Document:

Exhibit 10.1

 

 

$455,000,000

 

CREDIT
AGREEMENT

 

Dated as of November 22,
2005

 

among

 

POLYMER GROUP,
INC.,

as Borrower,

 

THE LENDERS
REFERRED TO HEREIN,

 

CITICORP NORTH
AMERICA, INC.,

as Administrative Agent, Documentation Agent,

Collateral Agent and Syndication Agent,

 

and

 

CITIGROUP
GLOBAL MARKETS INC.,

as Sole Lead Arranger and Sole Bookrunner

 

Cahill Gordon &
Reindel LLP

80 Pine Street

New York, New York  10005

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
   

  	
   

  	
   

  	
   

  
	
  DEFINITIONS

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  Defined Terms

  	
   

  	
  1

  
	
  SECTION 1.02.

  	
  Classification of Loans and Borrowings

  	
   

  	
  27

  
	
  SECTION 1.03.

  	
  Terms Generally

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  	
   

  
	
  THE CREDITS

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  Credit Commitments

  	
   

  	
  27

  
	
  SECTION 2.02.

  	
  Procedure for Borrowing

  	
   

  	
  28

  
	
  SECTION 2.03.

  	
  Conversion and Continuation Options for Loans

  	
   

  	
  29

  
	
  SECTION 2.04.

  	
  Swingline Loans

  	
   

  	
  30

  
	
  SECTION 2.05.

  	
  Optional and Mandatory Prepayments of Loans; Repayments of
  Term Loans

  	
   

  	
  31

  
	
  SECTION 2.06.

  	
  Letters of Credit

  	
   

  	
  34

  
	
  SECTION 2.07.

  	
  Repayment of Loans; Evidence of Debt

  	
   

  	
  37

  
	
  SECTION 2.08.

  	
  Interest Rates and Payment Dates

  	
   

  	
  38

  
	
  SECTION 2.09.

  	
  Computation of Interest

  	
   

  	
  39

  
	
  SECTION 2.10.

  	
  Fees

  	
   

  	
  39

  
	
  SECTION 2.11.

  	
  Termination, Reduction or Adjustment of Commitments

  	
   

  	
  40

  
	
  SECTION 2.12.

  	
  Inability to Determine Interest Rate; Unavailability of Deposits;
  Inadequacy of Interest Rate

  	
   

  	
  40

  
	
  SECTION 2.13.

  	
  Pro Rata Treatment and Payments

  	
   

  	
  41

  
	
  SECTION 2.14.

  	
  Illegality

  	
   

  	
  42

  
	
  SECTION 2.15.

  	
  Requirements of Law

  	
   

  	
  42

  
	
  SECTION 2.16.

  	
  Taxes

  	
   

  	
  43

  
	
  SECTION 2.17.

  	
  Indemnity

  	
   

  	
  45

  
	
  SECTION 2.18.

  	
  Change of Lending Office

  	
   

  	
  45

  
	
  SECTION 2.19.

  	
  Sharing of Setoffs

  	
   

  	
  45

  
	
  SECTION 2.20.

  	
  Assignment of Commitments Under Certain Circumstances

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  	
   

  
	
  REPRESENTATIONS
  AND WARRANTIES

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Organization, etc.

  	
   

  	
  47

  
	
  SECTION 3.02.

  	
  Due Authorization, Non-Contravention, etc.

  	
   

  	
  47

  
	
  SECTION 3.03.

  	
  Government Approval, Regulation, etc.

  	
   

  	
  47

  
	
  SECTION 3.04.

  	
  Validity, etc.

  	
   

  	
  48

  
	
  SECTION 3.05.

  	
  Financial Information

  	
   

  	
  48

  
	
  SECTION 3.06.

  	
  No Material Adverse Effect

  	
   

  	
  48

  
	
  SECTION 3.07.

  	
  Litigation

  	
   

  	
  48

  
	
  SECTION 3.08.

  	
  Compliance with Laws and Agreements

  	
   

  	
  48

  
	
  SECTION 3.09.

  	
  Subsidiaries

  	
   

  	
  48

  

 

i

 

	
  SECTION 3.10.

  	
  Ownership of Properties

  	
   

  	
  48

  
	
  SECTION 3.11.

  	
  Taxes

  	
   

  	
  49

  
	
  SECTION 3.12.

  	
  Pension and Welfare Plans

  	
   

  	
  49

  
	
  SECTION 3.13.

  	
  Environmental

  	
   

  	
  50

  
	
  SECTION 3.14.

  	
  Regulations U and X

  	
   

  	
  51

  
	
  SECTION 3.15.

  	
  Disclosure; Accuracy of Information; Pro
  Forma Balance Sheets and Projected Financial

  Statements

  	
   

  	
  51

  
	
  SECTION 3.16.

  	
  Insurance

  	
   

  	
  52

  
	
  SECTION 3.17.

  	
  Labor Matters

  	
   

  	
  52

  
	
  SECTION 3.18.

  	
  Solvency

  	
   

  	
  52

  
	
  SECTION 3.19.

  	
  Securities

  	
   

  	
  52

  
	
  SECTION 3.20.

  	
  Indebtedness Outstanding

  	
   

  	
  53

  
	
  SECTION 3.21.

  	
  Security Documents

  	
   

  	
  53

  
	
  SECTION 3.22.

  	
  Anti-Terrorism Laws

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  	
   

  	
   

  
	
  CONDITIONS

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Effective Date

  	
   

  	
  54

  
	
  SECTION 4.02.

  	
  Conditions to Each Credit Event

  	
   

  	
  60

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  	
   

  	
   

  	
   

  
	
  AFFIRMATIVE
  COVENANTS

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  Financial Information, Reports, Notices, etc.

  	
   

  	
  61

  
	
  SECTION 5.02.

  	
  Compliance with Laws, etc.

  	
   

  	
  63

  
	
  SECTION 5.03.

  	
  Maintenance of Properties

  	
   

  	
  63

  
	
  SECTION 5.04.

  	
  Insurance

  	
   

  	
  63

  
	
  SECTION 5.05.

  	
  Books and Records; Visitation Rights

  	
   

  	
  64

  
	
  SECTION 5.06.

  	
  Environmental Covenant

  	
   

  	
  64

  
	
  SECTION 5.07.

  	
  Information Regarding Collateral

  	
   

  	
  65

  
	
  SECTION 5.08.

  	
  Existence; Conduct of Business

  	
   

  	
  66

  
	
  SECTION 5.09.

  	
  Performance of Obligations

  	
   

  	
  66

  
	
  SECTION 5.10.

  	
  Casualty and Condemnation

  	
   

  	
  66

  
	
  SECTION 5.11.

  	
  Pledge of Additional Collateral

  	
   

  	
  66

  
	
  SECTION 5.12.

  	
  Further Assurances

  	
   

  	
  67

  
	
  SECTION 5.13.

  	
  Use of Proceeds

  	
   

  	
  67

  
	
  SECTION 5.14.

  	
  Payment of Taxes

  	
   

  	
  67

  
	
  SECTION 5.15.

  	
  Equal Security for Loans and Notes

  	
   

  	
  67

  
	
  SECTION 5.16.

  	
  Guarantees

  	
   

  	
  68

  
	
  SECTION 5.17.

  	
  Subordination of Intercompany Loans

  	
   

  	
  68

  
	
  SECTION 5.18.

  	
  Interest Rate Protection

  	
   

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  	
   

  	
   

  	
   

  
	
  NEGATIVE
  COVENANTS

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Indebtedness; Certain Equity Securities

  	
   

  	
  69

  
	
  SECTION 6.02.

  	
  Liens

  	
   

  	
  71

  

 

ii

 

	
  SECTION 6.03.

  	
  Fundamental Changes; Line of Business

  	
   

  	
  73

  
	
  SECTION 6.04.

  	
  Investments, Loans, Advances, Guarantees and Acquisitions

  	
   

  	
  74

  
	
  SECTION 6.05.

  	
  Asset Sales

  	
   

  	
  75

  
	
  SECTION 6.06.

  	
  Sale and Leaseback Transactions

  	
   

  	
  76

  
	
  SECTION 6.07.

  	
  Restricted Payments

  	
   

  	
  77

  
	
  SECTION 6.08.

  	
  Transactions with Affiliates

  	
   

  	
  77

  
	
  SECTION 6.09.

  	
  Restrictive Agreements

  	
   

  	
  78

  
	
  SECTION 6.10.

  	
  Amendments or Waivers of Certain Documents; Prepayments of Certain
  Indebtedness

  	
   

  	
  78

  
	
  SECTION 6.11.

  	
  No Other “Designated Senior Indebtedness.”

  	
   

  	
  78

  
	
  SECTION 6.12.

  	
  Interest Expense Coverage Ratio

  	
   

  	
  79

  
	
  SECTION 6.13.

  	
  Total Leverage Ratio

  	
   

  	
  80

  
	
  SECTION 6.14.

  	
  Capital Expenditures

  	
   

  	
  81

  
	
  SECTION 6.15.

  	
  Anti-Terrorism Law

  	
   

  	
  81

  
	
  SECTION 6.16.

  	
  Embargoed Person

  	
   

  	
  82

  
	
  SECTION 6.17.

  	
  Anti-Money Laundering

  	
   

  	
  82

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  	
   

  	
   

  	
   

  
	
  EVENTS OF
  DEFAULT

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  Listing of Events of Default

  	
   

  	
  82

  
	
  SECTION 7.02.

  	
  Action if Bankruptcy

  	
   

  	
  84

  
	
  SECTION 7.03.

  	
  Action if Other Event of Default

  	
   

  	
  85

  
	
  SECTION 7.04.

  	
  Action if Event of Termination

  	
   

  	
  85

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  	
   

  	
   

  
	
  THE AGENTS

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.01.

  	
  The Agents

  	
   

  	
  85

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
   

  	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
  Notices

  	
   

  	
  87

  
	
  SECTION 9.02.

  	
  Survival of Agreement

  	
   

  	
  88

  
	
  SECTION 9.03.

  	
  Binding Effect

  	
   

  	
  88

  
	
  SECTION 9.04.

  	
  Successors and Assigns

  	
   

  	
  88

  
	
  SECTION 9.05.

  	
  Expenses; Indemnity

  	
   

  	
  91

  
	
  SECTION 9.06.

  	
  Right of Setoff

  	
   

  	
  93

  
	
  SECTION 9.07.

  	
  Applicable Law

  	
   

  	
  93

  
	
  SECTION 9.08.

  	
  Waivers; Amendment

  	
   

  	
  93

  
	
  SECTION 9.09.

  	
  Interest Rate Limitation

  	
   

  	
  97

  
	
  SECTION 9.10.

  	
  Entire Agreement

  	
   

  	
  97

  
	
  SECTION 9.11.

  	
  WAIVER OF JURY TRIAL

  	
   

  	
  97

  
	
  SECTION 9.12.

  	
  Severability

  	
   

  	
  97

  
	
  SECTION 9.13.

  	
  Counterparts

  	
   

  	
  97

  
	
  SECTION 9.14.

  	
  Headings

  	
   

  	
  97

  
	
  SECTION 9.15.

  	
  Jurisdiction; Consent to Service of Process

  	
   

  	
  98

  

 

iii

 

 

	
  SECTION 9.16.

  	
  Confidentiality

  	
   

  	
  98

  
	
  SECTION 9.17.

  	
  Citigroup Direct Website Communications

  	
   

  	
  98

  

 

iv

 

	
  EXHIBIT A

  	
  Form of Administrative Questionnaire

  
	
  EXHIBIT B

  	
  Form of Borrowing Request

  
	
  EXHIBIT C

  	
  Form of Assignment and Acceptance

  
	
  EXHIBIT D

  	
  Form of Compliance Certificate

  
	
  EXHIBIT E

  	
  Form of Indemnity, Subrogation and Contribution Agreement

  
	
  EXHIBIT F-1

  	
  Form of Term Note

  
	
  EXHIBIT F-2

  	
  Form of Revolving Note

  
	
  EXHIBIT F-3

  	
  Form of Swingline Note

  
	
  EXHIBIT G

  	
  Form of Closing Certificate

  
	
  EXHIBIT H

  	
  Form of Guarantee Agreement

  
	
  EXHIBIT I

  	
  Form of Pledge Agreement

  
	
  EXHIBIT J

  	
  Form of Security Agreement

  
	
  EXHIBIT K

  	
  Form of Opinion of Local Counsel

  
	
  EXHIBIT L

  	
  Form of Solvency Certificate

  
	
  EXHIBIT M

  	
  Form of Mortgage

  
	
  EXHIBIT N

  	
  Form of Landlord Access Agreement

  
	
   

  	
   

  
	
  SCHEDULE 1.01

  	
  Permitted Restructuring

  
	
  SCHEDULE 1.02

  	
  Existing Letters of Credit

  
	
  SCHEDULE 2.01

  	
  Lenders and Commitments

  
	
  SCHEDULE 3.05

  	
  Financial Information

  
	
  SCHEDULE 3.09

  	
  Subsidiaries

  
	
  SCHEDULE 3.10(b)

  	
  Leased and Owned Real Property

  
	
  SCHEDULE 3.13(a)

  	
  Facilities/Properties Not in Compliance with Environmental Laws

  
	
  SCHEDULE 3.13(b)

  	
  Environmental Claims

  
	
  SCHEDULE 3.13(c)

  	
  Hazardous Materials

  
	
  SCHEDULE 3.16

  	
  Insurance

  
	
  SCHEDULE 3.19

  	
  Securities

  
	
  SCHEDULE 3.20(a)

  	
  Indebtedness to Be Paid

  
	
  SCHEDULE 3.20(b)

  	
  Liens to Be Terminated

  
	
  SCHEDULE 3.21(d)

  	
  Mortgage Filing Offices

  
	
  SCHEDULE 4.01(f)

  	
  Local Counsel

  
	
  SCHEDULE 4.01(u)(A)

  	
  Mortgaged Properties

  
	
  SCHEDULE 4.01(u)(C)

  	
  Title Insurance Amounts

  
	
  SCHEDULE 6.01

  	
  Existing Indebtedness

  
	
  SCHEDULE 6.02

  	
  Existing Liens

  
	
  SCHEDULE 6.04

  	
  Existing Investments

  
	
  SCHEDULE 6.09

  	
  Existing Restrictions

  

 

v

 

CREDIT AGREEMENT (this “Agreement”) dated as of November 22,
2005, among POLYMER GROUP, INC., a Delaware corporation (the “Borrower”);  the financial institutions listed on Schedule 2.01,
as such Schedule may from time to time be supplemented and amended (the “Lenders”);
CITICORP NORTH AMERICA, INC., as administrative agent (in such capacity, the “Administrative
Agent”) for the Lenders, as documentation agent (in such capacity, the “Documentation
Agent”), as syndication agent (in such capacity, the “Syndication Agent”),
and as collateral agent for the Secured Parties (the “Collateral Agent”);
and CITIGROUP GLOBAL MARKETS INC. (“CGMI”), as sole lead arranger and
sole bookrunner (in such capacity, the “Lead Arranger”).

 

The parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

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

 

“ABR Borrowing” means a Borrowing comprised of ABR Loans.

 

“ABR Loan” means any Loan bearing interest at a rate determined
by reference to the Alternate Base Rate in accordance with the provisions of Article II.

 

“Acquisition Consideration” means the purchase consideration for
any Permitted Acquisition and all other payments by the Borrower or any of its
Subsidiaries in exchange for, or as part of, or in connection with any
Permitted Acquisition, whether paid in cash or by exchange of Equity Interests
or of assets, by the assumption of Indebtedness or otherwise and whether
payable at or prior to the consummation of such Permitted Acquisition or
deferred for payment at any future time, whether or not any such future payment
is subject to the occurrence of any contingency, and includes any and all
payments representing the purchase price and any assumptions of Indebtedness, “earn-outs”
and other agreements to make any payment the amount of which is, or the terms
of payment of which are, in any respect subject to or contingent upon the
revenues, income, cash flow or profits (or the like) of any person or business.

 

“Additional Collateral” has the meaning assigned to such term in
Section 5.11.

 

“Adjusted LIBO Rate” means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.

 

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

 

“Administrative Questionnaire” means an Administrative
Questionnaire in the form of Exhibit A.

 

“Affiliate” of any Person means any other Person which, directly
or indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan).  A Person shall
be deemed to be “controlled by” any other Person if such other Person
possesses, directly or indirectly, power

 

(a)                                  to vote 10% or more of the
securities (on a fully diluted basis) of such Person having ordinary voting
power for the election of directors or managing general partners; or

 

 

(b)                                 to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.

 

“Agent Fees” has the meaning assigned to such term in Section 2.10(c).

 

“Agents” means the Administrative Agent and the Collateral
Agent.

 

“Aggregate Revolving Credit Exposure” means the aggregate amount
of the Revolving Lenders’ Revolving Credit Exposures.

 

“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 highest of (a) the Administrative Agent’s Base Rate in effect on
such day, (b) 0.5% per  annum above the
latest three-week moving average of secondary market morning offering rates in
the United States for three-month certificates of deposit of major United
States money market banks, such three-week moving average being determined
weekly on each Monday (or, if any such day is not a Business Day, on the next
succeeding Business Day) for the three-week period ending on the next previous
Friday by the Administrative Agent on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve Bank of
New York or, if such publication shall be suspended or terminated, on the
basis of quotations for such rates received by the Administrative Agent from
three New York certificate of deposit dealers of recognized standing
selected by the Administrative Agent, in either case adjusted to the nearest
0.25% or, if there is no nearest 0.25%, to the next higher 0.25% (the “Certificate
of Deposit Rate”), and (c) the Federal Funds Rate in effect on such
day plus 1/2 of 1%.  Any change in the
Alternate Base Rate due to a change in the Base Rate, the Certificate of Deposit
Rate or the Federal Funds Rate shall be effective as of the opening of business
on the effective day of such change in the Base Rate, the Certificate of
Deposit Rate or the Federal Funds Rate, respectively.

 

“Applicable Rate” means, for any day, (i) with respect to Term
Loans, (A) 1.25% per annum, in the case of ABR Loans, and
(B) 2.25% per annum, in the case of Eurodollar Loans, and
(ii) with respect to Revolving Loans, (A) before the Trigger Date, (x) 1.25% per annum,
in the case of ABR Loans, and (y) 2.25% per annum, in the
case of Eurodollar Loans, and (B) on and after the Trigger Date, the applicable
rate per annum set forth in the table below (x) under the
caption “ABR Revolving Loans Spread,” in the case of ABR Loans, and (y) under
the caption “Eurodollar Revolving Loans Spread,” in the case of Eurodollar
Loans, in each case based upon the Total Leverage Ratio as of the most recent
determination date:

 

	
  Total

  Leverage

  Ratio

  	
   

  	
  ABR

  Revolving Loans

  Spread

  	
   

  	
  Eurodollar

  Revolving Loans

  Spread

  	
   

  
	
  >3.00 to 1.00

  	
   

  	
  1.25

  	
  %

  	
  2.25

  	
  %

  
	
  <3.00 to 1.00

  >2.50 to 1.00

  	
   

  	
  1.00

  	
  %

  	
  2.00

  	
  %

  
	
  <2.50 to 1.00

  	
   

  	
  0.75

  	
  %

  	
  1.75

  	
  %

  

 

For purposes of such calculation of the Applicable Rate with respect to
Revolving Loans on and after the Trigger Date, (i) the Total Leverage
Ratio shall be determined as of the end of each fiscal quarter of the Borrower’s
fiscal year based upon the Borrower’s consolidated financial statements delivered
pursuant to Section 5.01(a) or (b) and (ii) each change in
the Applicable Rate resulting from a 

 

2

 

change in the Total Leverage Ratio shall be effective three (3) Business
Days after the date on which the Administrative Agent shall have received the
applicable financial statements and a Compliance Certificate calculating the
Total Leverage Ratio.  If at any time the
Borrower has not submitted to the Administrative Agent the applicable
information as and when required under Section 5.01(a) or (b), the
Applicable Rate shall be the highest rate set forth in the table above until
such time as the Borrower has provided the information required under Section 5.01(a) or
(b).  Within one (1) Business Day of
receipt of the applicable information as and when required under Section 5.01(a) or
(b), the Administrative Agent shall give each Lender telefacsimile or
telephonic notice (confirmed in writing) of the Applicable Rate in effect from
such date.

 

“Asset Sale” means any direct or indirect sale, transfer, lease,
conveyance or other disposition by the Borrower or any of its Subsidiaries of
any of its Property, including any sale or issuance of any Equity Interests of
any Subsidiary, except (a) sales, dispositions and leases permitted by Section 6.05
(other than subsection (ix) thereof) and (b) any such transaction or
series of transactions which, if an Asset Sale, would not generate Net Proceeds
in excess of $2.0 million (or, when taken together with all other such
transactions, in excess of $5.0 million in any Fiscal Year).

 

“Assignment and Acceptance” means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04(b)), and accepted by the
Administrative Agent, in the form of Exhibit C or such other form
as shall be approved by the Administrative Agent.

 

“Attributable Indebtedness” 
means, when used with respect to any Sale and Leaseback Transaction, as
at the time of determination, the present value (discounted at the interest
rate determined by the Borrower in good faith as its cost of borrowing for
Indebtedness of comparable term) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in any such
Sale and Leaseback Transaction; provided that if such Sale and Leaseback
Transaction results in a Capital Lease Obligation, the amount of Indebtedness
represented thereby will be determined in accordance with the definition of “Consolidated
Interest Expense”.

 

“Authorized Officer” means, with respect to the Borrower, those
of its officers whose signature and incumbency has been certified to the
Administrative Agent, the Collateral Agent and the Lenders by the Secretary of
the Borrower in a certificate dated the Effective Date or any successor
thereto.

 

“Available Revolving Credit Commitment” means as to any
Revolving Lender, at any time of determination, an amount equal to such
Revolving Lender’s Revolving Credit Commitment at such time minus such
Revolving Lender’s Revolving Credit Exposure at such time.

 

“Base Amount” has the meaning assigned to such term in Section 6.14(a).

 

“Base Rate” means the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its base rate in
effect at its principal office in New York City (the Base Rate not being
intended to be the lowest rate of interest charged by the Administrative Agent
in connection with extensions of credit to debtors) (any change in such rate
announced by the Administrative Agent shall take effect at the opening of
business on the day specified in the public announcement of such change).

 

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

 

3

 

“Borrower” has the meaning ascribed to such term in the preamble
to this Agreement.

 

“Borrowing” means a Loan or group of Loans to the Borrower of
the same Class and Type made (including through a conversion or
continuation) by the applicable Lenders on a single date and as to which a
single Interest Period is in effect.

 

“Borrowing Date” means any Business Day specified in a notice
pursuant to Section 2.02 as a date on which the Borrower requests Loans to
be made hereunder.

 

“Borrowing Request” has the meaning assigned to such term in Section 2.02(a).

 

“Business Day” means a day other than a Saturday, Sunday or
other day on which commercial banks in New York, New York are
authorized or required by law to close.

 

“Canadian Dollars” and “Cdn. $” means lawful money of
Canada.

 

“Capital Expenditures” means, for any period, any and all expenditures
made by the Borrower or any of its Subsidiaries in such period for assets added
to or reflected in its property, plant and equipment accounts or other similar
capital asset accounts or comparable items (which, for the avoidance of doubt,
shall not include normal replacements and maintenance which are properly
charged to current operations) or any other capital expenditures that are, or
should be, set forth as “additions to plant, property and equipment” on the
financial statement prepared in accordance with GAAP, whether such asset is
purchased for cash or financed as an account payable or by the incurrence of
Indebtedness, accrued as a liability or otherwise, but excluding expenditures
made in connection with the repair, replacement, substitution or restoration of
property pursuant to Section 2.05(c)(iv) or in connection with the
reinvestment in capital assets pursuant to Section 2.05(c)(iii).

 

“Capital Lease Obligations” means all monetary or financial
obligations of the Borrower and its Subsidiaries under any leasing or similar
arrangement conveying the right to use real or personal property, or a
combination thereof, which, in accordance with GAAP, would or should be
classified and accounted for as capital leases, and the amount of such obligations
shall be the capitalized amount thereof determined in accordance with GAAP and
the stated maturity thereof shall be the date of the last payment of rent or
any other amount due under such lease prior to the first date on which such
lease may be terminated by the lessee without payment of a penalty.

 

“Cash Equivalents” means Permitted Investments (other than as
described in clause (g) of the definition thereof).

 

“Cash Interest Expense” means, for any period, Consolidated
Interest Expense for such period, excluding any interest expense not payable in
cash (such as, for example, amortization of discount and amortization of debt
issuance costs), net of interest income.

 

“CERCLA” means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.

 

“CERCLIS” means the Comprehensive Environmental Response,
Compensation and Liability Information System List.

 

“Certificate of Deposit Rate” has the meaning assigned to such
term in the definition of “Alternate Base Rate”.

 

4

 

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

 

“Change in Control” means any one or
more of the following events shall occur and be continuing:

 

(i)                                     any
Person (other than the GOF Holders) shall own, collectively, on a fully-diluted
basis (in other words, giving effect to the exercise of any warrants, options
and conversion and other rights), more than 35% of the aggregate shares of
voting capital stock of the Borrower (representing at least 35% of the votes
that may be cast in an election of directors of the Borrower); or

 

(ii)                                  during
any period of 12 consecutive calendar months, at least a majority of the Board
of Directors of the Borrower shall no longer be composed of individuals (w) who
were appointed by one or more of the GOF Holders, (x) who were members of
said Board on the first day of such period, (y) whose election or
nomination to said Board was approved by individuals referred to in clause (x) above
constituting at the time of such election or nomination at least a majority of
said Board or (z) whose election or nomination to said Board was approved
by individuals referred to in clauses (w), (x) and (y) above
constituting at the time of such election or nomination at least a majority of
said Board.

 

“Charges” has the meaning assigned to such term in Section 9.09.

 

“Class,” when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are Revolving
Loans, Term Loans or Swingline Loans and, when used in reference to any
Commitment, refers to whether such Commitment is a Revolving Credit Commitment
or Term Commitment and, when used in reference to any Lender, refers to whether
such Lender is a Revolving Lender or a Term Lender.

 

“Closing Certificate” means a certificate substantially in the
form of Exhibit G.

 

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

 

“Collateral” means each Mortgaged Property and any and all other
Property of whatever kind and nature pledged as collateral under any Security
Document.

 

“Collateral Account” means the collateral account or sub-account
established and maintained by the Collateral Agent in its name as Collateral
Agent for the benefit of the Secured Parties, in accordance with the provisions
of the Security Agreement.

 

“Collateral Agent” has the meaning ascribed to such term in the
preamble to this Agreement.

 

“Commitment” means, with respect to any Lender, such Lender’s
Revolving Credit Commitment or Term Commitment or any combination thereof (as
the context requires).

 

“Commitment Fee” has the meaning assigned to such term in Section 2.10(a).

 

“Commitment Fee Average Daily Amount” has the meaning assigned
to such term in Section 2.10(a).

 

5

 

“Commitment Fee Percentage” means 0.50% per annum; provided,
however, that after the Trigger Date, the Commitment Fee Percentage shall mean
the applicable percentage set forth in the table below under the appropriate
caption:

 

	
  Total Leverage Ratio

  	
   

  	
  Commitment Fee Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  >2.50:1

  	
   

  	
  0.500

  	
  %

  
	
  <2.50:1

  	
   

  	
  0.375

  	
  %

  

 

For purposes of such calculation of the Commitment Fee Percentage on
and after the Trigger Date, (i) the Total Leverage Ratio shall be
determined as of the end of each fiscal quarter of the Borrower’s fiscal year
based upon the Borrower’s consolidated financial statements delivered pursuant
to Section 5.01(a) or (b) and (ii) each change in the
Commitment Fee Percentage resulting from a change in the Total Leverage Ratio
shall be effective three (3) Business Days after the date on which the
Administrative Agent shall have received the applicable financial statements
and a Compliance Certificate calculating the Total Leverage Ratio.  If at any time the Borrower has not submitted
to the Administrative Agent the applicable information as and when required
under Section 5.01(a) or (b), the Commitment Fee Percentage shall be
the higher rate set forth in the table above until such time as the Borrower
has provided the information required under Section 5.01(a) or
(b).  Within one (1) Business Day of
receipt of the applicable information as and when required under Section 5.01(a) or
(b), the Administrative Agent shall give each Lender telefacsimile or
telephonic notice (confirmed in writing) of the Commitment Fee Percentage in
effect from such date.

 

“Commitment Fee Termination Date” has the meaning assigned to
such term in Section 2.10(a).

 

“Commitment Percentage” means the percentage of the Total
Revolving Credit Commitment represented by such Lender’s Revolving Credit
Commitment.  If the Revolving Credit
Commitments have terminated or expired, the Commitment Percentage shall be
determined based upon the Revolving Credit Commitments most recently in effect,
giving effect to any assignments.

 

“Commitments” means the Revolving Credit Commitments, the
Swingline Commitments and the Term Commitments.

 

“Communications” has the meaning assigned to such term in Section 9.17(a).

 

“Compliance Certificate” has the meaning assigned to such term
in Section 5.01(a) and shall be substantially in the form of Exhibit D.

 

“Conduit Financing Arrangement” has the meaning assigned to such
term in Section 2.16.

 

“Consolidated Current Assets” means, as at any date of
determination, the total assets of the Borrower and its Subsidiaries which may
properly be classified as current assets on a consolidated balance sheet of the
Borrower and its Subsidiaries in accordance with GAAP (other than cash and Cash
Equivalents).

 

6

 

“Consolidated Current Liabilities” means, as at any date of
determination, the total liabilities of the Borrower and its Subsidiaries which
may properly be classified as current liabilities (other than the current
portion of any Loans) on a consolidated balance sheet of the Borrower and its
Subsidiaries in accordance with GAAP.

 

“Consolidated EBITDA” means, for any period, Consolidated Net
Income for such period, plus, without duplication and to the extent deducted in
determining Consolidated Net Income for such period, the sum of:  (a) the aggregate amount of Consolidated
Interest Expense for such period, (b) the aggregate amount of income and
franchise tax expense for such period, (c) all amounts attributable to
depreciation and amortization for such period, (d) all unusual or
non-recurring non-cash charges during such period (excluding any non-cash item
of expense requiring an accrual or reserve for future cash expense), (e) plant
restructuring and realignment costs not to exceed $25.0 million in the aggregate
during the term of this Agreement, (f) all fees and expenses paid during
such period directly relating to the refinancing of the Existing Credit
Agreement and (g) all non-cash stock compensation expense; and minus,
without duplication and to the extent included in determining Consolidated Net
Income for such period, all non-recurring non-cash gains during such period;
all as determined on a consolidated basis with respect to the Borrower and its
Subsidiaries in accordance with GAAP. 
Other than for purposes of calculating Excess Cash Flow, Consolidated
EBITDA shall be calculated on a Pro Forma Basis to give effect to the
Transactions, any Permitted Acquisition and Asset Sales consummated at any time
on or after the first day of the Test Period thereof as if the Transactions and
each such Permitted Acquisition had been effected on the first day of such
period and as if each such Asset Sale had been consummated on the day prior to
the first day of such period.

 

“Consolidated Indebtedness” means, at a particular date, the
aggregate stated balance sheet amount of all Indebtedness of the Borrower and
its Subsidiaries determined on a consolidated basis in accordance with GAAP at
such date.

 

“Consolidated Interest Expense” means, for any period, the total
consolidated interest expense of the Borrower and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP plus, without duplication:

 

(a)                                  imputed interest on
Capital Lease Obligations and Attributable Indebtedness of the Borrower and its
Subsidiaries for such period;

 

(b)                                 commissions, discounts
and other fees and charges owed by the Borrower or any of its Subsidiaries with
respect to letters of credit securing financial obligations, bankers’ acceptance
financing and receivables financings for such period;

 

(c)                                  amortization of debt
issuance costs, debt discount or premium and other financing fees and expenses
incurred by the Borrower or any of its Subsidiaries for such period;

 

(d)                                 all interest paid or
payable with respect to discontinued operations of the Borrower or any of its
Subsidiaries for such period;

 

(e)                                  the interest portion
of any deferred payment obligations of the Borrower or any of its Subsidiaries
for such period; and

 

(f)                                    all interest on any
Indebtedness of the Borrower or any of its Subsidiaries of the type described
in clause (iii) or (x) of the definition of “Indebtedness” for
such period

 

7

 

Consolidated Interest Expense and Cash Interest Expense (other than for
purposes of calculating Excess Cash Flow) shall be calculated on a Pro Forma
Basis to give effect to any Indebtedness incurred, assumed or permanently
repaid or extinguished during the relevant Test Period in connection with the
Transactions, any Permitted Acquisitions and Asset Sales as if such incurrence,
assumption, repayment or extinguishing had been effected on the first day of
such period.

 

“Consolidated Net Income” means, for any period, the sum of net
income (or loss) and minority interests for such period of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with GAAP, but
excluding:  (a) any income (or loss)
of any Person if such Person is not a Subsidiary of the Borrower, except that
the aggregate amount of cash actually distributed by such Person during such
period to the Borrower or a Subsidiary of the Borrower as a dividend or other
distribution shall be included; (b) the amount of any cash distributed by
any non-Wholly Owned Subsidiary to a Person other than the Borrower or any of
its Subsidiaries; (c) gains and losses due solely to fluctuations in
currency values and the related tax effects determined in accordance with GAAP
for such period; (d) unrealized gains and losses with respect to Hedging
Agreements for such period; and (e) the income of any Subsidiary of the
Borrower to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary of that income is prohibited by operation of
the terms of its charter or any agreement, instrument, judgment, decree,
statute, rule or governmental regulation applicable to such Subsidiary.

 

“Contested Collateral Lien Conditions” means (a) any
proceeding instituted contesting such Lien shall conclusively operate to stay
the sale or forfeiture of any portion of the Collateral on account of such
Lien; and (b) in the event the amount of any such Lien shall exceed
$2.0 million, the Loan Party or its applicable Subsidiary shall either
obtain a bond or maintain cash reserves, in either case, in an amount
sufficient to pay and discharge such Lien and the Collateral Agent’s reasonable
estimate of all interest and penalties related thereto.

 

“Credit Event” has the meaning assigned to such term in Section 4.02.

 

“Cumulative Retained Excess Cash Flow Amount” shall mean, at any
date, an amount, not less than zero, determined on a cumulative basis equal to (x) the
amount of Excess Cash Flow for all Fiscal Years (commencing with the Fiscal
Year ending December 30, 2006) which is not (and, in the case of any
Fiscal Year where the respective required date of prepayment has not yet
occurred pursuant to Section 2.05(c)(v), will not on such date of required
prepayment be) required to be applied in accordance with Section 2.05(c)(v) minus  (y) the aggregate amount of Capital
Expenditures made on or prior to such date pursuant to Section 6.14(b)(ii).

 

“Debt Incurrence” has the meaning assigned to such term in Section 2.05(c)(ii).

 

“Debt Repayments” means, for any period, principal repayments
permitted by Section 6.10 and optional prepayments (to the extent such
repayments and optional prepayments are made from internally generated funds)
of  Indebtedness made by the Borrower and
its Subsidiaries during such period (other than repayments or prepayments of
intercompany loans); provided that, with respect to payments of
Revolving Loans, such payments shall only be included in this definition to the
extent that such payment is accompanied by a simultaneous reduction of the
Revolving Credit Commitments).

 

“Default” means any Event of Default, any Event of Termination
and any event or condition which upon notice, lapse of time or both would
constitute an Event of Default or Event of Termination.

 

8

 

“Destruction” means any and all damage to, or loss or
destruction of, or loss of title to, all or any portion of the Property of the
Borrower or any of its Subsidiaries.

 

“Disqualified Equity Interests” has the meaning assigned to such
term in Section 6.01(b).

 

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

 

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

 

“Domestic Subsidiary” means any Subsidiary of the Borrower that
is not a Non-U.S. Subsidiary.

 

“Effective Date” means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section 9.08).

 

“Engagement Letter” means the Engagement Letter dated October 17,
2005 between CGMI and the Borrower.

 

“Environment” means ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, natural resources such as flora and fauna, or as otherwise
defined in any applicable Environmental Law.

 

“Environmental Claim” means any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
other Person for damages, injunctive or equitable relief, personal injury
(including sickness, disease or death), Remedial Action costs, tangible or
intangible property damage, natural resource damages, nuisance, pollution, any
adverse effect on the Environment caused by any Hazardous Material, or for
fines, penalties or restrictions, resulting from or based upon:  (a) the existence, or the continuation
of the existence, of a Release or threatened Release (including sudden or
non-sudden, accidental or non-accidental Releases); (b) exposure to any
Hazardous Material; (c) the presence, generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Material; or (d) the
violation or alleged violation of any Environmental Law or Environmental
Permit.

