Document:

Exhibit 10.9

 

 

 

$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
Collateral

 

16

 

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 substantial

 

18

 

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 Administrative 

 

20

 

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
$50.0 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 $405.0 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 consecutive

 

25

 

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 severally,

 

30

 

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

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  June 30, 2006

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  September 30, 2006

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  1,012,500

  	
   

  
	
  Term Loan Maturity Date

  	
   

  	
  $

  	
  377,662,500

  	
   

  

 

(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 Section 2.08(c)

 

36

 

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 Article VII),

 

37

 

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 occurred 

 

49

 

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 reasonably 

 

56

 

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 balance 

 

61

 

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 Administrative 

 

65

 

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

 

86

 

North America, Inc., as Syndication Agent, nor Citicorp 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 Borrower

 

91

 

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 10.10

 

 

 

SECURITY AGREEMENT

 

By

 

POLYMER GROUP, INC.

 

and

 

THE DOMESTIC SUBSIDIARIES PARTY HERETO,

as Grantors,

 

and

 

CITICORP NORTH AMERICA, INC.,

as Collateral Agent

 

 

Dated as of November 22, 2005

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS

  
	
   

  	
   

  	
   

  
	
  SECTION
  1.01.

  	
  Uniform Commercial Code Defined Terms

  	
  2

  
	
  SECTION
  1.02.

  	
  Credit Agreement Defined Terms

  	
  2

  
	
  SECTION
  1.03.

  	
  Definition of Certain Terms Used Herein

  	
  2

  
	
  SECTION
  1.04.

  	
  Rules of Construction

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  
	
  SECURITY
  INTERESTS

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.01.

  	
  Security Interests

  	
  8

  
	
  SECTION
  2.02.

  	
  No Assumption of Liability

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  
	
  REPRESENTATIONS
  AND WARRANTIES

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.01.

  	
  Title and Authority

  	
  8

  
	
  SECTION
  3.02.

  	
  Filings

  	
  8

  
	
  SECTION
  3.03.

  	
  Validity of Security Interests

  	
  9

  
	
  SECTION
  3.04.

  	
  Limitations on and Absence of Other Liens

  	
  9

  
	
  SECTION
  3.05.

  	
  Other Actions

  	
  10

  
	
  SECTION
  3.06.

  	
  Condition and Maintenance of Equipment.

  	
  13

  
	
  SECTION
  3.07.

  	
  No Conflicts, Consents, etc.

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  	
   

  	
   

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  
	
  SECTION
  4.01.

  	
  Change of Name; Location of Collateral;
  Records; Place of Business

  	
  13

  
	
  SECTION
  4.02.

  	
  Protection of Security

  	
  13

  
	
  SECTION
  4.03.

  	
  Further Assurances

  	
  14

  
	
  SECTION
  4.04.

  	
  Inspection and Verification

  	
  14

  
	
  SECTION
  4.05.

  	
  Taxes; Encumbrances

  	
  14

  
	
  SECTION
  4.06.

  	
  Assignment of Security Interest

  	
  14

  
	
  SECTION
  4.07.

  	
  Continuing Obligations of the Grantors

  	
  14

  
	
  SECTION
  4.08.

  	
  Use and Disposition of Collateral

  	
  14

  
	
  SECTION
  4.09.

  	
  Limitation on Modification of Accounts

  	
  14

  
	
  SECTION
  4.10.

  	
  Insurance

  	
  15

  
	
  SECTION
  4.11.

  	
  Certain Covenants and Provisions Regarding
  Patent, Trademark and Copyright Collateral

  	
  15

  

 

i

 

	
  ARTICLE V

  
	
   

  	
   

  	
   

  
	
  REMEDIES

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.01.

  	
  Remedies upon Default

  	
  17

  
	
  SECTION
  5.02.

  	
  Application of Proceeds

  	
  18

  
	
  SECTION
  5.03.

  	
  Collateral Agent’s Calculations

  	
  19

  
	
  SECTION
  5.04.

  	
  Grant of License to Use Intellectual
  Property

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
   

  	
   

  	
   

  
	
  COLLATERAL
  ACCOUNT

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.01.

  	
  Establishment of Collateral Account

  	
  20

  
	
  SECTION
  6.02.

  	
  Proceeds of Destruction, Taking and
  Excluded Asset Sale

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  	
   

  	
   

  
	
  The
  Collateral Agent

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.01.

  	
  General Authority of the Collateral Agent
  over the Collateral

  	
  21

  
	
  SECTION
  7.02.

  	
  Exercise of Powers

  	
  21

  
	
  SECTION
  7.03.

  	
  Remedies Not Exclusive

  	
  21

  
	
  SECTION
  7.04.

  	
  Waiver and Estoppel

  	
  22

  
	
  SECTION
  7.05.

  	
  Limitation on Collateral Agent’s Duty in
  Respect of Collateral

  	
  22

  
	
  SECTION
  7.06.

  	
  Limitation by Law

  	
  22

  
	
  SECTION
  7.07.

  	
  Rights of Secured Parties in Respect of
  Obligations

  	
  22

  
	
  SECTION
  7.08.

  	
  Compensation and Expenses

  	
  23

  
	
  SECTION
  7.09.

  	
  Stamp and Other Similar Taxes

  	
  23

  
	
  SECTION
  7.10.

  	
  Filing Fees, Excise Taxes, etc.

  	
  23

  
	
  SECTION
  7.11.

  	
  Indemnification

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  SECTION
  8.01.

  	
  Notices

  	
  24

  
	
  SECTION
  8.02.

  	
  Survival of Agreement

  	
  24

  
	
  SECTION
  8.03.

  	
  Binding Effect

  	
  24

  
	
  SECTION
  8.04.

  	
  Successors and Assigns

  	
  24

  
	
  SECTION
  8.05.

  	
  GOVERNING LAW

  	
  24

  
	
  SECTION
  8.06.

  	
  Waivers; Amendment; Several Agreement

  	
  24

  
	
  SECTION
  8.07.

  	
  WAIVER OF JURY TRIAL

  	
  25

  
	
  SECTION
  8.08.

  	
  Severability

  	
  25

  
	
  SECTION
  8.09.

  	
  Counterparts

  	
  25

  
	
  SECTION
  8.10.

  	
  Headings

  	
  25

  
	
  SECTION
  8.11.

  	
  Jurisdiction; Consent to Service of Process

  	
  25

  
	
  SECTION
  8.12.

  	
  Termination

  	
  26

  
	
  SECTION
  8.13.

  	
  Additional Grantors

  	
  26

  
	
  SECTION
  8.14.

  	
  Financing Statements

  	
  27

  
	
  SECTION
  8.15.

  	
  No Deemed Dividend.

  	
  27

  

 

ii

 

	
  SECTION
  8.16.

  	
  Collateral Agent Appointed Attorney-in-Fact

  	
  27

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  
	
   

  	
   

  	
   

  
	
  Schedule I

  	
  Domestic Subsidiaries

  	
   

  
	
   

  	
   

  	
   

  
	
  ANNEXES

  
	
   

  	
   

  	
   

  
	
  Annex I

  	
  Form of Joinder Agreement

  	
   

  
	
  Annex II

  	
  Form of Perfection Certificate

  	
   

  
	
  Annex III

  	
  Form of Bailee Letter

  	
   

  

 

iii

 

SECURITY AGREEMENT

 

SECURITY
AGREEMENT (as amended, amended and restated, supplemented or otherwise modified
from time to time, this “Agreement”) dated as of November 22, 2005
among POLYMER GROUP, INC., a Delaware corporation (the “Borrower”),
each Domestic Subsidiary of the Borrower listed on Schedule I
hereto (collectively, together with each Domestic Subsidiary that becomes a
party hereto pursuant to Section 8.13 of this Agreement, the “Subsidiary
Guarantors” and, together with the Borrower, the “Grantors”), and CITICORP
NORTH AMERICA, INC. (in such capacity, the “Collateral Agent”) on
behalf of the Secured Parties (as defined in the Credit Agreement) pursuant to
the Credit Agreement (as hereinafter defined), as pledgee, assignee and secured
party.

 

RECITALS

 

A.                                   The
Borrower, the Collateral Agent, Citicorp North America, Inc., as
administrative agent  (in such capacity
and together with any successors in such capacity, the “Administrative Agent”)
for the Lenders (as defined herein), as documentation agent (in such capacity,
the “Documentation Agent”) and as syndication agent (in such capacity,
the “Syndication Agent”), and Citigroup Global Markets Inc. (“CGMI”),
as sole lead arranger and sole bookrunner (in such capacity, the “Lead Arranger”),
and the lending institutions from time to time party thereto (the “Lenders”)
have, in connection with the execution and delivery of this Agreement, entered
into that certain credit agreement, dated as of the date hereof (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), providing for the making of Loans to the Borrower
and the issuance of and participations in Letters of Credit for the account of
the Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement.

 

B.                                     Each
Subsidiary Guarantor has, pursuant to the Guarantee Agreement, dated as of the
date hereof, among other things, unconditionally guaranteed the obligations of
the Borrower under the Credit Agreement.

 

C.                                     The
Borrower and each Subsidiary Guarantor will receive substantial benefits from
the execution, delivery and performance of the obligations under the Credit
Agreement and is, therefore, willing to enter into this Agreement.

 

D.                                    It
is contemplated that, to the extent permitted by the Credit Agreement, one or
more of the Grantors may enter into one or more Hedging Agreements with
one or more Persons that were Lenders or Affiliates of a Lender at the time
such Hedging Agreements were entered into 
(collectively, the “Hedging Exchangers”) fixing interest rates
relating to the Loans.

 

E.                                      Contemporaneously
with the execution and delivery of this Agreement, the Borrower and certain
Subsidiary Guarantors have executed and delivered to the Collateral Agent a
Pledge Agreement (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Pledge Agreement”).

 

F.                                      This
Agreement is given by each Grantor in favor of the Collateral Agent for the
benefit of the Secured Parties (as hereinafter defined) to secure the payment
and performance of all of the Obligations (as hereinafter defined).

