date (as defined in Waiver No. 2), no Credit Party shall nor shall it permit any of its Subsidiaries to (i) issue any new Convertible Preferred Equity Certificates (or any similar Securities) (x) that could reasonably be expected to be materially adverse to the interest of the Lenders or (y) unless prior to or contemporaneously with such issuance such Credit Party and the holder of such Convertible Preferred Equity Certificates (or similar Securities) has entered into a subordination agreement in form and substance satisfactory to the Administrative Agent and (ii) agree to any material amendment, restatement, supplement or other modification to, or waiver of, any of its CPECs in any manner that could reasonably be expected to be materially adverse to the interest of the Lenders without in each case obtaining the prior written consent of the Requisite Lenders for such amendment, restatement, supplement or other modification or waiver.

 

(e)                                  Schedule 6.1 of the Credit Agreement is hereby amended and restated in it entirety as set forth on Exhibit A attached hereto.

 

SECTION III.                                        CONDITIONS PRECEDENT TO EFFECTIVENESS

 

The effectiveness of the waivers set forth in Section I and the amendments set forth in Section II hereto is subject to the satisfaction, or waiver, of the following conditions on or before the date hereof (the “Waiver Closing Date”)  whereupon this Waiver No. 2 shall be effective as of the Waiver Closing Date:

 

(a)                                 Borrowers, the other Credit Parties and Requisite Lenders shall have indicated their consent by the execution and delivery of the signature pages hereof to Administrative Agent.

 

(b)                                 Borrower, the other Credit Parties and Requisite Lenders (as defined in the Mezzanine Loan Agreement) shall have entered into a Waiver and Amendment No. 2, dated as of the date hereof, in form and substance satisfactory to the Administrative Agent.

 

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(c)                                  Issuers and holders of each CPEC shall have entered into a subordination agreement in respect of their respective CPECs in form and substance satisfactory to the Administrative Agent.

 

(d)                                 Administrative Agent and Lenders shall have received such other documents and information regarding Credit Parties and the Credit Agreement as Administrative Agent or Lenders may reasonably request.

 

(e)                                  Borrower shall have paid the Administrative Agent for all reasonable out-of-pocket expenses incurred by it on or prior to the date hereof in connection with the negotiation and preparation of this Waiver No. 2, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent.

 

SECTION IV.                                         REPRESENTATIONS AND WARRANTIES

 

(a)                     Corporate Power and Authority. Each Credit Party has all requisite corporate power and authority to enter into this Waiver No. 2 and to carry out the transactions contemplated hereby.

 

(b)                     Authorization of Agreements. The execution and delivery of this Waiver No. 2 have been duly authorized by all necessary corporate or partnership (as applicable) action on the part of each Credit Party.

 

(c)                      Governmental Consents. No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is required in connection with the execution and delivery by each Credit Party of this Waiver No. 2.

 

(d)                     Binding Obligation. This Waiver No. 2 has been duly executed and delivered by each Credit Party and each constitutes a legal, valid and binding obligation of each Credit Party enforceable against each Credit Party in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors’ rights generally and except as enforceability may be limited by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

(e)                      Incorporation of Representations and Warranties From Credit Agreement. The representations and warranties contained in the Credit Agreement are and will be true, correct and complete in all material respects, after giving effect to the waivers and amendments contained in Waiver No. 1 and herein, on and as of the Waiver Closing Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date.

 

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(f)                               No Default.   After giving effect to this Waiver No. 2, no event will have occurred and be continuing that constitutes an Event of Default or a Default.

 

SECTION V.                                              ACKNOWLEDGEMENT AND CONSENT

 

(a)                     Each Guarantor hereby consents to the terms of this Waiver No. 2 and further hereby confirms and agrees that, notwithstanding the effectiveness of this Waiver No. 2, the obligations of such Guarantor under each of the Credit Documents to which such Guarantor is a party shall not be impaired and each of the Credit Documents to which such Guarantor is a party are, and shall continue to be, in full force and effect and are hereby confirmed and ratified in all respects.

 

(b)                     Each Guarantor hereby acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Waiver No. 2, such Guarantor is not required by the terms of the Credit Agreement or any other Credit Document to consent to the waiver and amendment to the Credit Agreement effected pursuant to this Waiver No. 2 and (ii) nothing in the Credit Agreement, this Waiver No. 2 or any other Credit Document shall be deemed to require the consent of such Guarantor to any future amendments to the Credit Agreement.

 

(c)                      Each of the Lenders hereby acknowledges and agrees that the amendments set forth in Section II of this Amendment shall apply from and after the Closing Date for purposes of calculating the financial covenants set forth in Section 6.7 of the Credit Agreement.