 

“Environmental Laws” means any and all applicable treaties, laws
(including common law), rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions or binding agreements issued, promulgated or entered
into by any Governmental Authority, relating in any way to the Environment,
preservation or reclamation of natural resources, the management, Release or
threatened Release of, or exposure to, any Hazardous Material.

 

“Environmental Liability” means any liability, 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 Borrower or any of its
Subsidiaries 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 or (d) the Release or threatened Release of any
Hazardous Materials into the Environment.

 

“Environmental Permit” means any permit, approval,
authorization, certificate, license, variance, filing or permission required by
or from any Governmental Authority pursuant to any Environmental Law.

 

9

 

“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.

 

“Equity Issuance” has the meaning assigned to such term in Section 2.05(c)(i).

 

“Equity Rights” means all securities convertible or exchangeable
for Equity Interests and all warrants, options or other rights to purchase or
subscribe for any Equity Interests, whether or not presently convertible,
exchangeable or exercisable.

 

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

 

“ERISA Affiliate” means any trade or business (whether or not
incorporated) that, together with any Loan Party, is treated as a single
employer under Sections 414(b) or (c) of the Code, and for the
purpose of Section 302 of ERISA and/or Section 412, 4971, 4977,
4980D, 4980E and/or each “applicable section” under Section 414(t)(2) of
the Code, within the meaning of Section 414(b), (c), (m) or (o) of
the Code.

 

“ERISA Event” means (a) any “reportable event,” as defined
in Section 4043(c) of ERISA or the regulations issued thereunder,
with respect to a Pension Plan (other than an event for which the 30-day notice
period is waived by regulation); (b) the existence with respect to any
Pension Plan of an “accumulated funding deficiency” (as defined in Section 412
of the Code or Section 302 of ERISA), whether or not waived, the failure
to make by its due date a required installment under Section 412(m) of
the Code with respect to any Pension Plan or the failure to make any required
contribution to a Multiemployer Plan; (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 Pension Plan; (d) the
incurrence by any Loan Party or ERISA Affiliate of any liability under
Title IV of ERISA with respect to any Pension Plan; (e) the receipt
by any Loan Party or ERISA Affiliate from the PBGC or a plan administrator of
any notice relating to an intention to terminate any Pension Plan, to appoint a
trustee to administer any Pension Plan, or to take any other action with
respect to a Pension Plan that could result in material liability to a Loan
Party or a Subsidiary, or the occurrence of any event or condition which could
reasonably be expected to constitute grounds under ERISA for the termination of
or the appointment of a trustee to administer, any Pension Plan; (f) the
incurrence by any Loan Party or ERISA Affiliate of any liability with respect
to the withdrawal or partial withdrawal from any Pension Plan or Multiemployer
Plan; (g) the receipt by a Loan Party or 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; (h) the making of any
amendment to any Pension Plan which could result in the imposition of a lien or
the posting of a bond or other security; or (i) the occurrence of a
nonexempt prohibited transaction (within the meaning of Section 4975 of
the Code or Section 406 of ERISA) which could result in liability to a
Loan Party or any of the Subsidiaries.

 

“Eurodollar Borrowing” means a Borrowing comprised of Eurodollar
Loans.

 

“Eurodollar Loan” means any Loan bearing interest at a rate
determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.

 

“Event of Default” has the meaning
assigned to such term in Section 7.01.

 

“Event of Termination” has the meaning assigned to such term in Section 7.01.

 

10

 

“Excess Cash Flow” means, for the Borrower and its Subsidiaries,
for any period, (a) the sum, without duplication, of:

 

(i)            Consolidated
EBITDA for such period;

 

(ii)           extraordinary
or non-recurring cash receipts of the Borrower and its Subsidiaries, if any,
during such period and not included in Consolidated EBITDA;

 

(iii)          reductions
to non-cash working capital of the Borrower and its Subsidiaries for such
period (i.e., the decrease, if any, in Consolidated Current Assets minus
Consolidated Current Liabilities from the beginning to the end of such period);
and

 

(iv)          to
the extent subtracted in determining Consolidated EBITDA, all items that did
not result from a cash payment by the Borrower or any of its Subsidiaries on a
consolidated basis during such period,

 

minus (b) the sum, without duplication,
of:

 

(i)            the
amount of any cash income and franchise taxes paid by the Borrower and its
Subsidiaries with respect to such period;

 

(ii)           Cash
Interest Expense of the Borrower and its Subsidiaries during such period;

 

(iii)          Capital
Expenditures committed or made in cash only from internally generated funds in
accordance with Section 6.14(a) and (c) during such period (and
not deducted from Excess Cash Flow in any prior year);

 

(iv)          extraordinary
or non-recurring expenses and losses to the extent paid in cash by the Borrower
and its Subsidiaries, if any, during such period and not included in
Consolidated EBITDA;

 

(v)           additions
to non-cash working capital of the Borrower and its Subsidiaries for such
period (i.e., the increase, if any, in Consolidated Current Assets minus Consolidated
Current Liabilities from the beginning to the end of such period);

 

(vi)          the
amount of all fees and expenses paid in cash during such period directly relating
to the refinancing of the Existing Credit Agreement;

 

(vii)         expenses
or losses excluded from the calculation of Consolidated EBITDA during such
period by operation of clause (e) of the definition thereof to the extent
paid in cash during such period; and

 

(viii)        to
the extent added to determine Consolidated EBITDA, all items that did not result
from a cash payment to the Borrower or any of its Subsidiaries on a
consolidated basis during such period;

 

provided that, to the extent otherwise
included herein, the Net Proceeds of Asset Sales, Destructions, Takings, Debt
Incurrences and Equity Issuances which are applied towards the prepayment of
Loans and/or the reduction of Commitments and/or the repair, replacement,
substitution, restoration of or reinvestment

 

11

 

in property in accordance with Section 2.05(c) shall be
excluded from the calculation of Excess Cash Flow.

 

“Excess Cash Flow Percentage” means, as of any date of
determination, (i) 50% if the Total Leverage Ratio is greater than or
equal to 3.0x as of such date and (ii) 25% if the Total Leverage Ratio is
less than 3.0x as of such date.

 

“Exchange” has the meaning set forth in Section 4.01(h).

 

“Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

“Excluded Equity Issuance” means (a) the issuance of any
warrants, options or Equity Interests to directors, officers or employees of
the Borrower or any of its Subsidiaries in the ordinary course of business and
any Equity Interests of the Borrower issued upon the exercise of such warrants
or options, (b) any issuance of Equity Interests (other than Disqualified
Equity Interests) of the Borrower to the GOF Holders and (c) any issuance
of Equity Interests (other than Disqualified Equity Interests) of the Borrower
to the extent the proceeds thereof are contemporaneously applied to fund
Permitted Acquisitions permitted by Section 6.04 or to fund Capital
Expenditures permitted by Section 6.14(a).

 

“Existing Credit Agreement” means the Credit Agreement dated as
of April 27, 2004 among the Borrower, Citicorp North America Inc., as
administrative agent, and the other financial institutions party thereto, as
amended.

 

“Federal Funds Rate” means, for any day, the weighted average of
the rates (rounded upwards, if necessary, to the nearest 1/100th of 1%) on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York; provided that (a) if
the day for which such rate is to be determined is not a Business Day, the
Federal Funds Rate for such day shall be such rate for such transactions on the
next preceding Business Day as so published on the next succeeding Business
Day, and (b) if such rate is not so published for any day which is a
Business Day, the Federal Funds Rate for such day shall be the average of the
quotations for the day of such transactions received by the Administrative
Agent from three federal funds brokers of recognized standing selected by it.

 

“Fees” means the Commitment Fees, the LC Fees and the Agent
Fees.

 

“Financial Covenants” means those covenants and agreements of
the Loan Parties set forth in Sections 6.12 through 6.14, inclusive.

 

“Financial Officer” of any corporation, partnership or other
entity means the chief financial officer, the principal accounting officer,
Treasurer or Controller of such corporation, partnership or other entity.

 

“Fiscal Quarter” means any quarter of a Fiscal Year.

 

“Fiscal Year” means any period of twelve consecutive calendar
months which form the basis for the Borrower’s financial statements in its Form 10-K;
references to a Fiscal Year with a number corresponding to any calendar year (e.g.,
the “2005 Fiscal Year”) refer to the Fiscal Year as disclosed in the Borrower’s
SEC filings.

 

12

 

“Foreign Plan” means any employee benefit plan, program, policy,
arrangement or agreement maintained or contributed to outside the United States
by any Loan Party or any Subsidiary primarily for the benefit of employees of
any Loan Party or any Subsidiary employed outside the United States.

 

“GAAP” means generally accepted accounting principles in the
United States applied on a consistent basis.

 

“GOF” means MatlinPatterson Global Opportunities Partners LP.

 

“GOF Holders” means GOF and each of its Affiliates that hold the
equity of the Borrower on the date hereof, so long as such entities continue to
be managed or controlled by GOF or are Affiliates or Subsidiaries of GOF.

 

“Governmental Authority” means any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body, including any central bank.

 

“Greenshoe Option” has the meaning assigned to such term in Section 9.08(g).

 

“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 (including pursuant to a “synthetic lease”), (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.  The amount of the
obligation under any Guarantee shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made (including principal, interest and
fees) and (b) the maximum amount for which such guarantor may be liable
pursuant to the terms of the instrument embodying such Guarantee, unless such
primary obligation and the maximum amount for which such guarantor may be
liable are not stated or determinable, in which case the amount of the
obligation under such Guarantee shall be such guarantor’s maximum reasonably
anticipated liability in respect thereof as determined by the guarantor in good
faith; irrespective, in any such case, of any amount thereof that would, in
accordance with GAAP, be required to be reflected on a balance sheet of such
Person.

 

“Guarantee Agreement” means the Guarantee Agreement,
substantially in the form of Exhibit H, made by the Borrower and
the Subsidiary Loan Parties.

 

“Hazardous Materials” means all pollutants, contaminants,
wastes, substances, chemicals, materials and constituents, including without
limitation, crude oil, petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls (“PCBs”) or
PCB-containing materials or equipment of any nature which can give rise to
liability under, or are subject to regulation pursuant to, any Environmental
Law.

 

13

 

“Hedging Agreement” means any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price
hedging arrangement and all other similar agreements or arrangements designed
to alter the risks of any Person arising from fluctuations in interest rate,
currency values or commodity prices.

 

“Impermissible Qualification” means, relative to the opinion or
certification of any independent public accountant as to any financial
statement of the Borrower, any qualification or exception to such opinion or
certification:

 

(a)           which
is of a “going concern” or similar nature;

 

(b)           which
relates to the limited scope of examination of matters relevant to such financial
statement; or

 

(c)           which
relates to the treatment or classification of any item in such financial
statement and which, as a condition to its removal, would require an adjustment
to such item the effect of which would be to cause the Borrower to be in
default of any of its obligations under any of Sections 6.12 or 6.13.

 

“Increased Cost Lender” has the meaning assigned to such term in
Section 2.20.

 

“Indebtedness” of any Person means the sum of all indebtedness
of such Person on a consolidated basis (without duplication) with respect to (i) borrowed
money or represented by bonds, debentures, notes and the like; (ii) the
aggregate amount of Capital Lease Obligations; (iii) all indebtedness secured
by any Lien on any Property of such Person; (iv) all indebtedness
representing the deferred purchase price of Property or services, excluding
trade payables in the ordinary course of business; (v) all obligations for
the reimbursement of any obligor in respect of letters of credit, letters of
guaranty, bankers’ acceptances and similar credit transactions; (vi) all
obligations under conditional sale or other title retention agreements relating
to property purchased by such Person; (vii) synthetic lease obligations of
such Person; (viii) all obligations under Hedging Agreements to the extent
required to be reflected on a balance sheet of such Person; (ix) all
Attributable Indebtedness of such Person; and (x) direct Guarantees and
indemnities in respect of, and to purchase or otherwise acquire, or otherwise
to assure a creditor against loss in respect of, or to assure an obligee
against failure to make payment in respect of, liabilities, obligations or
indebtedness of the kind described in clauses (i) through (ix).

 

“Indebtedness to Be Paid” has the
meaning assigned to such term in Section 3.20(a).

 

“Indemnity, Subrogation and Contribution Agreement” means the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit E.

 

“Information Memorandum” means the Confidential Information
Memorandum dated as of November 2005 and posted electronically on
Intralinks relating to the Borrower and this Agreement.

 

“Installment Payment Date” has the meaning assigned to such term
in Section 2.05(d).

 

“Interest Expense Coverage Ratio” means, for any Test Period,
the ratio of (a) Consolidated EBITDA to (b) Cash Interest Expense, in
each case for such Test Period.

 

“Interest Payment Date” means, with respect to any Loan, the
last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing

 

14

 

with an Interest Period of more
than three months’ duration, (a) each day that would have been an Interest
Payment Date had successive Interest Periods of three months’ duration been
applicable to such Borrowing and, in addition, (b) the date of any
refinancing of such Borrowing with a Borrowing of a different Type.

 

“Interest Period” means (a) as to any Eurodollar Borrowing,
the period commencing on the date of such Borrowing (including any date on
which such Borrowing shall have been converted from a Borrowing of a different
Type) or on the last day of the immediately preceding Interest Period applicable
to such Borrowing, as the case may be, and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the
last day) in the calendar month that is 1, 2, 3 or 6 months (or if
available to all Lenders, two weeks or 9 or 12 months) thereafter, as the
Borrower may elect; or (b) as to any ABR Borrowing (other than a Swingline
Borrowing), the period commencing on the date of such Borrowing (including any
date on which such Borrowing shall have been converted from a Borrowing of a
different Type) or on the last day of the immediately preceding Interest Period
applicable to such Borrowing, as the case may be, and ending on the earliest of
(i) the next succeeding March 31, June 30, September 30 or December 31,
(ii) the Revolving Credit Maturity Date and (iii) the date such
Borrowing is prepaid in accordance with Section 2.05 or converted in
accordance with Section 2.03 and (c) as to any Swingline Loan, a
period commencing on the date of such Loan and ending on the earliest of (i) the
fifth Business Day thereafter, (ii) the Revolving Credit Maturity Date and
(iii) the date such Loan is prepaid in accordance with Section 2.05; provided,
however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a Eurodollar Borrowing only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day.  Interest shall accrue from and including the
first day of an Interest Period to but excluding the last day of such Interest
Period.

 

“Investment” has the meaning assigned
to such term in Section 6.04.

 

“Issuing Bank” means Citibank NA, in its capacity as the issuer
of Letters of Credit hereunder, and its successors in such capacity as provided
in Section 2.06(i), or any other Revolving Lender approved by the Administrative
Agent and the Borrower.  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.

 

“Landlord Access Agreement” means a landlord access agreement
substantially in the form of Exhibit N attached hereto

 

“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 Borrower at such time.  The LC Exposure of any Revolving Lender at
any time shall be its Commitment Percentage of the total LC Exposure at such
time.

 

“LC Fees” has the meaning assigned to such term in Section 2.10(b).

 

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

 

15

 

“Lender Affiliate” means (a) with respect to any Lender, (i) an
Affiliate of such Lender or (ii) any entity (whether a corporation,
partnership, trust or otherwise) that is engaged in making, purchasing, holding
or otherwise investing in bank loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Lender or
an Affiliate of such Lender and (b) with respect to any Lender that is a
fund which invests in bank loans and similar extensions of credit, any other
fund that invests in bank loans and similar extensions of credit and is managed
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

 

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

 

“Letter of Credit” means any letter of credit issued pursuant to
this Agreement and shall also include the letters of credit issued by Citibank
NA under the Existing Credit Agreement and set forth on Schedule 1.02 hereto.

 

“LIBO Rate” means, with respect to any Eurodollar Borrowing for
any Interest Period the rate appearing on Page 3750 of the Telerate
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, as the rate
for Dollar deposits with a maturity comparable to such Interest Period.  In the event that such rate is not available
at such time for any reason, then the “LIBO Rate” with respect to such
Eurodollar Borrowing for such Interest Period shall be the rate supplied to the
Administrative Agent at its request quoted by the Reference Banks in the London
interbank market as of the day two Business Days prior to the commencement of
such Interest Period as the rate for Dollar deposits with a maturity comparable
to such Interest Period.

 

“Lien” means, with respect to any asset, (a) any mortgage,
deed of trust, deed to secure debt, lien, pledge, encumbrance, charge,
assignment, hypothecation or security interest in or on such asset, in each of
the foregoing cases whether voluntary or imposed by law, (b) the interest
of a vendor or a lessor under any conditional sale agreement, capital lease or
title retention agreement relating to such asset, (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities, (d) in the case of any investment property or
deposit account, any contract or other agreement under which any third party
has the right to control such investment property or deposit account and (e) any
other agreement intended to create any of the foregoing.

 

“Loan Documents” means this Agreement, the Indemnity,
Subrogation and Contribution Agreement, the Guarantee Agreement, the Security
Documents, each Note and, solely for purposes of Section 7.01(a), the
Engagement Letter.

 

“Loan Parties” means the Borrower and the Subsidiary Loan
Parties.

 

“Loans” means the Revolving Loans, the Swingline Loans and the
Term Loans.

 

“Material Adverse Effect” means a materially adverse effect on (a) the
business, assets, operations, properties, financial condition or liabilities of
the Loan Parties and their consolidated Subsidiaries, taken as a whole, or (b) the
ability of any Loan Party to perform their obligations under the Loan
Documents, (c) the rights of or benefits available to the Lenders under
any Loan Document or (d) the value of the Collateral or the validity,
enforceability, perfection or priority of the Liens granted to the

 

16

 

Collateral Agent (for its
benefit and for the benefit of the other Secured Parties) on the Collateral
pursuant to the Security Documents.

 

“Material Indebtedness” means Indebtedness (other than the Loans
and Letters of Credit) of any one or more of the Borrower and the Borrower’s
Subsidiaries, individually or in an aggregate principal amount exceeding
$10.0 million.  For purposes of
determining Material Indebtedness, the “principal amount” of the obligations of
the Borrower or any Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.

 

“Maximum Rate” has the meaning assigned to such term in Section 9.09.

 

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

 

“Mortgage” means a mortgage, deed of trust, leasehold mortgage
or deed of trust or other security document granting a Lien on any Mortgaged
Property, which shall be substantially in the form of Exhibit M.

 

“Mortgaged Property” means, initially, each parcel of real
property and the improvements thereto owned or leased by a Loan Party and
identified on Schedule 4.01(u)(A), and includes each other parcel
of real property and improvements thereto with respect to which a Mortgage is
granted pursuant to Section 5.11 or 5.12.

 

“Multiemployer Plan” means a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA (i) to which any Loan
Party or ERISA Affiliate is then making or has an obligation to make
contributions, (ii) to which any Loan Party or ERISA Affiliate has within
the preceding six plan years made contributions, including any Person which
ceased to be an ERISA Affiliate during such six year period, or (iii) with
respect to which Loan Party or any Subsidiary could incur liability.

 

“Net Proceeds” means, with respect to any Equity Issuance, Debt
Incurrence, Asset Sale, Destruction or Taking, (a) the cash proceeds
actually received in respect of such event, including (i) any cash
received in respect of any non-cash proceeds, but only as and when received, (ii) in
the case of a Destruction, insurance proceeds only to the extent in excess of
$2.5 million, in the aggregate for all such events and (iii) in the
case of a Taking, condemnation awards and similar payments only to the extent
in excess of $2.5 million, in the aggregate for all such events, net of (b) the
sum of (i) all reasonable fees and out-of-pocket expenses paid by the
Borrower and its Subsidiaries in connection with such event, (ii) the
amount of all taxes paid (or reasonably estimated to be payable) by the
Borrower and its Subsidiaries, and (iii) in the case of an Asset Sale,
Destruction or Taking, the amount of all payments required to be made by the
Borrower and its Subsidiaries as a result of such event to repay Indebtedness
(other than Loans) secured by a Prior Lien (as defined in the Security
Agreement or applicable Mortgage) on such asset and the amount of any reserves
established by the Borrower and its Subsidiaries to fund contingent liabilities
reasonably estimated to be payable, in each case during the year that such
event occurred or the next succeeding two years, and that are directly
attributable to such event (as determined reasonably and in good faith by the
Borrower); provided that any amount by which such reserves are reduced
for reasons other than payment of any such contingent liabilities shall be
considered “Net Proceeds” upon such reduction.

 

“Non-Consenting Lender” has the meaning assigned thereto in Section 2.20.

 

17

 

“Non-U.S. Jurisdiction” means each jurisdiction of organization
of a Subsidiary of the Borrower other than the United States (or any State
thereof) or the District of Columbia.

 

“Non-U.S. Pledge Agreements” means one or more pledge agreements
in form and substance reasonably satisfactory to the Collateral Agent covering
65% of the Equity Interests owned by a Loan Party directly in a Non-U.S.
Subsidiary.

 

“Non-U.S. Subsidiary” means any Subsidiary of the Borrower that
is or becomes organized under the laws of a Non-U.S. Jurisdiction, other than
following the consummation of the Permitted Restructuring, Chicopee Holdings
B.V., to the extent that such Subsidiary is a “disregarded entity” for purposes
of United States tax laws.

 

“Note” means a note substantially in the form of Exhibit F-1,
-2, or -3.

 

“Obligations” means the (a) unpaid principal of and
interest on (including interest accruing after the maturity of the Loans made
to the Borrower and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) the Loans made to or LC Disbursements made pursuant
to Letters of Credit issued for the account of the Borrower and all other
obligations and liabilities of the Loan Parties to any Secured Party, whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with, this Agreement, any other Loan Document or any other document made,
delivered or given in connection herewith, whether on account of principal,
interest, fees, indemnities, costs or expenses (including, without limitation,
all reasonable fees, charges and disbursements of counsel), or otherwise, (b) the
due and punctual payment and performance of all obligations of the Borrower and
the other Loan Parties under each interest rate protection agreement
constituting a Hedging Agreement relating to the Loans entered into with any
counterparty that was a Lender or a Lender Affiliate at the time such interest
rate protection agreement was entered into and (c) the due and punctual
payment and performance of all obligations of the Loan Parties in respect of
overdrafts and related liabilities owed to any Lender, any Lender Affiliate or
any Agent arising from treasury, depositary and cash management services or in
connection with any automated clearinghouse transfer of funds.

 

“Organic Document” means (i) relative to each Person that
is a corporation, its charter, its by-laws and all shareholder agreements,
voting trusts and similar arrangements applicable to any of its authorized
shares of capital stock, (ii) relative to each Person that is a partnership,
its partnership agreement and any other similar arrangements applicable to any
partnership or other equity interests in the Person and (iii) relative to
any Person that is any other type of legal entity, such documents as shall be
comparable to the foregoing.

 

“Overdraft Obligations” means the obligations described in
clause (c) of the definition of “Obligations.”

 

“Participant” has the meaning assigned to such term in Section 9.04(f).

 

“PBGC” means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA.

 

“Pension Plan” means a “pension plan,” as such term is defined
in Section 3(2) of ERISA, which is subject to Title IV of ERISA
(other than a Multiemployer Plan) and to which any Loan Party or any ERISA
Affiliate may have liability, including any liability by reason of having been
a

 

18

 

substantial employer within the
meaning of Section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under Section 4069
of ERISA.

 

“Perfection Certificate” means a certificate in the form of Annex 2
to the Security Agreement or any other form approved by the Administrative
Agent.

 

“Permitted Acquisition” means any acquisition, whether by
purchase, merger, consolidation or otherwise, by the Borrower or any Subsidiary
of all or substantially all the assets of, or all the Equity Interests in, a
Person or a division, line of business or other business unit of a Person so
long as:

 

(a)           such
acquisition shall not have been preceded by a tender offer that has not been
approved or otherwise recommended by the board of directors of such Person;

 

(b)           such
assets are to be used in, or such Person so acquired is engaged in, as the case
may be, a business of the type conducted by the Borrower and its Subsidiaries
on the Effective Date or in a business reasonably related thereto;

 

(c)           immediately
after giving effect thereto, (i) no Default has occurred and is continuing
or would result therefrom, (ii) all transactions related thereto are
consummated in all material respects in accordance with applicable laws, (iii) in
the case of an acquisition of Equity Interests, the Person acquired shall
become, immediately after giving effect thereto, a Subsidiary or be merged into
a Subsidiary and all actions required to be taken under Sections 5.11,
5.12 and 5.16 shall have been taken, (iv) the Borrower and its
Subsidiaries are in compliance, on a Pro Forma Basis after giving effect to
such acquisition, with the covenants contained in Sections 6.12 and 6.13
recomputed as at the date of the last ended Test Period, as if such acquisition
(and any related incurrence or repayment of Indebtedness) had occurred on the
first day of the relevant Test Period, (v) any Indebtedness or any
preferred stock that is incurred, acquired or assumed in connection with such
acquisition shall be in compliance with Section 6.01 and (vi) after
giving effect to any Revolving Credit Borrowings made in connection therewith,
the Total Revolving Credit Commitment less the Revolving Credit Exposure of all
Revolving Lenders shall not be less than $15.0 million; and

 

(d)           the
Borrower has delivered to the Administrative Agent an officers’ certificate to
the effect set forth in clauses (a), (b) and (c)(i) through (vi) above,
together with all relevant financial information for the Person or assets to be
acquired.

 

“Permitted Factoring Transaction” means the factoring of
receivables by the Borrower or any of its Subsidiaries structured as a true sale
to a Person that is not an Affiliate of the Borrower or any of its Subsidiaries
pursuant to a structured factoring program on market terms for companies having
a credit profile similar to the Borrower and its Subsidiaries at the time of
entering into the factoring program; provided that the outstanding
proceeds of all factoring programs shall not exceed (i) $20.0 million in
the case of the Borrower and its Domestic Subsidiaries or (ii) $20.0
million in the case of the Borrower’s Non-U.S. Subsidiaries.  For purposes of the foregoing limitations,
outstanding proceeds at any time shall be deemed to equal the then outstanding
capital amount or principal amount received by the Borrower or the relevant
Subsidiary in respect of sales of accounts receivable.

 

“Permitted Investments” means:

 

(a)           marketable
direct obligations issued by, or unconditionally guaranteed by, the United
States Government or any member state of the European Union or issued by any
agency

 

19

 

or instrumentality thereof and backed by the full faith and credit of
the United States of America or such member state of the European Union, in
each case maturing within one year from the date of acquisition thereof;

 

(b)           marketable
direct obligations issued by any State of the United States of America or any
political subdivision of any such State or any public instrumentality thereof
maturing within one year from the date of acquisition thereof and, at the time
of acquisition, having one of the two highest ratings obtainable from either
S&P or Moody’s;

 

(c)           commercial
paper maturing no more than one year from the date of creation thereof and, at
the time of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Moody’s;

 

(d)           time
deposits, demand deposits, certificates of deposit, Eurodollar time deposits or
bankers’ acceptances maturing within one year from the date of acquisition
thereof or overnight bank deposits, in each case, issued by any bank organized
under the laws of any member state of the European Union, the United States of
America or any State thereof or the District of Columbia, any U.S. branch of a
foreign bank or any other bank in any country where operations are conducted by
the Borrower and its Subsidiaries, in any case, having at the date of
acquisition thereof combined capital and surplus of not less than
$500.0 million;

 

(e)           repurchase
obligations with a term of not more than 90 days for underlying securities of
the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (d) above;

 

(f)            investments
in money market funds which invest substantially all their assets in securities
of the types described in clauses (a) through (e) above; and

 

(g)           Hedging
Agreements entered into for non-speculative purposes.

 

“Permitted Lien” has the meaning assigned to such term in Section 6.02.

 

“Permitted Refinancing” means, with respect to any Indebtedness,
any refinancing thereof; provided, however, that (i) no
Default shall have occurred and be continuing or would arise therefrom, (ii) any
such refinancing Indebtedness shall (a) not have a stated maturity or
Weighted Average Life to Maturity that is shorter than the Indebtedness being
refinanced, (b) be at least as subordinate to the Obligations as the
Indebtedness being refinanced (and unsecured if the refinanced Indebtedness is
unsecured), and (c) be in principal amount that does not exceed the
principal amount so refinanced, plus all accrued and unpaid interest thereon,
plus the stated amount of any premium and other payments required to be paid in
connection with such refinancing pursuant to the terms of the Indebtedness
being refinanced, plus in either case, the amount of reasonable expenses of the
Borrower or any of its Subsidiaries incurred in connection with such
refinancing, and (iii) the sole obligors and/or guarantors on such
refinancing Indebtedness shall be the obligors and/or guarantors on such
Indebtedness being refinanced.

 

“Permitted Restructuring” means a corporate restructuring of the
Borrower and its Subsidiaries substantially as set forth on Schedule 1.01,
which may be consummated in one or more steps; provided that (i) no
Default shall have occurred and be continuing or would arise therefrom and (ii) all
actions required to be taken under Sections 5.11, 5.12 and 5.16 shall have
been taken, including, without limitation, delivery of opinions of counsel,
including Dutch counsel, reasonably satisfactory to the

 

20

 

Administrative Agent confirming
the enforceability of the guarantees and security interests in favor of the
Secured Parties.

 

“Person” means any natural person, corporation, trust, joint
venture, association, company, partnership, limited liability company or government,
or any agency or political subdivision thereof.

 

“Plan” means any Pension Plan or Welfare Plan.

 

“Platform” has the meaning assigned to such term in Section 9.17(b).

 

“Pledge Agreement” means the Pledge Agreement, substantially in
the form of Exhibit I, among the Loan Parties and the Collateral
Agent for the benefit of the Secured Parties.

 

“Pledged Securities” has the meaning provided in the Pledge
Agreement.

 

“Preferred Stock” means, with respect to any Person, any and all
preferred or preference Equity Interests (however designated) of such Person
whether or not outstanding or issued on the Effective Date.

 

“Prepayment Date” has the meaning assigned to such term in Section 2.05(f).

 

“Pro Forma Basis” means on a pro forma basis in accordance with GAAP
and Regulation S-X under the Exchange Act and otherwise reasonably satisfactory
to the Administrative Agent.

 

“Projected Financial Statements” has the meaning assigned to
such term in Section 3.15(c).

 

“Pro Rata Percentage” of any Revolving Lender at any time means
the percentage of the aggregate Available Revolving Credit Commitment
represented by such Lender’s Available Revolving Credit Commitment.

 

“QRTC Amount” means $75.0 million.

 

“Property” means any right, title or interest in or to property
or assets of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible and including any ownership interests of any Person.

 

“Real Property” means all right, title and interest of any Loan
Party in and to a parcel of real property owned, leased or operated (including,
without limitation, any leasehold estate) by any Loan Party together with, in
each case, all improvements and appurtenant fixtures, equipment, personal property,
easements and other property and rights incidental to the ownership, lease or
operation thereof.

 

“Reference Banks” means:

 

(a)           in
connection with the initial syndication of the Loans and Commitments, in respect
of LIBO Rate, the principal London office of Citibank, N.A.; and

 

(b)           at
all other times, in respect of LIBO Rate, the principal London office of Citibank,
N.A. and such two other banks as may be appointed by the Administrative Agent
in consultation with the Borrower.

 

21

 

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

 

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

 

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

 

“Related Hedging Obligations” means the obligations described in
clause (b) of the definition of “Obligations.”

 

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

 

“Release” means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing, depositing, dispersing, emanating or migrating of any Hazardous
Material in, into, onto or through the Environment.

 

“Remedial Action” means (a) “remedial action” as such term
is defined in CERCLA, 42 USC Section 9601(24), and (b) all other
actions required by any Governmental Authority or voluntarily undertaken
to:  (i) clean up, remove, treat,
abate or otherwise take corrective action to address any Hazardous Material in
the Environment; (ii) prevent the Release or threat of Release, or
minimize the further Release of any Hazardous Material so it does not migrate
or endanger or threaten to endanger public health, welfare or the Environment;
or (iii) perform studies and investigations in connection with, or as a
precondition to, (i) or (ii) above.

 

“Requirement of Law” means, as to any Person, any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or assets or to which such Person or any of its property or assets is
subject.

 

“Requisite Class Lenders” means, at any time, (i) for
the Class of Lenders having Term Loans, Lenders holding more than fifty
percent (50%) of the aggregate Term Loans of all Lenders; and (ii) for the
Class of Lenders having Revolving Credit Commitments, Lenders holding more
than fifty percent (50%) of the aggregate outstanding amount of the Revolving
Credit Commitments or, after the Revolving Credit Maturity Date, the Revolving
Credit Exposure of all Lenders.

 

“Requisite Lenders” means, at any time, Lenders having more than
fifty percent (50%) of the sum of (a) the aggregate amount of the
Revolving Credit Commitments or, after the Revolving Credit Maturity Date, the
Revolving Credit Exposure and (b) the aggregate outstanding amount of all
Term Loans at such time.

 

“Requisite Revolving Lenders” means, at any time, Lenders having
more than fifty percent (50%) of the aggregate outstanding amount of the
Revolving Credit Commitments or, after the Revolving Credit Maturity Date, the
Revolving Credit Exposure.

 

“Restricted Payment” means any direct or indirect dividend or
other distribution (whether in cash, securities or other property) with respect
to any Equity Interests or Equity Rights in the Borrower or any Subsidiary, or
any payment (whether in cash, securities or other property), including any
sinking

 

22

 

fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any Equity Interests or Equity Rights in the Borrower or any
Subsidiary.

 

“Revolving Credit Borrowing” means a Borrowing comprised of
Revolving Loans.

 

“Revolving Credit Borrowing Request” means a Borrowing Request
in connection with a Revolving Credit Borrowing.

 

“Revolving Credit Commitment” means, with respect to each
Revolving Lender, the commitment of such Revolving Lender to make Revolving
Loans and to acquire participations in Letters of Credit and Swingline Loans
hereunder, expressed in each case as an amount representing the maximum
principal amount of such Revolving Lender’s Revolving Credit Exposure
hereunder, as the same may be reduced from time to time pursuant to the provisions
of this Agreement.  The initial amount of
each Revolving Lender’s Revolving Credit Commitment is set forth on Schedule 2.01
(in the case of Revolving Credit Commitments in effect on the Effective Date),
or in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its Revolving Credit Commitment, as applicable.  The aggregate amount of the Revolving Lenders’
Revolving Credit Commitments as of the Effective Date is $45.0 million.

 

“Revolving Credit Commitment Period” means the period from and
including the Effective Date to but not including the Revolving Credit Maturity
Date or any earlier date on which the Revolving Credit Commitments to make
Revolving Loans pursuant to Section 2.01 shall terminate as provided
herein.

 

“Revolving Credit Exposure” means with respect to any Revolving
Lender at any time, the sum of (a) the aggregate principal amount at such
time of all outstanding Revolving Loans of such Revolving Lender, plus (b) such
Revolving Lender’s LC Exposure at such time, plus (c) such Revolving
Lender’s Commitment Percentage of  the
aggregate principal amount at such time of all outstanding Swingline Loans.

 

“Revolving Credit Maturity Date” means the fifth anniversary of
the Effective Date.

 

“Revolving Lender” means a Lender with a commitment to make
Revolving Loans or with any Revolving Credit Exposure, in its capacity as such.

 

“Revolving Loans” means the revolving loans made pursuant to
clause (iii) of Section 2.01(a).

 

“S&P” means Standard & Poor’s Corporation.

 

“SEC” means the Securities and
Exchange Commission.

 

“Sale and Leaseback Transaction” has the meaning assigned
thereto in Section 6.06.

 

“Secured Parties” means the Agents, each Lender that holds Loans
or has Commitments (in its capacity as such), each holder of any Related
Hedging Obligations (in its capacity as such) and each person holding Overdraft
Obligations (in its capacity as such).

 

“Security Agreement” means the Security Agreement, substantially
in the form of  Exhibit J,
among the Loan Parties and the Collateral Agent for the benefit of the Secured
Parties.

 

23

 

“Security Documents” means the Security Agreement, the Pledge
Agreement, the Non-U.S. Pledge Agreements, the Mortgages, the Perfection
Certificate, Cash Management Agreements (as defined in the Security Agreement)
and each other security agreement or other instrument or document executed and
delivered pursuant to Section 5.11, 5.12 or 5.16 to secure any of the
Obligations.

 

“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 (expressed as a decimal) of the maximum
reserve percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by any Governmental Authority of
the United States or of the jurisdiction of such currency or any jurisdiction
to which banks in such jurisdiction are subject for any category of deposits or
liabilities customarily used to fund loans. 
Such reserve percentages shall include those imposed pursuant to such
Regulation D.  The Statutory Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.

 

“Subordinated Debt” means Indebtedness of Borrower or any other
Loan Party that is by its terms expressly subordinated in right of payment to
the Obligations of Borrower or such Loan Party, as applicable.

 

“Subordinated Debt Documents” means each document governing or
pursuant to which is issued any Subordinated Debt, as the same may be in effect
from time to time in accordance with the terms hereof and thereof.