 

NOW THEREFORE,
in consideration of the foregoing and other benefits accruing each Grantor, the
receipt and sufficiency of which are hereby acknowledged, each Grantor hereby
makes the following

 

 

representations
and warranties to the Collateral Agent for the benefit of the Secured Parties
(and each of their respective successors and assigns), as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.01.                 Uniform Commercial Code Defined Terms. Unless otherwise
defined herein, terms used herein that are defined in the UCC shall have the
meanings assigned to them in the UCC, including the following which are capitalized
herein:

 

“Accounts”; “Bank”; “Certificates
of Title”; “Chattel Paper”; “Commercial Tort Claim”; “Commodity
Account”; “Commodity Contract”; “Commodity Intermediary”; “Deposit
Accounts”; “Documents”; “Electronic Chattel Paper”; “Entitlement
Order”; “Equipment”; “Fixtures”; “Goods”; “Instruments”
(as defined in Article 9 rather than Article 3); “Inventory”; “Investment
Property”; “Letter-of-Credit Rights”; “Letters of Credit”; “Securities
Account”; “Securities Intermediary”; “Security Entitlement”; “Supporting
Obligations”; and “Tangible Chattel Paper”.

 

SECTION 1.02.                 Credit Agreement Defined Terms. Capitalized terms used but
not otherwise defined herein that are defined in the Credit Agreement shall
have the meanings given to them in the Credit Agreement.

 

SECTION 1.03.                 Definition of Certain Terms Used Herein. As used herein, the
following terms shall have the following meanings:

 

“Account
Debtor” shall mean any Person who is or who may become obligated to
any Grantor under, with respect to or on account of an Account.

 

“Accounts
Receivable” shall mean all Accounts and all right, title and interest in
any returned goods, together with all rights, titles, securities and guarantees
with respect thereto, including any rights to stoppage in transit,
replevin, reclamation and resales, and all related security interests, liens
and pledges, whether voluntary or involuntary, in each case whether now
existing or owned or hereafter arising or acquired.

 

“Bailee
Letter” shall mean an agreement in form substantially similar to Annex
III hereto.

 

“Books and
Records” shall mean all instruments, files, records, ledger sheets and
documents evidencing, covering or relating to any of the Collateral.

 

“Borrower”
shall have the meaning assigned to such term in the preamble of this Agreement.

 

“Charges”
shall mean any and all property and other taxes, assessments and special
assessments, levies, fees and all governmental charges imposed upon or assessed
against, and all claims (including, without limitation, landlords’, carriers’,
mechanics’, maritime, workmen’s, repairmen’s, laborers’, materialmen’s,
suppliers’ and warehousemen’s Liens and other claims arising by operation of
law) against, all or any portion of the Collateral.

 

“Collateral”
shall mean with respect to each of the Grantors all of the following, in each
case, whether now owned or hereafter acquired:

 

2

 

(a)                                  Accounts Receivable;

 

(b)                                 Books and Records;

 

(c)                                  cash and Deposit
Accounts;

 

(d)                                 Chattel Paper;

 

(e)                                  Collateral Account
and Collateral Account Funds;

 

(f)                                    Commercial Tort
Claims described on Schedule 15 to the Perfection Certificate;

 

(g)                                 Documents;

 

(h)                                 Equipment;

 

(i)                                     Fixtures;

 

(j)                                     General
Intangibles;

 

(k)                                  Goods;

 

(l)                                     Instruments;

 

(m)                               Inventory;

 

(n)                                 Investment Property;

 

(o)                                 Letter-of-Credit Rights;

 

(p)                                 Letters of Credit;

 

(q)                                 Supporting
Obligations;

 

(r)                                    Intellectual
Property;

 

(s)                                     to
the extent not covered by clauses (a) through (r) of this definition,
all other personal property, whether tangible or intangible; and

 

(s)                                  Proceeds
of any and all of the foregoing;

 

provided
that, for purposes of this Agreement, “Collateral” shall not include any
Excluded Property.

 

“Collateral
Account” shall mean that collateral account established pursuant to Section 6.01
of this Agreement.

 

“Collateral
Account Funds” shall mean, collectively, the following from time to time on
deposit in the Collateral Account:  all
funds, investments (including, without limitation, all Permitted Investments)
and all certificates and instruments from time to time representing or
evidencing such investments; all notes, certificates of deposit, checks and
other instruments from time to time hereafter delivered to or otherwise
possessed by the Collateral Agent for or on behalf of any Grantor in
substitution for, or in addition to, any or all of the Collateral; and all
interest, dividends, cash, instruments and other property from

 

3

 

time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the items constituting Collateral.

 

“Collateral
Agent” shall have the meaning assigned to such term in the preamble of this
Agreement.

 

“Collateral
Agent Fees” shall mean all fees, costs and expenses of the Collateral Agent
of the types described in Sections
7.08, 7.09, 7.10 and 7.11.

 

“Collateral
Estate” shall have the meaning assigned in Section 7.01(c).

 

“Control”
shall mean (i) in the case of each Deposit Account, “control,” as such
term is defined in Section 9-104 of the UCC, (ii) in the case of any
Security Entitlement, “control,” as such term is defined in Section 8-106(d) of
the UCC, and (iii) in the case of any Commodity Contract, “control,” as
such term is defined in Section 9-106(b) of the UCC.

 

“Control
Agreement” shall mean an agreement in form and substance reasonably
acceptable to the Collateral Agent for the purpose of effecting Control with
respect to any Deposit Account, Securities Account or Commodity Account.

 

“Copyright
License” shall mean each written agreement, now or hereafter in effect,
granting any right to any third party under any Copyright now or hereafter
owned by any Grantor or which such Grantor otherwise has the right to license,
or granting any right to such Grantor under any Copyright now or hereafter
owned by any third party, and all rights of such Grantor under any such
agreement.

 

“Copyrights”
shall mean, collectively, with respect to each Grantor, all copyrights (whether
statutory or common law, whether established or registered in the United States
by a Grantor or established or registered in any other country or any political
subdivision thereof by a Grantor if the beneficial interest is owned by such
Grantor, whether registered or unregistered and whether published or
unpublished) and all copyright registrations and applications made by such
Grantor, in each case, whether now owned or hereafter created or acquired by or
assigned to such Grantor, including, without limitation, the copyrights,
registrations and applications listed in Schedule 14(b) of the
Perfection Certificate, together with any and all (i) rights and
privileges arising under applicable law with respect to such Grantor’s use of
such copyrights, (ii) reissues, renewals, continuations and extensions
thereof, (iii) income, fees, royalties, damages, claims and payments now
or hereafter due and/or payable with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) rights corresponding thereto throughout the world and (v) rights
to sue for past, present or future infringements thereof.

 

“Credit
Agreement” shall have the meaning assigned to such term in the Recitals of
this Agreement.

 

“Distribution
Date” shall mean each date fixed by the Collateral Agent in its sole
discretion for a distribution to the Secured Parties of funds held in the
Collateral Account.

 

“Exchange
Rate” shall mean, at any date of
determination thereof with respect to any currency, the spot rate of exchange
for the conversion of such currency into dollars determined by reference to
such rate publishing service as is customarily utilized by the Collateral Agent
for such purpose; provided that, to the extent that “Exchange Rate” is
used herein to refer to an actual exchange by the Collateral Agent of one
currency for another, “Exchange Rate” shall be deemed to refer to the rate at
which such exchange actually occurs so long as such exchange is effected under
customary market conditions. Any such determination of the Exchange Rate shall
be conclusive absent manifest error.

 

4

 

“Excluded
Account” shall mean (i) any petty cash Deposit Account, opened by any
Grantor; provided that average daily balance during any ten day period
of any such excluded petty cash Deposit Account, when aggregated with the
average daily balance during any ten day period of all other excluded petty
cash Deposit Accounts shall not exceed $100,000 and (ii) any Deposit
Account used solely for payroll taxes or employee related benefit accounts.

 

“Excluded
Property” shall mean:

 

(a)                                  any
permit, lease or license, or the assets (owned by a Person other than a Loan
Party) subject thereto or covered thereby, held by any Grantor that validly
prohibits the creation by such Grantor of a security interest therein or thereon
(other than to the extent that any such prohibition would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or
any successor provision or provisions) of any relevant jurisdiction or any
other applicable law (including the Bankruptcy Code) or principles of equity);

 

(b)                                 any
permit, lease or license, or the assets (owned by a Person other than a Loan
Party) subject thereto or covered thereby, held by any Grantor to the extent
that any Requirement of Law applicable thereto prohibits the creation of a
security interest therein or thereon (other than to the extent that any such
prohibition would be rendered ineffective pursuant to Sections 9-406, 9-407,
9-408 or 9-409 of the UCC (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity);

 

(c)                                  goods
owned by any Grantor on the date hereof or hereafter acquired that are subject
to a Lien securing a purchase money obligation or Capital Lease Obligation
permitted to be incurred pursuant to the provisions of Section 6.01(vii) of
the Credit Agreement if the contract or other agreement in which such Lien is
granted (or the documentation providing for such purchase money obligation or
Capital Lease Obligation) validly prohibits the creation of any other Lien on
such Goods;

 

(d)                                 any
Intellectual Property Collateral, including without limitation, intent-to-use
trademark applications, for which the creation by a Grantor of a security
interest therein is prohibited (i) without the consent of third party, (ii) by
Requirement of Law, or (iii) would otherwise result in the loss by any
Loan Party of any material rights therein (other than to the extent that any
such prohibition would be rendered ineffective pursuant to Sections 9-406,
9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of
any relevant jurisdiction or any other applicable law (including the Bankruptcy
Code) or principles of equity);

 

(e)                                  Securities
Collateral (as defined in the Pledge Agreement);

 

(f)                                    any
Equity Interests pledged pursuant to any Non-U.S. Pledge Agreement; and

 

(g)                                 Equity
Interests in PGI Nonwovens, B.V. held by Chicopee Holdings, B.V. on the date
hereof;

 

provided
that the term “Excluded Property” shall not include any Proceeds, substitutions
or replacements of any Excluded Property (unless such Proceeds, substitutions
or replacements would constitute Excluded Property).