 

SECTION VI.                                         MISCELLANEOUS

 

(a)                     Binding Effect. This Waiver No. 2 shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. No Credit Party’s rights or obligations hereunder or any interest therein may be assigned or delegated by any Credit Party without the prior written consent of all Lenders.

 

(b)                     Severability. In case any provision in or obligation hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

(c)                      Effect on Credit Documents. Except as specifically waived or amended by this Waiver No. 2, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed. The parties hereto acknowledge and agree that this Waiver shall be deemed to be a Credit Document. On and after the Waiver Closing Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to the “Credit Agreement”, “thereunder”, “thereof”, “therein” or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Credit Agreement.

 

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(d)                    Expenses. Without limitation to the obligations of the Borrower under Section 10.2 of the Credit Agreement, Borrower agrees to promptly reimburse Administrative Agent for its reasonable and documented out-of-pocket expenses incurred in connection with this Waiver No. 2, including the reasonable fees, charges and disbursements of Skadden, Arps, Slate, Meagher & Flom LLP.

 

(e)                     Limitation. The execution, delivery and performance of this Waiver No. 2 shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of any Agent or Lender under, the Credit Agreement or any of the other Credit Documents and this Waiver No. 2 shall be limited precisely as written.

 

(f)                      Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

 

(g)                     APPLICABLE LAW. THIS WAIVER NO. 2, THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS WAIVER NO. 2 SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

(h)                                Counterparts. This Waiver No. 2 may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. As set forth herein, this Waiver No. 2 shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Administrative Agent of written or telephonic notification of such execution and authorization of delivery thereof.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Waiver No. 2 to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

 

	
 
    	
ISOLA   USA CORP., as Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond P. Sharpe
    
	
 
    	
 
    	
Name:
    	
Raymond   P. Sharpe
    
	
 
    	
 
    	
Title:
    	
President &   CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ISOLA   GROUP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond P. Sharpe
    
	
 
    	
 
    	
Name:
    	
Raymond   P. Sharpe
    
	
 
    	
 
    	
Title:
    	
Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HATTRICK   LUX NO. 2 S.À.R.L.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond P. Sharpe
    
	
 
    	
 
    	
Name:
    	
Raymond   P. Sharpe
    
	
 
    	
 
    	
Title:
    	
Sole   Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HATTRICK   LUX NO. 4 S.À.R.L.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond P. Sharpe
    
	
 
    	
 
    	
Name:
    	
Raymond   P. Sharpe
    
	
 
    	
 
    	
Title:
    	
Sole   Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HATTRICK   HOLDINGS U.S. INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Raymond P. Sharpe
    
	
 
    	
 
    	
Name:
    	
Raymond   P. Sharpe
    
	
 
    	
 
    	
Title:
    	
President &   CEO
    

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Waiver No. 2 to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

 

	
 
    	
GOLDMAN SACHS LENDING PARTNERS LLC, as Administrative   Agent
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Shane David Deaton
    
	
 
    	
 
    	
Authorized   Signatory
    

 

[Isola Senior Credit Agreement Waiver No. 2- Administrative Agent Signature Page]

 

 

WAIVER NO. 2 TO THE CREDIT AND GUARANTY AGREEMENT

 

 

	
 
    	
To   approve the Waiver No. 2:
    
	
 
    	
 
    
	
 
    	
CLEARLAKE CAPITAL PARTNERS II (MASTER), L.P.
    
	
 
    	
By:   Clearlake Capital Partners II GP, LP
    
	
 
    	
Its:   General Partner
    
	
 
    	
By:   Clearlake Capital Partners, LLC
    
	
 
    	
Its:   General Partner
    
	
 
    	
By:   CCG Operations, LLC
    
	
 
    	
Its:   Managing Member
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Behdad Eghbali
    
	
 
    	
 
    	
 
    	
Name:   Behdad Eghbali
    
	
 
    	
 
    	
 
    	
Title:   Manager
    

 

 

WAIVER NO. 2 TO THE CREDIT AND GUARANTY AGREEMENT

 

 

	
 
    	
To   approve the Waiver No. 2:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name   of Institution:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CONTINENTAL   CASUALTY COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Edward J. Lavin
    
	
 
    	
 
    	
Name:
    	
Edward   J. Lavin
    
	
 
    	
 
    	
Title:
    	
Assistant   Vice President
    

 

 

WAIVER NO. 2 TO THE CREDIT AND GUARANTY AGREEMENT

 

 

	
 
    	
To   approve the Waiver No. 2:
    
	
 
    	
 
    
	
 
    	