 

“Subsidiary” means, with respect to any Person, (i) any
corporation of which more than 50% of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time capital stock of any other
class or classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned
by such Person, by such Person and one or more other Subsidiaries of such
Person, or by one or more other Subsidiaries of such Person; (ii) any
partnership of which more than 50% of the outstanding partnership interests
having the power to act as a general partner of such partnership (irrespective
of whether at the time any partnership interests other than general partnership
interests of such partnership shall or might have voting power upon the
occurrence of any contingency) are at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person; or (iii) any other
legal entity the accounts of which would or should be consolidated with those
of such Person on a consolidated balance sheet of such Person prepared in
accordance with GAAP.  Unless otherwise
indicated, when used in this Agreement, the term “Subsidiary” shall refer to a
Subsidiary of the Borrower.

 

“Subsidiary Loan Party” means each of the Borrower’s Domestic
Subsidiaries that guarantees the Obligations pursuant to the Guarantee
Agreement.

 

“Survey” means a survey of any Mortgaged Property (and all
improvements thereon):  (i) prepared
by a surveyor or engineer licensed to perform surveys in the state where such
Mortgaged Property is located, (ii) dated (or redated) not earlier than
six months prior to the date of delivery thereof unless there shall have occurred
within six months prior to such date of delivery any exterior construction on
the site of such Mortgaged Property, in which event such survey shall be dated
(or redated) after the completion of such construction or if such construction
shall not have been completed as of such date of delivery, not earlier than
20 days prior to such date of delivery, (iii) certified by the
surveyor (in a manner reasonably acceptable to the Collateral Agent) to the
Collateral Agent and the Title Company, (iv) complying in all
respects with the minimum detail requirements of the American Land Title
Association as such requirements are in effect on the date of preparation of
such survey and (v) sufficient for the Title

 

24

 

Company to remove all standard
survey exceptions from the title insurance policy (or marked title insurance
commitment having the effect of a policy) and issue a survey endorsement.

 

“Swingline Commitment” means the commitment of the Swingline
Lender to make Loans pursuant to Section 2.04.

 

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

 

“Swingline Lender” means Citicorp North America, Inc., in
its capacity as lender of Swingline Loans.

 

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

 

“Swingline Sublimit” has the meaning assigned to such term as Section 2.04(a).

 

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

 

“Taking” means any taking of any Property of the Borrower or any
Subsidiary or any portion thereof, in or by condemnation or other eminent
domain proceedings pursuant to any law, general or special, or by reason of the
temporary requisition or use of any Property of the Borrower or any Subsidiary
or any portion thereof, by any Governmental Authority.

 

“Taxes” has the meaning assigned to such term in Section 2.16.

 

“Term Borrowing” means a Borrowing comprised of Term Loans on
the Effective Date.

 

“Term Borrowing Request” means a Borrowing Request in connection
with the Term Loans on the Effective Date.

 

“Term Commitment” means, with respect to each Lender, the
commitment, if any, of such Lender to make a Term Loan hereunder on the
Effective Date, expressed as an amount representing the maximum principal
amount of the Term Loan to be made by such Lender hereunder, as the same may be
reduced from time to time pursuant to the provisions of this Agreement.  The initial amount of each Lender’s Term
Commitment is set forth on Schedule 2.01 or in the Assignment and
Acceptance pursuant to which such Lender shall have assumed its Term Commitment,
as applicable.  The initial aggregate
amount of the Lenders’ Term Commitments is $410.0 million.

 

“Term Lender” means a Lender with a Term Commitment or an
outstanding Term Loan, in its capacity as such.

 

“Term Loan Maturity Date” means the seventh anniversary of the
Effective Date.

 

“Term Loans” means the Loans made pursuant to clause (i) of
Section 2.01(a).

 

“Terminated Lender” has the meaning assigned to such term in Section 2.20.

 

“Test Period” means (i) for the covenants contained in
Sections 6.12 and 6.13, the four consecutive complete Fiscal Quarters of
the Borrower then last ended as of the date closest to each date listed under
the heading “Date” therein and (ii) for all other provisions in this
Agreement, the four

 

25

 

consecutive complete Fiscal
Quarters of the Borrower ended as of the time indicated.  Compliance with such covenants shall be
tested, as of the end of each Test Period, on the date on which the financial
statements pursuant to Section 5.01(a) or (b) have been, or
should have been, delivered for the applicable fiscal period.

 

“Title Company” means Chicago Title Insurance Company or such
other title insurance or abstract company as shall be reasonably approved by
the Administrative Agent.

 

“Total Leverage Ratio” means, at any date, the ratio of (a) Consolidated
Indebtedness as of such date to (b) Consolidated EBITDA for the Test
Period most recently ended.

 

“Total Revolving Credit Commitment” means, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such
time.

 

“Transactions” means, collectively, the execution and delivery
by each Loan Party of each of the Loan Documents to which it is a party and the
Borrowing of the Term Loans and Revolving Loans hereunder in each case on the
Effective Date, the payment of Indebtedness to be Paid and the payment of fees
and expenses in connection with any of the foregoing.

 

“Trigger Date” means the date on which a Compliance Certificate
for the first quarter ending after the Effective Date shall have been received
by the Administrative Agent pursuant to Section 5.01(a) or (b).

 

“Type,” when used in respect of any Loan or Borrowing, refers to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined.  For
purposes hereof, “Rate” shall include the Adjusted LIBO Rate and the
Alternate Base Rate.

 

“UCC” means the Uniform Commercial Code as in effect in the
applicable state or jurisdiction.

 

“Unrefunded Swingline Loans” has the meaning assigned to such
term in Section 2.04(c).

 

“U.S. Dollar Equivalent” means, on any day, with respect to any
loan denominated in Canadian Dollars, the amount of U.S. Dollars that would be
required to purchase the Canadian Dollar amount of such loan on such day,
assuming a rate of exchange equal to the New York foreign exchange selling rate
quoted for such Canadian Dollars in the Wall Street Journal for such day (or,
for the most recent day on which the Wall Street Journal shall have been
published), provided that if for any reason the Wall Street Journal
shall cease to be published for three or more consecutive Business Days, “U.S.
Dollar Equivalent” shall mean the amount of U.S. Dollars that would be required
to purchase the Canadian Dollar amount of such loan on such day, based upon the
spot selling rate at which the Administrative Agent offers to sell Canadian
Dollars for U.S. Dollars in the London foreign exchange market at approximately
11:00 a.m. London time for delivery two Business Days later.

 

“Weighted Average Life to Maturity” means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the
original aggregate principal amount of such Indebtedness into (b) the sum
of the total of the products obtained by multiplying (i) the amount of
each scheduled installment, sinking fund, serial maturity or other required
payment of principal including payment at final maturity, in respect thereof,
by (ii) the number of years (calculated to the nearest one-twelfth) which will
elapse between such date and the making of such payment.

 

26

 

“Welfare Plan” means a “welfare plan,” as such term is defined
in Section 3(1) of ERISA, that is maintained or contributed to by a
Loan Party or any Subsidiary or with respect to which a Loan Party or any
Subsidiary could incur liability.

 

“Wholly Owned Subsidiary” means, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors’ qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.

 

“Withdrawal Liability” means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part 1 of Subtitle E of Title IV of
ERISA.

 

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”),
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 Credit Borrowing”), by Type (e.g., a “Eurodollar
Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving
Credit Borrowing”).

 

SECTION 1.03.            Terms Generally. 
(a)  The definitions in Section 1.01 shall apply equally to
both 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”.  All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections of,
and Exhibits and Schedules to, this Agreement unless the context shall
otherwise require.  Except as otherwise
expressly provided herein, (i) any reference in this Agreement to any Loan
Document means such document as amended, restated, supplemented or otherwise
modified from time to time and (ii) all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in effect from
time to time; provided, however, that for purposes of determining
compliance with the covenants contained in Article VI, all accounting
terms herein shall be interpreted and all accounting determinations hereunder
shall be made in accordance with GAAP as in effect on the Effective Date and
applied on a basis consistent with the application used in the financial
statements referred to in Section 3.05.

 

(b)           If any payment under
this Agreement or any other Loan Document shall be due on any 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 paid for the period of such extension.

 

ARTICLE II

 

THE CREDITS

 

SECTION 2.01.            Credit Commitments.  (a)  Subject to the terms and conditions
hereof, (i) each Term Lender severally agrees to make a Term Loan in
Dollars to the Borrower on the Effective Date in a principal amount not
exceeding its Term Commitment and (ii) each Revolving Lender severally
agrees to make Revolving Loans in Dollars to the Borrower from time to time
during the Revolving Credit Commitment Period. 
Amounts repaid or prepaid in respect of the Term Loans may not be reborrowed.  During the Revolving Credit Commitment Period
the Borrower may use the Revolving Credit Commitments by borrowing, prepaying
the Revolving Loans in whole or in part, and reborrowing, all in 

 

27

 

accordance with the terms and conditions hereof.  Notwithstanding anything to the contrary
contained in this Agreement, in no event may Revolving Loans be borrowed under
this Article II if, after giving effect thereto (and to any concurrent
repayment or prepayment of Loans), (i) the Aggregate Revolving Credit
Exposure would exceed the Total Revolving Credit Commitment then in effect or (ii) the
Revolving Credit Exposure of any Revolving Lender would exceed such Revolving
Lender’s Revolving Credit Commitment.

 

(b)           The Revolving Loans
and the Term Loans may from time to time be (i) Eurodollar Loans, (ii) ABR
Loans or (iii) a combination thereof, as determined by the Borrower and
notified to the Administrative Agent in accordance with Sections 2.02 and
2.03.

 

(c)           Each Loan (other
than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans
of the same Class and Type made by the Lenders ratably in accordance with
their respective Commitments of the applicable Class.  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.

 

SECTION 2.02.            Procedure for Borrowing.  (a)  The Borrower may borrow under the
Revolving Credit Commitments (subject to the limitations in Section 2.01(a))
or the Term Commitments by giving the Administrative Agent notice substantially
in the form of Exhibit B (a “Borrowing Request”), which
notice must be received by the Administrative Agent prior to (a) 12:00 noon,
New York City time, three Business Days prior to the requested Borrowing
Date, in the case of a Eurodollar Borrowing, or (b) 12:00 noon,
New York City time, on the Business Day prior to the requested Borrowing
Date, in the case of an ABR Borrowing. 
The Borrowing Request for each Borrowing shall specify (i) whether
the requested Borrowing is to be a Revolving Credit Borrowing or a Term
Borrowing, (ii) the amount to be borrowed, (iii) the requested
Borrowing Date (which must be the Effective Date, in the case of a Term
Borrowing), (iv) whether the Borrowing is to be of Eurodollar Loans or ABR
Loans, (v) if the Borrowing is to be of Eurodollar Loans, the length of
the initial Interest Period therefor, and (vi) the location and number of
the Borrower’s account to which funds are to be disbursed, which shall comply
with the requirements of this Agreement. 
If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. 
If no Interest Period is specified with respect to any requested
Eurodollar Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration.

 

(b)           Each Borrowing shall
be in a minimum aggregate principal amount of (i) in the case of a Term
Borrowing, $1.0 million or an integral multiple of $500,000 in excess
thereof or (ii) in the case of a Revolving Credit Borrowing, $1.0 million
or an integral multiple of $500,000 in excess thereof or, if less, the
aggregate amount of the then Available Revolving Credit Commitments.

 

(c)           Upon receipt of the
Term Borrowing Request, the Administrative Agent shall promptly notify each
Term Lender of the aggregate amount of the Term Borrowing and of the amount of
such Term Lender’s pro rata portion thereof, which shall be
based on their respective Term Commitments. 
Each Term Lender will make the amount of its pro rata
portion of the Term Borrowing available to the Administrative Agent for the
account of the Borrower at the New York office of the Administrative Agent
specified in Section 9.01 prior to 10:00 a.m., New York City
time, on the Effective Date in funds immediately available to the
Administrative Agent.  Amounts so
received by the Administrative Agent will promptly be made available to the
Borrower by the Administrative Agent crediting the account of the Borrower on
the books of such office with the aggregate of the amounts made available to
the Administrative Agent by the Revolving Lenders and in like funds as received
by the Administrative Agent.

 

28

 

(d)           Upon receipt of a
Revolving Credit Borrowing Request, the Administrative Agent shall promptly
notify each Revolving Lender of the aggregate amount of such Revolving Credit
Borrowing and of the amount of such Revolving Lender’s pro rata
portion thereof, which shall be based on the respective Available Revolving
Credit Commitments of all the Revolving Lenders.  Each Revolving Lender will make the amount of
its pro rata portion of each such Revolving Credit Borrowing
available to the Administrative Agent for the account of the Borrower at the
New York office of the Administrative Agent specified in Section 9.01
prior to 12:00 p.m., New York City time, on the Borrowing Date requested
by the Borrower in funds immediately available to the Administrative
Agent.  Amounts so received by the
Administrative Agent will promptly be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Revolving Lenders and in like funds as received by the
Administrative Agent; provided that if on the Borrowing Date of any
Revolving Loans to be made to the Borrower, any Swingline Loans made to the
Borrower or LC Disbursements for the account of the Borrower shall be then
outstanding, the proceeds of such Revolving Loans shall first be applied to pay
in full such Swingline Loans or LC Disbursements, with any remaining proceeds
to be made available to the Borrower as provided above; and provided further
that ABR Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.06(e) shall be remitted by the
Administrative Agent to the Issuing Bank.

 

SECTION 2.03.            Conversion and Continuation Options for Loans.  (a)  The Borrower may elect from time to
time to convert (i) Eurodollar Loans to ABR Loans, by giving the
Administrative Agent prior notice of such election not later than
12:00 noon, New York City time, on the Business Day prior to a
requested conversion or (ii) ABR Loans to Eurodollar Loans by giving the
Administrative Agent prior notice of such election not later than
12:00 noon, New York City time, three Business Days prior to a requested
conversion; provided that if any such
conversion of Eurodollar Loans is made other than on the last day of an
Interest Period with respect thereto, the Borrower shall pay any amounts due to
the Lenders pursuant to Section 2.17 as a result of such conversion.  Any such notice of conversion to Eurodollar
Loans shall specify the length of the initial Interest Period or Interest
Periods therefor.  Upon receipt of any
such notice the Administrative Agent shall promptly notify each Lender
thereof.  All or any part of the
outstanding Eurodollar Loans or ABR Loans may be converted as provided herein; provided
that (i) no Loan may be converted into a Eurodollar Loan when any Event of
Default has occurred and is continuing, and (ii) no Loan may be converted
into a Eurodollar Loan after the date that is one month prior to the Revolving
Credit Maturity Date or the Term Loan Maturity Date, as applicable.

 

(b)           Any Eurodollar Loans
may be continued as such upon the expiration of the then current Interest
Period with respect thereto by the Borrower giving prior notice to the
Administrative Agent, not later than 12:00 noon, New York City time, three
Business Days prior to a requested continuation setting forth the length of the
next Interest Period to be applicable to such Loans; provided that no
Eurodollar Loan may be continued as such (i) when any Event of Default has
occurred and is continuing, and (ii) after the date that is one month
prior to the Revolving Credit Maturity Date or the Term Loan Maturity Date, as
applicable; and provided, further, that if the Borrower shall
fail to give any required notice as described above in this Section 2.03
or if such continuation is not permitted pursuant to the preceding proviso,
then such Loans shall be automatically converted to ABR Loans on the last day
of such then expiring Interest Period (in which case the Administrative Agent
shall notify the Borrower of such conversion).

 

(c)           In connection with
any Eurodollar Loans, there shall be no more than ten (10) Interest
Periods outstanding at any time.

 

(d)           This Section shall
not apply to Swingline Loans.

 

29

 

SECTION 2.04.            Swingline Loans. 
(a)  Subject to the terms and conditions hereof, the Swingline
Lender agrees to make swingline loans (individually, a “Swingline Loan”
and collectively, the “Swingline Loans”) to the Borrower from time to
time during the Revolving Credit Commitment Period in accordance with the
procedures set forth in this Section 2.04, provided that (i) the
aggregate principal amount of all Swingline Loans shall not exceed $10.0
million (the “Swingline Sublimit”) at any one time outstanding, (ii) the
principal amount of any borrowing of Swingline Loans may not exceed the
aggregate amount of the Available Revolving Credit Commitments of all Revolving
Lenders immediately prior to such borrowing or result in the Aggregate
Revolving Credit Exposure then outstanding exceeding the Total Revolving Credit
Commitments then in effect, and (iii) in no event may Swingline Loans be
borrowed hereunder if (x) a Default or Event of Default or Event of
Termination shall have occurred and be continuing and (y) such Default or
Event of Default or Event of Termination shall not have been subsequently cured
or waived.  Amounts borrowed under this Section 2.04
may be repaid and, up to but excluding the Revolving Credit Maturity Date, reborrowed.  All Swingline Loans shall at all times be ABR
Loans.  The Borrower shall give the
Administrative Agent notice of any Swingline Loan requested hereunder (which
notice must be received by the Administrative Agent prior to 2:00 p.m.,
New York City time, on the requested Borrowing Date) specifying (A) the
amount to be borrowed, and (B) the requested Borrowing Date.  Upon receipt of such notice, the Administrative
Agent shall promptly notify the Swingline Lender of the aggregate amount of
such borrowing.  Not later than 4:00 p.m.,
New York City time, on the Borrowing Date specified in such notice the
Swingline Lender shall make such Swingline Loan available to the Administrative
Agent for the account of the Borrower at the office of the Administrative Agent
set forth in Section 9.01 in funds immediately available to the
Administrative Agent.  Amounts so
received by the Administrative Agent will promptly be made available to the
Borrower by the Administrative Agent crediting the account of the Borrower on
the books of such office with the amount made available to the Administrative
Agent by the Swingline Lender (or, in the case of a Swingline Loan made to finance
the reimbursement of an LC Disbursement as provided in Section 2.06(e), by
remittance to the Issuing Bank) and in like funds as received by the
Administrative Agent.  Each Borrowing
pursuant to this Section 2.04 shall be in a minimum principal amount of
$500,000 or an integral multiple of $100,000 in excess thereof.

 

(b)           Notwithstanding the
occurrence of any Default or Event of Default or Event of Termination or
noncompliance with the conditions precedent set forth in Article IV or the
minimum borrowing amounts specified in Section 2.02, if any Swingline Loan
shall remain outstanding at 10:00 a.m., New York City time, on the
seventh Business Day following the Borrowing Date thereof and if by such time
on such seventh Business Day the Administrative Agent shall have received
neither (i) a notice of borrowing delivered by the Borrower pursuant to Section 2.02
requesting that Revolving Loans be made pursuant to Section 2.01 on the
immediately succeeding Business Day in an amount at least equal to the aggregate
principal amount of such Swingline Loan, nor (ii) any other notice
satisfactory to the Administrative Agent indicating the Borrower’s intent to
repay such Swingline Loan on the immediately succeeding Business Day with funds
obtained from other sources, the Administrative Agent shall be deemed to have
received a notice from the Borrower pursuant to Section 2.02 requesting
that ABR Revolving Loans be made pursuant to Section 2.01 on such
immediately succeeding Business Day in an amount equal to the amount of such
Swingline Loan, and the procedures set forth in Section 2.02 shall be
followed in making such ABR Revolving Loans; provided that for the
purposes of determining each Lender’s Pro Rata Percentage with respect to such
Borrowing, the Swingline Loan to be repaid with the proceeds of such Borrowing
shall be deemed to not be outstanding. 
The proceeds of such ABR Revolving Loans shall be applied to repay such
Swingline Loan.

 

(c)           If, for any reason,
ABR Revolving Loans may not be, or are not, made pursuant to paragraph (b) of
this Section 2.04 to repay any Swingline Loan as required by such
paragraph, effective on the date such ABR Revolving Loans would otherwise have
been made, each Revolving Lender 

 

30

 

severally, unconditionally and irrevocably agrees that it shall,
without regard to the occurrence of any Default or Event of Default, purchase a
participating interest in such Swingline Loan (“Unrefunded Swingline Loan”)
in an amount equal to the amount of the ABR Revolving Loan which would
otherwise have been made pursuant to paragraph (b) of this Section 2.04.  Each Revolving Lender will immediately
transfer to the Administrative Agent, in immediately available funds, the
amount of its participation, and the proceeds of such participations shall be
distributed by the Administrative Agent to the Swingline Lender.  All payments by the Revolving Lenders in
respect of Unrefunded Swingline Loans and participations therein shall be made
in accordance with Section 2.13.

 

(d)           Notwithstanding the
foregoing, a Lender shall not have any obligation to acquire a participation in
a Swingline Loan pursuant to the foregoing paragraphs if a Default or Event of
Default or Event of Termination shall have occurred and be continuing at the
time such Swingline Loan was made and such Lender shall have notified the
Swingline Lender in writing prior to the time such Swingline Loan was made,
that such Default or Event of Default or such Event of Termination has occurred
and that such Lender will not acquire participations in Swingline Loans made
while such Default or Event of Default or such Event of Termination is
continuing.

 

SECTION 2.05.            Optional and Mandatory Prepayments of Loans;
Repayments of Term Loans.  (a) 
The Borrower may at any time and from time to time prepay the Loans (subject to
compliance with the terms of Section 2.17), in whole or in part, subject
to Section 2.05(e), upon irrevocable notice to the Administrative Agent
not later than 12:00 noon, New York City time, two Business Days prior to
the date of such prepayment, specifying (i) the date and amount of
prepayment, and (ii) the Class of Loans to be prepaid and whether the
prepayment is of Eurodollar Loans, ABR Loans or a combination thereof
(including in the case of Eurodollar Loans, the Borrowing to which such
prepayment is to be applied and, if of a combination thereof, the amount
allocable to each).  Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.  If any such notice is given,
the amount specified in such notice shall be due and payable on the date
specified therein, together with accrued interest to such date on the amount
prepaid.  Partial prepayments of Loans
(other than Swingline Loans) shall be in an aggregate principal amount of
$1.0 million or a whole multiple of $500,000 in excess thereof (or, if
less, the remaining outstanding principal amount thereof).  Partial prepayments of Swingline Loans shall
be in an aggregate principal amount of $500,000 or a whole multiple of $100,000
in excess thereof (or, if less, the remaining outstanding principal amount
thereof).

 

(b)           In the event and on
such occasion that the Aggregate Revolving Credit Exposure exceeds the Total
Revolving Credit Commitment, the Borrower shall prepay Revolving Credit Borrowings
or Swingline Borrowings (or, if no such Borrowings are outstanding, deposit
cash collateral in the account established with the Collateral Agent pursuant
to Section 2.06(j)) in an aggregate amount equal to such excess.

 

(c)           (i)  If
the Borrower shall issue any Equity Interests or Equity Rights (it being
understood that the issuance of debt securities convertible into, or
exchangeable or exercisable for, any Equity Interest or Equity Right shall be
governed by Section 2.05(c)(ii) below) (other than any Excluded
Equity Issuance) (each, an “Equity Issuance”), then 25% of the Net
Proceeds thereof shall be applied within three Business Days after receipt
thereof toward the prepayment of the Loans in accordance with Section 2.05(e) below.

 

(ii)           If the Borrower or
any of its Subsidiaries shall incur any Indebtedness (including pursuant to
debt securities which are convertible into, or exchangeable or exercisable for,
any Equity Interest or Equity Rights) (other than as permitted by Section 6.01(a))
(each, a “Debt Incurrence”), 

 

31

 

100% of the Net Proceeds thereof shall be applied within three Business
Days after receipt thereof toward the prepayment of the Loans in accordance
with Section 2.05(e) below.

 

(iii)          If the Borrower or
any of its Subsidiaries shall receive Net Proceeds from any Asset Sale, 100% of
such Net Proceeds shall be applied within three Business Days after receipt
thereof toward the prepayment of the Loans in accordance with Section 2.05(e) below;
provided that (x) the Net Proceeds from Asset Sales permitted by Section 6.05
shall not be required to be applied as provided herein on such date if and to
the extent that (1) no Default or Event of Default then exists or would
arise therefrom and (2) the Borrower delivers an officers’ certificate to
the Administrative Agent on or prior to the date of such Asset Sale stating
that such Net Proceeds shall be reinvested or committed to be reinvested in
capital assets of the Borrower or any Subsidiary in each case within 180 days
following the date of such Asset Sale (which certificate shall set forth the
estimates of the proceeds to be so expended), (y) all such Net Proceeds
shall be held in the Collateral Account and released therefrom only in
accordance with the terms of the Security Agreement, and (z) if all or any
portion of such Net Proceeds not so applied as provided herein is not so used
within such 180-day period (or if, prior to such 180th day, the Borrower or any
such Subsidiary shall have entered into a binding agreement to so use any such
Net Proceeds, within 360 days following the date of such binding agreement),
such remaining portion shall be applied on the last day of such period as
specified in this subsection (c)(iii); provided, further, if the
Property subject to such Asset Sale constituted Collateral under the Security
Documents, then any capital assets purchased with the Net Proceeds thereof
pursuant to this subsection shall be mortgaged or pledged, as the case may be,
to the Collateral Agent, for its benefit and for the benefit of the other
Secured Parties in accordance with Section 5.11.

 

(iv)          If the Borrower or
any of its Subsidiaries shall receive proceeds from insurance or condemnation
recoveries in respect of any Destruction or any proceeds or awards in respect
of any Taking, 100% of the Net Proceeds thereof shall be applied within three
Business Days after receipt thereof toward the prepayment of the Loans in
accordance with Section 2.05(e) below; provided, that (x) so
long as no Default or Event of Default then exists or would arise therefrom,
such Net Proceeds shall not be required to be so applied to the extent that the
Borrower has delivered an officers’ certificate to the Administrative Agent promptly
following the receipt of such Net Proceeds stating that such proceeds shall be
used to (1) repair, replace or restore any Property in respect of which
such Net Proceeds were paid or (2) fund the substitution of other Property
used or usable in the business of the Borrower or the Subsidiaries, in each
case within 180 days following the date of the receipt of such Net
Proceeds, (y) all such Net Proceeds shall be held in the Collateral
Account and released therefrom only in accordance with the terms of the
Security Agreement, and (z) if all or any portion of such Net Proceeds not
so applied as provided herein is not so used within 180 days (or if, prior
to such 180th day, the Borrower or any such Subsidiary shall have entered into
a binding agreement to so use any such Net Proceeds, within 360 days following
the date of such binding agreement) after the date of the receipt of such Net
Proceeds, such remaining portion shall be applied on the last day of such
period as specified in this subsection (c)(iv); provided, further,
if the Property subject to such Destruction or Taking constituted Collateral
under the Security Documents, then any replacement or substitution Property
purchased with the Net Proceeds thereof pursuant to this subsection shall be
mortgaged or pledged, as the case may be, to the Collateral Agent, for its
benefit and for the benefit of the other Secured Parties in accordance with Section 5.11.

 

(v)           If, for any Fiscal
Year of the Borrower commencing with its Fiscal Year ending on December 30,
2006, there shall be Excess Cash Flow for such Fiscal Year, an amount equal to (a) the
Excess Cash Flow Percentage of such Excess Cash Flow less (b) the amount
of Debt Repayments for such Fiscal Year shall be applied, not later than 10
days after the date upon which the Borrower is required to deliver its annual
audit report pursuant to Section 5.01(b), toward the prepayment of the
Loans in accordance with Section 2.05(e) below.

 

32

 

(d)           The Term Loans shall
be repaid in consecutive quarterly installments on the dates set forth below
(each such day, an “Installment Payment Date”), commencing on March 31,
2006, in an aggregate amount equal to the amount specified below for each such
Installment Payment Date.

 

 

	
  Installment Payment Date

  	
   

  	
  Installment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  March 31, 2006

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  June 30, 2006

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  September 30, 2006

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  1,025,000

  	
   

  
	
  Term Loan Maturity Date

  	
   

  	
  $

  	
  382,325,000

  	
   

  

 

(e)           (i)  Optional
prepayments in respect of Term Loans under this Agreement and mandatory prepayments
shall be applied first to reduce remaining scheduled installments of principal
due in respect of outstanding Term Loans under Section 2.05(d) in
direct order of maturity up to but not including the first scheduled
installment due after the date that is 24 months following the date of such
prepayment.  After application of
prepayments pursuant to the first sentence of this paragraph (e)(i) and to
the extent there are mandatory prepayment amounts remaining after such
application, such excess prepayments shall be applied to reduce outstanding
Term Loans pro rata against the remaining scheduled installments of principal
due in respect of the Term Loans under Section 2.05(d).

 

(ii)                 After
application of prepayments pursuant to paragraph (e)(i) and to the extent
there are prepayment amounts remaining after such application, the Revolving
Loans shall be repaid (but the Revolving Commitments not reduced), ratably
among the Revolving Lenders, in accordance with their applicable Revolving
Loans outstanding in an aggregate amount equal to the excess.

 

33

 

(iii)                Optional
terminations or reductions in Revolving Credit Commitments shall be made in
accordance with Section 2.11(b).

 

(iv)                Except
as otherwise may be directed by the Borrower, any prepayment of Loans pursuant
to this Section 2.05 shall be applied, first, to any ABR Loans then
outstanding and the balance of such prepayment, if any, to the Eurodollar Loans
then outstanding.

 

(f)            If on any day on
which Loans would otherwise be required to be prepaid pursuant to this Section 2.05,
but for the operation of this Section 2.05(f) (each, a “Prepayment
Date”), the amount of such required prepayment exceeds the then outstanding
aggregate principal amount of ABR Loans which are of the Type required to be
prepaid, and no Default or Event of Default exists or is continuing, then, at
the Borrower’s election, on such Prepayment Date, (i) the Borrower shall
deposit funds into the Collateral Account in an amount equal to such excess,
and only the outstanding ABR Loans which are of the Type required to be prepaid
shall be required to be prepaid on such Prepayment Date, and (ii) on the
last day of each Interest Period after such Prepayment Date in effect with
respect to a Eurodollar Loan which is of the Type required to be prepaid, the
Administrative Agent is irrevocably authorized and directed to apply funds from
the Collateral Account (and liquidate investments held in the Collateral Account
as necessary) to prepay such Eurodollar Loans for which the Interest Period is
then ending to the extent funds are available in the Collateral Account.

 

SECTION 2.06.            Letters of Credit.

 

(a)           General.  Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of Letters of Credit for its own
account, in a form reasonably acceptable to the Administrative Agent and the
Issuing Bank, at any time and from time to time during the Revolving Credit
Commitment Period.  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 Borrower to, or entered into by the 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 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 notice
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
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 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 $25.0 million and (ii) the Aggregate
Revolving Credit Exposure shall not exceed the Total Revolving Credit
Commitment.  With respect to any Letter
of Credit which contains any “evergreen” automatic renewal provision, the
Issuing Bank shall be deemed to have consented to any such extension or renewal
provided that all of the requirements of this Section 2.06 are met and no
Default or Event of Default exists.

 

34

 

(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 five Business Days prior to the Revolving Credit 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 Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Revolving Lender’s Commitment Percentage of the aggregate amount
available to be drawn under such Letter of Credit.  In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees
to pay to the Administrative Agent, for the account of the Issuing Bank, such
Revolving Lender’s Commitment Percentage of each LC Disbursement made by the
Issuing Bank and not reimbursed by the Borrower on the date due as provided in
paragraph (e) of this Section, or of any reimbursement payment
required to be refunded to the Borrower for any reason.  Each Revolving 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 Credit or the occurrence and continuance of a
Default or an Event of Default or reduction or termination of the Revolving
Credit 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 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 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 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 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 Borrower receives such notice, if such notice is not received
prior to such time on the day of receipt; provided that the Borrower
may, subject to the conditions to borrowing set forth herein, request in accordance
with Section 2.02 that such payment be financed with an ABR Revolving
Borrowing or Swingline Loan in an equivalent amount and, to the extent so
financed, the Borrower’s obligation to make such payment shall be discharged
and replaced by the resulting ABR Revolving Borrowing or Swingline Loan.  If the Borrower fails to make such payment
when due, the Administrative Agent shall notify each Revolving Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect
thereof and such Revolving Lender’s Commitment Percentage thereof.  Promptly following receipt of such notice,
each Revolving Lender shall pay to the Administrative Agent its Commitment
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.02 with respect to Loans made by such Revolving
Lender (and Section 2.02 shall apply, mutatis mutandis,
to the payment obligations of the Revolving Lenders), and the Administrative
Agent shall promptly pay to the Issuing Bank the amounts so received by it from
the Revolving Lenders.  Promptly
following receipt by the Administrative Agent of any payment from the Borrower
pursuant to this paragraph, the Administrative Agent shall distribute such
payment to the Issuing Bank or, to the extent that Revolving Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such
Revolving Lenders and the Issuing Bank as their interests may appear.  Any payment made by a Revolving Lender
pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR 

 

35

 

Revolving Loans or a Swingline Loan as contemplated above) shall not
constitute a Loan and shall not relieve the Borrower of its obligation to
reimburse such LC Disbursement.

 

(f)            Obligations
Absolute.  The Borrower’s obligation
to reimburse LC Disbursements as provided in paragraph (e) of this Section 2.06
shall be absolute, unconditional 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
Borrower’s obligations hereunder. 
Neither the Administrative Agent, the Revolving 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 the foregoing shall not be construed to excuse the Issuing Bank from
liability to the Borrower to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by the Issuing Bank’s bad faith, gross negligence or willful
misconduct or its 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 bad faith, gross negligence or willful misconduct
on the part of the Issuing Bank (as finally determined by a court of competent
jurisdiction), 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 which 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 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 Borrower of its obligation to
reimburse the Issuing Bank and the Revolving Lenders with respect to any such
LC Disbursement.

 

(h)           Interim Interest.  If the Issuing Bank shall make any LC
Disbursement, then, unless the 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 Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans; provided
that if the Borrower fails to reimburse such LC Disbursement when due pursuant
to paragraph (e) of this Section 2.06, then 

 

36

 

Section 2.08(c) 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 Revolving Lender pursuant to paragraph (e) of this Section 2.07
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.  The Issuing Bank
may be replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing
Bank.  The Administrative Agent shall
notify the Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to Section 2.10(b).  From and after the effective date of any such
replacement, (i) the successor 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 to any previous Issuing
Bank, or to such successor 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.

 

(j)            Cash
Collateralization.  If any Event of
Default shall occur and be continuing, on the Business Day that the Borrower
receives notice from the Administrative Agent or the Requisite Lenders (or, if
the maturity of the Loans has been accelerated, Revolving Lenders with LC
Exposure representing greater than 50% of the total LC Exposure) demanding the
deposit of cash collateral pursuant to this paragraph, the Borrower shall
deposit in the Collateral Account an amount in cash equal to 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 Borrower described in clause (a) of Section 7.01
or any Event of Default described in clause (i) of Section 7.01.  Each such deposit shall be held by the
Collateral Agent as collateral for the payment and performance of the
obligations of the Borrower under this Agreement and the Borrower hereby grants
the Collateral Agent a security interest in respect of each such deposit and
the Collateral Account in which such deposits are held.  The Collateral Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over the
Collateral Account.  Other than any
interest earned on the investment of such deposits, which investments shall be
made in accordance with the Security Agreement, such deposits shall not bear
interest.  Interest or profits, if any,
on such investments shall accumulate in the Collateral Account.  Moneys deposited in the Collateral Account
pursuant to this Section 2.06(j) shall be applied by the Collateral
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 Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated
(but subject to the consent of Revolving Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement.  If the 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 Borrower within three Business Days after all Defaults or
Events of Default have been cured or waived.

 

SECTION 2.07.            Repayment of Loans; Evidence of Debt.  (a)  The Borrower hereby unconditionally
promises to pay to the Administrative Agent for the account of the relevant
Lenders (i) in respect of Revolving Credit Borrowings, on the Revolving
Credit Maturity Date (or such earlier date as, and to the extent that, such
Revolving Loan becomes due and payable pursuant to Section 2.05 or 

 

37

 

Article VII), the unpaid principal amount of each Revolving Loan
and each Swingline Loan made to it by each such Lender and (ii) in respect
of Term Borrowings, on the Term Loan Maturity Date (or such earlier date as,
and to the extent that, such Term Loan becomes due and payable pursuant to Section 2.05
or Article VII), the unpaid principal amount of each Term Loan held by
each such Lender.  The Borrower hereby
further agrees to pay interest in immediately available funds at the applicable
office of the Administrative Agent (as specified in Section 2.13(a)) on
the unpaid principal amount of the Revolving Loans, Swingline Loans and Term
Loans made to it from time to time from the date hereof until payment in full
thereof at the rates per annum, and on the dates, set forth in Section 2.08.  All payments required hereunder shall be made
in Dollars.

 

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

 

(c)           The Administrative
Agent shall maintain the Register pursuant to Section 9.04, and a subaccount
for each Lender, in which Register and subaccounts (taken together) shall be
recorded (i) the amount of each such Loan, the Class and Type of each
such Loan and the Interest Period applicable thereto, (ii) the amount of
any principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder in respect of each such Loan and (iii) the
amount of any sum received by the Administrative Agent hereunder from the
Borrower in respect of each such Loan and each Lender’s share thereof.