 

5

 

“General
Intangibles” shall mean, collectively, all “general intangibles,” as such
term is defined in the UCC, and in any event shall include, without limitation,
all choses in action and causes of action and all other intangible personal
property of any Grantor of every kind and nature now owned or hereafter
acquired by any Grantor, including all rights and interests in partnerships,
limited partnerships, limited liability companies and other unincorporated
entities, corporate or other business records, indemnification claims, contract
rights (including rights under leases, whether entered into as lessor or
lessee, Hedging Agreements and other agreements), Intellectual Property,
goodwill, registrations, franchises and tax refund claims.

 

“Grantors”
shall have the meaning assigned to such term in the preamble of this Agreement.

 

“Hedging
Exchangers” shall have the meaning assigned to such term in the Recitals of
this Agreement.

 

“Intellectual
Property” shall mean all intellectual and similar property of any Grantor
of every kind and nature now owned in the United States by a Grantor, or with
respect to any country other than the United States, established, registered or
recorded by a Grantor and beneficially owned by such Grantor, or hereafter
acquired by any Grantor, including inventions, designs, Patents, Copyrights,
Licenses, Trademarks, trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or information, software
and databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions, improvements
and accessions to, and books and records describing or used in connection with,
any of the foregoing.

 

“Lenders”
shall have the meaning assigned to such term in the Recitals of this Agreement.

 

“License”
shall mean any Patent License, Trademark License, Copyright License or other
license or sublicense to which any Grantor is a party, including, without
limitation, those listed on Schedules 14(a) and 14(b) of
the Perfection Certificate (other than those license agreements in existence on
the date hereof and listed on Schedules 14(a) and 14(b) of
the Perfection Certificate).

 

“Patent
License” shall mean any written agreement, now or hereafter in effect,
granting to any third party any right to make, use or sell any invention on
which a Patent, now or hereafter owned by any Grantor or which any Grantor
otherwise has the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent, now or
hereafter owned by any third party, is in existence, and all rights of any
Grantor under any such agreement.

 

“Patents”
shall mean all of the following now owned in the United States by a Grantor, or
with respect to any country other than the United States, registered or
recorded by a Grantor and beneficially owned by such Grantor, or hereafter
acquired by any Grantor:  (a) all
patents and all applications for patent of the United States or any other
country, including registrations, recordings and pending applications in the
United States Patent and Trademark Office or any other country, including those
listed on Schedule 14(a) of the Perfection Certificate, and (b) all
reissues, continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed therein, including
the right to make, use and/or sell the inventions disclosed or claimed therein.

 

“Perfection
Certificate” shall mean a certificate substantially in the form of
Annex II hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by the Grantors.

 

“Pledge
Agreement” shall have the meaning assigned to such term in the Recitals of
this Agreement.

 

6

 

“Pledged
Securities” shall have the meaning assigned to such term in the Pledge
Agreement and shall include Equity Interests pledged pursuant to Non-U.S.
Pledge Agreements; provided, however, that Pledged Securities
shall not include the pledge of Equity Interests in PGI Nonwovens B.V. held by
Chicopee Holdings, B.V. on the date hereof.

 

“Proceeds”
shall mean, collectively, all “proceeds,” as such term is defined in the UCC,
and in any event shall include, without limitation, any consideration received
from the sale, exchange, license, lease or other disposition of any asset or
property that constitutes Collateral, any payment received from any insurer or
other Person or entity as a result of the destruction, loss, theft, damage or
other involuntary conversion of whatever nature of any asset or property that
constitutes Collateral, and shall include (a) all cash and negotiable
instruments received by or held on behalf of the Collateral Agent, (b) any
claim of any Grantor against any third party for (and the right to sue and
recover for and the rights to damages or profits due or accrued arising out of
or in connection with) (i) past, present or future infringement of
any Patent now or hereafter owned by any Grantor, or licensed under a Patent
License, (ii) past, present or future infringement or dilution of any
Trademark now or hereafter owned by any Grantor or licensed under a Trademark
License or injury to the goodwill associated with or symbolized by any
Trademark now or hereafter owned by any Grantor, (iii) past, present or
future breach of any License and (iv) past, present or future infringement
of any Copyright now or hereafter owned by any Grantor or licensed under a
Copyright License and (c) any and all other amounts from time to time paid
or payable under or in connection with any of the Collateral.

 

“Security
Interests” shall have the meaning assigned to such term in Section 2.01.

 

“Subsidiary
Guarantors” shall have the meaning assigned to such term in the preamble of
this Agreement.

 

“Trademark
License” shall mean any written agreement, now or hereafter in effect,
granting to any third party any right to use any Trademark now or hereafter
owned by any Grantor or that any Grantor otherwise has the right to license, or
granting to any Grantor any right to use any Trademark now or hereafter owned
by any third party, and all rights of any Grantor under any such agreement.

 

“Trademarks”
shall mean all of the following now owned in the United States by a Grantor, or
with respect to any country other than the United States, registered or
recorded by a Grantor and beneficially owned by such Grantor, or hereafter
acquired by any Grantor:  (a) all
trademarks, service marks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, trade dress, logos,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith,
including registrations and registration applications in the United States
Patent and Trademark Office, any State of the United States or any similar
offices in any other country or any political subdivision thereof, and all
extensions or renewals thereof, including those listed on Schedule 14(a) of
the Perfection Certificate, (b) all goodwill associated therewith or
symbolized thereby and (c) all other assets, rights and interests that
uniquely reflect or embody such goodwill.

 

“UCC”
shall mean the Uniform Commercial Code as in effect on the date hereof in
the State of New York; provided, however, that if by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of
either Collateral Agent’s and the Secured Parties’ security interest in any
item or portion of the Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than the State of New York, the
term “UCC” shall mean the Uniform Commercial Code as in effect on the date
hereof in such other jurisdiction for purposes of the provisions hereof
relating to such attachment, perfection or priority and for purposes of
definitions relating to such provisions.

 

7

 

SECTION 1.04                    Rules of Construction. Unless the context otherwise
requires:

 

(1)                                  a term has the
meaning assigned to it;

 

(2)                                  an accounting term
not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(3)                                  “or” is not
exclusive;

 

(4)                                  words in the singular
include the plural, and in the plural include the singular; or

 

(5)                                  provisions apply to
successive events and transactions.

 

ARTICLE II

 

SECURITY
INTERESTS

 

SECTION 2.01.                 Security Interests. It being expressly understood and agreed
that the security interests granted herein for the benefit of the Collateral
Agent on behalf of the Secured Parties shall be subject to the terms of the
Credit Agreement, as collateral security for the payment and performance in
full of all the Obligations, each Grantor hereby pledges and grants to the
Collateral Agent, for the benefit of the Secured Parties, a lien on and
security interest in and to all of the right, title and interest of such
Grantor in, to and under the Collateral.

 

The Liens
granted hereunder to secure the Obligations are collectively referred to herein
as the “Security Interests”.

 

SECTION 2.02.                 No Assumption of Liability. The Security Interests are
granted as security only and shall not subject the Collateral Agent or any
other Secured Party to, or in any way alter or modify, any obligation or liability
of any Grantor with respect to or arising out of the Collateral.

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES

 

The Grantors
jointly and severally represent and warrant to the Collateral Agent and the
Secured Parties that:

 

SECTION 3.01.                 Title and Authority. Each Grantor has good and valid rights
in and title to the Collateral with respect to which it has purported to grant
a Security Interest hereunder and has full power and authority to grant to the
Collateral Agent the Security Interest in such Collateral pursuant hereto and
to execute, deliver and perform its obligations in accordance with the
terms of this Agreement, without the consent or approval of any other Person
other than any consent or approval which has been obtained.

 

SECTION 3.02.                 Filings. (a)  All information set forth herein as
of the date hereof and in the Perfection Certificate (as of the latest date
such document is required to be updated), including the Schedules annexed
hereto and thereto, has been duly prepared, completed and executed and the
information set forth herein and therein is correct and complete in all
material respects. Except with regard to foreign Intellectual Property, the
Collateral described on the Schedules annexed to the Perfection Certificate constitutes
all of the property of such type of Collateral owned or held by the Grantors to
the extent required to be scheduled thereon. Fully completed UCC financing
statements (including fixture filings, as applicable)

 

8

 

or other appropriate filings,
recordings or registrations containing a description of the Collateral have
been delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 7 to the Perfection
Certificate, which, except with regard to (i) foreign Intellectual
Property and (ii) collateral located outside the United States, are all
the filings, recordings and registrations that are necessary to publish notice
of and protect the validity of and to establish a legal, valid and perfected
security interest in favor of the Collateral Agent (for the benefit of the
Secured Parties) in respect of all Collateral in which a security interest may be
perfected by filing, recording or registration under Article 9 of the UCC
in the United States (or any political subdivision thereof) and its territories
and possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration under Article 9 of the UCC is
necessary in any such jurisdiction, except as provided under applicable law
with respect to the filing of continuation statements.

 

(b)                                 Each
Grantor represents and warrants that fully executed security agreements in the form hereof
(or short form security agreements) containing a description of all
Collateral consisting of Intellectual Property with respect to United States
Patents, United States registered Trademarks (and Trademarks for which United
States registration applications are pending) have been delivered to the
Collateral Agent for registration with the United States Patent and Trademark
Office pursuant to 35 U.S.C. § 261 or 17 U.S.C. § 205 and
the regulations thereunder, as applicable, and otherwise as may be
required pursuant to the laws of any other necessary jurisdiction to protect
the validity of and to establish a legal, valid and perfected security interest
in favor of the Collateral Agent for the benefit of the Secured Parties in
respect of all Collateral consisting of Patents and Trademarks in which a
security interest may be perfected by filing, recording or registration in
the United States (or any political subdivision thereof) and its territories
and possessions, and, except with regard to foreign Intellectual Property, no further
or subsequent filing, refiling, recording, prerecording, registration or
preregistration is necessary (other than such actions as are necessary to
perfect the Security Interest with respect to any Collateral consisting of
Patents, Trademarks and Copyrights (or registration or application for
registration thereof) acquired or developed after the date hereof).