Name   of Institution:
    
	
 
    	
 
    
	
 
    	
OCM   PF LAMINATES, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Cass Traub
    
	
 
    	
 
    	
Name:   Cass Traub
    
	
 
    	
 
    	
Title:  Authorized   Signatory
    

 

 

WAIVER NO. 2 TO THE CREDIT AND GUARANTY AGREEMENT

 

	
 
    	
To approve the Waiver No. 2:
    
	
 
    	
 
    
	
 
    	
SPECIAL VALUE OPPORTUNITIES FUND, LLC, SPECIAL VALUE   EXPANSION FUND, LLC, TENNENBAUM OPPORTUNITIES PARTNERS V, LP,
    
	
 
    	
each   as a Lender
    
	
 
    	
 
    
	
 
    	
On   behalf of each of the above-listed entities:
    
	
 
    	
 
    
	
 
    	
By:   Tennenbaum Capital Partners, LLC 
    
	
 
    	
Its:   Investment Manager
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Philip Tseng
    
	
 
    	
 
    	
Title:
    	
Partner
    

 

 

EXHIBIT A

 

Schedule 6.1
 Certain Indebtedness

 

1.             ISOLA USA Corp. has a continuous customs bond, dated as of May 7, 2008, in the amount of $60,000.00 securing customs duties, taxes or other charges.

 

2.             An irrevocable standby letter of credit in an approximate amount of $50,000.00 in favor of LibertyMutual Insurance Company (for the account of ISOLA USA Corp.).

 

3.             An irrevocable standby letter of credit in an approximate amount of $21,000.00 in favor of American Casualty Company of Reading Pennsylvania and/or CNA (for the account of ISOLA USA Corp.).

 

4.             An irrevocable standby letter of credit in an approximate amount of $408,000.00 in favor of Travelers Indemnity Company (for the account of ISOLA USA Corp.).

 

5.             Statutory warranty obligations in the ordinary course of business.

 

6.             Indebtedness of Isola Laminate Systems (Suzhou) Co. Ltd. as evidenced by certain promissory notes in favor of various third party lenders in the aggregate principal amount of approximately $14.6 million as of June 30, 2010.

 

7.             Indebtedness of Isola Asia Pacific (Dalian) Co. Ltd. as evidenced by that certain Entrustment Loan in the aggregate principal amount of approximately $5.3 million as of June 30, 2010.

 

8.             Capital Leases of Isola Fabrics S.R.L. in the aggregate principal amount of approximately $13.3 million as of June 30, 2010.

 

9.             Capital Leases of Isola GmbH in the aggregate principal amount of approximately $2.4 million as of June 30, 2010.

 

10.      Line of Credit between Isola Fabrics S.R.L. and Unicredit in an approximate amount of €1,400,000.

 

11.      Loan Agreement, dated June 1, 2004, by and between Hattrick Lux No. 2 S.à.r.l., as Lender, and Hattrick Lux No. 3 S.à.r.l., as Borrower, in an original principal amount equal to €50,000 (EUR).

 

12.      The following Convertible Preferred Equity Certificates are currently outstanding:

 

·                 420,455 Class A CPECs, each with a par value €1, issued by Isola Group S.a.r.l. to TPG Hattrick Partners LP;

 

·                 95,776,449 Class B CPECs, each with a par value €1, issued by Isola Group S.a.r.l. to TPG Hattrick Partners LP;

 

 

·                 43,500,666 Class C CPECs, each with a par value €1, issued by Isola Group S.a.r.1. to TPG Hattrick Partners LP;

 

·                 654,655 Class A CPECs, each with a par value €1, issued by Hattrick Lux. No. 2 S.a.r.1. to Isola Group S.a.r.1.;

 

·                 95,776,449 Class B CPECs, each with a par value €l, issued by Hattrick Lux. No. 2 S.a.r.1. to Isola Group S.a.r.1.;

 

·                 43,500,666 Class C CPECs, each with a par value €1, issued by Hattrick Lux. No. 2 S.a.r.1. to Isola Group S.a.r.1.;

 

·                 13,690,721 Class A CPECs, each with a par value €1, issued by Hattrick Lux. No. 3 S.a.r.1. to Hattrick Lux. No. 2 S.a.r.1.;

 

·                 70,796,512 Class A CPECs, each with a par value €1, issued by Hattrick Lux. No. 4 S.a.r.1. to Hattrick Lux. No. 2 S.a.r.1.; and

 

·                 43,500,666 Class C CPECs, each with a par value €1, issued by Hattrick Lux. No. 4 S.a.r.1. to Hattrick Lux. No. 2 S.a.r.1.

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