 

(d)           The entries made in
the Register and accounts maintained pursuant to paragraphs (b) and (c) of
this Section 2.07 and the Notes maintained pursuant to paragraph (e) of
this Section 2.07 shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of any
Lender or the Administrative Agent to maintain such account, such Register or
such subaccount, as applicable, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the
Loans made to the Borrower by such Lender in accordance with the terms of this
Agreement.

 

(e)           The Loans of each Class made
by each Lender to the Borrower shall, if requested by the applicable Lender
(which request shall be made to the Administrative Agent), be evidenced by a
single Note duly executed on behalf of the Borrower, in substantially the form
attached hereto as Exhibit F-1, -2 or -3, as
applicable, with the blanks appropriately filled, payable to the order of such
Lender.

 

SECTION 2.08.            Interest Rates and Payment Dates.  (a)  Each Eurodollar Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a
year of 360 days) for each day during each Interest Period with respect thereto
at a rate per annum equal to the Adjusted LIBO Rate determined for such
Interest Period, plus the Applicable Rate.

 

(b)           Each ABR Loan
(including each Swingline Loan) shall bear interest (computed on the basis of
the actual number of days elapsed over a year of 365 or 366 days, as the case
may be, or over a year of 360 days when the Alternate Base Rate is determined
by reference to clause (c) of the definition of “Alternate Base Rate”)
at a rate per annum equal to the Alternate Base Rate plus the Applicable Rate.

 

38

 

(c)           If all or a portion
of (i) the principal amount of any Loan, (ii) any interest payable
thereon or (iii) any Commitment Fee or other amount payable hereunder
shall not be paid when due (whether at the stated maturity thereof or by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum which is (x) in the case of overdue principal (except as
otherwise provided in clause (y) below), the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this Section 2.08
plus 2.00% per annum or (y) in the case of any overdue interest,
Commitment Fee or other amount, the rate described in Section 2.08(b) applicable
to an ABR Revolving Loan plus 2.00% per annum, in each case from the
date of such nonpayment to (but excluding) the date on which such amount is
paid in full (after as well as before judgment).

 

(d)           Interest shall be
payable in arrears on each Interest Payment Date and on the Term Loan Maturity
Date and the Revolving Credit Maturity Date; provided that (i) interest
accrued pursuant to paragraph (c) of this Section shall be
payable on demand, (ii) in the event of any repayment or prepayment of any
Loan, accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment and (iii) 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. 
Interest in respect of each Loan shall accrue from and including the
first day of an Interest Period to but excluding the last day of such Interest
Period.

 

SECTION 2.09.            Computation
of Interest.  Each determination of
an interest rate by the Administrative Agent pursuant to any provision of this
Agreement shall be conclusive and binding on the Borrower and the Lenders in
the absence of manifest error.

 

SECTION 2.10.            Fees.  (a)  The Borrower agrees to pay a
commitment fee (a “Commitment Fee”) to each Revolving Lender, for which
payment will be made in arrears through the Administrative Agent on the last
day of March, June, September and December beginning after the
Effective Date, and on the Commitment Fee Termination Date (as defined
below).  The Commitment Fee due to each
Revolving Lender shall commence to accrue for a period commencing on the
Effective Date and shall cease to accrue on the date (the “Commitment Fee
Termination Date”) that is the earlier of (i) the date on which the
Revolving Credit Commitment of such Revolving Lender shall be terminated as provided
herein and (ii) the first date after the end of the Revolving Credit
Commitment Period.  The Commitment Fee
accrued to each Revolving Lender shall equal the Commitment Fee Percentage
multiplied by such Lender’s Commitment Fee Average Daily Amount (as defined
below) for the applicable quarter (or shorter period commencing on the date of
this Agreement and ending with such Lender’s Commitment Fee Termination
Date).  A Revolving Lender’s “Commitment
Fee Average Daily Amount” with respect to a calculation period shall equal
the average daily amount during such period calculated using the daily amount
of such Revolving Lender’s Revolving Credit Commitment less such Revolving
Lender’s Revolving Credit Exposure (excluding clause (c) of the
definition thereof for purposes of determining the Commitment Fee Average Daily
Amount only) for any applicable days during such Revolving Lender’s Revolving
Credit Commitment Period.  All Commitment
Fees shall be computed on the basis of the actual number of days elapsed in a
year of 360 days.

 

(b)           The Borrower agrees
to pay (i) to the Administrative Agent for the account of each Revolving
Lender a participation fee with respect to its participations in Letters of
Credit, which shall accrue at a rate equal to the Applicable Rate for
Eurodollar Revolving Loans on the average daily amount of such 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 Revolving Lender’s Revolving
Credit Commitment terminates and the date on which such Revolving Lender ceases
to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee,
which 

 

39

 

shall accrue at the rate of 0.125% per annum 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
Revolving Credit Commitments and the date on which there ceases to be any LC
Exposure, as well as the Issuing Bank’s reasonable and customary 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 (collectively, “LC Fees”) accrued
through and including the last day of March, June, September and December of
each calendar year during the Revolving Credit Commitment Period shall be
payable on the third Business Day following such last day, 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 Revolving Credit
Commitments terminate and any such fees accruing after the date on which the
Revolving Credit 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
therefor.  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 Borrower agrees
to pay to the Administrative Agent the correct administrative fee set forth in
the Engagement Letter (the “Agent Fees”).

 

(d)           All Fees shall be
paid on the dates due, in immediately available funds, to the Administrative
Agent for distribution.  Once paid, none
of the Fees shall be refundable.

 

SECTION 2.11.            Termination, Reduction or Adjustment of Commitments.  (a)  Unless previously terminated, (i) the
Term Commitments shall terminate at 5:00 p.m., New York City time, on
the Effective Date and (ii) the Revolving Credit Commitments shall
terminate on the Revolving Credit Maturity Date.

 

(b)           The Borrower shall
have the right, upon one Business Day’s notice to the Administrative Agent, to
terminate or, from time to time, reduce the amount of the Revolving Credit
Commitments; provided that no such termination or reduction of Revolving
Credit Commitments shall be permitted if, after giving effect thereto and to
any repayments of the Loans made on the effective date thereof, the Aggregate
Revolving Credit Exposure then outstanding would exceed the Total Revolving
Credit Commitment then in effect.

 

(c)           The Borrower shall
pay to the Administrative Agent for the account of the applicable Revolving
Lenders, on each date of termination or reduction of the Revolving Credit
Commitments, the Commitment Fee on the amount of the Revolving Credit
Commitments so terminated or reduced accrued to the date of such termination or
reduction.

 

SECTION 2.12.            Inability to Determine Interest Rate; Unavailability
of Deposits; Inadequacy of Interest Rate. 
If prior to 11:00 a.m., London time, two Business Days before the
first day of any Interest Period, including an initial Interest Period, for a
requested Eurodollar Borrowing:

 

(i)      the Administrative Agent shall have
determined in good faith (which determination shall be conclusive and binding
upon the Borrower) that, by reason of circumstances affecting the relevant
market generally, adequate and reasonable means do not exist for ascertaining
the Adjusted LIBO Rate for such Eurodollar Borrowing for such Interest Period,
or

 

40

 

(ii)             the
Administrative Agent shall have received notice from a majority in interest of
the Lenders of the applicable Class that the Adjusted LIBO Rate determined
or to be determined for such Interest Period for such Eurodollar Borrowing will
not adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Loans during
such Interest Period,

 

then the Administrative Agent shall give telecopy or telephonic notice
thereof to the Borrower and the Lenders by 12:00 noon, New York City time, on
the same day.  The Administrative Agent
shall give telecopy or telephonic notice to the Borrower and the Lenders as
soon as practicable after the circumstances giving rise to such notice no
longer exist, and until such notice has been given, any affected Eurodollar
Loans shall not be (x) converted or continued pursuant to Section 2.03
or (y) made pursuant to a Borrowing Request, and shall be continued or
made as an ABR Loans, as the case may be.

 

SECTION 2.13.            Pro Rata Treatment and Payments.  (a)  Each reduction of the Revolving
Credit Commitments of the Revolving Lenders shall be made pro rata
according to the amounts of such Revolving Lenders’ Commitment
Percentages.  Each payment (including
each prepayment) by the Borrower on account of principal of and interest on
Loans which are ABR Loans shall be made pro rata according
to the respective outstanding principal amounts of such ABR Loans then held by
the Lenders of the applicable Class. 
Each payment (including each prepayment) by the Borrower on account of
principal of and interest on Loans which are Eurodollar Loans designated by the
Borrower to be applied to a particular Eurodollar Borrowing shall be made pro rata
according to the respective outstanding principal amounts of such Loans then
held by the Lenders of the applicable Class. 
Each payment (including each prepayment) by the Borrower on account of
principal of and interest on Swingline Loans shall be made pro rata
according to the respective outstanding principal amounts of the Swingline
Loans or participating interests therein, as the case may be, then held by the
relevant Lenders.  All payments
(including prepayments) to be made by the Borrower hereunder, whether on
account of principal, interest, fees or otherwise, shall be made without setoff
or counterclaim and shall be made prior to 12:00 noon, New York time,
on the due date thereof to the Administrative Agent, for the account of the
Lenders of the applicable Class, at the Administrative Agent’s New York
office specified in Section 9.01 in Dollars and in immediately available
funds.  The Administrative Agent shall
distribute such payments to the Lenders entitled thereto promptly upon
receipt.  If any payment hereunder (other
than payments on Eurodollar Loans) becomes due and payable on a day other than
a Business Day, such payment shall be extended to the next succeeding Business
Day, and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.  If any payment on a Eurodollar Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day (and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension) unless the result of such extension would be to extend
such payment into another calendar month, in which event such payment shall be
made on the immediately preceding Business Day.

 

(b)           Subject to Section 2.12,
unless the Administrative Agent shall have been notified in writing by any
Lender prior to a Borrowing that such Lender will not make the amount that
would constitute its share of such Borrowing available to the Administrative
Agent, the Administrative Agent may assume that such Lender is making such
amount available to the Administrative Agent, and the Administrative Agent may,
in reliance upon such assumption, make available to the Borrower a
corresponding amount.  If such amount is
not made available to the Administrative Agent by the required time on the
Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on
demand, such amount with interest thereon at a rate equal to the daily average
Federal Funds Rate for the period until such Lender makes such amount
immediately available to the Administrative Agent.  A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this Section 2.13(b) 

 

41

 

shall be conclusive in the absence of manifest error.  If such Lender’s share of such Borrowing is
not made available to the Administrative Agent by such Lender within three
Business Days of such Borrowing Date, the Administrative Agent shall also be
entitled to recover such amount with interest thereon at the rate per annum
applicable to ABR Revolving Loans hereunder, on demand, from the Borrower, but
without prejudice to any right or claim that the Borrower may have against such
Lender.

 

(c)           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.

 

SECTION 2.14.            Illegality. 
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law, or in the interpretation or application
thereof, shall make it unlawful for any Lender to make or maintain Eurodollar
Loans as contemplated by this Agreement, (a) the commitment of such Lender
hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert ABR Loans to Eurodollar Loans shall forthwith be suspended until such
time as the making or maintaining of Eurodollar Loans shall no longer be
unlawful, and (b) such Lender’s Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to ABR Loans on the respective
last days of the then current Interest Periods with respect to such Loans or
within such earlier period as required by law.

 

SECTION 2.15.            Requirements of Law.  (a)  If at any time any Lender or
the Issuing Bank reasonably determines that the introduction of, or any change
in or in the interpretation of, any law, treaty or governmental rule,
regulation or order (other than any change by way of imposition or increase of
reserve requirements included in determining the Adjusted LIBO Rate) or the
compliance by such Lender or the Issuing Bank with any guideline, request or
directive from any central bank or other Governmental Authority (whether or not
having the force of law), shall have the effect of increasing the cost to such
Lender or the Issuing Bank for agreeing to make or making, funding or
maintaining any Eurodollar Loans or participating in, issuing or maintaining
any Letter of Credit, then the Borrower shall from time to time, within five
days of demand therefor by such Lender or the Issuing Bank (with a copy of such
demand to the Administrative Agent), pay to the Administrative Agent for the
account of such Lender or the Issuing Bank additional amounts sufficient to compensate
such Lender or the Issuing Bank for such increased cost.  A certificate as to the amount of such
increased cost, submitted to the Borrower and the Administrative Agent by such
Lender or the Issuing Bank, shall be conclusive and binding for all purposes,
absent manifest error.  Such Lender or
the Issuing Bank, as applicable, shall promptly notify the Administrative Agent
and the Borrower in writing of the occurrence of any such event, such notice to
state, in reasonable detail, the reasons therefor and the additional amount
required fully to compensate such Lender or the Issuing Bank, as applicable,
for such increased cost or reduced amount. 
Such additional amounts shall be payable directly to such Lender or the
Issuing Bank, as applicable, within five days of the Borrower’s receipt of such
notice, and such notice shall, in the absence of manifest error, be conclusive
and binding on the Borrower.

 

(b)           If any change in, or
the introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other Governmental Authority after the date hereof affects or would affect
the amount of capital required or expected to be maintained by any Lender or
the Issuing Bank (or a holding company controlling such Lender or the Issuing
Bank) and such 

 

42

 

Lender or the Issuing Bank reasonably determines that the rate of
return on its capital (or the capital of its holding company, as the case may
be) as a consequence of its Revolving Credit Commitment or the Loans made by it
or its participations in Swingline Loans or any issuance, participation or
maintenance of Letters of Credit is reduced to a level below that which such
Lender or the Issuing Bank (or its holding company) could have achieved but for
the occurrence of any such circumstance, then, in any such case upon notice
from time to time by such Lender or the Issuing Bank to the Borrower, the
Borrower shall, within five days of the Borrower’s receipt of such notice, pay
directly to such Lender or the Issuing Bank, as the case may be, additional
amounts sufficient to compensate such Lender or the Issuing Bank (or its
holding company) for such reduction in rate of return.  A statement of such Lender or the Issuing
Bank as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrower. 
In determining such amount, such Lender or the Issuing Bank may use any
reasonable method of averaging and attribution that it shall deem applicable.

 

(c)           In the event that
the Issuing Bank or any Lender determines that any event or circumstance that
will lead to a claim under this Section 2.15 has occurred or will occur,
the Issuing Bank or such Lender will use its best efforts to so notify the
Borrower; provided that any failure to provide such notice shall in no
way impair the rights of the Issuing Bank or such Lender to demand and receive
compensation under this Section 2.15, but without prejudice to any claims
of the Borrower for compensation for actual damages sustained as a result of
any failure to observe this undertaking.

 

SECTION 2.16.            Taxes.  All
payments by the Borrower of principal of, and interest on, the Loans and all
other amounts payable hereunder shall be made free and clear of and without
deduction for any present or future income, excise, stamp or franchise taxes
and other taxes, fees, duties, withholdings or other charges of any nature
whatsoever imposed by any taxing authority on the Administrative Agent, the
Issuing Bank or any Lender (or any assignee of such Lender or the Issuing Bank,
as the case may be, or a Participant or a change in designation of the lending
office of a Lender or the Issuing Bank, as the case may be (a “Transferee”)),
but excluding franchise taxes and taxes imposed on or measured by the recipient’s
net income (such non-excluded items being called “Taxes”) unless
required by applicable law, rule or regulation.  In the event that any withholding or
deduction from any payment to be made by the Borrower hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation,
then the Borrower will:

 

(a)           pay
directly to the relevant authority the full amount required to be so withheld
or deducted;

 

(b)           promptly
forward to the Administrative Agent an official receipt or other documentation
reasonably satisfactory to the Administrative Agent evidencing such payment to
such authority; and

 

(c)           pay
to the Administrative Agent for the account of the Lenders or the Issuing Bank,
as the case may be, such additional amount or amounts as are necessary to
ensure that the net amount actually received by each Lender or the Issuing
Bank, as the case may be, will equal the full amount such Lender or the Issuing
Bank, as the case may be, would have received had no such withholding or
deduction been required.

 

Moreover, if any Taxes are directly asserted against the Administrative
Agent, the Issuing Bank or any Lender or Transferee with respect to any payment
received by the Administrative Agent, the Issuing Bank or such Lender or
Transferee hereunder, the Administrative Agent, the Issuing Bank or such Lender
or Transferee may pay such Taxes and the Borrower will promptly pay such
additional amounts (including 

 

43

 

any penalties, interest or expenses) as shall be necessary in order
that the net amount received by such Person after the payment of such Taxes
(including any Taxes on such additional amount) shall equal the amount such
Person would have received had such Taxes not been asserted.  In addition, the Borrower shall also
reimburse each Lender or Transferee or the Issuing Bank, upon the written
request of such Lender or Transferee or Issuing Bank, for taxes imposed on or
measured by the net income of such Person pursuant to the laws of the United
States of America, any state or political subdivision thereof, or the
jurisdiction in which such Person is incorporated, or a jurisdiction in which
the principal executive office or lending office of such Person is located, or
under the laws of any political subdivision or taxing authority of any such
jurisdiction, as such Person shall reasonably determine are or were payable by
such Person, in respect of amounts payable to such Person pursuant to this Section 2.16
taking into account the amount of Taxes that are (x) allowed as a
deduction in determining taxes imposed on or measured by the net income or
allowed as a credit against any taxes imposed on or measured by net income and (y) payable
to such Person pursuant to this Section 2.16.

 

If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent, for the account
of the Issuing Bank, the respective Lenders or Transferees, the required
receipts or other required documentary evidence, the Borrower shall indemnify
the Issuing Bank, Lenders and Transferees for any incremental Taxes, interest,
penalties or other costs (including reasonable attorneys’ fees and expenses)
that may become payable by the Issuing Bank, any Lender or Transferee as a
result of any such failure.  For purposes
of this Section 2.16, a distribution hereunder by the Administrative Agent
to or for the account of the Issuing Bank, any Lender or Transferee shall be
deemed a payment by the Borrower.

 

Each Lender or Transferee that is organized under the laws of a
jurisdiction other than the United States of America or any state or political
subdivision thereof shall, on or prior to the Effective Date (in the case of
each Lender that is a party hereto on the Effective Date) or on or prior to the
date of any assignment, participation or change in the designated lending
office hereunder (in the case of a Transferee) and thereafter as reasonably
requested from time to time by the Borrower or the Administrative Agent,
execute and deliver, if legally able to do so, to the Borrower and the
Administrative Agent one or more (as the Borrower or the Administrative Agent
may reasonably request) United States Internal Revenue Service Forms W-8BEN or
such other forms or documents (or successor forms or documents), appropriately
completed, as may be applicable to establish the extent, if any, to which a
payment to such Lender or Transferee is exempt from or entitled to a reduced
rate of withholding or deduction of Taxes.

 

With respect to obligations under this Agreement other than those
specified in the immediately following paragraph, the Borrower shall not be
required to indemnify or to pay any additional amounts to the Issuing Bank, any
Lender or Transferee with respect to any Taxes pursuant to this Section 2.16
to the extent that (i) any obligation to withhold, deduct or pay amounts
with respect to such Tax existed on the date the Issuing Bank, such Lender or
Transferee became a party to this Agreement or otherwise becomes a Transferee
(and, in such case, the Borrower may deduct and withhold such Tax from payments
to the Issuing Bank, such Lender or Transferee), or (ii) any Lender or
Transferee fails to comply in full with the provisions of the immediately
preceding paragraph (and, in such case, the Borrower may deduct and
withhold all Taxes required by law as a result of such noncompliance from
payments to the Issuing Bank, such Lender or Transferee).

 

Notwithstanding anything to the contrary in this Section 2.16, if
the Internal Revenue Service determines that a Lender (or Transferee) is a
conduit entity participating in a conduit financing arrangement as defined in Section 7701(l) of
the Code and the regulations thereunder and the Borrower was not a participant
to such arrangement (other than as the Borrower under this Agreement) (a “Conduit
Financing Arrangement”), then (i) the Borrower shall have no
obligation to pay additional amounts or 

 

44

 

indemnify the Lender or Transferee for any Taxes with respect to any
payments hereunder to the extent the amount of such Taxes exceeds the amount
that would have otherwise been withheld or deducted had the Internal Revenue Service
not made such a determination and (ii) such Lender or Transferee shall indemnify
the Borrower in full for any and all taxes for which the Borrower is held
directly liable under Section 1461 of the Code by virtue of such Conduit
Financing Arrangement; provided that the Borrower (i) promptly
forwards to the indemnitor an official receipt or other documentation
satisfactorily evidencing such payment, (ii) shall contest such tax upon
the reasonable request of the indemnitor and at such indemnitor’s cost and (iii) shall
pay to such indemnitor within 30 days any refund of such taxes (including
interest thereon).  Each Lender or
Transferee represents that it is not participating in a Conduit Financing
Arrangement.

 

In the event that the Issuing Bank or any Lender determines that any
event or circumstance that will lead to a claim by it under this Section 2.16
has occurred or will occur, the Issuing Bank or such Lender will use its best
efforts to so notify the Borrower; provided that any failure to provide
such notice shall in no way impair the rights of the Issuing Bank or any Lender
to demand and receive compensation under this Section 2.16, but without
prejudice to any claims of the Borrower for failure to observe this
undertaking.

 

SECTION 2.17.            Indemnity.  In the event any Lender shall incur any loss
or expense (including any loss (other than lost profit) or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to make, continue or maintain any portion of the principal
amount of any Loan as, or to convert any portion of the principal amount of any
Loan into, a Eurodollar Loan) as a result of any conversion of a Eurodollar
Loan to an ABR Loan or repayment or prepayment of the principal amount of any Eurodollar
Loan on a date other than the scheduled last day of the Interest Period applicable
thereto, whether pursuant to Section 2.03, 2.05, 2.07, 2.14, 2.15 or 2.20
or otherwise, or any failure to borrow or convert any Eurodollar Loan after
notice thereof shall have been given hereunder, whether by reason of any
failure to satisfy a condition to such Borrowing or otherwise, then, upon the
written notice of such Lender to the Borrower (with a copy to the
Administrative Agent), the Borrower shall, within five days of its receipt
thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or
expense.  Such written notice (which
shall include calculations in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrower.

 

SECTION 2.18.            Change of Lending Office.  Each Lender (or Transferee) agrees that, upon
the occurrence of any event giving rise to the operation of Section 2.14,
2.15 or 2.16 with respect to such Lender (or Transferee), it will, if requested
by the Borrower, use commercially reasonable efforts (subject to overall policy
considerations of such Lender (or Transferee)) to designate another lending office
for any Loans affected by such event with the object of avoiding the
consequences of such event; provided that such designation is made on
terms that, in the sole judgment of such Lender, cause such Lender and its
respective lending offices to suffer no material economic, legal or regulatory
disadvantage; and provided, further, that nothing in this Section 2.18
shall affect or postpone any of the obligations of the Borrower or the rights
of any Lender (or Transferee) pursuant to Sections 2.14, 2.15 and 2.16.

 

SECTION 2.19.            Sharing of Setoffs.  Each Lender agrees that if it shall, through
the exercise of a right of banker’s lien, setoff or counterclaim against the
Borrower, or pursuant to a secured claim under Section 506 of
Title 11 of the United States Code or other security or interest arising
from, or in lieu of, such secured claim received by such Lender under any
applicable bankruptcy, insolvency or other similar law or otherwise, or by any
other means, obtain payment (voluntary or involuntary) in respect of any Loans
or participations in LC Disbursements which at the time shall be due and
payable as a result of which the unpaid principal portion of its Loans and
participations in LC Disbursements which at 

 

45

 

the time shall be due and payable shall be proportionately less than
the unpaid principal portion of such Loans and participations in LC Disbursements
of any other Lender, it shall be deemed simultaneously to have purchased from
such other Lender at face value, and shall promptly pay to such other Lender
the purchase price for, a participation in such Loans and participations in LC
Disbursements of such other Lender, so that the aggregate unpaid principal
amount of such Loans and participations in LC Disbursements held by each Lender
shall be in the same proportion to the aggregate unpaid principal amount of all
such Loans and participations in LC Disbursements as prior to such exercise of
banker’s lien, setoff or counterclaim or other event; provided, however,
that if any such purchase or purchases or adjustments shall be made pursuant to
this Section 2.19 and the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be rescinded to the
extent of such recovery and the purchase price or prices or adjustments
restored without interest.  The Borrower
expressly consents to the foregoing arrangements and agrees that any Lender
holding a participation in a Loan or an LC Disbursement deemed to have been so
purchased may exercise any and all rights of banker’s lien, setoff or counterclaim
with respect to any and all moneys owing by the Borrower to such Lender by
reason thereof as fully as if such Lender were a direct creditor directly to
the Borrower in the amount of such participation.

 

SECTION 2.20.            Assignment of Commitments Under Certain Circumstances.  In the event that (a) any Lender shall
have delivered a notice or certificate pursuant to Section 2.14 or 2.15,
or the Borrower shall be required to make additional payments to any Lender
under Section 2.16 (each, an “Increased Cost Lender”) or (b) subject
to the terms and conditions of Section 9.08(e), in connection with any
proposed amendment, modification, termination, waiver or consent with respect
to any of the provisions hereof described in Section 9.08(e), the consent
of all Lenders required hereunder would have been obtained but for such Lender’s
failure to consent (such Lender, a “Non-Consenting Lender”); then, with
respect to each such Non-Consenting Lender and Increased Cost Lender (the “Terminated
Lender”), the Borrower shall have the right, but not the obligation, at its
own expense, upon notice to such Terminated Lender and the Administrative
Agent, to replace such Terminated Lender with an assignee (in accordance with
and subject to the restrictions contained in Section 9.04) approved by the
Administrative Agent, the Issuing Bank and the Swingline Lender (which approval
shall not be unreasonably withheld), and such Terminated Lender hereby agrees
to transfer and assign 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 such assignee; provided, however,
that no Terminated Lender shall be obligated to make any such assignment unless
(i) such assignment shall not conflict with any law or any rule,
regulation or order of any Governmental Authority and (ii) such assignee
or the Borrower shall pay to the affected Terminated Lender in immediately
available funds on the date of such assignment the principal of and interest accrued
to the date of payment on the Loans made by such Terminated Lender and
participations in LC Disbursements and Swingline Loans held by such Terminated
Lender and all commitment fees and other fees owed to such Terminated Lender
hereunder and all other amounts accrued for such Terminated Lender’s account or
owed to it hereunder (including, without limitation, any Commitment Fees).  Each Lender agrees that, if it becomes a
Terminated Lender, it shall execute and deliver to the Administrative Agent an
Assignment and Acceptance to evidence such sale and purchase and shall deliver
to the Administrative Agent any Note (if the assigning Lender’s Loans are
evidenced by Notes) subject to such Assignment and Acceptance; provided, however,
that the failure of any Terminated Lender to execute an Assignment and
Acceptance shall not render such sale and purchase (and the corresponding
assignment) invalid and such assignment shall be recorded in the Register.

 

46

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

In order to induce the Lenders and the Administrative Agent to enter
into this Agreement and to extend credit hereunder and under the other Loan
Documents on the Effective Date, the Loan Parties, jointly and severally, make
the representations and warranties set forth in this Article III (after
giving effect to the Transactions) and upon the occurrence of each Credit Event
thereafter:

 

SECTION 3.01.            Organization, etc. 
Each Loan Party (a) is a corporation or other form of legal entity,
and each of its Subsidiaries is a corporation, partnership or other form of
legal entity, validly organized and existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, as the case may be,
(b) has all requisite corporate or other power and authority to carry on
its business as now conducted, (c) is duly qualified to do business and is
in good standing as a foreign corporation or foreign partnership (or comparable
foreign qualification, if applicable, in the case of any other form of legal
entity), as the case may be, in each jurisdiction where the nature of its
business requires such qualification, except where the failure to so qualify
will not have a Material Adverse Effect, and (d) has full power and
authority and holds all requisite material governmental licenses, permits and
other approvals to enter into and perform its obligations under this Agreement
and each other Loan Document to which it is a party and to own or hold under
lease its Property and to conduct its business substantially as currently
conducted by it.

 

SECTION 3.02.            Due Authorization, Non-Contravention, etc.  The execution, delivery and performance by
each Loan Party of this Agreement and each other Loan Document to which it is a
party, the borrowing of the Loans, the use of the proceeds thereof and the
issuance of the Letters of Credit hereunder are within each Loan Party’s
corporate, partnership or comparable powers, as the case may be, have been duly
authorized by all necessary corporate, partnership or comparable and, if
required, stockholder action, as the case may be, and do not

 

(a)           contravene
the Organic Documents of any Loan Party or any of its respective Subsidiaries;

 

(b)           contravene
any material law, statute, rule or regulation binding on or affecting any
Loan Party or any of its respective Subsidiaries;

 

(c)           violate
or result in a default or event of default or an acceleration of any rights or
benefits under any material indenture, agreement or other instrument binding
upon any Loan Party or any of its respective Subsidiaries; or

 

(d)           result
in, or require the creation or imposition of, any Lien on any assets of any
Loan Party or any of its respective Subsidiaries that would have or could
reasonably be expected to have a Material Adverse Effect, except Liens created
under the Loan Documents.

 

SECTION 3.03.            Government Approval, Regulation, etc.  No consent, authorization or approval or
other action by, and no notice to or filing with, any Governmental Authority or
regulatory body or other Person is required for the due execution, delivery or
performance by the Borrower or any other Loan Party of this Agreement or any
other Loan Document, the borrowing of the Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder except such as have
been obtained or made and are in full force and effect and except filings
necessary to perfect Liens under the Security 

 

47

 

Documents.  No Loan Party or any
of its respective Subsidiaries is an “investment company” within the meaning of
the Investment Company Act of 1940, as amended.

 

SECTION 3.04.            Validity, etc. 
This Agreement has been duly executed and delivered by the Borrower and
constitutes, and each other Loan Document to which any Loan Party is to be a
party will, on the due execution and delivery thereof and assuming the due
execution and delivery of this Agreement by each of the other parties hereto,
constitute, the legal, valid and binding obligation of such Loan Party
enforceable in accordance with its respective terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
the enforceability of creditors’ rights generally and to general principles of
equity.

 

SECTION 3.05.            Financial Information.  (a)  The consolidated balance sheets of
the Borrower and its Subsidiaries as of January 1, 2005 reported on by
Ernst & Young LLP, independent public accountants, and the related
consolidated statements of income, stockholders’ equity and cash flow of the
Borrower for the three years ended January 1, 2005, copies of which have
been furnished to the Administrative Agent, have been prepared in accordance
with GAAP, and present fairly in all material respects the consolidated
financial condition of the Borrower and its Subsidiaries as of the dates
thereof and the results of their operations and cash flows for the periods then
ended (including with respect to the fresh-start accounting adjustments made to
the first three fiscal quarters of 2003).

 

(b)           As of the Effective
Date, except as disclosed in the financial statements referred to above or the
notes thereto or on Schedule 3.05, none of the Borrower or its
Subsidiaries has any material Indebtedness, contingent liabilities, long-term
commitments or unrealized losses.

 

SECTION 3.06.            No Material Adverse Effect.  Since January 1, 2005, no event or circumstance
has occurred that has had, or could reasonably be expected to have, a Material
Adverse Effect.

 

SECTION 3.07.            Litigation. 
There is no pending or, to the knowledge of the Loan Parties,
threatened, litigation, action or proceeding affecting the Borrower or any of
its Subsidiaries, or any of their respective operations, properties,
businesses, assets or prospects, or the ability of the parties to consummate
the transactions contemplated hereby, which has a reasonable likelihood of
adverse determination and, if determined adversely, in the case of the Borrower
and its Subsidiaries, would reasonably be expected to have a Material Adverse
Effect or which purports to affect the legality, validity or enforceability of
this Agreement or any other Loan Document or the transactions contemplated
hereby or thereby.

 

SECTION 3.08.            Compliance with Laws and Agreements.  None of the Loan Parties has violated, is in
violation of or has been given written notice of any violation of any laws
(other than Environmental Laws, which are the subject of Section 3.13),
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 for any violations which do not have a Material Adverse
Effect.  No Default or Event of Default
has occurred and is continuing.

 

SECTION 3.09.            Subsidiaries. 
Schedule 3.09 sets forth the name of, and the direct or
indirect ownership interest of the Borrower in, each Subsidiary of the Borrower
and identifies each Subsidiary that is a Loan Party, in each case as of the
Effective Date.

 

SECTION 3.10.            Ownership of Properties.  (a)  Each of the Borrower and its
Subsidiaries has good and marketable title to (or other similar title in
jurisdictions outside the United States of America), or valid leasehold
interests in, or easements or other limited property interests in, or is
licensed

 

48

 

to use, all its material properties and assets (including all 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 and assets for their intended purposes and except where the failure
to have such title in the aggregate could not reasonably be expected to have a
Material Adverse Effect.  All such
material properties and assets are free and clear of Liens, other than
Permitted Liens.

 

(b)           As of the Effective
Date, Schedule 3.10(b) contains a true and complete list of
each parcel of Real Property (i) owned by any Loan Party as of the date
hereof and describes the type of interest therein held by such Loan Party and (ii) leased,
subleased or otherwise occupied or utilized by any Loan Party, as lessee, as of
the date hereof and describes the type of interest therein held by such Loan
Party and whether such lease, sublease or other instrument requires the consent
of the landlord thereunder or other parties thereto to the Transactions.

 

(c)           Each of the Borrower
and its Subsidiaries has complied with all obligations under all leases to
which it is a party, except where the failure to comply would not have a
Material Adverse Effect, and all such leases are in full force and effect,
except leases in respect of which the failure to be in full force and effect
could not reasonably be expected to have a Material Adverse Effect.  Each of the Borrower and its Subsidiaries
enjoys peaceful and undisturbed possession under all such leases, other than
leases in respect of which the failure to enjoy peaceful and undisturbed
possession could not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect.

 

(d)           Each of the Borrower
and its Subsidiaries owns, possesses, is licensed or otherwise has the right to
use, or could obtain ownership or possession of, on terms not materially
adverse to it, all patents, trademarks, service marks, trade names, copyrights,
licenses and rights with respect thereto necessary for the present conduct of
its business, without any known conflict with the rights of others, except
where such conflicts could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(e)           As of the Effective
Date, no Loan Party or any of its respective Subsidiaries has received any
written notice of, or has any knowledge of, any pending or contemplated condemnation
proceeding affecting any of the Mortgaged Properties or any sale or disposition
thereof in lieu of condemnation that remains unresolved as of the Effective
Date.

 

(f)            Neither the
Borrower nor any of its Subsidiaries is obligated on the Effective Date under
any right of first refusal, option or other contractual right to sell, assign
or otherwise dispose of any Mortgaged Property or any interest therein.

 

SECTION 3.11.            Taxes.  Each
of the Borrower and its Subsidiaries has timely filed all federal and all other
material income tax returns and reports required by law to have been filed by
it and has paid all material taxes and governmental charges due, except any
such taxes or charges which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books; provided that any such contest
of taxes or charges with respect to Collateral shall satisfy the Contested
Collateral Lien Conditions.

 

SECTION 3.12.            Pension and Welfare Plans.  No ERISA Event has occurred or is reasonably
expected to occur which could reasonably be expected to have a Material Adverse
Effect or give rise to a Lien on the assets of the Borrower or any of its
Subsidiaries.  The Borrower and its
Subsidiaries and their ERISA Affiliates are in compliance in all respects with
the presently applicable provisions of ERISA and the Code with respect to each
Plan except for failures to so comply which could not reasonably be expected to
have a Material Adverse Effect.  No
condition exists or event or transaction has

 

49

 

occurred with respect to any Plan which reasonably might result in the
incurrence by the Borrower or any of its Subsidiaries or any ERISA Affiliate of
any liability, fine or penalty which could reasonably be expected to have a
Material Adverse Effect.  Neither the
Borrower nor any of its Subsidiaries has any contingent liability with respect
to post-retirement benefits provided by the Borrower or any of its Subsidiaries
under a Welfare Plan, other than (i) liability for continuation coverage
described in Part 6 of Subtitle B of Title I of ERISA and (ii) liabilities
that, individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect.

 

Except as could not reasonably be expected to have a Material Adverse
Effect, (a) each Foreign Plan has been maintained in compliance with its
terms and with the requirements of any and all applicable laws, statutes,
rules, regulations and orders and has been maintained, where required, in good
standing with applicable regulatory authorities, and (b) neither the
Borrower nor any of its Subsidiaries has incurred any obligation in connection
with the termination of or withdrawal from any Foreign Plan.

 

SECTION 3.13.            Environmental. 
(a)  Except as set forth on Schedule 3.13(a), all facilities
and property owned, leased or operated by the Borrower or any of its
Subsidiaries, and all operations conducted thereon, are in compliance with all
Environmental Laws, except for such noncompliance that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

(b)           Except
as set forth on Schedule 3.13(b), there are no pending or
threatened (in writing):

 

(i)      Environmental Claims received by the
Borrower or any of its Subsidiaries, or

 

(ii)     written claims, complaints, notices or
inquiries received by the Borrower or any of its Subsidiaries regarding
Environmental Liability,

 

in each case which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect.