 

SECTION 3.03.                 Validity of Security Interests. The Security Interests
constitute (a)  legal and valid security interests under New York law in all
the Collateral securing the payment and performance of the Obligations, (b) subject
to the filings described in Section 3.02 above, perfected security
interests in all Collateral in which a security interest may be perfected
by filing, recording or registering a financing statement or analogous document
in the United States (or any political subdivision thereof) and its territories
and possessions pursuant to the UCC in such jurisdictions, (c)  security
interests that shall be perfected in all Collateral in which a security
interest may be perfected upon the receipt and registering and recording
of this Agreement or a short form security agreement with the United
States Patent and Trademark Office, and (d)  perfected security interests
in all Collateral in which a security interest may be perfected by
possession or control by the Collateral Agent, in each case, to the extent
required pursuant to the provisions hereof. The Security Interests are and
shall be prior to any other Lien on any of the Collateral, other than Permitted
Liens.

 

SECTION 3.04.                 Limitations on and Absence of Other Liens. The Collateral is
owned by the Grantors or the Grantors have rights therein, free and clear of
any Lien, except for Permitted Liens. The Grantors have not filed or consented
to the filing of (a) any financing statement or analogous document under
the UCC or any other applicable laws covering any Collateral, (b) any
assignment in which any Grantor assigns any Collateral or any security
agreement or similar instrument covering any Collateral with the United States
Patent and Trademark Office and the United States Copyright Office or (c) any
assignment in which any Grantor assigns any Collateral or any security
agreement or similar instrument covering any Collateral with any foreign
governmental, municipal or other office, which financing statement or analogous
document, assignment, security agreement or similar instrument is still in
effect, except, in each case, for Permitted Liens or dispositions permitted by
the Credit Agreement.

 

9

 

SECTION 3.05.                 Other Actions. In order to further ensure the attachment,
perfection and priority of, and the ability of the Collateral Agent to enforce,
the Collateral Agent’s security interests in the Collateral, each Grantor
agrees, in each case at such Grantor’s own expense, to take the following
actions with respect to the following Collateral:

 

(a)                                  Instruments and Tangible Chattel Paper. As of the date
hereof, each Instrument and each item of Tangible Chattel Paper specified in Schedule 13
to the Perfection Certificate valued in excess of $500,000 has been properly
endorsed, assigned and delivered to the Collateral Agent, and, if necessary,
accompanied by instruments of transfer or assignment duly executed in blank. If
any amount individually or in the aggregate in excess of $500,000 payable under
or in connection with any of the Collateral shall be evidenced by any
Instrument or Tangible Chattel Paper, the Grantor acquiring such Instrument or
Tangible Chattel Paper shall, on a quarterly basis, notify the Collateral Agent
and promptly endorse, assign and deliver the same to the Collateral Agent,
accompanied by such instruments of transfer or assignment duly executed in
blank as the Collateral Agent may from time to time reasonably request; provided,
however, that so long as no Event of Default shall have occurred and be
continuing, the Collateral Agent shall return such Instrument or Tangible
Chattel Paper to such Grantor from time to time, to the extent necessary for
collection in the ordinary course of such Grantor’s business.

 

(b)                                 Deposit Accounts. Each Grantor hereby represents and
warrants that (i) it has neither opened nor maintains any Deposit Accounts
other than the accounts listed in Schedule 16 of the Perfection
Certificate as supplemented from time to time and (ii) the Collateral
Agent has a perfected security interest in each Deposit Account, other than any
Excluded Accounts, by Control. No Grantor shall hereafter establish and
maintain any Deposit Account, other than an Excluded Account, unless (1) the
applicable Grantor shall have given the Collateral Agent 10 days’ prior written
notice (or such shorter period as the Collateral Agent shall agree to) of its
intention to establish such new Deposit Account with a Bank, and (2) such
Bank and such Grantor shall have duly executed and delivered to the Collateral
Agent a Control Agreement with respect to such Deposit Account. The Collateral
Agent agrees with each Grantor that the Collateral Agent shall not give any
instructions directing the disposition of funds from time to time credited to
any Deposit Account or withhold any withdrawal rights from such Grantor with
respect to funds from time to time credited to any Deposit Account unless an Event
of Default of the type specified in Section 7.01(a) of the Credit
Agreement has occurred and is continuing or upon the occurrence of the Loans or
other Obligations becoming declared immediately due and payable and/or the
Commitments being declared terminated. Upon cure or waiver of all Events of
Default, the Collateral Agent shall promptly notify the relevant Bank(s) that
the applicable Loan Party may withdraw funds from the relevant Deposit
Account(s). No Grantor shall grant Control of any Deposit Account to any Person
other than the Collateral Agent.

 

Notwithstanding the provisions of the
immediately preceding paragraph, each Grantor will not be required to enter
into Control Agreements, subject to the conditions set forth in this paragraph,
with respect to the following Deposit Accounts:  (i) any Deposit Accounts used to fund
petty cash expenditures to the extent such accounts do not hold greater than
$30,000 at any time; (ii) any Deposit Accounts used solely to fund payroll
disbursements to employees; (iii) the Deposit Account held at Wachovia
(Acct no: 2000003339970) to the extent such account does not hold over $30,000
at any one time; (iv) the Deposit Account held at Wachovia (Acct no:
6728001483) to the extent such account does not hold over $30,000 for any consecutive
five Business Days; (v) the Deposit Accounts held at JP Morgan Chase Bank
- Hong Kong Branch and identified on the Perfection Certificate on the date
hereof, to the extent that these accounts do not hold over $2,000,000 (or the
U.S. dollar equivalent thereof at the then prevailing rates of foreign
exchange), in the aggregate, at any time; (vi) the Deposit Account held at
The Fuji Bank, Ltd.

 

10

 

and identified on the Perfection Certificate
on the date hereof, to the extent that this account does not hold over $30,000
(or the U.S. dollar equivalent thereof at the then prevailing rates of foreign
exchange) at any time; (vii) the Deposit Accounts held at Bank of Nova
Scotia and identified on the Perfection Certificate as amended on the Amendment
Effectiveness Date, to the extent that all funds held in these accounts are
deposited bi-weekly pursuant to an agreement which is reasonably satisfactory
to the Collateral Agent into a Deposit Account subject to a Control Agreement in
favor of the Collateral Agent; and (viii) any Deposit Account held at the
Collateral Agent. The Grantors shall use their Deposit Accounts in accordance
with past practices and shall not manipulate the balances in any of their
Deposit Accounts solely to ensure that the balances in the Deposit Accounts
meet the limits set forth in the foregoing clauses (i), (iii), (iv) and
(vi).

 

(c)                                  Investment Property. (i)  Each Grantor hereby
represents and warrants that (1) it has neither opened nor maintains any
Securities Accounts or Commodity Accounts other than those listed in Schedule 16
of the Perfection Certificate and the Collateral Agent has a perfected first
priority security interest in such Securities Accounts and Commodity Accounts
by Control and (2) it does not hold, own or have any interest in any
certificated securities or uncertificated securities other than those
constituting Securities Collateral under the Pledge Agreement and those
maintained in Securities Accounts or Commodity Accounts listed in Schedule 16
of the Perfection Certificate. If any Grantor shall at any time hold or acquire
any certificated securities constituting Investment Property valued in excess
of $500,000 that are not Pledged Securities under the Pledge Agreement, such
Grantor shall immediately endorse, assign and deliver the same to the
Collateral Agent, accompanied by such instruments of transfer or assignment
duly executed in blank, all in form and substance reasonably satisfactory
to the Collateral Agent; provided that in no event shall such Grantor be
required to pledge more than 65% of the voting stock of any non-U.S. Subsidiary.
If any securities now or hereafter acquired by any Grantor constituting
Investment Property that are not Pledged Securities are uncertificated, such
Grantor shall promptly notify each Collateral Agent thereof and use its
commercially reasonable efforts to, within five (5) Business Days and in
any event no later than 30 days (except where legally prohibited therefrom),
pursuant to an agreement in form and substance reasonably satisfactory to
the Collateral Agent, either (at such Grantor’s option) (a) cause the
issuer to agree to comply with instructions from the Collateral Agent as to
such securities, without further consent of any Grantor, or (b) arrange
for the Collateral Agent to become the registered owner of the securities. No
Grantor shall hereafter establish and maintain any Securities Account or
Commodity Account with any Securities Intermediary or Commodity Intermediary
unless (1) the applicable Grantor shall have given the Collateral Agent 10
days’ prior written notice of its intention to establish such new Securities
Account or Commodity Account with such Securities Intermediary or Commodity
Intermediary and (2) such Securities Intermediary or Commodity
Intermediary, as the case may be, and such Grantor shall have duly
executed and delivered to the Collateral Agent a Control Agreement with respect
to such Securities Account or Commodity Account, as the case may be. Each
Grantor shall accept any cash and Investment Property (not subject to the
Pledge Agreement or Non-U.S. Pledge Agreements) in trust for the benefit of the
Collateral Agent and within five (5) Business Days of actual receipt
thereof, deposit such Investment Property and any new securities, instruments,
documents or other Investment Property by reason of ownership of such
Investment Property received by it into a Securities Account or Commodity
Account subject to a Control Agreement in favor of the Collateral Agent. The Collateral
Agent agrees with each Grantor that the Collateral Agent shall not give any
Entitlement Orders or instructions or directions to any issuer of
uncertificated securities, Securities Intermediary or Commodity Intermediary,
and shall not withhold its consent to the exercise of any withdrawal or dealing
rights by such Grantor, unless an Event of Default has occurred and is
continuing. Upon cure or waiver of all Events of Default, the Collateral Agent
shall promptly notify the relevant Securities Intermediary or Commodities
Intermediary that the applicable Grantor may withdraw funds from the relevant
Securities

 

11

 

Accounts or Commodities Accounts. No Grantor
shall grant control over any Investment Property to any Person other than the
Collateral Agent. Notwithstanding the foregoing, the “Collateral Investment
Account” as identified on Schedule 16 of the Perfection Certificate
need not be subject to a Control Agreement for a period not to exceed thirty
days from the date hereof.