 

(c)           Except as set forth
on Schedule 3.13(c), there have been no Releases of Hazardous
Materials at, on, under or from any property or facility now or, to any Loan
Party’s knowledge, previously owned, leased or operated by the Borrower or any
of its Subsidiaries that, individually or in the aggregate, have had or could
reasonably be expected to have a Material Adverse Effect.

 

(d)           The Borrower and its
Subsidiaries have been issued and are in compliance with all Environmental
Permits necessary for their operations, facilities and businesses and each is
in full force and effect, except for such Environmental Permits which, if not
so obtained or as to which the Borrower and its Subsidiaries are not in
compliance, or are not in effect, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

 

(e)           No property now or,
to any Loan Party’s knowledge previously, owned, leased or operated by the
Borrower or any of its Subsidiaries is listed or, to any Loan Party’s
knowledge, proposed (with respect to owned property only) for listing (i) on
the National Priorities List pursuant to CERCLA or (ii) on the CERCLIS or
on any similar list of sites requiring investigation or clean-up, which, in the
case of this clause (ii) only, singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

(f)            There are no
underground storage tanks, active or abandoned, including petroleum storage
tanks, surface impoundments or disposal areas, on or under any property now or,
to any

 

50

 

Loan Party’s knowledge previously, owned or leased by the Borrower or
any of its Subsidiaries which, singly or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 

(g)           Neither the Borrower
nor any of its Subsidiaries has transported or arranged for the transportation
of any Hazardous Material to any location which is listed or proposed for
listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or
on any similar list or which is the subject of federal, state or local
enforcement actions or other investigations which would reasonably be expected
to lead to any Environmental Claim against the Borrower or such Subsidiary
which (other than in the case of a listing or proposed listing on the National
Priorities List pursuant to CERCLA), singly or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

(h)           No liens have been
recorded pursuant to any Environmental Law with respect to any property or
other assets currently owned or leased by the Borrower or its Subsidiaries.

 

(i)            Neither the
Borrower nor any of its Subsidiaries is currently conducting any Remedial
Action pursuant to any Environmental Law, nor has any of the Loan Parties or
any of their respective Subsidiaries assumed by contract, agreement or
operation of law any obligation under Environmental Law, the cost of which,
singly or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

 

(j)            There are no
polychlorinated biphenyls or friable asbestos present at any property or
facility owned, leased or operated by the Borrower or any of its Subsidiaries,
which, singly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

 

SECTION 3.14.            Regulations U and X.  The Loans, the use of the proceeds thereof,
this Agreement and the transactions contemplated hereby will not result in a
violation of any provision of Regulation U or Regulation X.

 

SECTION 3.15.            Disclosure; Accuracy of Information; Pro Forma Balance
Sheets and Projected Financial Statements. 
(a)  The Loan Parties have disclosed to the Lenders all agreements,
instruments and corporate or other restrictions to which they or any of their
Subsidiaries is subject, and all other matters known to any of them that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.  Neither this
Agreement nor any other material document, certificate or statement furnished
to the Administrative Agent or any Lender by or on behalf of any Loan Party in
connection herewith (including, without limitation, the Information Memorandum
and the Projected Financial Statements) contains any untrue statement of a
material fact or omits to state any material fact necessary in order to make
the statements contained herein and therein not misleading, in light of the
circumstances under which they were made; provided that to the extent
this or any such document, certificate or statement (including without
limitation the Information Memorandum and the Projected Financial Statements)
was based upon or constitutes a forecast or projection, the Loan Parties
represent only that they acted in good faith and utilized assumptions believed
by management to be reasonable at the time made.  The Administrative Agent and the Lenders
recognize, however, that forecasts and projections as to future events are not
to be viewed as representations with respect to future performance and that the
actual results during the period or periods covered by the forecasts or
projections probably will differ from the projected results and that the
difference may be material.

 

(b)           The Borrower shall have
furnished to the Lenders the pro forma consolidated balance sheet as of October 1,
2005, prepared giving effect to the Transactions as if the Transactions had
occurred on such date.  Such pro forma
consolidated balance sheet (i) was prepared in good faith based on the
same assumptions used to prepare the pro forma financial statements included in
the Information

 

51

 

Memorandum, (ii) accurately reflects in all material respects all
adjustments necessary to give effect to the Transactions and (iii) presents
fairly in all material respects the pro forma financial position of the
Borrower and its consolidated Subsidiaries as of October 1, 2005.

 

(c)           The Borrower shall
have furnished to the Lenders pro forma consolidated income statement
projections for the Borrower and its Subsidiaries, pro forma consolidated
balance sheet projections for the Borrower and its Subsidiaries and pro forma
consolidated cash flow projections for the Borrower and its Subsidiaries through
the 2012 Fiscal Year, which shall be prepared on a quarterly basis through the
2006 Fiscal Year and annually thereafter (the “Projected Financial
Statements”), which give effect to the Transactions and all Indebtedness
and Liens incurred or created in connection with the Transactions.

 

SECTION 3.16.            Insurance. 
As of the Effective Date, set forth on Schedule 3.16 is a
summary of all insurance policies maintained by the Borrower and each of its
Subsidiaries with financially sound and responsible insurance companies (a) with
respect to its properties material to the business of the Borrower and its Subsidiaries
against such casualties and contingencies and of such types and in such amounts
as are customary in the case of similar businesses operating in the same or
similar locations, and (b) required to be maintained pursuant to the
Security Documents.

 

SECTION 3.17.            Labor Matters. 
Except as could not reasonably be expected to have a Material Adverse
Effect, (a) there are no strikes, lockouts or slowdowns against the
Borrower or any Subsidiary pending or, to the knowledge of any Loan Party,
threatened; (b) the hours worked by and payments made to employees of the
Borrower and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Federal, state, local or foreign law
dealing with such matters; and (c) all payments due from the Borrower or
any Subsidiary, or for which any claim may be made against the 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
Borrower or such Subsidiary.

 

SECTION 3.18.            Solvency. 
Immediately following the making of each Loan and after giving effect to
the application of the proceeds of such Loans, (a) the fair value of the
assets of the Borrower, individually, and the Loan Parties, taken as a whole,
at a fair valuation, will exceed its or their debts and liabilities,
subordinated, contingent or otherwise; (b) the present fair saleable value
of the property of the Borrower, individually, and the Loan Parties, taken as a
whole, will be greater than the amount that will be required to pay the
probable liability of its or their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute
and matured; (c) the Borrower, individually, and the Loan Parties, taken
as a whole, will be able to pay its or their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) each Loan Party will not have unreasonably
small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.

 

SECTION 3.19.            Securities. 
The Equity Interests of each Subsidiary held, directly or indirectly, by
the Borrower are owned, directly or indirectly, by the Borrower free and clear
of all Liens other than Liens permitted by Section 6.02 (i), (v) or
(x).  There are not, as of the Effective
Date, any existing options, warrants, calls, subscriptions, convertible or
exchangeable securities, rights, agreements, commitments or arrangements for
any Person to acquire any common stock of the Borrower or its Subsidiaries or
any other securities convertible into, exchangeable for or evidencing the right
to subscribe for any such common stock, except as set forth on Schedule 3.19.

 

52

 

SECTION 3.20.            Indebtedness Outstanding.  (a)  Set forth on Schedule 3.20(a) hereto
is a list and description of all Indebtedness of the Loan Parties and their
respective Subsidiaries that will be repaid, defeased, transferred or otherwise
terminated on or immediately prior to the Effective Date (such Indebtedness, “Indebtedness
to Be Paid”).

 

(b)           Set forth on Schedule 3.20(b) hereto
is a list and description of all Liens of the Loan Parties and their respective
Subsidiaries that will be repaid, defeased, transferred or otherwise terminated
on or immediately prior to the Effective Date.

 

SECTION 3.21.            Security Documents.  (a)  The Pledge Agreement is effective
to create in favor of the Collateral Agent for its benefit and the benefit of
the Secured Parties, legal, valid and enforceable security interests in the
Collateral (as defined in the Pledge Agreement) and, when such Collateral is
delivered to the Collateral Agent, the Pledge Agreement shall constitute fully
perfected Liens on, and security interests in, all right, title and interest of
the pledgor thereunder in such Collateral to the extent such Liens and security
interests can be perfected by possession.

 

(b)           (i) The
Security Agreement and each Non-U.S. Pledge Agreement is effective to create in
favor of the Collateral Agent, for its benefit and the benefit of the Secured
Parties, legal, valid and enforceable security interests in the Collateral (as
defined in the Security Agreement) and (ii) when (x) financing
statements in appropriate form are filed in the offices specified on Schedule 7
to the Perfection Certificate and (y) upon the taking of possession or
control by the Collateral Agent of any such Collateral in which a security
interest may be perfected only by possession or control (which possession or
control shall be given to the Collateral Agent to the extent possession or
control by the Collateral Agent is required by the Security Agreement), the
Security Agreement shall constitute fully perfected Liens on, and security
interests in, all right, title and interest of the grantors thereunder in such Collateral
to the extent such Liens and security interests can be perfected by the filing
of a financing statement pursuant to the UCC or by possession or control by the
Collateral Agent, in each case prior and superior in right to any other Person,
other than with respect to Permitted Liens.

 

(c)           When the filings in
clause (b)(ii)(x) above are made and when the Security Agreement (or
a summary thereof) is filed in the United States Patent and Trademark Office
and the United States Copyright Office, the Security Agreement shall constitute
fully perfected Liens on, and security interests in, all right, title and
interest of the Loan Parties in the Intellectual Property (as defined in the
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 (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 Liens on registered trademarks,
trademark applications and copyrights acquired by the Loan Parties after the
Effective Date), in each case prior and superior in right to any other Person
other than with respect to Permitted Liens.

 

(d)           Each Mortgage
executed and delivered to the Collateral Agent to secure the Obligations as of
the Effective Date is, or, to the extent any Mortgage is duly executed and delivered
thereafter by the relevant Loan Party, will be, effective to create, subject to
the exceptions listed in each title insurance policy covering each such
Mortgage, in favor of the Collateral Agent, for its benefit and the benefit of
the Secured Parties, legal, valid and enforceable Liens on and security
interests in all of the Loan Parties’ right, title and interest in and to the
Mortgaged Properties thereunder and the proceeds thereof, and when such
Mortgages are filed in the offices specified on Schedule 3.21(d),
such Mortgages shall constitute Liens on, and security interests in, all right,
title and interest of the Loan Parties in such Mortgaged Properties and the
proceeds thereof, in each case prior and superior in right to any other Person,

 

53

 

other than with respect to the rights of Persons under the exceptions
listed in each title insurance policy covering each such Mortgage.

 

SECTION 3.22.            Anti-Terrorism Laws.  (a)  None of the Loan Parties or, to the
knowledge of any of the Loan Parties, any of their Affiliates is in violation
of any laws relating to terrorism or money laundering (“Anti-Terrorism Laws”),
including Executive Order No. 13224 on Terrorist Financing, effective September 24,
2001 (the “Executive Order”), and the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001, Public Law 107-56.

 

(b)           No Loan Party or, to
the knowledge of any of the Loan Parties, any of their Affiliates or their
respective brokers or other agents acting or benefiting in any capacity in
connection with the Loans is any of the following:

 

(i)              a
Person or entity that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order;

 

(ii)             a
Person or entity owned or controlled by, or acting for or on behalf of, any
Person or entity that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order;

 

(iii)            a
Person or entity with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;

 

(iv)            a
Person or entity that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order; or

 

(v)             a
Person or entity that is named as a “specially designated national and blocked
person” on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control at its official website or any replacement
website or other replacement official publication of such list.

 

(c)           No Loan Party or, to
the knowledge of any Loan Party, any of its brokers or other agents acting in
any capacity in connection with the Loans (i) conducts any business or
engages in making or receiving any contribution of funds, goods or services to
or for the benefit of any Person described in clause (b) above, (ii) deals
in, or otherwise engages in any transaction relating to, any property or interests
in property blocked pursuant to the Executive Order, or (iii) engages in
or conspires to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law.

 

ARTICLE IV

 

CONDITIONS

 

SECTION 4.01.            Effective Date. 
The obligations of the Lenders to make Loans, and the obligation of each
Issuing Bank to issue Letters of Credit, in each case, on the Effective Date
are subject, at the time of the making of such Loans or the issuance of such
Letters of Credit, to satisfaction or waiver of the following conditions on or
prior to the Effective Date:

 

54

 

(a)           The
Administrative Agent (or its counsel) shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of
this Agreement) that such party has signed a counterpart of this Agreement.

 

(b)           The
Administrative Agent shall have received (i) counterparts of the Guarantee
Agreement signed on behalf of each Domestic Subsidiary and (ii) counterparts
of the Indemnity, Subrogation and Contribution Agreement signed on behalf of
each Loan Party.

 

(c)           The
Administrative Agent shall have received from the Borrower a Closing
Certificate, dated the Effective Date and signed on behalf of the Borrower by a
Financial Officer of the Borrower.

 

(d)           The
Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of each Loan Party, the authorization
of the Transactions and any other legal matters relating to the Loan Parties,
the Loan Documents or the Transactions, all in form and substance reasonably
satisfactory to the Administrative Agent and its counsel.

 

(e)           The
Administrative Agent shall have received from Kirkland & Ellis LLP,
counsel to the Loan Parties, an opinion addressed to each Agent and the Lenders
and dated the Effective Date substantially in form and substance reasonably
satisfactory to the Administrative Agent.

 

(f)            The
Administrative Agent shall have received favorable written opinions of (i) local
counsel in each of the jurisdictions (in each case unless, and to the extent
otherwise agreed by the Administrative Agent) referred to in Schedule 4.01(f),
in each case reasonably satisfactory to the Administrative Agent, which
opinions shall (x) be addressed to each Agent and the Lenders and be dated
the Effective Date, (y) cover various matters regarding the perfection and
priority of the security interests granted in respect of the Equity Interests
of Persons organized in such Non-U.S. Jurisdiction, and such other maters
incident to the transactions contemplated herein as the Agents may reasonably
request and (z) be in form, scope and substance reasonably satisfactory to
the Agents, and (ii) local counsel to the Loan Parties as specified in Schedule 4.01(f) in
the form of Exhibit K, which opinions (x) shall be addressed
to each Agent and each of the Lenders and be dated the Effective Date, (y) shall
cover the enforceability of the respective Mortgage and perfection of the Liens
and security interests granted pursuant to the relevant Security Documents and
such other matters incident to the transactions contemplated herein as the
Agents may reasonably request and (z) shall be in form and substance
reasonably satisfactory to the Agents.

 

(g)           All
documents executed or submitted in connection with this Agreement, the
borrowings hereunder and the other Loan Documents shall be reasonably
satisfactory to the Lenders.

 

(h)           The
Lenders shall have received the audited consolidated balance sheets and related
statements of income, stockholders’ equity and cash flows of the Borrower
described in Section 3.05, which audited financial statements (and the
notes thereto) shall be in form and scope reasonably satisfactory to the
Lenders.

 

(i)            All
corporate and legal proceedings and all instruments and agreements in
connection with the transactions contemplated by this Agreement and the other
Loan Documents to

 

55

 

occur on or prior to the Effective Date shall be in form and substance
reasonably satisfactory to the Administrative Agent, and the Administrative
Agent shall have received all information and copies of all documents and
papers, including records of corporate proceedings, governmental approvals,
good standing certificates and bring down telegrams or facsimiles, if any,
which the Administrative Agent reasonably may have requested in connection
therewith, such documents and papers where appropriate to be certified by
proper corporate or governmental authorities.

 

(j)            The
Requisite Lenders shall be satisfied that the representations and warranties
set forth in Article III hereof and in the other Loan Documents that are
made as of the Effective Date shall be true and correct (or true and correct in
all material respects if not otherwise qualified by materiality or by a
Material Adverse Effect) with the same effect as if then made.

 

(k)           The
Requisite Lenders shall be satisfied that at the time of and immediately after
the Borrowings and issuances of Letters of Credit, no Default or Event of
Default shall have occurred and be continuing.

 

(l)            The
Lenders shall have received a certificate of the chief financial officer of the
Borrower in the form of Exhibit L and reasonably satisfactory to
the Administrative Agent, together with such other evidence reasonably
requested by the Lenders, confirming the solvency of each of the Loan Parties
on a consolidated basis after giving effect to the Transactions.

 

(m)          The
Lenders shall have received (i) the pro forma consolidated balance sheet
referred to in Section 3.15(b), together with the certificate of the chief
financial officer of the Borrower certifying clauses (i)-(iii) thereof and
the Lenders shall be reasonably satisfied that such balance sheet is not
materially inconsistent with the forecasts previously provided to the Lenders
and (ii) the Projected Financial Statements.

 

(n)           The
Administrative Agent shall have received reasonably satisfactory evidence that
all loans and letters of credit outstanding under, and all other amounts due in
respect of, the Indebtedness to Be Paid shall have been repaid in full (or
satisfactory arrangements made for such repayment and letters of credit) and
the commitments thereunder shall have been permanently terminated, and all
related guarantees and security interests shall have been terminated (or
provisions reasonably satisfactory to the Administrative Agent shall have been
made for their termination).

 

(o)           After
giving effect to the Transactions, none of the Borrower or its respective
Subsidiaries shall have outstanding any Indebtedness other than (i) the
Loans and other extensions of credit under this Agreement and (ii) Indebtedness
permitted under Section 6.01 (other than clauses (vi), (vii), (xiii),
(xiv) and (xv) thereof).

 

(p)           All
requisite material governmental authorities and third parties shall have
approved or consented to the Transactions to the extent required, all
applicable appeal periods shall have expired and there shall be no judicial or
regulatory action by a governmental agency, actual or threatened, that could
reasonably be expected to restrain, prevent or impose materially burdensome
conditions on the Transactions or the other transactions contemplated hereby.

 

(q)           The
Lenders shall be reasonably satisfied that no litigation or administrative
proceeding or development in any litigation or administrative proceeding by any
entity (private or governmental) shall be pending or, to the knowledge of the
Borrower, threatened that could

 

56

 

reasonably be expected to have, a Material Adverse Effect or a material
adverse effect on the ability of the parties to consummate the Transactions.

 

(r)            The
Administrative Agent shall have received all fees payable to the Administrative
Agent or any Lender on or prior to the Effective Date under the Engagement Letter
and all other amounts due and payable pursuant to the Loan Documents on or
prior to the Effective Date, including reimbursement or payment of all
reasonable and invoiced out-of-pocket expenses (including reasonable fees,
charges and disbursements of Cahill Gordon & Reindel LLP and domestic
and foreign local counsel) required to be reimbursed or paid by the Borrower
hereunder or under any other Loan Document.

 

(s)           The
Collateral Agent shall have received counterparts of the Pledge Agreement
signed by each Loan Party and covering pledges of 100% of the Equity Interests
held by the Loan Parties in all of their Domestic Subsidiaries and 65% of the
Equity Interests of their “first tier” Non-U.S. Subsidiaries (other than any
Equity Interests of such Subsidiaries pledged pursuant to Non-U.S. Pledge
Agreements) of the Borrower or any Domestic Subsidiary and counterparts of the
Non-U.S. Pledge Agreements covering pledges of 65% of the Equity Interests of
the “first tier” Non-U.S. Subsidiaries of the Borrower, and the Collateral
Agent shall have received all promissory notes (the “Intercompany Notes”)
evidencing all intercompany Indebtedness owed to any Loan Party by the Borrower
or any Subsidiary as of the Effective Date and stock powers and instruments of
transfer, endorsed in blank, with respect to the Equity Interests of the
Borrower’s Domestic Subsidiaries and any such promissory notes.

 

(t)            The
Collateral Agent shall have received counterparts of the Security Agreement and
Pledge Agreement signed by each Loan Party, in each case, together with the following
in form and substance reasonably satisfactory to the Collateral Agent:

 

(A)          certificates
representing all Pledged Securities, together with executed and undated stock
powers and/or assignments in blank;

 

(B)           a
favorable written opinion of foreign counsel in the jurisdiction of organization
of each “first-tier” Non-U.S. Subsidiary (except for PGI Nonwovens Mauritius
Ltd.) as shall be reasonably acceptable to the Collateral Agent, (a) addressed
to the Collateral Agent and the Lenders and (b) covering such matters
relating to the Security Documents and the Loan Documents as the Collateral
Agent shall reasonably request including, without limitation, the perfection of
the security interest created in the Pledged Securities of such Non-U.S.
Subsidiaries;

 

(C)           instruments
representing all intercompany Indebtedness payable to any Loan Party, together
with executed and undated instruments of assignment endorsed in blank;

 

(D)          certificates
of insurance required under this Agreement;

 

(E)           appropriate
financing statements or comparable documents authorized by (and executed by, to
the extent applicable) the appropriate entities in proper form for filing under
the provisions of the UCC and applicable domestic or local laws, rules or
regulations in each of the offices where such filing is necessary or
appropriate, in the Collateral Agent’s reasonable discretion, to grant to the
Collateral Agent perfected Liens on

 

57

 

such Collateral, superior and prior to the rights of all third persons
other than the holders of Permitted Liens;

 

(F)           UCC,
judgment and tax lien, bankruptcy and pending lawsuit search reports listing
all effective financing statements or comparable documents which name any
applicable Loan Party as debtor and which are filed in those jurisdictions in
which, any Loan Party is organized and to the extent the Administrative Agent
reasonably requests, any jurisdiction in which any of such Collateral is
located and the jurisdictions in which any applicable Loan Party’s principal
place of business is located in the United States, together with copies of such
existing financing statements, none of which shall encumber such Collateral
covered or intended or purported to be covered by the Security Documents other
than Permitted Liens;

 

(G)           evidence
of the preparation for recording or filing, as applicable, of all recordings
and filings of each such Security Document, including, without limitation, with
the United States Patent and Trademark Office and the United States Copyright Office,
and delivery and recordation, if necessary, of such other security and other
documents, including, without limitation, UCC-3 termination statements with
respect to UCC filings that do not constitute Permitted Liens, as may be
necessary or, in the reasonable opinion of the Collateral Agent, desirable to
perfect the Liens created, or purported or intended to be created, by such
Security Documents;

 

(H)          with
respect to leased Real Property which is not subject to a leasehold Mortgage as
of the Effective Date, if any Pledged Collateral (as defined in the Security
Agreement) of any Loan Party or its Subsidiaries is maintained on such
premises, the Borrower shall use its commercially reasonable efforts to deliver
a Landlord Access Agreement with respect thereto;

 

(I)            evidence
that all other actions reasonably necessary or, in the opinion of the
Collateral Agent, desirable to perfect the security interest created by the
Security Documents have been taken; and

 

(J)            a
completed Perfection Certificate dated the Effective Date and signed by an
executive officer or Financial Officer of the Borrower, together with all
attachments contemplated thereby, including the results of a search of the UCC
(or equivalent) filings 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
Liens or have been released.

 

(u)           The Collateral Agent shall have
received the following documents and instruments:

 

(A)          with
respect to each Mortgaged Property indicated on Schedule 4.01(u)(A) hereto,
a Mortgage encumbering each of the same in favor of the Collateral Agent, for
its benefit and the benefit of the Secured Parties, duly executed and acknowledged
by the applicable Loan Party, and otherwise in form for recording in the recording
office where each such Mortgaged Property is situated, together with such certificates,
affidavits, questionnaires or returns as shall be required in connection with
the

 

58

 

recording or filing thereof to create a first priority lien under
applicable law, in favor of the Collateral Agent for the benefit of the Secured
Parties, and such UCC-1 financing statements and other similar statements as
are contemplated by the counsel opinions described in Section 4.01(f) in
respect of such Mortgages, all of which shall be in form and substance
reasonably satisfactory to the applicable Collateral Agent, and any other instruments
necessary to grant a mortgage lien under the laws of any applicable jurisdiction,
which Mortgages and financing statements and other instruments shall when recorded
be effective to create Liens on such Mortgaged Property subject to no other
Liens except the Prior Liens;

 

(B)           with
respect to each Mortgaged Property, such consents, approvals, amendments,
supplements, estoppels, tenant subordination agreements or other instruments,
in form acceptable to the Collateral Agent, as necessary or required to consummate
the transactions contemplated hereby or as shall reasonably be deemed necessary
by the Collateral Agent in order for the owner or holder of the fee or
leasehold interest constituting such Mortgaged Property to grant the Liens
contemplated by the Mortgages with respect to such Mortgaged Property;

 

(C)           with
respect to each Mortgage granted in favor of the Collateral Agent, a policy of
title insurance (or marked title commitment having the effect of a title
insurance policy) insuring the Liens of such Mortgages, respectively, as valid
first mortgage Liens on the real property and fixtures described therein in
favor of the Collateral Agent for the benefit of the Secured Parties in an
amount equal to not less than in an amount not less than the amount set forth
on Schedule 4.01(u)(C) (115% of the fair market value
thereof), which policies (or marked commitments having the effect of title
insurance policies) shall (w) be issued by the Title Company, (x) include
such reinsurance arrangements (with provisions for direct access) as shall be
reasonably acceptable to the Collateral Agent, (y) contain a “tie-in” or “cluster”
endorsement (if available under applicable law) (i.e., policies which
insure against losses regardless of location or allocated value of the insured
property up to a stated maximum coverage amount) and have been
supplemented by such endorsements (or where such endorsements are not
available, opinions of special counsel, architects or other professionals
reasonably acceptable to the Collateral Agent to the extent that such opinions
can be obtained at a cost which is reasonable with respect to the value of the
real property subject to such Mortgage) as shall be reasonably requested by the
Collateral Agent (including, without limitation, endorsements, to the extent
available in each jurisdiction at commercially reasonably rates, on matters
relating to usury, first loss, last dollar, zoning, contiguity, variable rate,
revolving credit, doing business, access, survey, address, subdivision,
separate tax lot, lender non-imputation and so-called comprehensive coverage
over covenants and restrictions) and (z) contain only such exceptions to
title as shall be agreed to by the Collateral Agent on or prior to the
Effective Date with respect to such Mortgaged Property;

 

(D)          with
respect to each Mortgaged Property, policies or certificates of insurance as
required hereby or by the Mortgage relating thereto, which policies or
certificates shall comply with the insurance requirements contained herein or
in such Mortgage;

 

(E)           with
respect to each Mortgaged Property, a Survey in form and substance acceptable
to the Collateral Agent;

 

59

 

(F)           with
respect to each Mortgaged Property, such affidavits, certificates, information
(including financial data) and instruments of indemnification (including, without
limitation, a so-called “gap” indemnification) as shall be required to induce
the Title Company to issue the policy or policies (or marked commitment
having the effect of a title insurance policy) and endorsements contemplated in
subparagraph (C) above;

 

(G)           evidence
acceptable to the Collateral Agent of payment by the appropriate Loan Party or
Subsidiary thereof of all applicable title insurance premiums, search and
examination charges, survey costs and related charges, mortgage recording
taxes, fees, charges, costs and expenses required for the recording of the
Mortgages and issuance of the title insurance policies referred to in
subparagraph (C) above; and

 

(H)          with
respect to each Real Property or Mortgaged Property, copies of all leases or
other agreements relating to possessory interests to which any Loan Party or
Subsidiary thereof is a party.  To the
extent any of the foregoing in which any Loan Party is a landlord or
sublandlord affect any Mortgaged Property, such agreement shall be subordinate
to the Mortgage to be recorded against such Mortgaged Property and otherwise
acceptable to the Collateral Agent.

 

(v)           The
Administrative Agent shall have received subordination agreements in form and
substance reasonably satisfactory to it covering all intercompany notes or
other obligations owed by a Loan Party to a Subsidiary of the Borrower that is
not a Loan Party.

 

(w)          The
Collateral Agent shall have received evidence and be reasonably satisfied that
the insurance required by Section 5.04 and the Security Documents is in
effect in form and substance satisfactory to the Collateral Agent.

 

SECTION 4.02.            Conditions to Each Credit Event.  The agreement of each Lender to make any Loan
and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit
(such event being called a “Credit Event”) (excluding continuations and
conversions of Loans) requested to be made by it on any date is subject to the
satisfaction of the following conditions:

 

(a)           The
Administrative Agent shall have received a notice of such Credit Event as
required by Section 2.02 or 2.05, as applicable.

 

(b)           The
representations and warranties set forth in Article III hereof and in the
other Loan Documents shall be true and correct (or true and correct in all
material respects if not otherwise qualified by materiality or by a Material
Adverse Effect) with the same effect as if then made (unless expressly stated
to relate to an earlier date, in which case such representations and warranties
shall be true and correct as of such earlier date).

 

(c)           At
the time of and immediately after such Credit Event, no Default or Event of
Default shall have occurred and be continuing.

 

Each Credit Event shall be deemed to constitute a representation and
warranty by the Borrower on the date of such Credit Event, as to the matters
specified in paragraphs (b) and (c) of this Section 4.02.

 

60

 

ARTICLE V

 

AFFIRMATIVE COVENANTS

 

Each Loan Party hereby covenants and agrees with the Lenders that on or
after the Effective Date and until the Commitments have expired or terminated
and the principal of and interest on each Loan and all fees and other amounts
due and payable hereunder or under any other Loan Document have been paid in
full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed:

 

SECTION 5.01.            Financial Information, Reports,
Notices, etc.  The Borrower will furnish,
or will cause to be furnished, to each Lender and the Administrative Agent
copies of the following financial statements, reports, notices and information:

 

(a)           as
soon as available and in any event within 45 days (or, if SEC Form 12b-25
is filed in respect of such Fiscal Quarter, 50 days or such shorter period for
the filing of the Borrower’s Form 10-Q as may be required by the SEC)
after the end of each of the first three Fiscal Quarters of each Fiscal Year of
the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries
as of the end of such Fiscal Quarter and consolidated statements of earnings,
stockholders’ equity and cash flow of the Borrower and its Subsidiaries for
such Fiscal Quarter and for the same period in the prior Fiscal Year and for
the period commencing at the end of the previous Fiscal Year and ending with
the end of such Fiscal Quarter, certified by a Financial Officer of the Borrower,
it being understood and agreed that the delivery of the Borrower’s Form 10-Q
(as filed with the SEC), if certified as required in this clause (a),
shall satisfy the requirements set forth in this clause, together with a
certificate from a Financial Officer of the Borrower (a “Compliance
Certificate”) containing a computation in reasonable detail of, and showing
compliance with, each of the financial ratios and restrictions contained in the
Financial Covenants and to the effect that, in making the examination necessary
for the signing of such certificate, such Financial Officer has not become
aware of any Default or Event of Default that has occurred and is continuing,
or, if such Financial Officer has become aware of such Default or Event of Default,
describing such Default or Event of Default and the steps, if any, being taken
to cure it;

 

(b)           as
soon as available and in any event within 90 days (or, if SEC Form 12b-25
is filed in respect of such Fiscal Year, 105 days or such shorter period as may
be required for the filing of the Borrower’s Form 10-K by the SEC) after
the end of each Fiscal Year of the Borrower, a copy of the annual audit report
for such Fiscal Year for the Borrower, including therein a consolidated balance
sheet of the Borrower and its Subsidiaries as of the end of such Fiscal Year
and consolidated statements of earnings, stockholders’ equity and cash flow of
the Borrower and its Subsidiaries for such Fiscal Year, in each case certified
(without any Impermissible Qualification) in a manner reasonably acceptable to
the Administrative Agent by Ernst & Young LLP or other independent
public accountants reasonably acceptable to the Administrative Agent (it being
understood and agreed that the delivery of the Borrower’s Form 10-K (as
filed with the SEC), if certified as required in this clause (b), shall
satisfy such delivery requirement in this clause), together with a Compliance
Certificate and a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Event of Default under
any of the Financial Covenants (which certificate may be limited to the extent
required by accounting rules or guidelines);

 

(c)           no
later than February 28 of each Fiscal Year of the Borrower, a detailed
consolidated budget by Fiscal Quarter for such Fiscal Year (including a
projected consolidated

 

61

 

balance sheet and related statements of projected operations and cash
flow as of the end of and for each Fiscal Quarter during such Fiscal Year) and
the next two succeeding Fiscal Years and, promptly when available, any
significant revisions of such budgets;

 

(d)           promptly
upon receipt thereof, copies of all reports submitted to the Borrower by
independent certified public accountants in connection with each annual,
interim or special audit of the books of the Borrower or any of its
Subsidiaries made by such accountants, including any management letters
submitted by such accountants to management in connection with their annual
audit;

 

(e)           as
soon as possible and in any event within five Business Days after becoming
aware of the occurrence of any Default or Event of Default, a statement of a
Financial Officer of the Borrower setting forth details of such Default or
Event of Default and the action which the Borrower has taken and proposes to
take with respect thereto;

 

(f)            as
soon as possible and in any event within five Business Days after (i) the
occurrence of any adverse development with respect to any litigation, action or
proceeding that, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect or (ii) the commencement of any
litigation, action or proceeding that could reasonably be expected to have a
Material Adverse Effect or that purports to affect the legality, validity or enforceability
of this Agreement or any other Loan Document or the transactions contemplated
hereby or thereby, notice thereof and copies of all documentation relating
thereto;

 

(g)           promptly
after the sending or filing thereof, copies of all reports which the Borrower
sends to any of its security holders (in their capacity as such), and all
reports, registration statements (other than on Form S-8 or any successor
form) or other materials (including affidavits with respect to reports) which
the Borrower or any of its Subsidiaries files with the SEC or any national
securities exchange;

 

(h)           promptly
upon becoming aware of the taking of any specific actions by the Borrower or
any other Person to terminate any Pension Plan (other than a termination pursuant
to Section 4041(b) of ERISA which can be completed without the
Borrower or any Subsidiary having to provide more than $5.0 million in addition
to the normal contribution required for the plan year in which termination
occurs to make such Pension Plan sufficient), or the occurrence of an ERISA
Event which could result in a Lien on the assets of any Loan Party or a
Subsidiary or in the incurrence by a Loan Party of any liability, fine or
penalty which could reasonably be expected to have a Material Adverse Effect,
or any increase in the contingent liability of a Loan Party with respect to any
post-retirement Welfare Plan benefit if the increase in such contingent
liability which could reasonably be expected to have a Material Adverse Effect,
notice thereof and copies of all documentation relating thereto;

 

(i)            upon
request by the Administrative Agent, copies of: 
(i) each Schedule B (Actuarial Information) to the annual
report (Form 5500 Series) filed by any Loan Party or ERISA Affiliate with
the Internal Revenue Service with respect to each Pension Plan; (ii) the
most recent actuarial valuation report for each Pension Plan and each Foreign
Plan for which a report is prepared; (iii) all notices received by any
Loan Party or ERISA Affiliate from a Multiemployer Plan sponsor or any
governmental agency concerning an ERISA Event; and (iv) such other
documents or governmental reports or filings relating to any Plan or Foreign
Plan as the Administrative Agent shall reasonably request;

 

62

 

(j)                                     as soon as
possible, notice of any other development that could reasonably be expected to
have a Material Adverse Effect; and

 

(k)                                  such other
information respecting the condition or operations, financial or otherwise, of
the Borrower or any of its Subsidiaries as any Lender through the
Administrative Agent may from time to time reasonably request.

 

SECTION 5.02.                                    Compliance
with Laws, etc.  The Loan Parties
will, and will cause each of their Subsidiaries to, comply in all respects with
all applicable laws, rules, regulations and orders, except where such
noncompliance, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect, such compliance to include, subject
to the foregoing:

 

(a)                                  the maintenance and
preservation of their and their Subsidiaries’ existence and their qualification
as a foreign corporation or partnership (or comparable foreign qualification,
if applicable, in the case of any other form of legal entity), and

 

(b)                                 the payment, before
the same become delinquent, of all taxes, assessments and governmental charges
imposed upon them or upon their property in excess of $250,000 other than any
such tax, assessment or charge the payment of which is being contested in good
faith and by proper proceeding and for which proper reserves are being
maintained in accordance with GAAP.

 

SECTION 5.03.                                    Maintenance
of Properties.  Each Loan Party and
each of its respective Subsidiaries will maintain, preserve, protect and keep
its material properties and assets in good repair, working order and condition
(ordinary wear and tear and loss from casualty or condemnation excepted), and
make necessary and proper repairs, renewals and replacements so that its
business carried on in connection therewith may be properly conducted at all
times; provided that nothing in this Section 5.03 shall prevent any
Loan Party from discontinuing the operation and maintenance of any of its
properties or any of those of its Subsidiaries if such discontinuance is, in
the reasonable commercial judgment of such Loan Party, desirable in the conduct
of its or their business and does not in the aggregate have a Material Adverse
Effect.

 

SECTION 5.04.                                    Insurance.  The Loan Parties will and will cause each of
their respective Subsidiaries to maintain or cause to be maintained with
financially sound and responsible insurance companies (a) insurance with
respect to their properties material to the business of the Loan Parties and
their respective Subsidiaries against such casualties and contingencies and of
such types and in such amounts with such deductibles as is customary in the
case of similar businesses operating in the same or similar locations
(including, without limitation, (i) physical hazard insurance on an “all
risk” basis, (ii) commercial general liability against claims for bodily
injury, death or property damage covering any and all claims, (iii) explosion
insurance in respect of any boilers, machinery or similar apparatus constituting
Collateral, (iv) business interruption insurance, (v) worker’s
compensation insurance as may be required by any Requirement of Law, (vi) flood
insurance, if at any time the area in which any improvements located on any
Mortgaged Property is designated a “flood hazard area” in any Flood Insurance
Rate Map published by the Federal Emergency Management Agency (or any successor
agency) and otherwise comply with the National Flood Insurance Program as set
forth in the Flood Disaster Protection Act of 1973 (as amended from time to
time) and (vii) such other insurance against risks as the Administrative
Agent may from time to time reasonably require) and (b) all insurance
required to be maintained pursuant to the Security Documents, and will, upon
request of the Administrative Agent, furnish to each Lender at reasonable intervals
a certificate of an Authorized Officer of the Borrower setting forth the nature
and extent of all insurance maintained by the Loan Parties and their respective
Subsidiaries in accordance with this Section. 
Each such insurance policy shall provide that (i) it may not be
cancelled or otherwise 

 

63

 

terminated without at least thirty (30) days’ prior written notice to
the Collateral Agent (and to the extent any such policy is cancelled, modified
or renewed, the Borrower shall deliver a copy of the renewal or replacement
policy (or other evidence thereof) to the Administrative Agent and the
Collateral Agent, or insurance certificate with respect thereto, together with
evidence reasonably satisfactory to the Administrative Agent and Collateral
Agent of the payment of the premium therefor); (ii) the Collateral Agent
and the Administrative Agent are permitted to pay any premium therefor within
thirty (30) days after receipt of any notice stating that such premium has not
been paid when due; (iii) all losses thereunder shall be payable
notwithstanding any act or negligence of any Loan Party or any of its
Subsidiaries or its agents or employees which otherwise might have resulted in
a forfeiture of all or a part of such insurance payments; (iv) to the
extent such insurance policy constitutes property insurance, all losses payable
thereunder in an amount in excess of $1.0 million shall be payable to the
Collateral Agent, as additional insured and as loss payee, pursuant to a
standard non-contributory New York mortgagee endorsement and shall be in
an amount at least sufficient to prevent coinsurance liability; provided that the Collateral Agent, as loss
payee pursuant to the foregoing, shall not agree to the adjustment of any claim
without the consent of the Borrower (such consent not to be unreasonably
withheld or delayed); and (v) with respect to liability insurance, the
Collateral Agent shall be named as an additional insured.  Notwithstanding the inclusion in each
insurance policy of the provision described in clause (ii) of the
immediately preceding sentence, in the event any Loan Party gives the
Collateral Agent written notice that it does not intend to pay any premium
relating to any insurance policy when due, the Collateral Agent shall not
exercise its right to pay such premium so long as such Loan Party delivers to
the Collateral Agent a replacement insurance policy or insurance certificate
evidencing that such replacement policy or certificate provides the same
insurance coverage required under this Section 5.04 as the policy being
replaced by such Loan Party with no lapse in such coverage.

 

SECTION 5.05.                                    Books
and Records; Visitation Rights.  Each
Loan Party will, and will cause each of its respective Subsidiaries to, keep
books and records which accurately reflect its business affairs in all material
respects and material transactions and permit the Administrative Agent or its
representatives, at reasonable times and intervals and upon reasonable notice, to
visit all of its offices, to discuss its financial matters with its officers
and independent public accountant and, upon the reasonable request of the
Administrative Agent or a Lender, to examine (and, at the expense of the
Borrower, photocopy extracts from) any of its books or other corporate or
partnership records.

 

SECTION 5.06.                                    Environmental
Covenant.  Each Loan Party will, and
will cause each of its respective Subsidiaries to:

 

(a)                                  use and operate all
of its facilities and properties in compliance with all applicable
Environmental Laws except for such noncompliance which, singly or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
and handle all Hazardous Materials in compliance with all applicable
Environmental Laws, except for any noncompliance that would not reasonably be
expected to have a Material Adverse Effect;

 

(b)                                 promptly notify the
Administrative Agent and provide copies of all written inquiries, claims,
complaints or notices from any Person relating to the environmental condition
of its facilities and properties or compliance with or liability under any
Environmental Law which could reasonably be expected to have a Material Adverse
Effect, and promptly cure and have dismissed with prejudice or contest in good
faith any actions and proceedings relating thereto;

 

(c)                                  in the event of the
presence of any Hazardous Material on any Mortgaged Property which is in
violation of any Environmental Law or which could reasonably be expected to
result in Environmental Liability which violation or Environmental Liability
could reasonably be 

 

64

 

expected to have a material adverse effect on any Mortgaged Property,
each applicable Loan Party and its Subsidiaries, upon discovery thereof, shall
take all necessary steps to initiate and expeditiously complete all response,
corrective or other action to mitigate and eliminate any such adverse effect in
accordance with and to the extent required by applicable Environmental Laws,
and shall keep the Administrative Agent informed of their actions;

 

(d)                                 at the written request
of the Administrative Agent or the Requisite Lenders, which request shall
specify in reasonable detail the basis therefor, each Loan Party will provide,
at such Loan Party’s sole cost and expense, an environmental site assessment
report concerning any Mortgaged Property now or hereafter owned or leased by
such Loan Party or any of its respective Subsidiaries, prepared by an
environmental consulting firm reasonably acceptable to the Administrative
Agent, indicating the presence or absence of Hazardous Materials and the
potential cost of any Remedial Action in connection with such Hazardous
Materials on, at, under or emanating from such Mortgaged Property pursuant to any
applicable Environmental Law; provided that such request may be made
only if (i) there has occurred and is continuing an Event of Default or (ii) the
Administrative Agent or the Requisite Lenders reasonably believe that the Borrower
or any such Mortgaged Property is not in compliance with Environmental Law and
such noncompliance could reasonably be expected to have a Material Adverse
Effect, or that circumstances exist that could reasonably be expected to form
the basis of an Environmental Claim against such Loan Party or to result in
Environmental Liability, in each case that could reasonably be expected to have
a Material Adverse Effect (in such events as are listed in this subparagraph,
the environmental site assessment shall be focused upon the noncompliance or
other circumstances as applicable).  If
any Loan Party fails to provide the same within 90 days after such request
was made and the circumstances described in clause (i) or (ii) still
exist, the Administrative Agent may order the same, and such Loan Party shall
grant and hereby grants to the Administrative Agent and the Requisite Lenders
and their agents access to such Mortgaged Property and specifically grants the
Administrative Agent and the Requisite Lenders an irrevocable non-exclusive
license, subject to the rights of tenants, to perform such an assessment, all
at such Loan Party’s sole cost and expense; and

 

(e)                                  provide such
information and certifications which the Administrative Agent may reasonably
request from time to time to evidence compliance with this Section 5.06.

 

SECTION 5.07.                                    Information
Regarding Collateral.  (a)  Each
Loan Party will furnish to the Administrative Agent and the Collateral Agent
prompt written notice of any change (i) in such 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 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 organizational identification number or (v) in
any Loan Party’s jurisdiction of organization. 
Each Loan Party agrees not to effect or permit any change referred to in
the preceding sentence unless (i) it shall have given the Administrative
Agent and the Collateral Agent thirty (30) days’ prior written notice and (ii) all
filings have been made under the UCC or otherwise that are required in order
for the Collateral Agent to continue at all times following such change to have
a valid, legal and perfected security interest in all the Collateral.  Each Loan Party also agrees promptly to
notify the Administrative Agent if any material portion of the Collateral is
damaged or destroyed.

 

(b)                                 Each
year, at the time of delivery of annual financial statements with respect to
the preceding Fiscal Year pursuant to clause (b) of Section 5.01,
the Borrower shall deliver to the 

 

65

 

Administrative Agent a certificate of a Financial Officer and the chief
legal officer of the Borrower (i) setting forth the information required
pursuant to Sections 1, 2, 7, 8, 11, 12, 13, 14, 15, 16, 17 and 18 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 UCC 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
Documents 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 5.08.                                    Existence;
Conduct of Business.  Each Loan Party
will, and will cause each of its respective Subsidiaries to, do or cause to be
done all things reasonably 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 its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section 6.03.

 

SECTION 5.09.                                    Performance
of Obligations.  Each Loan Party and
its respective Subsidiaries will perform all of their respective obligations
under the terms of each mortgage, indenture, security agreement, other debt
instrument and material contract by which they are bound or to which they are a
party except for such noncompliance as in the aggregate would not have a
Material Adverse Effect.

 

SECTION 5.10.                                    Casualty
and Condemnation.  Each Loan Party (a) will
furnish to the Administrative Agent and the Lenders prompt written notice of
any casualty or other insured damage to any Collateral in an amount in excess
of $2.5 million 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 and (b) will
ensure that the Net Proceeds of any such event (whether in the form of
insurance proceeds, condemnation awards or otherwise) are collected and applied
in accordance with the applicable provisions of this Agreement and the Security
Documents.

 

SECTION 5.11.                                    Pledge
of Additional Collateral.  Within
30 days after the acquisition of assets of the type that would have on the
Effective Date constituted Collateral under the Security Documents (the “Additional
Collateral”), each appropriate Loan Party will, and will cause its
respective Subsidiaries to, take all necessary action, including the filing of
appropriate financing statements under the provisions of the UCC, applicable
domestic or local laws, rules or regulations in each of the offices where
such filing is necessary or appropriate, or entering into or amending the
Guarantee Agreement and the Security Documents, or in the case of the Equity
Interests of a “first tier” Non-U.S. Subsidiary, entering into a Non-U.S.
Pledge Agreement providing for the Collateral Agent to have an enforceable and
perfected security interest in 65% of the Equity Interests in such Subsidiary,
to grant to each Collateral Agent for its benefit and the benefit of the
respective Secured Parties perfected Liens in such Collateral pursuant to and
to the full extent required by the Security Documents and this Agreement
(including, without limitation, delivery of an opinion substantially in the
form of Exhibit K and otherwise reasonably acceptable in form and
substance to the Collateral Agent and satisfaction of the conditions set forth
in subsections (v) and (w) of Section 4.01).  In the event that any Loan Party acquires or
leases additional Real Property or renews any lease of Real Property (whether
or not the subject of a leasehold Mortgage under the Security Documents) and (x) the
fair market value of such acquired Real Property is in excess of $1.0 million
as determined in good faith by the Borrower or (y) the average annual rent
payments under any such lease is greater than $400,000, the Borrower or the
appropriate Loan Party, as the case may be, using its commercially 

 

66

 

reasonable efforts in respect of any such leases, will take such
actions and execute such documents as the Collateral Agent shall require to
confirm the Liens of a Mortgage, if applicable, or to create a new Mortgage
(including, without limitation, satisfaction of the conditions set forth in
subsections (f), (v) and (w) of Section 4.01) (unless, with
respect to any such Real Property, (x) such Real Property is already
mortgaged to a third party to the extent permitted by Section 6.02 or (y) the
Administrative Agent determines, in its reasonable discretion, that the fees
and expenses of obtaining a Mortgage with respect to such Real Property and the
other related deliveries required by this Section 5.11 would be
disproportionate to the expected benefits to be received by the Secured
Parties).  All actions taken by the
parties in connection with the pledge of Additional Collateral, including,
without limitation, reasonable costs of counsel for the Administrative Agent
and the Collateral Agent, shall be for the account of the Borrower, which shall
pay all sums due on demand.

 

SECTION 5.12.                                    Further
Assurances.  The Loan Parties will,
and will cause each Subsidiary of a 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 and the delivery
of appropriate opinions of counsel), which may be required under any applicable
law, or which the Administrative Agent or the Requisite Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents or
to grant, preserve, protect or perfect the Liens created by the Security
Documents or the validity or priority of any such Lien, all at the expense of
the Loan Parties.  The Loan Parties also
agree to provide to the Collateral Agent, from time to time upon reasonable
request, evidence reasonably satisfactory to the Collateral Agent as to the
perfection and priority of the Liens created or intended to be created by the
Security Documents.

 

SECTION 5.13.                                    Use
of Proceeds.  The Borrower covenants
and agrees that (i) the proceeds of the Term Borrowings and Revolving
Credit Borrowings on the Effective Date will be used to finance the
Transactions and to pay fees and expenses payable hereunder and (ii) all
other Revolving Credit Borrowings after the Effective Date will be used for
general corporate purposes, including Permitted Acquisitions.

 

SECTION 5.14.                                    Payment
of Taxes.  Each Loan Party and its
respective Subsidiaries will pay and discharge all material taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any Properties belonging to it, prior to the date on which
material penalties attach thereto, and all lawful claims which, if unpaid,
might become a Lien or charge upon any Properties of such Loan Party or any of
its respective Subsidiaries or cause a failure or forfeiture of title thereto; provided
that neither such Loan Party nor any of its respective Subsidiaries shall be
required to pay any such tax, assessment, charge, levy or claim that is being
contested in good faith and by proper proceedings diligently conducted, which
proceedings have the effect of preventing the forfeiture or sale of the
Property or asset that may become subject to such Lien, if it has maintained
adequate reserves with respect thereto in accordance with and to the extent
required under GAAP; provided, further, that any such contest of
any tax, assessment, charge, levy or claim with respect to Collateral shall
satisfy the Contested Collateral Lien Conditions.

 

SECTION 5.15.                                    Equal
Security for Loans and Notes.  If any
Loan Party shall create or assume any Lien upon any of its Property which does
not constitute Collateral, whether now owned or hereafter acquired, other than
Permitted Liens (unless prior written consent to the creation or assumption
thereof shall have been obtained from the Administrative Agent and the
Requisite Lenders), it shall make or cause to be made effective provisions
whereby the Obligations will be secured by such Lien equally and ratably by
such Property with any and all other obligations thereby secured as long as any
such obligations shall be secured; provided that this covenant shall not
be construed as consent by the Administrative 

 

67

 

Agent and the Requisite Lenders to any violation by any Loan Party of
the provisions of Section 6.02.

 

SECTION 5.16.                                    Guarantees.  In the event that any Domestic Subsidiary of
the Borrower existing on the Effective Date has not previously executed the
Guarantee Agreement or in the event that any Person becomes a Domestic
Subsidiary of the Borrower after the Effective Date (including as a result of
the Permitted Reorganization), the Borrower will promptly notify the
Administrative Agent of that fact and cause such Subsidiary to, within 30 days
of becoming a Domestic Subsidiary, execute and deliver to the Administrative
Agent a counterpart of the Guarantee Agreement and deliver to the Collateral
Agent a counterpart of the Security Agreement and the Pledge Agreement and to
take all such further actions and execute all such further documents and instruments
(including actions, documents and certificates comparable to those described in
Sections 4.01(t) and (u)) as may be necessary or, in the reasonable
opinion of the Administrative Agent, desirable to create in favor of the
Collateral Agent, for its benefit and of the other Secured Parties, valid and
perfected Liens on all of the Property of such Subsidiary described in the
applicable forms of the Security Documents, subject to Liens permitted by the
applicable Loan Documents.

 

SECTION 5.17.                                    Subordination
of Intercompany Loans.  Each Loan
Party covenants and agrees that any existing and future debt obligation of the
Borrower or any Subsidiary Loan Party to any Non-U.S. Subsidiary shall be
subordinated to the Loans to at least the same extent as such existing
obligations were subordinated to the obligations under the Existing Credit
Agreement.

 

SECTION 5.18.                                    Interest
Rate Protection.  No later than the
30th day after the Effective Date, Borrower shall enter into (or otherwise be a
party to), and for a minimum of 18 months thereafter maintain, Hedging
Agreements with terms and conditions reasonably acceptable to the
Administrative Agent that result in at least 50% of the aggregate principal
amount of the Borrower’s and its Subsidiaries’ Indebtedness being effectively
subject to a fixed or maximum interest rate reasonably acceptable to the
Administrative Agent.

 

SECTION 5.19.                                   Post-Closing
Matters

 

(a)                                  The
applicable Loan Parties shall use their commercially reasonable efforts to
obtain and deliver to the Collateral Agent (unless waived or extended by the
Collateral Agent in its sole discretion), within the time periods set forth
below, to the extent such items have not provided as of the Closing Date, the
following:

 

(i)                       within sixty (60) days after the
Closing Date, Landlord Access Agreements or Bailee Letters, as applicable for
the Real Properties listed on Schedule 5.19(b), each in form and substance
reasonably acceptable to the Collateral Agent; and

 

(ii)                    within ten (10) days after the
Closing Date, with respect to each Mortgaged Property, title policies meeting
the requirements of Section 4.01(u).

 

(b)                                 The
applicable Loan Parties shall provide to the Collateral Agent (unless waived or
extended by the Collateral Agent in its sole discretion), within seven (7) Business
Days of the Closing Date, evidence of the release of the lien under the
Existing Credit Agreement on the Bonlam S.A. de C.V. stock (including the
notation on the stock thereof), entry into the new Mexican pledge agreement and
the related Mexican legal opinion with respect to the pledge of such Bonlam
S.A. de C.V. stock.

 

68

 

(c)                                  The
applicable Loan Parties shall use commercially reasonable efforts to provide
the Collateral Agent (unless waived or extended by the Collateral Agent in its
sole discretion), within 30 days of the Closing Date, evidence of termination
of lien or assignments recorded against any Loan Party in the U.S. Copyright
Office.

 

(d)                                 The
applicable Loan Parties shall provide the Collateral Agent (unless waived or
extended by the Collateral Agent in its sole discretion), within two (2) Business
Days of the Closing Date, originals copies of the stock certificates issued by
Fabrene, Inc. (and accompanying stock powers) pledged pursuant to the
terms of the Pledge Agreement.

 

(e)                                  The
applicable Loan Parties shall provide the Collateral Agent (unless waived or
extended by the Collateral Agent in its sole discretion) within ten(10) Business
Days of the Closing Date a good standing certificate for Poly-Bond Inc. in the
State of Virginia and an issuers’ acknowledgement for Chicopee Holdings B.V.

 

(f)                                    The
applicable Loan Parties shall provide to the Collateral Agent (unless waived or
extended by the Collateral Agent in its sole discretion) within 5 days of the
Closing Date final updated intellectual property schedules to the Perfection
Certificate.

 

(g)                                 The
applicable Loan Parties shall provide the Collateral Agent (unless waived or
extended by the Collateral Agent in its sole discretion) within 30 days of the
Closing Date insurance certificates with respect to assets located in China and
Europe.

 

(h)                                 The
applicable Loan Parties shall provide the Collateral Agent (unless waived or
extended by the Collateral Agent in its sole discretion) within 10 days of the
Closing Date (i) an updated intercompany note schedule to the Pledge
Agreement and Perfection Certificate and (ii) all intercompany notes
(along with endorsements in blank) required to be delivered, but not previously
delivered.

 

(i)                                     The
applicable Loan Parties shall provide the Collateral Agent (unless waived or
extended by the Collateral Agent in its sole discretion) within 2 days of the
Closing Date, an executed copy of the Dutch pledge Agreement relating to
Chicopee Holding, B.V. and the related foreign counsel opinion.

 

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 amounts payable hereunder or
under any other Loan Document have been paid in full and all Letters of Credit
have expired or terminated and all LC Disbursements shall have been reimbursed,
each of the Loan Parties and their respective Subsidiaries agree with the
Lenders that:

 

SECTION 6.01.                                    Indebtedness;
Certain Equity Securities.  (a) 
The Loan Parties will not, and will not permit any of their Subsidiaries to,
directly or indirectly, create, incur, assume or permit to exist (including by
way of Guarantee) any Indebtedness, except:

 

(i)                                     Indebtedness
incurred and outstanding under the Loan Documents;

 

69

 

(ii)                                  Indebtedness
(A) outstanding on the Effective Date and set forth on Schedule 6.01
and (B) any Permitted Refinancing thereof;

 

(iii)                               Indebtedness
of the Borrower to any Subsidiary Loan Party and of any Subsidiary to the
Borrower or any other Subsidiary;

 

(iv)                              Guarantees
by (x) the Borrower of Indebtedness of any Subsidiary Loan Party, (y) any
Subsidiary Loan Party of Indebtedness of the Borrower or any other Subsidiary
Loan Party and (z) any Subsidiary that is not a Loan Party of Indebtedness
of any other Subsidiary that is not a Loan Party, in each case (x), (y) or
(z), to the extent such Indebtedness was permitted to be incurred hereunder,
and if such Indebtedness is subordinated to the Obligations under the Loan
Documents, such Guarantee is as subordinated in right of payment to the
Obligations;

 

(v)                                 Indebtedness
arising from the honoring by a bank or other financial institution of a check,
draft or similar instrument drawn against insufficient funds in the ordinary
course of business; provided that such Indebtedness is extinguished
within two Business Days of its incurrence;

 

(vi)                              Guarantees
by the Borrower or any Subsidiary Loan Party of trade payables of Subsidiaries
that are not Loan Parties; provided that (a) any such Guarantee is
subordinated to the Obligations under the Loan Documents and (b) the
aggregate amount of trade payables guaranteed by such Guarantees shall not
exceed $10.0 million at any one time outstanding;

 

(vii)                           Indebtedness
of the 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, and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof or
result in an earlier maturity date or decreased Weighted Average Life to
Maturity thereof; provided that (A) such Indebtedness is incurred
prior to or within 90 days after such acquisition or the completion of such
construction or improvement and (B) the aggregate principal amount of
Indebtedness permitted by this clause (vii) shall not exceed $30.0
million at any time outstanding;

 

(viii)                        Hedging
Agreements entered into in the ordinary course of business and not for
speculative purposes;

 

(ix)                                Indebtedness
owed to (including obligations in respect of letters of credit for the benefit
of) any Person providing worker’s compensation, health, disability or other
employee benefits or property, casualty or liability insurance to Borrower or
any Subsidiary, pursuant to reimbursement or indemnification obligations to
such Person;

 

(x)                                   Indebtedness
of the Borrower and its Subsidiaries in respect of performance bonds, bid
bonds, appeal bonds, surety bonds and similar obligations and trade-related
letters of credit, in each case provided in the ordinary course of business,
including those incurred to secure health, safety and environmental obligations
in the ordinary course of business;

 

70

 

(xi)                                Indebtedness
arising from agreements of the Borrower or any Subsidiary of the Borrower
providing for indemnification, adjustment of purchase price or similar obligations,
in each case, incurred or assumed in connection with the disposition of any
business, assets or a Subsidiary, other than Guarantees of Indebtedness incurred
by any Person acquiring all or any portion of such business, assets or a
Subsidiary for the purpose of financing such acquisition;

 

(xii)                             obligations
in respect of performance and surety bonds and completion guarantees provided
by the Borrower or any Subsidiary in the ordinary course of business;

 

(xiii)                          Indebtedness
of a Person existing at the time such Person becomes a Subsidiary of the
Borrower in connection with a Permitted Acquisition, but only if such Indebtedness
was not created or incurred in contemplation of such Person becoming a Subsidiary
and so long as the aggregate principal amount thereof does not exceed $5.0
million at any time outstanding; provided that (x) no Default or
Event of Default shall have occurred or be continuing or would result therefrom
and (y) after giving effect to the incurrence of such Indebtedness (and
any other Indebtedness incurred since the last day of the immediately preceding
Test Period) on a Pro Forma Basis as if it was incurred on the first day of the
immediately preceding Test Period (but tested as if the applicable ratio were
the ratio for the next succeeding Test Period), the Borrower would be in
compliance with the Financial Covenants;

 

(xiv)                         other
Indebtedness of the Borrower or any Subsidiary in an aggregate principal amount
not exceeding $20.0 million at any time outstanding; and

 

(xv)                            Indebtedness
of Non-U.S. Subsidiaries in an aggregate principal amount not exceeding
$20.0 million at any time outstanding.

 

(b)                                 The
Loan Parties will not, nor will they permit any of their Subsidiaries to, directly
or indirectly, issue any Preferred Stock or other preferred Equity Interest (“Disqualified
Equity Interests”) which (i) matures or is mandatorily redeemable
pursuant to a sinking fund obligation or otherwise, (ii) is or may become
redeemable or repurchaseable at the option of the holder thereof, in whole or
in part, or (iii) is convertible or exchangeable at the option of the
holder thereof for Indebtedness or Preferred Stock or any other preferred
Equity Interest described in this paragraph, in each case, prior to six months
following the Term Loan Maturity Date.

 

SECTION 6.02.                                    Liens.  The Loan Parties will not, and will not
permit any of their Subsidiaries to, directly or indirectly, create, incur,
assume or permit to exist any Lien on any Property or asset now owned or
hereafter acquired by them, or assign or sell any income or revenues (including
accounts receivable) or rights in respect of any thereof, except the following
(herein collectively referred to as “Permitted Liens”):

 

(i)                                     Liens
in favor of the Collateral Agent under the Security Documents;

 

(ii)                                  Liens
on assets acquired after the Effective Date existing at the time of acquisition
thereof by the Borrower or any Subsidiary; provided that such Liens were
not incurred in connection with, or in contemplation of, such acquisition and
do not extend to any assets of the Borrower or any Subsidiary other than the
specific assets so acquired;

 

(iii)                               Liens
to secure the performance of statutory obligations, surety or appeal bonds or
performance bonds, landlords’, carriers’, warehousemen’s, mechanics’, suppliers’,

 

71

 

materialmen’s, attorney’s or other like liens, in any case incurred in
the ordinary course of business and with respect to amounts not yet delinquent
or being contested in good faith by appropriate proceedings promptly instituted
and diligently conducted; provided that (A) a reserve or other
appropriate provision, if any, as is required by GAAP shall have been made
therefor, (B) if such Lien is on Collateral, the Contested Collateral Lien
Conditions shall at all times be satisfied and (C) such Liens relating to
statutory obligations, surety or appeal bonds or performance bonds shall only
extend to or cover cash and Cash Equivalents not in the Collateral Account;

 

(iv)                              Liens
existing on the Effective Date and identified on Schedule 6.02 to
the extent permitted by the applicable Security Documents;

 

(v)                                 Liens
for taxes, assessments or governmental charges or claims or other like
statutory Liens, in any case incurred in the ordinary course of business, that
do not secure Indebtedness for borrowed money and (A) that are not yet
delinquent or (B) that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded; provided that (1) any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor and (2) if such Lien is on Collateral,
the Contested Collateral Lien Conditions shall at all times be satisfied;

 

(vi)                              Liens
to secure Indebtedness (including Capital Lease Obligations) of the type
described in Section 6.01(a)(vii) covering only the assets acquired
or improved with such Indebtedness;

 

(vii)                           Liens
securing Indebtedness incurred to refinance Indebtedness secured by the Liens
of the type described in clause (ii) of this Section 6.02; provided
that any such Lien shall not extend to or cover any assets not securing the
Indebtedness so refinanced;

 

(viii)                        (A) Liens
in the form of zoning restrictions, easements, licenses, reservations,
covenants, conditions or other restrictions on the use of real property or
other minor irregularities in title (including leasehold title) that do not (1) secure
Indebtedness or (2) individually or in the aggregate materially impair the
value or marketability of the real property affected thereby or the occupation,
use and enjoyment in the ordinary course of business of the Borrower and any
Subsidiary at such real property and (B) with respect to leasehold
interests in real property, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to exist and arising by,
through or under a landlord or owner of such leased property encumbering the
landlord’s or owner’s interest in such leased property;

 

(ix)                                Liens
in the form of pledges or deposits securing bids, tenders, contracts (other
than contracts for borrowed money) or leases to which the Borrower or any
Subsidiary is a party, in each case, made in the ordinary course of business
for amounts (A) not yet due and payable or (B) being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted; provided that (1) a reserve or other appropriate
provision, if any, as is required by GAAP shall have been made therefor, (2) if
such Lien is on Collateral, the Contested Collateral Lien Conditions shall at
all times be satisfied and (3) such Liens shall in no event encumber any
Collateral other than cash and Cash Equivalents not in the Collateral Account;

 

72

 

(x)             Liens
resulting from operation of law with respect to any judgments, awards or orders
to the extent that such judgments, awards or orders do not cause or constitute
a Default under this Agreement; provided that if any such Liens are on
Collateral, the Contested Collateral Lien Conditions shall at all times be
satisfied;

 

(xi)            Liens
in the form of licenses, leases or subleases granted or created by the Borrower
or any Subsidiary, which licenses, leases or subleases do not interfere, individually
or in the aggregate, in any material respect with the business of the Borrower
or such Subsidiary or individually or in the aggregate materially impair the
use (for its intended purpose) or the value of the property subject thereto, provided
that (x) to the extent such licenses, leases or subleases relate to
Mortgaged Property in existence as of the Effective Date, the Borrower or such
Subsidiary shall use its commercially reasonable efforts to as soon as practicable
cause such licenses, leases or subleases to be subordinated to the Lien granted
and evidenced by the Security Documents in accordance with the provisions
thereof and (y) to the extent entered into after the Effective Date, such
licenses, leases or subleases shall be subordinate to the Lien granted and evidenced
by the Security Documents in accordance with the provisions thereof; provided,
further, that any such Lien shall not extend to or cover any assets of
the Borrower or any Subsidiary that is not the subject of any such license,
lease or sublease;

 

(xii)           Liens
on fixtures or personal property held by or granted to landlords pursuant to
leases to the extent that such Liens are not yet due and payable; provided
that (i) with respect to any such Liens on any material portion of the
Collateral in existence on the Effective Date, the Borrower or any applicable
Subsidiary has used its commercially reasonable efforts to obtain a landlord
lien waiver reasonably satisfactory to the Collateral Agent and (ii) with
respect to any leases entered into after the Effective Date, the Borrower or
any applicable Subsidiary shall use its commercially reasonable efforts to (x) enter
into a lease that does not grant a Lien on fixtures or personal property in
favor of the landlord thereunder or (y) obtain a landlord lien waiver
reasonably satisfactory to the Collateral Agent;

 

(xiii)          Liens
securing Indebtedness permitted by Section 6.01(a)(xiii); provided
that such Liens existed prior to such Person becoming a Subsidiary, were not
created in anticipation thereof and attach only to specific assets of such
Person that is the subject of the Permitted Acquisition;

 

(xiv)          Liens
securing Indebtedness permitted by Section 6.01(a)(xiv) or 6.01(a)(xv);
and

 

(xv)           Liens
on assets of Subsidiaries that are not Loan Parties securing Indebtedness of
Subsidiaries that are not Loan Parties;

 

provided, however, that no Liens shall
be permitted to exist, directly or indirectly, on any Securities Collateral (as
defined in the Security Agreement) other than Liens in favor of the Collateral
Agent and Liens permitted by clauses (v) and (x).

 

SECTION 6.03.            Fundamental Changes; Line of Business.  (a)  The Loan Parties will not, and will
not permit any of their Subsidiaries to, directly or indirectly, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with them, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default or Event of
Default shall have occurred and be continuing, (i) any Subsidiary may
merge into the Borrower in a transaction

 

73

 

in which the
Borrower is the surviving corporation, (ii) any Subsidiary of the Borrower
may merge with or into any Subsidiary in a transaction in which the surviving
entity is a Subsidiary of the Borrower and (if any party to such merger is a
Subsidiary Loan Party) is a Subsidiary Loan Party, (iii) Permitted
Acquisitions as permitted by Section 6.04 (vii) of this Agreement may
be consummated and (iv) the Permitted Restructuring may be consummated; provided
that in connection with the foregoing, the appropriate Loan Parties shall take
all actions necessary or reasonably requested by the Collateral Agent to maintain
the perfection of or perfect, as the case may be, protect and preserve the
Liens on the Collateral granted to the Collateral Agent pursuant to the
Security Documents and otherwise comply with the provisions of
Sections 5.11 and 5.12, in each case, on the terms set forth therein and
to the extent applicable.

 

(b)           Notwithstanding the
foregoing, (i) any Loan Party may dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to any other Loan Party and (ii) any
Subsidiary which is not a Loan Party may dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or any other
Subsidiary; provided that in connection with each of the foregoing, the
appropriate Loan Parties shall take all actions necessary or reasonably
requested by the Collateral Agent to maintain the perfection of or perfect, as
the case may be, protect and preserve the Liens on the Collateral granted to
the Collateral Agent pursuant to the Security Documents and otherwise comply
with the provisions of Sections 5.11 and 5.12, in each case, on the terms
set forth therein and to the extent applicable).

 

(c)           The Borrower will
not, and will not permit any of its Subsidiaries to, directly or indirectly,
engage in any business other than businesses of the type conducted by the
Borrower and the Subsidiaries on the Effective Date and businesses reasonably
related thereto.

 

SECTION 6.04.            Investments, Loans, Advances, Guarantees and
Acquisitions.  The Loan Parties will
not, and will not permit any Subsidiary to, directly or indirectly, 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 in or
evidences of Indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or provide other
credit support for any Person or purchase or otherwise acquire (in one
transaction or a series of transactions) any assets of any other Person
constituting a business unit (each of the foregoing, an “Investment” and collectively, “Investments”),
except:

 

(i)              Permitted
Investments;

 

(ii)             Investments
existing on the Effective Date (or in respect of which a binding commitment to
make such investment exists on the Effective Date) and set forth on Schedule 6.04;

 

(iii)            Investments
(A) by the Borrower or any Subsidiary of the Borrower in the Borrower or
any Subsidiary Loan Party (whether made prior to or after the Effective Date), (B) by
any Subsidiary that is not a Loan Party in Borrower or any Wholly Owned Subsidiary
(whether made prior to or after the Effective Date) and (C) after the
Effective Date by the Borrower or any Subsidiary in any Subsidiary that is not
a Loan Party; provided that the aggregate
amount of such Investments pursuant to this clause (C) shall not exceed
$20.0 million (less the aggregate amount of Restricted Payments made pursuant
to Section 6.07(iv)) at any one time outstanding; and provided, further, that any such Investment held by a
Loan Party shall be pledged pursuant to a Pledge Agreement or a Non-U.S. Pledge
Agreement in accordance with Section 5.11;

 

74

 

(iv)            Guarantees
constituting Indebtedness permitted by Section 6.01(a)(iv) or Section
6.01(a)(vi);

 

(v)             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;

 

(vi)            loans
and advances to employees of the Borrower or its Subsidiaries in the ordinary
course of business (including, without limitation, for travel, entertainment
and relocation expenses) not to exceed $1.0 million in the aggregate at any
time outstanding; provided that (x) to the extent such loans or
advances are evidenced by promissory notes, such promissory notes shall be
endorsed in blank and delivered to the Collateral Agent pursuant to the Pledge
Agreement and (y) the Borrower shall and shall cause its Subsidiaries to
take all actions and execute all documents reasonably requested by the
Collateral Agent to confirm the Collateral Agent’s security interest in such
loans and advances and/or promissory notes pursuant to the applicable Security
Documents;

 

(vii)           Permitted
Acquisitions for aggregate Acquisition Consideration since the Effective Date
not to exceed $50.0 million (of which not more than $30.0 million may be used
to consummate Permitted Acquisitions by Subsidiaries that are not Loan
Parties);

 

(viii)          Investments
of the Borrower or any Subsidiary Loan Party not in excess of the QRTC Amount
outstanding at any time less the aggregate amount of Capital Expenditures made
pursuant to Section 6.14(c);

 

(ix)            loans
made by the Borrower or any of the Subsidiary Loan Parties to Subsidiaries that
are not Loan Parties; provided that (a) the proceeds of such loans
shall be used either to (x) fund Capital Expenditures permitted to be made
pursuant to Section 6.14(a) or (y) purchase the Equity Interests
in a non-wholly owned Subsidiary not owned by the Borrower or any of its
Subsidiaries and (b) any such loan shall be pledged pursuant to a Pledge
Agreement or a non-U.S. Pledge Agreement in accordance with Section 5.11;
and

 

(x)             the
Permitted Restructuring.

 

The aggregate amount of an Investment at any one time outstanding for
purposes of this Section 6.04 shall be deemed to be equal to (A) the
aggregate amount of cash, together with the aggregate fair market value of
Property, loaned, advanced, contributed, transferred or otherwise invested that
gives rise to such Investment minus (B) the
aggregate amount of dividends, distributions or other payments received in cash
in respect of such Investment (including by way of a sale or other disposition
of such Investment).  The amount of an
Investment shall not in any event be reduced by reason of any write-off of such
Investment.