 

(ii)                                  Each
Grantor shall promptly pay all Charges and fees with respect to the Investment
Property pledged by it under this Agreement, other than any Charges and fees
constituting Liens permitted by Section 6.02(iii) of the Credit
Agreement. In the event any Grantor shall fail to make such payment
contemplated in the immediately preceding sentence, the Collateral Agent may upon
notice to such Grantor, do so for the account of such Grantor and the Grantors
shall promptly reimburse and indemnify the Collateral Agent from all reasonable
costs and expenses incurred by the Collateral Agent under this Section 3.05(c).

 

(d)                                 Electronic Chattel Paper and Transferable Records. If any
amount individually or in the aggregate in excess of $500,000 payable under or
in connection with any of the Collateral shall be evidenced by any Electronic
Chattel Paper or any “transferable record,” as that term is defined in Section 201
of the Federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in
any relevant jurisdiction, the Grantor acquiring such Electronic Chattel Paper
or transferable record shall, on a quarterly basis, notify the Collateral Agent
and shall, promptly, take such action as the Collateral Agent may reasonably
request to vest in the Collateral Agent control under UCC Section 9-105 of
such Electronic Chattel Paper or control under Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or, as the case may be,
Section 16 of the Uniform Electronic Transactions Act, as so in
effect in such jurisdiction, of such transferable record. The Collateral Agent
agrees with such Grantor that the Collateral Agent will arrange, pursuant to
procedures reasonably satisfactory to the Collateral Agent and so long as such
procedures will not result in the Collateral Agent’s loss of control, for the
Grantor to make alterations to the Electronic Chattel Paper or transferable
record permitted under UCC Section 9-105 or, as the case may be, Section 201
of the Federal Electronic Signatures in Global and National Commerce Act or Section 16
of the Uniform Electronic Transactions Act for a party in control to allow
without loss of control, unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by such Grantor
with respect to such Electronic Chattel Paper or transferable record.

 

(e)                                  Letter-of-Credit Rights. If any Grantor is at any time a
beneficiary under a Letter of Credit now or hereafter issued in favor of such
Grantor in an amount individually in excess of $100,000 or in the aggregate in
excess of $500,000, such Grantor shall notify the Collateral Agent on a
quarterly basis thereof and such Grantor shall promptly, use commercially
reasonable efforts to either (at the option of such Grantor) (i) arrange
for the issuer and any confirmer of such Letter of Credit to consent to an
assignment to the Collateral Agent of the proceeds of any drawing under the
Letter of Credit or (ii) arrange for the Collateral Agent to become the
transferee beneficiary of such Letter of Credit in each case, pursuant to an
agreement in form and substance reasonably satisfactory to the Collateral
Agent.

 

(f)                                    Commercial Tort Claims. As of the date hereof each Grantor
hereby represents and warrants that it holds no Commercial Tort Claims other
than those listed in Schedule 15 to the Perfection Certificate (as
supplemented from time to time). If any Grantor shall at any time hold or
acquire a Commercial Tort Claim having a value individually or in the aggregate
in excess of $500,000, such Grantor shall promptly notify the Collateral Agent
in writing signed by such Grantor of the brief details thereof and grant to the
Collateral Agent in such writing a security

 

12

 

interest therein and in the Proceeds thereof,
all upon the terms of this Agreement, with such writing to be in form and
substance reasonably satisfactory to the Collateral Agent.

 

(g)                                 Motor Vehicles. Upon the reasonable request of the
Collateral Agent, each Grantor shall deliver to the Collateral Agent originals
of the certificates of title or ownership for the motor vehicles (and any other
Equipment covered by Certificates of Title or ownership) owned by it with the
Collateral Agent listed as a lienholder therein. Such requirement shall apply
to the Grantors if any such motor vehicle (or any such other Equipment) is
valued over $50,000, provided that the value of all such motor vehicles
(and such Equipment) as to which any Grantor has not delivered a Certificate of
Title or ownership is over $500,000.

 

(h)                                 Landlord’s Access Agreements/Bailee Letters. Each Grantor
shall use its commercially reasonable efforts to obtain a Bailee Letter or a
Landlord Access Agreement, as applicable, from all such bailees and landlords,
as applicable, who from time to time have possession of Collateral in excess of
$100,000.

 

SECTION 3.06.                 Condition and Maintenance of Equipment.The Equipment of such
Grantor is in good repair, working order and condition, reasonable wear and
tear, casualty and condemnation excepted. Except as determined by such Grantor’s
commercially reasonable business judgment, each Grantor shall cause the
Equipment to be maintained and preserved in good repair, working order and
condition, reasonable wear and tear excepted, and shall as quickly as
commercially reasonably practicable make or cause to be made all repairs,
replacements and other improvements which are necessary or appropriate in the
conduct of such Grantor’s business.

 

SECTION 3.07.                 No Conflicts, Consents, etc.In the event that the Collateral
Agent desires to exercise any remedies, voting or consensual rights or attorney-in-fact
powers set forth in this Agreement and determines it necessary to obtain any
approvals or consents of any Governmental Authority or any other Person
therefor, then, upon the reasonable request of the Collateral Agent, such
Grantor agrees to use its commercially reasonable efforts to assist and aid the
Collateral Agent to obtain as soon as practicable any necessary approvals or
consents for the exercise of any such remedies, rights and powers.

 

ARTICLE IV

 

COVENANTS

 

SECTION 4.01.                 Change of Name; Location of Collateral; Records; Place of Business.
(a)  Each Grantor shall comply with the provisions of Section 5.07
of the Credit Agreement.

 

(b)                                 Each
Grantor agrees to maintain, at its own cost and expense, records which are complete
and accurate in all material respects with respect to the Collateral owned by
it as is consistent with its current practices and, at such time or times as the
Collateral Agent may reasonably request, promptly to prepare and deliver
to the Collateral Agent a duly certified schedule or schedules in form and
detail reasonably satisfactory to the Collateral Agent showing the identity,
amount and location of any and all Collateral.

 

SECTION 4.02.                 Protection of Security. Except as determined by such Grantor’s
commercially reasonable business judgment, each Grantor shall, at its own cost
and expense, take any and all actions necessary and reasonable to defend title
to the Collateral against all Persons and to defend the Security Interests of
the Collateral Agent in the Collateral and the priority thereof against any
Lien other than Permitted Liens.

 

13

 

SECTION 4.03.                 Further Assurances. Each Grantor agrees, at its own expense,
to execute, acknowledge, deliver and cause to be duly filed all such further
instruments and documents and take all such actions as the Collateral Agent may from
time to time reasonably request to preserve, protect and perfect the Security
Interests and the rights and remedies created hereby, including the payment of
any fees and taxes required in connection with the execution and delivery of
this Agreement, the granting of the Security Interests and the filing of any
financing statements (including fixture filings) or other documents in
connection herewith or therewith.

 

SECTION 4.04.                 Inspection and Verification. The Collateral Agent and its
representatives as the Collateral Agent may reasonably designate shall
have the right, at the Grantors’ own cost and expense, to at all reasonable
times and intervals and upon reasonable prior notice inspect the Collateral,
all records related thereto (and to make extracts and copies from such records)
and the premises upon which any of the Collateral is located in each case
during business hours. The Collateral Agent shall have the absolute right to
share any information it gains from such inspection or verification with any
Secured Party (subject to Section 9.16 of the Credit Agreement).

 

SECTION 4.05.                 Taxes; Encumbrances. At its option, the Collateral Agent may discharge
past due taxes, assessments, charges, fees, Liens, security interests or other
encumbrances at any time levied or placed on the Collateral except to the
extent the same constitute Permitted Liens, and may pay for the
maintenance and preservation of the Collateral to the extent any Grantor fails
to do so as required by this Agreement (in each case with reasonable prior written
notice to such Grantor), and each Grantor jointly and severally agrees to
reimburse the Collateral Agent within 15 days of written demand for any payment
made or any expense incurred by the Collateral Agent pursuant to the foregoing
authorization; provided, however, that nothing in this Section 4.05
shall be interpreted as excusing any Grantor from the performance of, or
imposing any obligation on the Collateral Agent or any Secured Party to cure or
perform, any covenants or other promises of any Grantor with respect to taxes,
assessments, charges, fees, liens, security interests or other encumbrances and
maintenance as set forth herein or in the other Loan Documents.

 

SECTION 4.06.                 Assignment of Security Interest. If at any time any Grantor
shall take a security interest in any property of an Account Debtor or any
other Person to secure payment and performance of an Account valued in excess
of $500,000, such Grantor shall promptly assign such security interest to the
Collateral Agent. Such assignment need not be filed of public record unless
necessary to continue the perfected status of the security interest against
creditors of and transferees from the Account Debtor or other Person granting
the security interest.

 

SECTION 4.07.                 Continuing Obligations of the Grantors. Each Grantor shall
remain liable to observe and perform all the conditions and obligations to
be observed and performed by it under each contract, agreement or instrument
relating to the Collateral, all in accordance with the terms and conditions
thereof, and each Grantor jointly and severally agrees to indemnify and hold
harmless the Collateral Agent and the Secured Parties from and against any and
all liability for such performance unless finally judicially determined to have
arisen from the gross negligence, bad faith or willful misconduct of the indemnified
party.

 

SECTION 4.08.                 Use and Disposition of Collateral. None of the Grantors
shall make or permit to be made an assignment for security, pledge or
hypothecation of the Collateral or shall grant any other Lien in respect of the
Collateral other than Liens securing the Obligations and Permitted Liens.