 

SECTION 6.05.            Asset Sales. 
The Loan Parties will not, and will not permit any Subsidiary to,
directly or indirectly, sell, transfer, lease or otherwise dispose of any
asset, including any Equity Interest owned by them, nor will the Borrower
permit any of its Subsidiaries to, directly or indirectly, issue any additional
Equity Interest in such Subsidiary, except:

 

(i)              sales
of inventory or used, surplus, obsolete, outdated, inefficient or worn out
equipment and other property in the ordinary course of business;

 

75

 

(ii)             sales,
transfers and dispositions to the Borrower or any Subsidiary Loan Party; provided
that in connection with the foregoing, the appropriate Loan Parties shall take
all actions necessary or reasonably requested by the Collateral Agent to
maintain the perfection of or perfect, as the case may be, protect and preserve
the Liens on the Collateral granted to the Collateral Agent pursuant to the
Security Documents and otherwise comply with the provisions of
Sections 5.11 and 5.12, in each case, on the terms set forth therein and
to the extent applicable;

 

(iii)            sales,
transfers and dispositions by any Subsidiary that is not a Loan Party to any
Wholly Owned Subsidiary of the Borrower;

 

(iv)            the
lease or sublease of Real Property in the ordinary course of business and not
constituting a sale and leaseback transaction;

 

(v)             sales
of Permitted Investments on ordinary business terms;

 

(vi)            Liens
permitted by Section 6.02 and Investments permitted under Section 6.04;

 

(vii)           the
lease of certain facilities of Chicopee located in Little Rock, Arkansas;

 

(viii)          the
Permitted Restructuring;

 

(ix)            sales,
transfers and dispositions of assets (other than Equity Interests of a
Subsidiary) not otherwise permitted under this Section; provided that
the aggregate fair market value of all assets sold, transferred or otherwise
disposed of in reliance upon this clause (ix) shall not exceed $35.0
million in the aggregate and the Net Proceeds thereof are applied as required
by Section 2.05(c)(iii);

 

(x)             (A) issuances
of Equity Interests by any Subsidiary of the Borrower to the Borrower or any
Wholly Owned Subsidiary of the Borrower and (B) capital contributions by
the Borrower or any Wholly Owned Subsidiary of the Borrower to any Subsidiary
of the Borrower; and

 

(xi)            Permitted
Factoring Transactions;

 

provided that all sales, transfers, leases and
other dispositions permitted hereby shall be made for fair value and, in the
case of sales, transfers, leases and other dispositions permitted by
clauses (i), (v), (viii) and (ix), for consideration consisting of at
least 75% cash and Cash Equivalents.

 

SECTION 6.06.            Sale and Leaseback Transactions.  The Loan Parties will not, and will not
permit any of their Subsidiaries to, directly or indirectly, enter into any
arrangement, directly or indirectly, whereby they shall sell or transfer any
Property, real or personal, used or useful in their business, whether now owned
or hereafter acquired, and thereafter rent or lease such Property or other
Property that they intend to use for substantially the same purpose or purposes
as the Property sold or transferred (a “Sale and Leaseback Transaction”)
unless (i) the sale of such Property is permitted by Section 6.05 and
(ii) any Lien arising in connection with the use of such Property by any
Loan Party or a Subsidiary is permitted by Section 6.02.

 

76

 

SECTION 6.07.            Restricted Payments.  The Loan Parties will not, and will not
permit any Subsidiary to, directly or indirectly, 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)              Subsidiaries
of the Borrower may declare and pay dividends to the Borrower, another
Subsidiary or any other holder of its Equity Interests ratably with respect to
their Equity Interests or additional shares of the same class of shares as the
dividend being paid to the extent such payment complies with Section 6.01(b);
provided that no such dividend or distribution shall be made by any such
Subsidiary to any Person other than the Borrower or another Subsidiary unless
ratable dividends or distributions are concurrently made to all holders of the
applicable Equity Interests;

 

(ii)             the
Borrower may pay dividends consisting solely of shares of its common stock or
additional shares of the same class of shares as the dividend being paid;

 

(iii)            the
Borrower and its Subsidiaries may make Restricted Payments not to exceed $5.0
million in the aggregate since the Effective Date;

 

(iv)            Subsidiaries
that are not Loan Parties may redeem their Equity Interests held by Persons
other than the Borrower or any of its Subsidiaries; provided that the
aggregate amount of such redemptions since the Effective Date shall not exceed
$20.0 million (less the amount of Investments outstanding under Section 6.04(iii)(C));
and

 

(v)             The
Borrower may redeem up to $10,000,000 in the aggregate of the Borrower’s Class A,
Class B, and Class C Common Stock from Persons other than the GOF
Holders.

 

SECTION 6.08.            Transactions with Affiliates.  The Loan Parties will not, and will not
permit any of their Subsidiaries to, directly or indirectly, 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 their Affiliates, unless such transactions are in the
ordinary course of the Borrower’s business and are at prices and on terms and
conditions not less favorable to the Loan Party or such Subsidiary than could
be obtained on an arm’s-length basis from unrelated third parties, except:

 

(i)              transactions
between or among the Borrower and the Subsidiaries not involving any other
Affiliate;

 

(ii)             any
Restricted Payment permitted by Section 6.07;

 

(iii)            fees
and compensation, benefits and incentive arrangements paid or provided to, and
any indemnity provided on behalf of, officers, directors or employees of the
Borrower or any Subsidiary as determined in good faith by the board of
directors of the Borrower;

 

(iv)            loans
and advances to employees of the Borrower or any Subsidiary Loan Party
permitted by Section 6.04(vii);

 

(v)             transactions
for purchases of raw materials in the ordinary course of business on
commercially reasonable terms and conditions from suppliers from which the
Borrower or any of its Subsidiaries has made such purchases prior to the
Effective Date; and

 

77

 

(vi)            the
issuance or sale of any Equity Interests of the Borrower.

 

SECTION 6.09.            Restrictive Agreements.  The Loan Parties 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 any Loan Party 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 or to make or repay loans or advances to the Borrower
or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any
other Subsidiary or to transfer property to the Borrower or any of its
Subsidiaries; provided that the foregoing shall not apply to:

 

(i)              conditions
imposed by law or by any Loan Document;

 

(ii)             clause (a) shall
not apply to assets encumbered by Permitted Liens as long as such restriction
applies only to the asset encumbered by such Permitted Lien;

 

(iii)            restrictions
and conditions existing on the Effective Date not otherwise excepted from this Section 6.09
identified on Schedule 6.09 (but shall not apply to any amendment
or modification expanding the scope of any such restriction or condition);

 

(iv)            in
the case of clause (a) only, any agreement in effect at the time any Person
becomes a Subsidiary of the Borrower; provided that such agreement was
not entered into in contemplation of such Person becoming a Subsidiary;

 

(v)             customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary (or the assets of a Subsidiary) pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that is to be
sold (or whose assets are to be sold) and such sale is permitted hereunder; and

 

(vi)            clause (a) shall
not apply to customary provisions in leases and service contracts in the
ordinary course of business between the Borrower or any Subsidiary and its
customers and other contracts restricting the assignment thereof.

 

SECTION 6.10.            Amendments or Waivers of Certain Documents; Prepayments
of Certain Indebtedness.  (a) 
The Loan Parties will not, and will not permit any Subsidiary to, directly or
indirectly, amend or otherwise change (or waive) the terms of any Organic
Document in a manner adverse to the Lenders.

 

(b)           The Loan Parties
will not, and will not permit any Subsidiary to, make (or give any notice or
offer in respect of) any voluntary or optional payment or mandatory prepayment
or redemption or acquisition for value of (including, without limitation, by
way of depositing with any trustee with respect thereto money or securities
before such Indebtedness is due for the purpose of paying such Indebtedness
when due) or exchange of principal of any Subordinated Debt, other than
pursuant to any customary registered exchange offer therefor after a private
placement thereof, any Permitted Refinancing or (so long as no Default then
exists) any exchange of Equity Interests of the Borrower for any such Indebtedness.

 

SECTION 6.11.            No Other “Designated Senior Indebtedness.”  Neither the Borrower nor any other Loan Party
shall designate, or permit the designation of, any Indebtedness (other than
under

 

78

 

this Agreement
or the other Loan Documents) as “Designated Senior Indebtedness” (or any equivalent
term) under any Subordinated Debt Documents.

 

SECTION 6.12.            Interest Expense Coverage Ratio.  The Borrower will not permit the Interest
Expense Coverage Ratio for any Test Period to be less than the ratio set forth
below opposite the date set forth below which is closest to the last day of
such Test Period:

 

	
  Date

  	
   

  	
  Ratio

  	
   

  
	
  December 31, 2005

  	
   

  	
  2.50:1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  2.50:1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  2.50:1.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  2.50:1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  2.75:1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  2.75:1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  2.75:1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  2.75:1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  3.00:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  3.00:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  3.00:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  3.00:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  3.25:1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  3.25:1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  3.25:1.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  3.25:1.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  3.50:1.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  3.50:1.00

  	
   

  
	
  June 30, 2010

  	
   

  	
  3.50:1.00

  	
   

  
	
  September 30, 2010

  	
   

  	
  3.50:1.00

  	
   

  
	
  December 31, 2010

  	
   

  	
  3.50:1.00

  	
   

  
	
  March 31, 2011

  	
   

  	
  3.50:1.00

  	
   

  
	
  June 30, 2011

  	
   

  	
  3.50:1.00

  	
   

  
	
  September 30, 2011

  	
   

  	
  3.50:1.00

  	
   

  
	
  December 31, 2011

  	
   

  	
  3.50:1.00

  	
   

  
	
  March 31, 2012

  	
   

  	
  3.50:1.00

  	
   

  
	
  June 30, 2012

  	
   

  	
  3.50:1.00

  	
   

  

 

79

 

	
  Date

  	
   

  	
  Ratio

  	
   

  
	
  September 30, 2012

  	
   

  	
  3.50:1.00

  	
   

  

 

SECTION 6.13.            Total Leverage Ratio.  The Borrower will not permit the Total Leverage
Ratio at the end of any Test Period to exceed the ratio set forth opposite the
date set forth below which is closest to the last day of such Test Period:

 

	
  Date

  	
   

  	
  Ratio

  	
   

  
	
  December 31, 2005

  	
   

  	
  4.50:1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  4.50:1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  4.50:1.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  4.50:1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  4.00:1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  4.00:1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  4.00:1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  4.00:1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  3.50:1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  3.50:1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  3.50:1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  3.50:1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  3.00:1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  3.00:1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  3.00:1.00

  	
   

  
	
  September 30, 2009

  	
   

  	
  3.00:1.00

  	
   

  
	
  December 31, 2009

  	
   

  	
  3.00:1.00

  	
   

  
	
  March 31, 2010

  	
   

  	
  3.00:1.00

  	
   

  
	
  June 30, 2010

  	
   

  	
  3.00:1.00

  	
   

  
	
  September 30, 2010

  	
   

  	
  3.00:1.00

  	
   

  
	
  December 31, 2010

  	
   

  	
  3.00:1.00

  	
   

  
	
  March 31, 2011

  	
   

  	
  3.00:1.00

  	
   

  
	
  June 30, 2011

  	
   

  	
  3.00:1.00

  	
   

  
	
  September 30, 2011

  	
   

  	
  3.00:1.00

  	
   

  
	
  December 31, 2011

  	
   

  	
  3.00:1.00

  	
   

  
	
  March 31, 2012

  	
   

  	
  3.00:1.00

  	
   

  

 

80

 

	
  Date

  	
   

  	
  Ratio

  	
   

  
	
  June 30, 2012

  	
   

  	
  3.00:1.00

  	
   

  
	
  September 30, 2012

  	
   

  	
  3.00:1.00

  	
   

  

 

SECTION 6.14.            Capital Expenditures.  The Borrower will not, and will not permit
any of its Subsidiaries to, make or commit to make any Capital Expenditures,
except that:

 

(a)           the
Borrower and its Subsidiaries may make or commit to make Capital Expenditures
not exceeding the amount set forth below (the “Base Amount”) for each of
the Fiscal Years of the Borrower set forth below:

 

	
  Fiscal Year

  	
   

  	
  Base Amount

  	
   

  
	
  2005

  	
   

  	
  $

  	
  90.0 million

  	
   

  
	
  2006

  	
   

  	
  $

  	
  65.0 million

  	
   

  
	
  2007

  	
   

  	
  $

  	
  65.0 million

  	
   

  
	
  2008

  	
   

  	
  $

  	
  50.0 million

  	
   

  
	
  2009

  	
   

  	
  $

  	
  50.0 million

  	
   

  
	
  2010

  	
   

  	
  $

  	
  50.0 million

  	
   

  
	
  2011

  	
   

  	
  $

  	
  50.0 million

  	
   

  
	
  2012

  	
   

  	
  $

  	
  50.0 million

  	
   

  

 

provided that for
any period set forth above, the Base Amount set forth above may be increased
for any such period by carrying over to any such period any portion of the Base
Amount (without giving effect to any increase) not spent in the immediately
preceding period, and that Capital Expenditures in any period shall be deemed
first made from the Base Amount applicable to such period in any given period; provided,
further, that for avoidance of doubt, Capital Expenditures for the
Fiscal Year beginning January 1, 2005 shall include Capital Expenditures
made or committed to be made by the Borrower and its Subsidiaries prior to the
Effective Date.

 

(b)           the
Borrower and its Subsidiaries may make additional Capital Expenditures (i) to
the extent funded by the Net Proceeds from Equity Issuances (excluding
issuances of Disqualified Equity Interests of the Borrower), subject to first
complying with Section 2.05(c)(i), and (ii) at any time in an amount
not to exceed the Cumulative Retained Excess Cash Flow Amount at such time.

 

(c)           the
Borrower and its Subsidiaries may make additional Capital Expenditures not to
exceed the QRTC Amount in the aggregate; provided that the aggregate
amount of Capital Expenditures made pursuant to this clause (c) plus the
aggregate amount of Investments outstanding under Section 6.04(viii) shall
not exceed the QRTC Amount at any one time.

 

SECTION 6.15.            Anti-Terrorism Law.  The Loan Parties shall not (i) conduct
any business or engage in making or receiving any contribution of funds, goods
or services to or for the benefit of any Person described in Section 3.22
above, (ii) deal in, or otherwise engage in any transaction relating

 

81

 

to, any
property or interests in property blocked pursuant to the Executive Order or
any other Anti-Terrorism Law, or (iii) engage in or conspire to engage in
any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law (and the Loan Parties shall deliver to the Lenders any
certification or other evidence requested from time to time by any Lender in
its reasonable discretion, confirming the Loan Parties’ compliance with this Section 6.15).

 

SECTION 6.16.            Embargoed Person. 
At all times throughout the term of the Loans, (a) none of the
funds or assets of the Loan Parties that are used to repay the Loans shall
constitute property of, or shall be beneficially owned directly or, to the
knowledge of any Loan Party, indirectly by, any Person subject to sanctions or
trade restrictions under United States law (“Embargoed Person” or “Embargoed
Persons”) that is identified on (1) the “List of Specially Designated
Nationals and Blocked Persons” (the “SDN List”) maintained by the Office
of Foreign Assets Control (OFAC), U.S. Department of the Treasury, and/or to
the knowledge of any Loan Party, as of the date thereof, based upon reasonable
inquiry by such Loan Party, on any other similar list (“Other List”)
maintained by OFAC pursuant to any authorizing statute including, but not limited
to, the International Emergency Economic Powers Act, 50 U.S.C.
§§ 1701 et seq., The Trading with the Enemy
Act, 50 U.S.C. App. 1 et seq., and any Executive
Order or regulation promulgated thereunder, with the result that the investment
in the Loan Parties (whether directly or indirectly) is prohibited by law, or
the Loans made by the Lenders would be in violation of law, or (2) the
Executive Order, any related enabling legislation or any other similar
Executive Orders (collectively, “Executive Orders”), and (b) no
Embargoed Person shall have any direct interest, and to the knowledge of any
Loan Party, as of the date hereof, based upon reasonable inquiry by any Loan
Party, indirect interest, of any nature whatsoever in the Loan Parties, with
the result that the investment in the Loan Parties (whether directly or
indirectly) is prohibited by law or the Loans are in violation of law.

 

SECTION 6.17.            Anti-Money Laundering.  At all times throughout the term of the
Loans, to the knowledge of any Loan Party, as of the date hereof, based upon
reasonable inquiry by such Loan Party, none of the funds of such Loan Party
that are used to repay the Loans shall be derived from any unlawful activity
with the result that the investment in the Loan Parties (whether directly or
indirectly), is prohibited by law or the Loans would be in violation of law.

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

SECTION 7.01.            Listing of Events of Default.  Each of the following events or occurrences
described in this Section 7.01 shall constitute (i) an “Event of
Default”, if any Loans, LC Disbursements or Letters of Credit are
outstanding, and (ii) an “Event of Termination”, if no Loans, LC Disbursements
or Letters of Credit are outstanding:

 

(a)           The
Borrower shall default (i) in the payment when due of any principal of any
Loan (including, without limitation, on any Installment Payment Date) or any
reimbursement obligation in respect of any LC Disbursement, (ii) in the
payment when due of any interest on any Loan (and such default shall continue
unremedied for a period of three Business Days), or (iii) in the payment
when due of any Fee described in Section 2.10 or of any other previously invoiced
amount (other than an amount described in clauses (i) and (ii))
payable under this Agreement or any other Loan Document (and such default shall
continue unremedied for a period of three Business Days).

 

82

 

(b)                                 Any representation or
warranty of the Borrower or any other Loan Party made or deemed to be made
hereunder or in any other Loan Document or any other writing or certificate
furnished by or on behalf of the Borrower or any other Loan Party to the Administrative
Agent, the Issuing Bank or any Lender for the purposes of or in connection with
this Agreement or any such other Loan Document is or shall be incorrect in any
material respect when made or deemed made.

 

(c)                                  The Borrower or any
other Loan Party shall default in the due performance and observance of any of
its obligations under clause (e), (f) or (j) of Section 5.01,
clause (a) of Section 5.02 (with respect to the maintenance and
preservation of the Borrower’s corporate existence) or Article VI.

 

(d)                                 The Borrower or any
other Loan Party shall default in the due performance and observance of any
agreement (other than those specified in paragraphs (a) through (c) above)
contained herein or in any other Loan Document, and such default shall continue
unremedied for a period of 30 days after the date of such default.

 

(e)                                  A default shall occur
(i) in the payment when due (subject to any applicable grace period),
whether by acceleration or otherwise, of any Material Indebtedness or (ii) in
the performance or observance of any obligation or condition with respect to
any Material Indebtedness if the effect of such default referred to in this
clause (ii) is to accelerate the maturity of any such Material
Indebtedness or enable or permit (with or without the giving of notice, the
lapse of time or both) the holder or holders of any such Material Indebtedness
or any trustee or agent on its or their behalf to cause any such Material
Indebtedness to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, prior to its scheduled maturity.

 

(f)                                    Any judgment or
order (or combination of judgments and orders) for the payment of money equal
to or in excess of $10.0 million individually or in the aggregate shall be
rendered against the Borrower or any of its Subsidiaries (or any combination
thereof) and

 

(i)             enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order and not stayed;

 

(ii)          such judgment has not
been stayed, vacated or discharged within 60 days of entry; or

 

(iii)       there shall be any period
(after any applicable statutory grace period) of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect and such judgment is not fully
insured against by a policy or policies of insurance (with reasonable or
standard deductible provisions) issued by an insurer other than an Affiliate of
the Borrower.

 

(g)                                 Any
of the following events shall occur:

 

(i)             the taking of any specific
actions by a Loan Party, any ERISA Affiliate or any other Person to terminate a
Pension Plan if, as a result of such termination, a Loan Party or any ERISA
Affiliate could reasonably expect to incur a liability or obligation to such
Pension Plan which could reasonably be expected to have a Material Adverse Effect;
or

 

83

 

(ii)          an ERISA Event, or
termination, withdrawal or event of noncompliance with applicable law or plan
terms with respect to Foreign Plans, shall have occurred that when taken
together with all other ERISA Events and terminations, withdrawals and events
of noncompliance with respect to Foreign Plans that have occurred, could reasonably
be expected to have a Material Adverse Effect.

 

(h)                                 Any Change in Control
shall occur.

 

(i)                                     Any
Loan Party shall

 

(i)             become insolvent or
generally fail to pay debts as they become due;

 

(ii)          apply for, consent to or
acquiesce in the appointment of a trustee, receiver, sequestrator or other
custodian for any Loan Party or substantially all of its property, or make a
general assignment for the benefit of creditors;

 

(iii)       in the absence of such
application, consent or acquiescence, permit or suffer to exist the appointment
of a trustee, receiver, sequestrator or other custodian for any Loan Party or
for a substantial part of its property, and such trustee, receiver, sequestrator
or other custodian shall not be discharged or stayed within 60 days, provided
that each Loan Party hereby expressly authorizes the Administrative Agent and
each Lender to appear in any court conducting any relevant proceeding during
such 60-day period to preserve, protect and defend their rights under the Loan
Documents;

 

(iv)      permit or suffer to exist
the commencement of any bankruptcy, reorganization, debt arrangement or other
case or proceeding under any bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of any Loan Party and, if any
such case or proceeding is not commenced by any Loan Party, such case or
proceeding shall be consented to or acquiesced in by such Loan Party or shall
result in the entry of an order for relief or shall remain for 60 days
undismissed and unstayed; provided that each Loan Party hereby expressly
authorizes the Administrative Agent and each Lender to appear in any court
conducting any such case or proceeding during such 60-day period to preserve,
protect and defend their rights under the Loan Documents; or

 

(v)         take any corporate or
partnership action (or comparable action, in the case of any other form of
legal entity) for the purpose of effecting any of the foregoing.

 

(j)                                     The obligations of
any Loan Party under the Guarantee Agreement shall cease to be in full force
and effect (except in accordance with its terms) or any such Loan Party shall
repudiate its obligations thereunder.

 

(k)                                  Any Security Document
shall cease to be in full force and effect (except in accordance with its
terms) or any Lien purported to be created under any Security Document shall
fail or cease to be, or shall be asserted by any Loan Party not to be, a valid
and perfected Lien on any material portion of the Collateral, with the priority
required by the applicable Security Document.

 

SECTION 7.02.                                    Action
if Bankruptcy.  If any Event of Default
described in Section 7.01(i) shall occur, the Commitments (if not
theretofore terminated) shall automatically terminate and the outstanding
principal amount of all outstanding Loans and all other Obligations shall
automatically be

 

84

 

and become immediately due and payable, without notice or demand, all
of which are hereby waived by the Borrower.

 

SECTION 7.03.                                    Action
if Other Event of Default.  If any
Event of Default (other than any Event of Default described in Section 7.01(i))
shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Administrative Agent, upon the direction of the Requisite
Lenders, shall by written notice to the Borrower and each Lender declare all or
any portion of the outstanding principal amount of the Loans and other
Obligations to be due and payable and/or the Commitments (if not theretofore
terminated) to be terminated, whereupon the full unpaid amount of such Loans
and other Obligations which shall be so declared due and payable shall be and
become immediately due and payable, without further notice, demand or
presentment and/or, as the case may be, the Commitments shall terminate.

 

SECTION 7.04.                                    Action
if Event of Termination.  Upon the
occurrence and continuation of any Event of Termination, the Requisite Lenders
may, by notice from the Administrative Agent to the Borrower and the Lenders
(except if an Event of Termination described in Section 7.01(i) shall
have occurred, in which case the Commitments (if not theretofore terminated)
shall, without notice of any kind, automatically terminate) declare their Commitments
terminated, and upon such declaration the Lenders shall have no further
obligation to make any Loans hereunder. 
Upon such termination of the Commitments, all accrued fees and expenses
shall be immediately due and payable.

 

ARTICLE VIII

 

THE AGENTS

 

SECTION 8.01.                                    The
Agents.  Citicorp North America, Inc.
is hereby appointed to act as Administrative Agent on behalf of the
Lenders.  Each Lender that holds Loans or
has Commitments and each holder of any Related Hedging Obligations and each
person holding Overdraft Obligations (in each case, in its capacity as such)
hereby irrevocably designates and appoints the Collateral Agent as an agent of
such person under this Agreement and each other Loan Document to which the
Collateral Agent is a party.   Each of
the Lenders and each assignee of any such Lender hereby irrevocably authorizes
each of the Agents to take such actions on behalf of such Lender or assignee
and to exercise such powers as are specifically delegated to such Agent by the
terms and provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto.  Each Agent is hereby expressly authorized by
the Lenders, without hereby limiting any implied authority, (a) to receive
on behalf of the Lenders all payments of principal of and interest on the
Loans, all payments and all other amounts due to the Lenders hereunder, and
promptly to distribute to each Lender its proper share of each payment so
received; (b) to give notice on behalf of each of the Lenders to any of
the Loan Parties of any Default specified in this Agreement of which such Agent
has actual knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Lender copies of all notices, financial statements and other
materials delivered by any of the Loan Parties pursuant to this Agreement as
received by such Agent.

 

None of the Agents nor any of their Related Parties shall be liable to
the Lenders as such for any action taken or omitted to be taken by any of them
except to the extent finally judicially determined to have resulted from its or
his or her own gross negligence or willful misconduct, or be responsible for
any statement, warranty or representation herein or the contents of any
document delivered in connection herewith, or be required to ascertain or to
make any inquiry concerning the performance or observance by any Loan Party of
any of the terms, conditions, covenants or agreements contained in any Loan
Document.  The Agents shall not be
responsible to the Lenders for the due execution, genuineness, validity,
enforceability or effectiveness of this Agreement or any other Loan Documents
or other instruments or agreements.  Each
Agent shall in all cases be fully protected in acting, or refraining from
acting, in

 

85

 

accordance with written instructions signed by the Requisite Lenders
(or, when expressly required hereby, all the Lenders) and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders.  Each Agent shall, in the absence of actual
knowledge to the contrary, be entitled to rely on any instrument or document
believed by it in good faith to be genuine and correct and to have been signed
or sent by the proper person or persons. 
None of the Agents nor any of their Related Parties shall have any responsibility
to the Loan Parties on account of the failure of or delay in performance or
breach by any Lender of any of its obligations hereunder or to any Lender on
account of the failure of or delay in performance or breach by any other Lender
or the Loan Parties of any of their respective obligations hereunder or under
any other Loan Document or in connection herewith or therewith.  Each Agent may execute any and all duties
hereunder by or through any of its Related Parties or any sub-agent appointed
by it and shall be entitled to rely upon the advice of legal counsel selected
by it with respect to all matters arising hereunder and shall not be liable for
any action taken or suffered in good faith by it in accordance with the advice
of such counsel.

 

The Lenders hereby acknowledge that no Agent shall be under any duty to
take any discretionary action permitted to be taken by it pursuant to the
provisions of any Loan Document unless it shall be requested in writing to do
so by the Requisite Lenders.

 

Subject to the appointment and acceptance of a successor Agent as
provided below, any Agent may resign at any time by notifying the Lenders, the
Issuing Bank and the Borrower.  Upon any
such resignation, the Requisite Lenders (with the consent of the Borrower, not to
be unreasonably withheld) shall have the right to appoint a successor.  If no successor shall have been so appointed
by the Requisite Lenders and shall have accepted such appointment within 30
days after the retiring Agent gives notice of its resignation, then the
retiring Agent may (with the consent of the Borrower, not to be unreasonably
withheld), on behalf of the Lenders and the Issuing Bank, appoint a successor
Agent which shall be a bank with an office in New York, New York,
having a combined capital and surplus of at least $500.0 million or an
Affiliate of any such bank.  Upon the
acceptance of any appointment as an Agent hereunder by such a successor bank,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations hereunder.  After an Agent’s resignation hereunder, the
provisions of this Article and Section 9.05 shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as an Agent.

 

With respect to any Loans made by it hereunder, each Agent in its
individual capacity and not as an Agent shall have the same rights and powers
as any other Lender and may exercise the same as though it were not an
Agent.  In addition, Agents and their
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any Subsidiary or other Affiliate thereof
as if any were not Agents.

 

Each Lender acknowledges that it has, independently and without
reliance upon any 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 any 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 or any other Loan Document, any related agreement or any document
furnished hereunder or thereunder.

 

Notwithstanding anything to the contrary in this Agreement, neither
CGMI, as Sole Lead Arranger and Sole Bookrunner, nor Citicorp North America, Inc.,
as Syndication Agent, nor Citicorp 

 

86

 

North America, Inc., as Documentation Agent, in such respective
capacities, shall have any obligations, duties or responsibilities, or shall
incur any liabilities, under this Agreement or any other Loan Document.

 

ARTICLE IX

 

MISCELLANEOUS

 

SECTION 9.01.                                    Notices.  (a)  Except as set forth in Section 9.17,
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, sent by telecopy or electronic mail, as follows:

 

(i)                  if to the
Borrower, to it at  Polymer Group, Inc.,
4055 Faber Place, Suite 201, North Charleston, South Carolina 29405,
attention:  Willis C. Moore III
(telecopy:  843-329-0415) (e-mail:  mooreb@pginw.com), with a copy to Kirkland &
Ellis LLP, 200 E. Randolph Drive, Chicago, IL 60601, attention:  H. Kurt von Moltke, P.C. (telecopy:  (312) 861-2200) (e-mail:  kvonmoltke@kirkland.com);

 

(ii)               if to the
Administrative Agent or the Collateral Agent, to it at Citicorp North America, Inc.,
390 Greenwich St., New York, NY 10013, attention:  Christina Quezon (telecopy:  (212) 994-0961) (e-mail:  christina.m.quezon@citigroup.com), with a
copy to Cahill Gordon & Reindel LLP, 80 Pine Street,
New York, NY 10005, attention: 
Michael E. Michetti, Esq. (telecopy:  (212) 269-5420) (e-mail:  mmichetti@cahill.com);

 

(iii)            if to the Lead
Arranger, to it at Citigroup Global Markets, Inc., 390 Greenwich St., New
York, NY 10013, attention: Christina Quezon (telecopy:  (212) 994-0961) (e-mail:  christina.m.quezon@citigroup.com), with a
copy to Cahill Gordon & Reindel LLP, 80 Pine Street,
New York, NY 10005, attention: 
Michael E. Michetti, Esq. (telecopy:  (212) 269-5420) (e-mail:  mmichetti@cahill.com);

 

(iv)           if to the Issuing Bank,
to it at Citibank, N.A., 390 Greenwich St., New York, NY 10013, attention:
Suzanne Crymes (telecopy: 
(646) 291-1621) (e-mail:  suzanne.crymes@citigroup.com),
with a copy to Cahill Gordon & Reindel LLP, 80 Pine Street,
New York, NY 10005, attention: 
Michael E. Michetti, Esq. (telecopy:  (212) 269-5420) (e-mail:  mmichetti@cahill.com); and

 

(v)              if to a Lender, to
it at its address (or telecopy number) set forth in Schedule 2.01
or its Administrative Questionnaire or in the Assignment and Acceptance
pursuant to which such Lender shall have become a party 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 if delivered by hand or overnight courier service
or sent by telecopy or electronic mail or on the date five Business Days after
dispatch by certified or registered mail if mailed, in each case delivered,
sent or mailed (properly addressed) to such party as provided in this Section 9.01
or in accordance with the latest unrevoked direction from such party given in
accordance with this Section 9.01. 
Each Loan Party and Lender hereunder agrees to notify the Administrative
Agent and the Collateral Agent in writing promptly of any change to the notice
information provided above or in Schedule 2.01.

 

87

 

(b)                                 The
Borrower shall forthwith on demand indemnify each Lender against any loss or
liability which that Lender or Agent incurs (and that Lender shall not be
liable to the Borrower in any respect) as a consequence of:

 

(i)             any Person to whom
any notice or communication under or in connection with this Agreement is sent
by the Borrower by telecopy failing to receive that notice or communication
(unless directly caused by that Person’s gross negligence or willful default);
or

 

(ii)          any telecopy
communication which reasonably appears to that Lender or Agent to have been
sent by the Borrower having in fact been sent by a Person other than the
Borrower.

 

SECTION 9.02.                                    Survival
of Agreement.  All covenants,
agreements, representations and warranties made by the Loan Parties herein and
in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be considered
to have been relied upon by Lenders hereto and shall survive the making by the
Lenders of the 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 Event of 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 or any other Loan Document is outstanding and unpaid or any Letter of
Credit is outstanding and so long as the Commitments have not been terminated.  The provisions of Sections 2.14, 2.15,
2.16, 2.17, 9.05 and 9.16 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 9.03.                                    Binding
Effect.  Subject to Section 4.01,
this Agreement shall become effective when it shall have been executed by the
Borrower and the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, 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 permitted
successors and assigns.

 

SECTION 9.04.                                    Successors
and Assigns.  (a)  Whenever in
this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the permitted successors and assigns of such party
(including any Affiliate of the Issuing Bank that issues any Letter of
Credit).  All covenants, promises and
agreements by or on behalf of the Borrower, the Agents or the Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns. 
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
clause (f) below and, solely to the extent expressly contemplated
hereby, the Related Parties of each of the Agents, the Issuing Bank and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)                                 Each
Lender may assign to one or more assignees all or a portion of its interests,
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it); provided, however,
that (i) except in the case of an assignment to a Lender or a Lender
Affiliate or in connection with the initial syndication of the Commitments and
Loans, the Borrower and the Administrative Agent (and, in the case of any
assignment of a Revolving Credit Commitment

 

88

 

or any Lender’s obligations in respect of its LC Exposure or Swingline
Exposure, the Issuing Bank and the Swingline Lender) must give their prior
written consent to such assignment (which consent shall not be unreasonably
withheld or delayed), (ii) except in the case of an assignment to a
Lender, a Lender Affiliate or a Federal Reserve Bank or in connection with the
initial syndication of the Commitments and Loans, the amount of the Commitment
or Loans of the assigning Lender subject to each such assignment (determined as
of the date the Assignment and Acceptance with respect to such assignment is
delivered to the Administrative Agent) shall not be less than, in the case of
the Term Loans, $1.0 million and increments of $1.0 million in excess thereof
and, in the case of the Revolving Loans, $5.0 million and increments of $1.0
million in excess thereof (or (A) if the aggregate amount of the
Commitment or Loans of the assigning Lender is a lesser amount, the entire
amount of such Commitment or Loans, or (B) in any other case, such lesser
amount as the Borrower and the Administrative Agent otherwise agree), (iii) 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 (iii) 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 and Loans, (iv) except
in the case of the assignment to an Affiliate of such Lender or an assignment
required to be made pursuant to Section 2.20, the parties to each such
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500
(provided that only one such fee shall be payable in the event of
contemporaneous assignments to two or more Lender Affiliates by a Lender or by
two or more Lender Affiliates to a Lender) , and (v) the assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire; provided, further, that any consent
of the Borrower otherwise required under this paragraph shall not be required
if an Event of Default has occurred and is continuing.  Subject to acceptance and recording pursuant
to paragraph (e) of this Section 9.04, from and after the effective
date specified in each Assignment and Acceptance, which effective date shall be
at least five Business Days after the execution thereof (unless otherwise
determined by the Administrative Agent), (A) the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this
Agreement, and (B) the assigning Lender thereunder shall, to the extent of
the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an 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, 2.17 and 9.05 with respect to facts and circumstances occurring prior to
the effective date of such assignment, as well as to any Fees accrued for its
account and not yet paid).  Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does
not comply with this paragraph 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 (f) of this Section.

 

(c)                                  By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the assignee thereunder shall be deemed to confirm to and agree
with each other and the other parties hereto as follows:  (i) such assigning Lender warrants that
it is the legal and beneficial owner of the interest being assigned thereby
free and clear of any adverse claim and that its Commitment, and the
outstanding balances of its Loans and participations in Swingline Loans, in
each case without giving effect to assignments thereof which have not become
effective, are as set forth in such Assignment and Acceptance, (ii) except
as set forth in (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto, or the financial condition of the Borrower
or any Subsidiary or the performance or observance by the Borrower or any Subsidiary
of any of its obligations under this Agreement, any other Loan Document or any
other instrument or document furnished pursuant hereto; (iii) such

 

89

 

assignee represents and warrants that it is legally authorized to enter
into such Assignment and Acceptance; (iv) such assignee confirms that it
has received a copy of this Agreement, together with copies of the most recent
financial statements, if any, delivered pursuant to Section 5.01 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon either Agent, such
assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes each Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to
such Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; (vii) such assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this Agreement
are required to be performed by it as a Lender; and (viii) Schedule 2.01
shall be deemed to be amended to reflect the assigning Lender thereunder and
the assignee thereunder after giving effect thereto.

 

(d)                                 The
Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance 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, and participations in Swingline
Loans, owing to, each Lender pursuant to the terms hereof from time to time
(the “Register”).  Except to the
extent inconsistent with Section 2.07(d), the entries in the Register
shall be conclusive and the Borrower, the Agents, 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 Borrower, the Issuing
Bank and any Lender, at any reasonable time and from time to time upon
reasonable prior notice.

 

(e)                                  Upon
its receipt of a duly completed Assignment and Acceptance executed by an
assigning Lender and an assignee, an Administrative Questionnaire completed in
respect of the assignee (unless the assignee shall already be a Lender hereunder),
the processing and recordation fee referred to in paragraph (b) above
and, if required, the written consent of the Borrower, the Issuing Bank, the
Swingline Lender and the Administrative Agent to such assignment, the
Administrative Agent shall (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt
notice thereof to the Lenders.  No
assignment shall be effective unless it has been recorded in the Register as
provided in this paragraph (e).

 

(f)                                    Each
Lender may without the consent of the Borrower, the Swingline Lender, the
Issuing Bank or the Administrative Agent, sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans owing to it); provided, however,
that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) each
Participant shall be entitled to the benefit of the cost protection provisions
contained in Sections 2.14, 2.15, 2.16 and 2.17 and the provisions of Section 5.01
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section 9.04 (provided
that no participant shall be entitled to receive any greater amount pursuant to
such Sections than the Lender would have been entitled to receive in
respect of the interest transferred unless either (x) such transfer to
such Participant is made with the Borrower’s prior written consent (not to be
unreasonably withheld) or (y) a Default or an Event of Default has
occurred and is continuing at the time of such participation), and (iv) the
Borrower, the Agents, the Issuing Bank and the Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights
and obligations under

 

90

 

this Agreement, and such Lender shall retain the sole right (which each
Lender agrees will not be limited by the terms of any participation agreement
or other agreement with a participant) to enforce the Loan Documents and to
approve any amendment, modification or waiver of any provision of the Loan Documents
(other than, without the consent of the Participant, amendments, modifications
or waivers described in clauses (i), (iv) and (v) of Section 9.08(c) that
affect such Participant).  To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 9.06
as though it were a Lender, provided such Participant agrees to be subject to Section 2.20
as though it were a Lender.

 

(g)                                 Any
Lender or participant may, in connection with any assignment, pledge or
participation or proposed assignment or participation pursuant to this Section 9.04,
disclose to the assignee or participant or proposed assignee or participant any
information relating to Borrower and its Subsidiaries furnished to such Lender
by or on behalf of any of the Loan Parties; provided that, prior to any
such disclosure of information designated by the Borrower as confidential, each
such assignee, pledgee or participant or proposed assignee, pledgee or
participant shall execute a confidentiality agreement in form and substance
consistent with provisions of Section 9.16.

 

(h)                                 Any
Lender, without the consent of or notice to the Borrower or the Administrative
Agent, 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 9.04 shall not apply to any such pledge or
assignment of a security interest; provided that (x) 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 and (y) any foreclosure or similar action shall
be subject to the provisions of this Section 9.04(b) concerning
assignments and shall not be effective to transfer any rights under this Agreement
or in any Loan, Note or other instrument evidencing the rights of a Lender
under this Agreement until the requirements of Section 9.04(b) concerning
assignments are fully satisfied.  In
order to facilitate such a pledge or assignment, the Borrower shall, at the
request of the assigning Lender, duly execute and deliver to the assigning
Lender a promissory note or notes evidencing the Loans made to the Borrower by
the assigning Lender hereunder.

 

(i)                                     The
Borrower shall not assign or delegate any of its rights or duties hereunder
without the prior written consent of the Administrative Agent and each Lender,
and any attempted assignment without such consent shall be null and void.

 

SECTION 9.05.                                    Expenses;
Indemnity.  (a)  The Borrower
agrees to pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent, CGMI and their Affiliates,
including the reasonable fees, charges and disbursements of Cahill Gordon &
Reindel LLP, counsel for the Administrative Agent, in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of this Agreement and the other Loan Documents or in connection
with any amendments, modifications or waivers of the provisions hereof or
thereof (whether or not the transactions hereby contemplated 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 Lead Arranger, the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender in
connection with the enforcement or protection of its rights in connection with
this Agreement (including its rights under this Section), the other Loan
Documents or the Loans made or Letters of Credit issued hereunder, including
all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit, and, in connection
with any such enforcement or protection, the fees, charges and disbursements of
any other counsel for the Administrative Agent, the Collateral Agent, the Lead
Arranger, the Issuing Bank or any Lender; provided, however, that
the

 

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Borrower shall not be obligated to pay for expenses incurred by a
Lender in connection with the assignment of Loans to an assignee Lender (except
pursuant to Section 2.20) or the sale of Loans to a participant pursuant
to Section 9.04.

 

(b)                                 The
Borrower agrees to indemnify the Administrative Agent, the Collateral Agent,
the Syndication Agent, the Documentation Agent, the Lead Arranger, the Issuing
Bank, each Lender, each Affiliate of any of the foregoing Persons and each of
their respective Related Parties (each such Person being called an “Indemnitee”)
against, and to hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related reasonable expenses, including reasonable
counsel fees, charges and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document or any agreement
or instrument contemplated thereby, the performance by the parties hereto or
thereto of their respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby, (ii) the use
of the proceeds of the Loans or Letters of Credit (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 claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not
any Indemnitee is a party thereto, or (iv) any actual or alleged presence
or Release of Hazardous Materials at, on, under or from any property owned or operated
by the Borrower or any of the Subsidiaries, or any Environmental Liability or
Environmental Claim related in any way to the Borrower or the Subsidiaries; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related reasonable expenses
are finally judicially determined to have arisen by reason of the Indemnitee’s
gross negligence or willful misconduct.

 

(c)                                  To
the extent that the Borrower fails to promptly pay any amount to be paid by it
to any Agent, the Lead Arranger, the Issuing Bank or the Swingline Lender under
paragraph (a) or (b) of this Section, each Lender severally
agrees to pay to such Agent, the Lead Arranger, the Issuing Bank 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 (other than syndication
expenses); 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 applicable Agent, the Lead Arranger, the Issuing
Bank or the Swingline Lender in its capacity as such; provided further,
however, that to the extent any Issuing Bank or Swingline Lender is entitled to
indemnification under this Section 9.05, to the extent such
indemnification relates solely to such Issuing Bank’s or such Swingline Lender’s
acting in such capacity the indemnification provided for in this Section 9.05
will be the obligation solely of the Revolving Lenders.  For purposes hereof, a Lender’s “pro rata
share” shall be determined based upon its share of the sum of the total
Revolving Credit Exposures, outstanding Term Loans and unused Commitments at
the time.

 

(d)                                 To
the extent permitted by applicable law, the Borrower shall not assert, and
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, any other Loan Document or any other agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof.

 

(e)                                  The
provisions of this Section 9.05 shall remain operative and in full force
and effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Loans, the expiration of the Commitments, the invalidity or
unenforceability of any term or provision of this Agreement or any other Loan
Document, or any

 

92

 

investigation made by or on behalf of the Administrative Agent or any
Lender.  All amounts due under this Section 9.05
shall be payable on written demand therefor.

 

SECTION 9.06.                                    Right
of Setoff.  If an Event of Default or
Event of Termination shall have occurred and be continuing, each Lender is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of any Loan Party against any of and all the obligations of such Loan
Party now or hereafter existing under this Agreement and other Loan Documents
held by such Lender, irrespective of whether or not such Lender shall have made
any demand under this Agreement or such other Loan Document and although such
obligations may be unmatured.  In
connection with exercising its rights pursuant to the previous sentence, a
Lender may at any time use any Loan Party’s credit balances with the Lender to
purchase at the Lender’s applicable spot rate of exchange any other currency or
currencies which the Lender considers necessary to reduce or discharge any
amount due by such Loan Party to the Lender, and may apply that currency or
those currencies in or towards payment of those amounts.  The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.  Each Lender
agrees promptly to notify the Borrower and the Administrative Agent after
making any such setoff.

 

SECTION 9.07.                                    Applicable
Law.  THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS)
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.

 

SECTION 9.08.                                    Waivers;
Amendment.  (a)  No failure or
delay of any Agent, the Issuing Bank or any Lender in exercising any power or
right hereunder or under any 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 Agents, the Issuing Bank and the Lenders hereunder and under the other
Loan Documents are cumulative and are not exclusive of any rights or remedies
which they would otherwise have.  No
waiver of any provision of this Agreement or any other Loan Document or consent
to any departure by the Borrower therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, 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 of a Letter
of Credit shall not be construed as a waiver of any Default or Event of Default
regardless of whether an Agent, any Lender or the Issuing Bank may have had
notice or knowledge of such Default or Event of Default at the time.  No notice or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.

 

(b)                                 Subject
to Sections 9.08(c) and 9.08(d) no amendment, modification,
termination or waiver of any provision of any Loan Document, or consent to any
departure by any Loan Party therefrom, shall in any event be effective without
the written concurrence of the Requisite Lenders.

 

(c)                                  Without
the written consent of each Lender that would be directly adversely affected
thereby (whose consent shall be sufficient therefor without the consent of the
Requisite Lenders), no amendment, modification, termination, waiver or consent
shall be effective if the effect thereof would:

 

(i)             extend the scheduled
final maturity of any Loan or Note;

 

93

 

(ii)             extend
the stated expiration date of any Letter of Credit beyond the Revolving Credit
Maturity Date;

 

(iii)            reduce
or forgive the rate of interest on any Loan (other than any waiver of any
increase in the interest rate applicable to any Loan pursuant to Section 2.08)
or any fee payable hereunder, it being understood that any amendment or
modification to the financial definitions in this Agreement shall not
constitute a reduction in the rate of interest for purposes of this clause
(iii);

 

(iv)            extend
the time for payment of any such interest or fees;

 

(v)             reduce
or forgive the principal amount of any Loan or any reimbursement obligation in
respect of any Letter of Credit or waive, reduce or postpone any scheduled
repayment pursuant to Section 2.05(d);

 

(vi)            amend,
modify, terminate or waive any provision of Section 9.08 (except for
technical amendments with respect to additional extensions of credit pursuant
to this Agreement consented to by the Requisite Lenders which afford the
protections to such additional extensions of credit of the type provided to the
Revolving Credit Commitments and/or the relevant Class of Term Loans on
the Effective Date);

 

(vii)           amend
the definition of “Requisite Lenders” or “Pro Rata Percentage”; provided,
with the consent of the Requisite Lenders, additional extensions of credit
pursuant hereto may be included in the determination of “Requisite Lenders” or “Pro
Rata Percentage” on substantially the same basis as the Revolving Credit
Commitments, Revolving Loans, Term Commitments and/or Term Loans are included
on the Effective Date;

 

(viii)          except
as expressly provided in the Loan Documents, release all or substantially all
of the Collateral or all or substantially all of the Subsidiary Loan Parties
from the Guarantee or subordinate the Liens under any Security Document;

 

(ix)            consent
to the assignment or transfer by any Loan Party of any of its rights and
obligations under any Loan Document;

 

(x)             waive,
amend or modify the provisions of Section 9.08(g); or

 

(xi)            amend
the indemnification obligations of the Lenders set forth in Section 9.05(c) or
amend Sections 2.02(c), 2.02(d), 2.13(a) or 2.19 (only to the extent
relating to pro rata treatment of Lenders).

 

(d)           Subject to Section 9.08(e),
no amendment, modification, termination, waiver or consent with respect to any
provision of the Loan Documents, or consent to any departure by any Loan Party
therefrom, shall:

 

(i)      increase any Commitment of any Lender over
the amount thereof then in effect without the consent of such Lender; provided
no amendment, modification, termination, waiver or consent with respect to any
condition precedent, covenant, Default or Event of Default shall constitute an
increase in any Commitment of any Lender;

 

94

 

(ii)             amend,
modify, terminate or waive any provision hereof relating to the Swingline
Sublimit or the Swingline Loans without the consent of Swingline Lender;

 

(iii)            amend
the definition of “Requisite Class Lenders” without the consent of
Requisite Class Lenders of each Class; provided, with the consent
of the Requisite Lenders, additional extensions of credit pursuant hereto may
be included in the determination of such “Requisite Class Lenders” on
substantially the same basis as the Revolving Credit Commitments, Revolving
Loans, Term Commitments and/or Term Loans are included on the Effective Date;

 

(iv)            alter
the required application of any repayments or prepayments as between Classes
pursuant to Section 2.05 or Section 2.11 without the consent of Requisite
Class Lenders of each Class, in any case which is being allocated a
different repayment or prepayment as a result thereof; provided the
Requisite Lenders may waive, in whole or in part, any prepayment so long as the
application, as between Classes, of any portion of such prepayment is still
required to be made is not altered and, if additional extensions of term credit
under this Agreement consented to by the Requisite Lenders are made, such new
term loans may be included on a pro rata basis in the
various prepayments required pursuant to Section 2.05 subject to the
ordering of prepayments set forth in 2.05(e);

 

(v)             amend,
modify, terminate or waive any obligation of the Revolving Lenders relating to
the issuance of or purchase of participations in Letters of Credit without the
written consent of Administrative Agent and of Issuing Bank;

 

(vi)            amend,
modify, terminate or waive any provision of Section 8 as the same applies
to any Agent, or any other provision hereof as the same applies to the rights or
obligations of any Agent, in each case without the consent of such Agent;

 

(vii)           amend,
modify, terminate or waive any provision of any Loan Document specifying the
number or percentage of Lenders (or Lenders of any Class) required to waive,
amend or modify any rights thereunder or make any determination to grant any
consent thereunder without the written consent of each Lender (or each Lender
of such Class, as the case may be);

 

(viii)          expressly
amend, modify, supplement or waive any condition precedent in Section 4.02
to any Revolving Credit Borrowing without the written consent of the Requisite
Revolving Lenders; or

 

(ix)            increase
the maximum duration of Interest Periods hereunder without the consent of all
Lenders.

 

(e)           If, in connection
with any proposed change, waiver, discharge or termination of or to any of the
provisions of this Agreement (other than as contemplated by Section 9.08(c)(i),
(iv) and (v) above), the consent of the Requisite Lenders is obtained
but the consent of one or more of such other Lenders whose consent is required
is not obtained, then the Borrower shall have the right, so long as all
Non-Consenting Lenders whose individual consent is required are treated as
described in either clause (i) or (ii) below, to either (i) replace
each such Non-Consenting Lender or Lenders (or, at the option of the Borrower
if the respective Lender’s consent is required with respect to less than all
Classes of Loans (or related Commitments), to replace only the Commitments
and/or Loans of the respective Non-Consenting Lender that gave rise to the need
to obtain such Lender’s individual consent) with one or more assignees

 

95

 

pursuant to, and with the
effect of an assignment under, Section 2.20 so long as at the time of such
replacement, each such assignee consents to the proposed change, waiver,
discharge or termination or (ii) terminate such Non-Consenting Lender’s
Commitment (if such Lender’s consent is required as a result of its Commitment)
and/or repay each Class of outstanding Loans of such Lender that gave rise
to the need to obtain such Lender’s consent and/or cash collateralize its LC
Exposure in accordance with this Agreement; provided that, unless
the Commitments that are terminated and Loans that are repaid pursuant to the
preceding clause (ii) are immediately replaced in full at such time
through the addition of new Lenders or the increase of the Commitments and/or
outstanding Loans of existing Lenders (who in each case must specifically
consent thereto), then in the case of any action pursuant to the preceding
clause (ii), the Requisite Lenders (determined after giving effect to the
proposed action) shall specifically consent thereto.  In addition, any waiver, amendment or
modification of this Agreement that by its terms affects the rights or duties
under this Agreement of any Class of Lenders (but not any other Class of
Lenders) may be effected by an agreement or agreements in writing entered into
by the Borrower and the requisite percentage in interest of the affected Class of
Lenders that would be required to consent thereto under this Section 9.08
if such Class of Lenders were the only Class of Lenders hereunder at
the time.

 

(f)            Without the consent
of any other Person, the Loan Parties and the Administrative Agent and/or
Collateral Agent may (in their respective sole discretion, or shall, to the
extent required by any Loan Document) enter into any amendment, modification or
waiver of any Loan Document, or enter into any new agreement or instrument, to
effect the granting, perfection, protection, expansion or enhancement of any
security interest in any Collateral or additional property to become Collateral
for the benefit of the Secured Parties, or as required by local law to give
effect to, or protect any security interest for the benefit of the Secured
Parties, in any property or so that the security interests therein comply with
applicable law.

 

(g)           Notwithstanding
anything in Section 9.08 to the contrary, this Agreement and the other
Loan Documents may be amended at any time, and from time to time, after the
Closing Date to increase the aggregate Revolving Credit  Commitments and/or to establish additional
Term Loans under this Agreement, at the discretion of the Borrower and the Lead
Arranger (the “Greenshoe Option”), by an agreement in writing entered
into by the Borrower, the Administrative Agent, the Collateral Agent, the Lead
Arranger and each Person (including any Lender) that shall agree to provide
such Commitment and/or make a Term Loan (and each such Person that shall not
already be a Lender shall, at the time such agreement becomes effective, become
a Lender with the same effect as if it had originally been a Lender under this
Agreement with the Commitment and/or Term Loans set forth in such agreement); provided
that (i) the aggregate principal amount of the additional Term Loans and
the new Revolving Credit Commitments established pursuant to this paragraph
shall not exceed $100,000,000 in the aggregate or a lesser amount in integral multiples
of $10.0 million, (ii) no Default or Event of Default shall have occurred
and be continuing at the time of such increase, (iii) after giving effect
to such increase, the Borrower shall be in compliance with the Financial
Covenants, (iv) no Commitment of any Lender shall be increased without the
consent of such Lender and (v) if the Term Loans are increased pursuant to
the Greenshoe Option, the remaining scheduled payments set forth in Section 2.05(d) shall
be increased pro rata and the maturity of such additional Term Loans shall not
be any earlier than the then existing Term Loans and (vi) any such
additional Term Loans shall be entitled to share in any mandatory or optional
prepayments ratably (and not more than ratably) with then existing Term Loans
(although any additional Term Loans may be created as a separate tranche).  The Loans and Commitments established
pursuant to this paragraph shall constitute Loans and Commitments under, and
shall be entitled to all the benefits afforded by, this Agreement and the other
Loan Documents, and shall, without limiting the foregoing, benefit equally and
ratably from the Guarantees and security interests created by the Security
Documents.

 

96

 

SECTION 9.09.            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 which are treated as interest on such Loan
under applicable law (collectively, the “Charges”), shall exceed the
maximum lawful rate (the “Maximum Rate”) which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan or
participation in accordance with applicable law, the rate of interest payable in
respect of such Loan or participation 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 or participation 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 participations 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 9.10.            Entire Agreement. 
This Agreement and the other Loan Documents constitute the entire
contract between the parties relative to the subject matter hereof.  Any previous agreement among the parties with
respect to the subject matter hereof is superseded by this Agreement and the
other Loan Documents; provided that any letter agreement relating to the
subject matter hereof between the Borrower and a Lender shall remain effective
in accordance with its terms.  Nothing in
this Agreement or in the other Loan Documents, expressed or implied, is
intended to confer upon any party other than the parties hereto and thereto any
rights, remedies, obligations or liabilities under or by reason of this
Agreement or the other Loan Documents.

 

SECTION 9.11.            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 RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.  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 AND THE OTHER
LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.11.

 

SECTION 9.12.            Severability. 
In the event any one or more of the provisions contained in this
Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.  The
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

 

SECTION 9.13.            Counterparts. 
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, and
shall become effective as provided in Section 9.03. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.

 

SECTION 9.14.            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 are not to affect the
construction of, or to be taken into consideration in interpreting, this
Agreement.

 

97

 

SECTION 9.15.            Jurisdiction; Consent to Service of Process.  (a)  The Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United
States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the 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 shall affect any
right that the Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or the other Loan Documents against the Borrower or its
properties in the courts of any jurisdiction.

 

(b)           The Borrower hereby
irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection which 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 the other Loan Documents in any New York State or
Federal court referred to in paragraph (a) 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.

 

(c)           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.

 

SECTION 9.16.            Confidentiality. 
No Agent or any Lender may disclose to any Person any confidential,
proprietary or non-public information of the Loan Parties furnished to the
Agents or the Lenders by the Loan Parties (such information being referred to
collectively herein as the “Loan Party Information”), except that each
of the Agents and the Lenders may disclose Loan Party Information (i) to
its and its Affiliates’ employees, officers, directors, agents, accountants,
attorneys, trustees and other advisors (it being understood that the Persons to
whom such disclosure is made will be informed of the confidential nature of
such Loan Party Information and instructed to keep such Loan Party Information
confidential on substantially the same terms as provided herein), (ii) to
the extent requested by any regulatory authority, (iii) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (iv) to any other party to this Agreement, (v) in connection
with the exercise of any remedies hereunder or under any other Loan Document or
any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (vi) subject
to an agreement containing provisions substantially the same as those of this Section 9.16,
to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, (vii) to
the extent such Loan Party Information (A) is or becomes generally
available to the public on a nonconfidential basis other than as a result of a
breach of this Section 9.16 by such Agent or such Lender, or (B) is
or becomes available to such Agent or such Lender on a nonconfidential basis
from a source other than the Loan Parties and (viii) with the consent of
the Loan Parties.  Nothing in this provision
shall imply that any party has waived any privilege it may have with respect to
advice it has received.

 

SECTION 9.17.            Citigroup Direct Website Communications.

 

(a)           Delivery.  (i)  Each Loan Party hereby agrees that
it will provide to the Administrative Agent all information, documents and
other materials that it is obligated to furnish to the Administrative Agent pursuant
to this Agreement and any other Loan Document, including, without limitation,
all

 

98

 

notices, requests, financial statements, financial and other reports,
certificates and other information materials, but excluding any such
communication that (A) relates to a request for a new, or a conversion of
an existing, Borrowing or other extension of credit (including any election of
an interest rate or interest period relating thereto), (B) relates to the
payment of any principal or other amount due under this Agreement prior to the
scheduled date therefor, (C) provides notice of any Default or Event of
Default under this Agreement or (D) is required to be delivered to satisfy
any condition precedent to the effectiveness of this Agreement and/or any
borrowing or other extension of credit hereunder (all such non-excluded
communications collectively, the “Communications”), by transmitting the
Communications in an electronic/soft medium in a format reasonably acceptable
to the Administrative Agent to oploanswebadmin@citigroup.com.  In addition, each Loan Party agrees to
continue to provide the Communications to the Administrative Agent in the
manner specified in this Agreement or any other Loan Document but only to the
extent reasonably requested by the Administrative Agent.  Nothing in this Section 9.17 shall
prejudice the right of the Agents, Syndication Agent, the Documentation Agent,
the Lead Arranger or any Lender or any Loan Party to give any notice or other
communication pursuant to this Agreement or any other Loan Document in any
other manner specified in this Agreement or any other Loan Document.

 

(ii)           The Administrative
Agent agrees that receipt of the Communications by the Administrative Agent at
its e-mail address set forth above shall constitute effective delivery of the
Communications to the Administrative Agent for purposes of the Loan
Documents.  Each Lender agrees that
notice to it (as provided in the next sentence) specifying that the
Communications have been posted to the Platform (as defined below) shall
constitute effective delivery of the Communications to such Lender for purposes
of the Loan Documents.  Each Lender
agrees (A) to notify the Administrative Agent in writing (including by
electronic communication) from time to time of such Lender’s e-mail address to
which the foregoing notice may be sent by electronic transmission and (B) that
the foregoing notice may be sent to such e-mail address.

 

(b)           Posting.  Each Loan Party further agrees that the
Administrative Agent may make the Communications available to the Lenders by
posting the Communications on Intralinks or a substantially similar electronic
transmission system (the “Platform”).

 

(c)           The Platform is
provided “as is” and “as available.”  The
Agent Parties (as defined below) do not warrant the accuracy or completeness of
the Communications, or the adequacy of the Platform and expressly disclaim
liability for errors or omissions in the communications.  No warranty of any kind, express, implied or
statutory, including, without limitation, any warranty of merchantability,
fitness for a particular purpose, non-infringement of third party rights or
freedom from viruses or other code defects, is made by any Agent Party (as
defined below) in connection with the Communications or the Platform.  In no event shall the Administrative Agent or
any of its affiliates or any of their respective officers, directors,
employees, agents advisors or representatives (collectively, “Agent Parties”)
have any liability to the Loan Parties, any Lender or any other person or
entity for damages of any kind, including, without limitation, direct or
indirect, special, incidental or consequential damages, losses or expenses
(whether in tort, contract or otherwise) arising out of any Loan Party’s or the
Administrative Agent’s transmission of communications through the internet,
except to the extent the liability of any Agent Party is found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Agent Party’s gross negligence or willful misconduct.

 

[Signature Pages Follow]

 

99

 

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.

 

	
   

  	
  POLYMER
  GROUP, INC.,

  
	
   

  	
  as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

S-1

 

	
   

  	
  CITICORP
  NORTH AMERICA, INC.,

  
	
   

  	
  as
  Administrative Agent, Documentation Agent,

  
	
   

  	
  Collateral
  Agent and Syndication Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

S-2

 

	
   

  	
  CITIGROUP
  GLOBAL MARKETS INC.,

  
	
   

  	
  as Lead
  Arranger

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title

  

 

S-3

 

	
   

  	
  [LENDER], as
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

S-4EXHIBIT 10.4

 

EIGHTH AMENDMENT TO CREDIT
AGREEMENT

 

THIS EIGHTH AMENDMENT TO
CREDIT AGREEMENT (this “Amendment”)
is effective as of August         ,
2008, by and between NORTECH SYSTEMS INCORPORATED, a Minnesota corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL
ASSOCIATION (“Lender”).

 

RECITALS

 

A.    Borrower is currently
indebted to Lender pursuant to the terms and conditions of that certain Amended
and Restated Credit Agreement between Borrower and Lender dated on or about December 30,
2002, as amended from time to time (“Credit
Agreement”).

 

B.    Lender and Borrower have
agreed to certain changes in the terms and conditions set forth in the Credit
Agreement and have agreed to amend the Credit Agreement to reflect said
changes.

 

NOW, THEREFORE, for valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree that the Credit Agreement shall be amended as follows:

 

1.     Defined Terms. Capitalized terms used in this Amendment that
are defined in the Credit Agreement shall have the same meanings as defined
therein, unless otherwise defined herein.

 

In addition, Section 1.1 of the Credit Agreement is amended by
adding or amending, as the case may be, the following definitions:

 

The definition of “Debt Service Coverage
Ratio” is hereby deleted.

 

“Fixed Charge Coverage Ratio” means, for
any period, the ratio of (i) the sum of (A) Net Income, plus (B) depreciation
and amortization, plus/minus (C) Net Distributions, to (ii) Current
Maturities of Long Term Debt.

 

“Net Distributions” means, for any
period, the sum of (a) all proceeds from the sale or issuance of any
equity securities of Borrower actually received during such period, plus (b) additional
equity contributions actually received by Borrower for such period, minus (c) all
distributions with respect to its equity paid by Borrower during such period,
and (d) any change in Subordinated Debt, if any.

 

 “Maturity
Date” means June 30, 2010 for the Revolving Note and May 31,
2012 for the Real Estate Term Note.

 

2.     Interest
Rates.  Section 2.11
(b) of the Credit Agreement is hereby deleted in its entirety and the
following shall be substituted therefor:

 

(b)  Margins.  The
Margins through and including the first adjustment occurring as specified below
shall be one and three quarters of one percent (1.75%) for Revolving Advances
and two percent (2.0%) for Term Advances. 
Commencing June 30, 2008, the Margins shall be adjusted each fiscal
quarter on the 

 

 

basis
of the Total Funded Debt to EBITDA Ratio of the Borrower as of the end of the
previous fiscal quarter, in accordance with the following table:

 

	
   

  	
   

  	
  Margins

  
	
  FINANCIAL TEST

  	
   

  	
  Revolving Note

  	
   

  	
  Real Estate Term Note

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i) Total Funded Debt to EBITDA is determined
  by the Lender to be < 2.50.

  	
   

  	
  1.75%

  	
   

  	
  2.00%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii) Total Funded Debt to EBITDA is
  determined by the Lender to be > 2.50.

  	
   

  	
  2.00%

  	
   

  	
  2.25%

  

 

Reductions
and increases in the Margins will be made following receipt of the Borrower’s
financial statements required under Section 6.1.  Each Margin change shall become effective on the first calendar day of the month
following the month of receipt by the Lender of the Borrower’s most recent
financial statements.  Notwithstanding the foregoing, (i) if
the Borrower fails to deliver any financial statements as required under Section 6.1,
the Lender may, following notice to the Borrower, increase any Margin to the
highest Margin set forth above, in addition to imposing the Default Rate
applicable under the terms of this Agreement, and (ii) no reduction in any
Margin will be made if a Default Period exists at the time that such reduction
would otherwise be made.

 

If amended or restated
financial statements change previously calculated Margins, the Lender may
reduce or increase the Margins from the date of receipt of such amended or
restated financial statements, to the beginning of the appropriate fiscal
quarter to which the restated statements relate or to the beginning of the
fiscal quarter in which any Event of Default has occurred, as the Lender in its
sole discretion deems appropriate.

 

3.     Financial Covenants.  Section 6.2
of the Credit Agreement is hereby deleted in its entirety and restated as
follows:

 

(a)           Minimum
Fixed Charge Coverage Ratio. The Borrower will maintain its Fixed
Charge Coverage Ratio, determined on a consolidated basis as at the end of each
fiscal quarter on a rolling four quarter basis, at not less than 1.25 to 1.00.

 

 (b)          Maximum Total Funded Debt to EBITDA Ratio.
The Borrower will maintain its ratio of Total Funded Debt to EBITDA, determined
on a consolidated basis as at the end of each fiscal quarter on a rolling four
quarter basis, at not more than 3.00 to 1.00.

 

(c)           Minimum
Net Income. The Borrower will achieve Net Income determined on a
consolidated basis as at the end of each fiscal quarter on a rolling four
quarter basis of not less than $1.00.

 

(d)           Capital
Expenditures. Except to the extent reasonably necessary to complete
the Suntron Acquisition, the Borrower will not incur or contract to incur
Capital Expenditures of more than $4,000,000 in the aggregate as at the end of
each fiscal year without the Lender’s written approval for capital items,
including without limitation for new building and building expansion projects,
new business acquisition and or major unplanned equipment projects.

 

 

4.     Compliance Certificate.  The
Borrower further agrees that the Compliance Certificate attached to the Credit
Agreement as Exhibit B is amended in its entirety and replaced by the
Compliance Certificate attached as Exhibit B hereto.

 

5.     Conditions Precedent.  Except as otherwise provided below, this
Amendment shall be effective when the Lender shall have received an executed
original hereof together with such other documents as requested by the Lender
in form and substance acceptable to the Lender in its sole discretion.

 

6.     No Other Changes.  Except
as specifically provided herein, all terms and conditions of the Credit
Agreement remain in full force and effect, without waiver or modification.  This Amendment and the Credit Agreement shall
be read together, as one document.

 

7.     Representations and Warranties.  Borrower
hereby remakes all representations and warranties contained in the Credit
Agreement and reaffirms all covenants set forth therein.  Borrower further certifies that as of the
date of this Amendment there exists no Event of Default as defined in the
Credit Agreement, nor any condition, act or event which with the giving of
notice or the passage of time or both would constitute any such Event of
Default.

 

8.     References. All references in the Credit Agreement to “this
Agreement” shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Security Documents to the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby.

 

9.     No Waiver. Unless otherwise provided for herein, the execution of this Amendment and
acceptance of any documents related hereto shall not be deemed to be a waiver
of any Default or Event of Default under
either of the Credit Agreements or breach, default or event of default under
any Security Document or other document held by the Lender, whether or not
known to the Lender and whether or not existing on the date of this Amendment.

 

10.   Release. The Borrower hereby absolutely and unconditionally
releases and forever discharges the Lender, and any and all participants,
parent corporations, subsidiary corporations, affiliated corporations,
insurers, indemnitors, successors and assigns thereof, together with all of the
present and former directors, officers, agents and employees of any of the
foregoing, from any and all claims, demands or causes of action of any kind,
nature or description, whether arising in law or equity or upon contract or
tort or under any state or federal law or otherwise, which the Borrower has had,
now has or has made claim to have against any such person for or by reason of
any act, omission, matter, cause or thing whatsoever arising from the beginning
of time to and including the date of this Amendment, whether such claims,
demands and causes of action are matured or unmatured or known or unknown.

 

11.   Costs and Expenses. The Borrower hereby reaffirms its
agreement under the Credit Agreements to pay or reimburse the Lender on demand
for all costs and expenses incurred by the Lender in connection with the Loan
Documents, including without limitation all reasonable fees and disbursements
of legal counsel. Without limiting the generality of the foregoing, the
Borrower specifically agrees to pay all fees and disbursements of counsel to
the Lender for the services performed by such counsel in connection with the
preparation of this Amendment and the documents and instruments incidental
hereto. The Borrower hereby agrees that the Lender may, at any time or from
time to time in its sole discretion and without further authorization by the
Borrower, make a loan to the Borrower under the Credit Agreements, or apply the
proceeds of any loan, for the purpose of paying any such fees, disbursements,
costs and expenses.

 

 

12.   Miscellaneous. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one
and the same instrument.

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the
parties hereto have caused this Eighth Amendment to be executed as of the day
and year first written above.

 

 

	
  NORTECH
  SYSTEMS

  	
   

  	
   

  	
  WELLS
  FARGO BANK,

  	
   

  
	
  INCORPORATED

  	
   

  	
   

  	
  NATIONAL
  ASSOCIATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NORTECH SYSTEMS INCORPORATED

  	
   

  	
  WELLS FARGO BANK,

  	
   

  
	
   

  	
   

  	
   

  	
  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Richard
  G. Wasielewski

  	
   

  	
  By:

  	
  /s/
  Mark T. Lundquist

  
	
  Name:

  	
  Richard G. Wasielewski

  	
   

  	
   

  	
  Mark T. Lundquist

  
	
   

  	
  Its Chief Financial
  Officer

  	
   

  	
   

  	
  Its Vice President

  
							

 

Signature page to Eighth Amendment dated as of
July     , 2008

 

 

Exhibit B to Amended and Restated Credit and Security Agreement

 

Compliance Certificate

 

	
  To:

  	
   

  	
  Mark
  T. Lundquist

  
	
   

  	
   

  	
  Wells
  Fargo Bank, N.A.

  
	
  Date:

  	
   

  	
                               ,
  200     

  
	
  Subject:

  	
   

  	
  Nortech
  Systems Incorporated

  
	
   

  	
   

  	
  Financial
  Statements

  

 

In accordance with our Amended
and Restated Credit and Security Agreement dated as of December 30, 2002,
and as amended from time to time (as amended, the “Credit Agreement”), attached are the financial statements of
Nortech Systems Incorporated (the “Borrower”)
as of and for
                                ,
200       (the “Reporting
Date”) and the year-to-date period then ended (the “Current Financials”). All terms used in
this certificate have the meanings given in the Credit Agreement.

 

As of each quarterly reporting
period, I certify that the Current Financials have been prepared in accordance
with GAAP, subject to year-end audit adjustments, and fairly present the
Borrower’s financial condition as of the date thereof.

 

Events of Default. (Check
one):

 

o            The
undersigned does not have knowledge of the occurrence of a Default or Event of
Default under the Credit Agreement except as previously reported in writing to
the Lender.

 

o            The
undersigned has knowledge of the occurrence of a Default or Event of Default under
the Credit Agreement not previously reported in writing to the Lender and
attached hereto is a statement of the facts with respect to thereto. The
Borrower acknowledges that pursuant to Section 2.11(d) of the Credit
Agreement, the Lender may impose the Default Rate at any time during the
resulting Default Period.

 

Financial Covenants. I further hereby certify as follows:

 

1.             Minimum Fixed Charge Coverage Ratio. Section 6.2(a) of the Credit
Agreement.

Required Ratio: 1.25 to 1.00 as of the end of each fiscal quarter.

As of the Reporting Date, Borrower’s quarterly consolidated Fixed
Charge Coverage Ratio (calculated as shown on attached work sheet) was
           to 1.00.

 

2.             Maximum Total Funded Debt to EBITDA Ratio. Section 6.2(b) of the Credit
Agreement.

Required Funded Debt to EBITDA Ratio shall be not more than:

 

3.00 to 1.00 as of the end of each fiscal quarter.

 

As of the Reporting Date, Borrower’s Total Funded
Debt to EBITDA Ratio was          to
1.00.

 

 

3.             Minimum Net Income.  Section 6.2(c) of
the Credit Agreement.

Required Covenant: not less than $1.00 on a consolidated basis as at
the end of each fiscal quarter on a rolling four quarter basis.

 

The Borrower’s consolidated Net Income for the
rolling, four quarter period ending on the Reporting Date was
$                          .

 

4.             Capital Expenditures. Section 6.2(d) of the Credit
Agreement.

Required Covenant: No more than $4,000,000 in aggregate as at the end
of each fiscal year, except for expenses reasonably necessary to complete
Suntron Acquisition.

As of the Reporting Date, Borrower’s consolidated year-to-date capital
expenditures was
$                          .

 

Attached to are all relevant
facts in reasonable detail to evidence, and the computations of the financial
covenants referred to above. These computations were made in accordance with
GAAP.

 

	
   

  	
  NORTECH
  SYSTEMS, INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:
  Richard G. Wasielewski

  
	
   

  	
   

  	
  Its Chief
  Financial Officer/Treasurer

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