 

SECTION 4.09.                 Limitation on Modification of Accounts. None of the Grantors
will, without the Collateral Agent’s prior written consent, grant any extension
of the time of payment of any of the Accounts Receivable, compromise, compound
or settle the same for less than the full amount thereof, release,

 

14

 

wholly or partly, any Person
liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than extensions, credits, discounts, compromises or settlements
granted or made in the ordinary course of business and consistent with its
current practices and in accordance with such prudent and standard practices
used in industries that are the same as or similar to those in which such Grantor
is engaged.

 

SECTION 4.10.                 Insurance. The Grantors, at their own expense, shall
maintain or cause to be maintained insurance covering physical loss or damage
to the Inventory and Equipment in accordance with Section 5.04 of the
Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor’s true and lawful agent (and attorney-in-fact)
for the purpose, during the continuance of an Event of Default, of making,
settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument
or other item of payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect thereto. In the event that
any Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in whole or part relating
thereto, the Collateral Agent may, without waiving or releasing any obligation
or liability of the Grantors hereunder or any Event of Default, in its
reasonable discretion and upon prior notice to the Grantors obtain and maintain
such policies of insurance and pay such premium and take any other actions with
respect thereto as the Collateral Agent deems reasonably advisable. All sums
disbursed by the Collateral Agent in connection with this Section 4.10,
including reasonable attorneys’ fees, court costs, out-of-pocket expenses and
other charges relating thereto, shall be payable, upon written demand, by the
Grantors to the Collateral Agent and shall be additional Obligations secured
hereby in the same priority as the original Obligations. So long as no Event of
Default has occurred and is continuing, all actions to be taken with respect to
the making, settling and adjusting of claims under insurance policies may be
taken by the Grantors without any requirement of participation or consent from the
Collateral Agent and all proceeds received from any insurance with respect to
any claim may be paid directly to the applicable Grantor to be applied in
accordance with the provisions of Section 6.02 hereof.

 

SECTION 4.11.                 Certain Covenants and Provisions Regarding Patent, Trademark and
Copyright Collateral. (a)  Except as determined by such
Grantor’s reasonable business judgment, each Grantor agrees that it will not,
nor will it permit any of its licensees to, do any act, or omit to do any act,
whereby any Patent which is material to the conduct of such Grantor’s business may become
invalidated or dedicated to the public, and agrees that it shall continue to
mark any products covered by a Patent with the relevant patent number as
necessary and sufficient to establish and preserve its maximum rights under
applicable patent laws.

 

(b)                                 Except
as determined by such Grantor’s reasonable business judgment, each Grantor
(either itself or through its licensees or its sublicenses) will, for each
Trademark material to the conduct of such Grantor’s business, use its
commercially reasonable efforts to (i) maintain such Trademark in full
force free from any claim of abandonment or invalidity for nonuse, (ii) maintain
the quality of products and services offered under such Trademark, (iii) display
such Trademark with notice of Federal or foreign registration to the extent
necessary and sufficient to establish and preserve its rights under applicable
law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights.

 

(c)                                  Except
as determined by such Grantor’s reasonable business judgment, each Grantor
(either itself or through licensees) will, for each work covered by a material
registered Copyright, publish, reproduce, display, adopt and distribute such
work with such appropriate copyright notice as necessary and sufficient to
establish and preserve its rights under applicable copyright laws.

 

15

 

(d)                                 Each
Grantor shall notify the Collateral Agent as soon as practicable if it knows
that any Patent, Trademark or Copyright material to the conduct of its business
may become abandoned, lost or dedicated to the public, or of any
materially adverse determination or development including the institution of,
or any such determination or development in, any proceeding in the United States
Patent and Trademark Office or United States Copyright Office (or any court or
similar office of any country) regarding such Grantor’s ownership of any
Patent, Trademark or Copyright, or its right to register the same, or to keep
and maintain the same.

 

(e)                                  In
the event that any Grantor, either itself or through any agent, employee,
licensee or designee, files an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office or United States Copyright Office, or
any office or agency in any political subdivision of the United States or in
any other country or any political subdivision thereof, such Grantor shall
notify the Collateral Agent (within at least three months of the initial filing
thereof) and execute and deliver any and all agreements, instruments, documents
and papers as the Collateral Agent may reasonably request to evidence the
Collateral Agent’s security interests in such Patent, Trademark or Copyright or
application therefor, and pursuant to Section 8.16 of this Agreement, each
Grantor hereby appoints the Collateral Agent as its attorney-in-fact to execute
and file such writings with prior written notice to such Grantor solely for the
foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power, being coupled with an interest, is irrevocable.

 

(f)                                    Each
Grantor will take all necessary steps that are consistent with its reasonable
business judgment in any proceeding before the United States Patent and
Trademark Office or United States Copyright Office, or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks or Copyrights that is material to the conduct of
any Grantor’s business, including timely filings of applications for renewal,
affidavits of use, affidavits of incontestability and payment of maintenance
fees, and, if consistent with commercially reasonable business judgment, to
initiate opposition, interference and cancellation proceedings against third parties.

 

(g)                                 In
the event that any Grantor has reason to believe that any Collateral consisting
of a material Patent, Trademark or Copyright has been or is about to be
infringed, misappropriated or diluted by a third party, such Grantor promptly
shall notify the Collateral Agent and shall, if consistent with commercially
reasonable business judgment, promptly sue for infringement, misappropriation
or dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and take such other actions as are reasonably
appropriate under the circumstances to protect such Collateral.

 

(h)                                 To
each Grantor’s actual knowledge, on and as of the date hereof, such Grantor is
not infringing upon any Patent, Trademark or Copyright of any other Person
other than such infringement that, individually or in the aggregate, would not
(or would not reasonably be expected to) result in a material adverse effect on
the value or utility of the Collateral consisting of Intellectual Property or
any portion thereof material to the use and operation of the Collateral and no
proceedings have been instituted or are pending against such Grantor or, to
such Grantor’s knowledge, threatened, and no claim against such Grantor has
been received by such Grantor, alleging any such violation.

 

(i)                                     Upon
and during the continuance of an Event of Default, each Grantor shall upon the
written request of the Collateral Agent use its commercially reasonable efforts
to obtain all requisite consents or approvals by the licensor of each Copyright
License, Patent License or Trademark License to effect the assignment of all of
such Grantor’s right, title and interest thereunder to the Collateral Agent or its
designees.

 

16

 

Notwithstanding
anything herein to the contrary, any Grantor may, for commercially reasonable
cause, abandon or allow to become lost or dedicated to the public any Patent,
Trademark or Copyright.

 

ARTICLE V

 

REMEDIES

 

SECTION 5.01.                 Remedies upon Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor agrees upon written request to
deliver each item of Collateral to the Collateral Agent, and it is agreed that
the Collateral Agent shall have the right to take any of or all the following
actions at the same or different times:  (a) with
respect to any Collateral consisting of Intellectual Property, on demand, to
cause the Security Interest to become an assignment, transfer and conveyance of
any of or all such Collateral by the applicable Grantors to the Collateral
Agent, or to license or sublicense, whether general, special or otherwise, and
whether on an exclusive or nonexclusive basis, any such Collateral throughout
the world on such terms and conditions and in such manner as the Collateral
Agent shall determine (other than in violation of applicable law or any then
existing licensing arrangements to the extent that waivers cannot be obtained),
and (b) with or without legal process and with or without prior notice or
demand for performance, to take possession of the Collateral and without
liability for trespass to enter peaceably any premises where the Collateral may be
located for the purpose of taking possession of or removing the Collateral and,
generally, to exercise any and all rights afforded to a secured party under the
UCC or other applicable law. Without limiting the generality of the foregoing,
each Grantor agrees that the Collateral Agent shall have the right, subject to
the mandatory requirements of applicable law, to sell or otherwise dispose of
all or any part of the Collateral, at public or private sale or at any
broker’s board or on any securities exchange, for cash, upon credit or for
future delivery as the Collateral Agent shall deem reasonably appropriate. The
Collateral Agent shall be authorized at any such sale (if it deems it advisable
to do so) to restrict the prospective bidders or purchasers to Persons who will
represent and agree that they are purchasing the Collateral for their own
account for investment and not with a view to the distribution or sale thereof,
and upon consummation of any such sale the Collateral Agent shall have the
right to assign, transfer and deliver to the purchaser or purchasers thereof
the Collateral so sold. Each such purchaser at any such sale shall hold the
property sold absolutely, free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which such Grantor now has or may at
any time in the future have under any rule of law or statute now existing
or hereafter enacted.

 

The Collateral
Agent shall give a Grantor ten (10) Business Days’ prior written
notice (which each Grantor agrees is reasonable notice within the meaning of Section 9-611
of the UCC) of the Collateral Agent’s intention to make any sale or other
disposition of such Grantor’s Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale
at a broker’s board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof, will first be offered for sale at such board or exchange. Any
such public sale shall be held at such time or times within ordinary business
hours and at such place or places as the Collateral Agent may fix and
state in the notice of such sale. At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the
time and place to which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Collateral Agent until the sale
price is paid by the purchaser or purchasers thereof, but the Collateral Agent
shall not incur any liability

 

17

 

in case any
such purchaser or purchasers shall fail to take up and pay for the Collateral
so sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public (or, to the extent permitted by law,
private) sale made pursuant to this Section, any Secured Party may bid for
or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Grantor (all
said rights being also hereby waived and released), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any
Obligation then due and payable to such Secured Party from any Grantor as a
credit against the purchase price, and such Secured Party may, upon compliance
with the terms of sale, hold, retain and dispose of such property without
further accountability to any Grantor therefor. For purposes hereof, a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof; the Collateral Agent shall be free to carry out such sale pursuant
to such agreement and no Grantor shall be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact
that after the Collateral Agent shall have entered into such an agreement all
Events of Default shall have been remedied and the Obligations paid in full. As
an alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any
sale pursuant to the provisions of this Section shall be deemed to conform to
the commercially reasonable standards as provided in Section 9-611 of the
UCC.

 

SECTION 5.02.                 Application of Proceeds. All Proceeds received by the
Collateral Agent in respect of any sale of, collection from or other
realization upon all or any part of the Collateral pursuant to the
exercise by the Collateral Agent of its remedies, together with any other
moneys then held by the Collateral Agent in the Collateral Account shall, to
the extent available for distribution (it being understood that the Collateral
Agent may liquidate investments prior to maturity in order to make a
distribution pursuant to this Section 5.02), be distributed (subject to
the provisions of Section 5.03) by the Collateral Agent on each
Distribution Date in the following order of priority:

 

First:  to the Collateral Agent for any unpaid
Collateral Agent Fees;

 

Second:  without duplication of amounts applied
pursuant to clause First above, to any other Secured Party which has
theretofore advanced or paid any Collateral Agent Fees constituting administrative
expenses allowable under Section 503(b) of the Bankruptcy Code, an
amount equal to the amount thereof so advanced or paid by such Secured Party
and for which such Secured Party has not been reimbursed prior to such
Distribution Date, and, if such moneys shall be insufficient to pay such
amounts in full, then ratably (without priority of any one over any other) to
such Secured Parties in proportion to the amounts of such Collateral Agent Fees
advanced by the respective Secured Parties and remaining unpaid on such Distribution
Date;

 

Third:  without duplication of the amounts applied
pursuant to clause First and Second above, to any Secured Party
which has theretofore advanced or paid any Collateral Agent Fees other than
such administrative expenses, an amount equal to the amount thereof so advanced
or paid by such Secured Party and for which such Secured Party has not been
reimbursed prior to such Distribution Date, and, if such moneys shall be
insufficient to pay such amounts in full, then ratably (without priority of any
one over any other) to such Secured Parties in proportion to the amounts of
such Collateral Agent Fees advanced by the respective Secured Parties and
remaining unpaid on such Distribution Date;

 

Fourth:  without duplication of the amounts applied
pursuant to clauses First, Second and Third above, subject
to the provisions of Section 2.06(j) of the Credit Agreement, to the
Secured Parties, in an amount equal to all Obligations, whether or not then due
and payable (but other than

 

18

 

contingent indemnification obligations not then claimed or due), and,
if such moneys shall be insufficient to pay such amounts in full, then ratably
(without priority of any one over any other) to such Secured Parties in
proportion to the unpaid amounts thereof on such Distribution Date;

 

Fifth,
without duplication of the amounts applied pursuant to clauses First, Second,
Third and Fourth above, any surplus then remaining shall be paid
to the Grantors or their successors or assigns or to whomever may be
lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

 

In the event
that any such proceeds are insufficient to pay in full the items described in
clauses First through Fourth of this Section 5.02, the
Grantors shall remain liable for any deficiency.

 

The term “unpaid”
as used in this Section 5.02 refers:

 

(i)                                     in
the absence of a bankruptcy proceeding with respect to the relevant Grantor(s),
to all amounts of the relevant Obligations outstanding as of a Distribution
Date, and

 

(ii)                                  during the pendency
of a bankruptcy proceeding with respect to the relevant Grantor(s), to all
amounts allowed by the bankruptcy court in respect of the relevant Obligations
as a basis for distribution (including estimated amounts, if any, allowed in
respect of contingent claims), to the extent that prior distributions have not
been made in respect thereof.

 

SECTION 5.03.                 Collateral Agent’s Calculations. In making the
determinations and allocations required by Section 5.02, the Collateral
Agent may conclusively rely upon information supplied by the
Administrative Agent as to the amounts of unpaid principal and interest and
other amounts outstanding with respect to any Obligations, and the Collateral
Agent shall have no liability to any of the Secured Parties for actions taken
in reliance on such information; provided that nothing in this sentence
shall prevent any Grantor from contesting any amounts claimed by any Secured
Party in any information so supplied. In addition, for purposes of making the
allocations required by Section 5.02 with respect to any amount that is
denominated in any currency other than Dollars, the Collateral Agent shall, on
the applicable Distribution Date, convert such amount into an amount of Dollars
based upon the relevant Exchange Rate as of a recent date specified by the
Collateral Agent in its reasonable discretion. All distributions made by the
Collateral Agent pursuant to Section 5.02 shall be (subject to any decree
of any court of competent jurisdiction) final (absent manifest error), and the
Collateral Agent shall have no duty to inquire as to the application by the
Administrative Agent of any amounts distributed to it for distribution to any
Lenders.

 

SECTION 5.04.                 Grant of License to Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Article at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to use, license or
sublicense any of the Collateral, except to the extent that such license may not
be granted as a result of a pre-existing exclusive license arrangement,
consisting of Intellectual Property now owned or hereafter acquired by such
Grantor, and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Collateral
Agent may only be exercised, at the option of the Collateral Agent, upon
the occurrence and during the continuation of an Event of Default.

 

19

 

ARTICLE VI

 

COLLATERAL
ACCOUNT

 

SECTION 6.01.                 Establishment of Collateral Account. (a)  The
Collateral Agent is hereby authorized to establish and maintain, in the name of
the Collateral Agent and pursuant to a Control Agreement, a restricted deposit
account designated “Polymer Group, Inc. Collateral Account.”  Each Grantor shall deposit into the Collateral
Account from time to time all amounts required to be deposited in the
Collateral Account by the Credit Agreement and any amounts specifically required
to be deposited therein by any other Loan Documents.

 

(b)                                 The
balance from time to time in the Collateral Account shall constitute part of
the Collateral and shall not constitute payment of the Obligations until
applied as hereinafter provided. So long as no Event of Default has occurred
and is continuing or will result therefrom and to the extent Grantor is not
required to repay debt under any Loan Documents, the Collateral Agent shall
within two Business Days of receiving a request of the applicable Grantor for
release of cash proceeds constituting (A) Net Proceeds from any
Destruction or Taking from the Collateral Account remit such cash proceeds on deposit
in the Collateral Account to or upon the order of such Grantor, so long as such
Grantor has satisfied the conditions relating thereto set forth in Section 6.02
hereof and, (B) Net Proceeds from any Asset Sale from the Collateral Account,
remit such cash proceeds on deposit in the Collateral Account, so long as such
Guarantor has satisfied the conditions relating thereto set forth in Section 6.02
hereof. At any time following the occurrence and during the continuance of an
Event of Default, the Collateral Agent may in its reasonable discretion
apply or cause to be applied (subject to collection) the balance from time to
time outstanding to the credit of the Collateral Account to the payment of the
Obligations in the manner specified in Section 5.02; provided, however,
notwithstanding the foregoing, moneys deposited in the Collateral Account
pursuant to Section 2.06(j) of the Credit Agreement shall be held and
applied as set forth therein.

 

(c)                                  Amounts
on deposit in the Collateral Account shall be invested from time to time in
Permitted Investments as the applicable Grantor (or, after the occurrence and
during the continuance of an Event of Default, the Collateral Agent) shall
determine, which Permitted Investments shall be held in the name and be under
the control of the Collateral Agent (or any subagent); provided that at
any time after the occurrence and during the continuance of an Event of
Default, the Collateral Agent may in its reasonable discretion at any time
and from time to time elect to liquidate any such Permitted Investments and to
apply or cause to be applied the proceeds thereof to the payment of the
Obligations in the manner specified in Section 5.02.

 

SECTION 6.02.                 Proceeds of Destruction, Taking and Excluded Asset Sale. (a)  So
long as no Default or Event of Default shall have occurred and be continuing,
and to the extent the applicable Grantor is permitted by Section 2.05(c)(iii) or
(iv) of the Credit Agreement to apply any Net Proceeds as contemplated
therein, in the event there shall be any Net Proceeds in respect of any Taking
or any Destruction or from any Asset Sale, the applicable Grantor shall have
the right, at such Grantor’s option, to apply such Net Proceeds within the time
periods provided in Section 2.05(c)(iii) or (iv) of the Credit
Agreement for purposes permitted thereby and the Collateral Agent shall release
such Net Proceeds to such Grantor in accordance with the provisions of Section 6.01(b) hereof.

 

(b)                                 Notwithstanding
Section 6.02(a), the Collateral Agent shall not release any amounts in the
Collateral Account constituting Net Proceeds of a Taking or Destruction or from
an Asset Sale, until the applicable Grantor has furnished to the Collateral
Agent an Officers’ Certificate, at least five (5) days’ prior to the
proposed date of release, setting forth: 
(1) a brief description of the application to be made (including
the dollar amount thereof), (2) to the extent the application is a reinvestment
in properties or

 

20

 

 

assets, such
reinvestment properties or assets will be Collateral to the extent required by
the Credit Agreement and all security agreements and mortgages and other items
required to subject such reinvestment properties or assets to the Lien of this
Agreement in favor of the Collateral Agent, for its benefit and for the benefit
of the other Secured Parties, shall be accomplished at the times required
hereby and by Section 5.11 of the Credit Agreement and (3)  the
reinvestment otherwise complies with the terms of the Credit Agreement.

 

ARTICLE VII

 

The
Collateral Agent

 

SECTION 7.01.                 General Authority of the Collateral Agent over the Collateral.
(a)  Subject to the provisions herein, each Grantor hereby appoints the
Collateral Agent as its true and lawful attorney-in-fact for the purpose,
during the continuance of an Event of Default, of taking any action and
executing any and all documents and instruments that the Collateral Agent may deem
necessary to carry out the terms of this Agreement and accomplish the purposes
hereof and, without limiting the generality of the foregoing, each Grantor
hereby acknowledges that the Collateral Agent shall have all powers and
remedies set forth in the Security Documents. The foregoing grant of authority
is a power of attorney coupled with an interest and such appointment shall be
irrevocable for the term hereof.

 

(b)                                 By
acceptance of the benefits of this Agreement and the Security Documents:  each Secured Party shall be deemed
irrevocably (1) to consent to the appointment of the Collateral Agent as
its agent hereunder and under the Security Documents, (2) to confirm that
the Collateral Agent shall have the authority to act as the exclusive agent of
such Secured Party for enforcement of any provisions of this Agreement and the
Security Documents against any Grantor or the exercise of remedies hereunder or
thereunder, (3) to agree that such Secured Party shall not take any action
to enforce any provisions of this Agreement or any Security Document against
any Grantor or to exercise any remedy hereunder or thereunder and (4) to
agree to be bound by the terms of this Agreement and the Security Documents.

 

(c)                                  The
Collateral Agent hereby agrees that it holds and will hold all of its right,
title and interest in, to and under the Security Documents and the Collateral
granted to the Collateral Agent thereunder whether now existing or hereafter
arising (all such right, title and interest being hereinafter referred to as
the “Collateral Estate”) under and subject to the conditions set forth
in this Agreement; and the Collateral Agent further agrees that it will hold
such Collateral Estate for the benefit of the Secured Parties, for the
enforcement of the payment of all Obligations (subject to the limitations and
priorities set forth herein and in the respective Security Documents) and as
security for the performance of and compliance with the covenants and
conditions of this Agreement and each of the Security Documents.

 

SECTION 7.02.                 Exercise of Powers. All of the powers, remedies and rights
of the Collateral Agent as set forth in this Agreement may be exercised by
the Collateral Agent in respect of any Security Document as though set forth in
full therein and all of the powers, remedies and rights of the Collateral Agent
as set forth in any Security Document may be exercised from time to time
as herein and therein provided.

 

SECTION 7.03.                 Remedies Not Exclusive. (a)  No remedy conferred upon
or reserved to the Collateral Agent herein or in the Security Documents is
intended to be exclusive of any other remedy or remedies, but every such remedy
shall be cumulative and shall be in addition to every other remedy conferred
herein or in any Security Document or now or hereafter existing at law or in
equity or by statute.

 

(b)                                 No
undue delay or omission by the Collateral Agent to exercise any right, remedy
or power hereunder or under any Security Document shall impair any such right,
remedy or power or shall

 

21

 

be construed
to be a waiver thereof, and every right, power and remedy given by this
Agreement or any Security Document to the Collateral Agent may be
exercised from time to time and as often as may be deemed expedient by the
Collateral Agent.

 

(c)                                  If
the Collateral Agent shall have proceeded to enforce any right, remedy or power
under this Agreement or any Security Document and the proceeding for the enforcement
thereof shall have been discontinued or abandoned for any reason or shall have
been determined adversely to the Collateral Agent, then the Grantors, the
Collateral Agent and the other Secured Parties shall, subject to any
determination in such proceeding, severally and respectively be restored to
their former positions and rights hereunder or thereunder with respect to the
Collateral Estate and in all other respects, and thereafter all rights,
remedies and powers of the Collateral Agent shall continue as though no such
proceeding had been taken.

 

SECTION 7.04.                 Waiver and  Estoppel.

(a)                                  Each
Grantor, to the extent it may lawfully do so, on behalf of itself and all
who may claim through or under it, including without limitation any and
all subsequent creditors, vendees, assignees and licensors, waives and releases
all rights to demand or to have any marshaling of the Collateral upon any sale,
whether made under any power of sale granted herein or in any Security Document
or pursuant to judicial proceedings or upon any foreclosure or any enforcement
of this Agreement or any Security Document and consents and agrees that all the
Collateral may at any such sale be offered and sold as an entirety.

 

(b)                                 Each
Grantor waives, to the extent permitted by applicable law, presentment, demand,
protest and any notice of any kind (except notices explicitly required
hereunder or under any Security Document) in connection with this Agreement and
the Security Documents and any action taken by the Collateral Agent with
respect to the Collateral.

 

SECTION 7.05.                 Limitation on Collateral Agent’s Duty in Respect of Collateral.
Except as required by applicable law, beyond its duties as to the custody
thereof expressly provided herein or in any Security Document and to account to
the Secured Parties and the Grantors for moneys and other property received by it
hereunder or under any Security Document and any other express duties specified
in the Security Documents, the Collateral Agent shall not have any duty to the
Grantors or to the Secured Parties as to any Collateral in its possession or
control or in the possession or control of any of its agents or nominees, or
any income thereon or as to the preservation of rights against prior parties or
any other rights pertaining thereto.

 

SECTION 7.06.                 Limitation by Law. All rights, remedies and powers provided
in this Agreement or any Security Document may be exercised only to the
extent that the exercise thereof does not violate any applicable provision of
law, and all the provisions hereof are intended to be subject to all applicable
mandatory provisions of law which may be controlling and to be limited to
the extent necessary so that they will not render this Agreement invalid,
unenforceable in whole or in part or not entitled to be recorded,
registered or filed under the provisions of any applicable law.

 

SECTION 7.07.                 Rights of Secured Parties in Respect of Obligations. Notwithstanding
any other provision of this Agreement or any Security Document, the right of
each Secured Party to receive payment of the Obligations held by such Secured
Party when due (whether at the stated maturity thereof, by acceleration or
otherwise), as expressed in the instruments evidencing or agreements governing
such Obligations, or to institute suit for the enforcement of such payment on
or after such due date, shall not be impaired or affected without the consent
of such Secured Party given in the manner prescribed by the instruments
evidencing or agreements governing such Obligations.

 

22

 

SECTION 7.08.                 Compensation and Expenses. Each Grantor agrees to pay to the
Collateral Agent, from time to time upon written demand, (a) reasonable
compensation for its services hereunder and under the Security Documents and
for administering the Collateral Estate, as agreed by the Grantors and the
Collateral Agent, and (b) all of the reasonable out-of-pocket costs and
expenses of the Collateral Agent (including, without limitation, the reasonable
fees and disbursements of its counsel, advisors and agents) (i) arising in
connection with the preparation, execution, delivery, modification and
termination of this Agreement and each Security Document or the enforcement of
any of the provisions hereof or thereof or (ii) incurred or required to be
advanced in connection with the sale or other disposition of Collateral
pursuant to any Security Document and the preservation, protection or defense
of the Collateral Agent’s rights under this Agreement and the Security
Documents and in and to the Collateral and the Collateral Estate. Such fees,
costs and expenses are intended to constitute expenses of administration under
any bankruptcy law relating to creditors’ rights generally. The obligations of
each Grantor under this Section 7.08 shall survive the termination of the
other provisions of this Agreement and the resignation or removal of the Collateral
Agent hereunder.

 

SECTION 7.09.                 Stamp and Other Similar Taxes. Each Grantor agrees to
indemnify and hold harmless the Collateral Agent, the Administrative Agent and
each other Secured Party from any present or future claim for liability for any
stamp or any other similar tax, and any penalties or interest with respect
thereto, which may be assessed, levied or collected by any jurisdiction in
connection with this Agreement, any Security Document, the Collateral Estate or
any Collateral. The obligations of each Grantor under this Section 7.09
shall survive the termination of the other provisions of this Agreement and the
resignation or removal of the Collateral Agent hereunder.

 

SECTION 7.10.                 Filing Fees, Excise Taxes, etc.Each Grantor agrees to pay or
to reimburse the Collateral Agent for any and all payments made by the
Collateral Agent in respect of all search, filing, recording and registration
fees, taxes, excise taxes and other similar imposts which may be payable
or determined to be payable in respect of the execution and delivery of this
Agreement and each Security Document. The obligations of each Grantor under
this Section 7.10 shall survive the termination of the other provisions of
this Agreement and the resignation or removal of the Collateral Agent hereunder.

 

SECTION 7.11.                 Indemnification. Each Grantor agrees to pay, indemnify and
hold the Collateral Agent, the Administrative Agent and the other Secured
Parties (and their respective directors, officers, agents and employees)
harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
and agents) or disbursements of any kind or nature whatsoever with respect to
the execution, delivery, enforcement, performance and administration of this
Agreement and the Security Documents, unless finally judicially determined to
have arisen from the gross negligence, bad faith or willful misconduct of the
indemnified party, including for taxes in any jurisdiction in which the
Collateral Agent is subject to tax by reason of actions hereunder or under the
Security Documents, unless such taxes are imposed on or measured by compensation
paid to the Collateral Agent under Section 7.08. To the extent permitted
by applicable law, in any suit, proceeding or action brought by the Collateral
Agent under or with respect to any contract, agreement, interest or obligation
constituting part of the Collateral for any sum owing thereunder, or to
enforce any provisions thereof, each Grantor will save, indemnify and keep the
Collateral Agent, the Administrative Agent and the other Secured Parties
harmless from and against all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of liability whatsoever
of the obligor thereunder, arising out of a breach by any Grantor of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such obligor or its successors
from any Grantor, and all such obligations of each Grantor shall be and remain
enforceable against and only against each Grantor and shall not be enforceable
against the Collateral Agent, the Administrative Agent or any other Secured
Party.

 

23

 

The agreements in this Section 7.11
shall survive the termination of the other provisions of this Agreement and the
resignation or removal of the Collateral Agent hereunder.

 

ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.01.                 Notices. All communications and notices hereunder shall
(except as otherwise expressly permitted herein) be in writing and given as
provided in Section 9.01 of the Credit Agreement. All communications and
notices hereunder to any Subsidiary Guarantor shall be given to it c/o the
Borrower at the Borrower’s address as provided in Section 9.01 of the
Credit Agreement, with a copy to the Borrower.

 

SECTION 8.02.                 Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor 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 the Collateral Agent and the other Secured Parties and
shall survive the making by the Lenders of the Loans and the Lenders’ issuance
of and participations in Letters of Credit, regardless of any investigation
made by the Secured Parties or on their behalf, and shall continue in full
force and effect until this Agreement shall terminate.

 

SECTION 8.03.                 Binding Effect. This Agreement shall become effective as to
any Grantor when a counterpart hereof executed on behalf of such Grantor
shall have been delivered to the Collateral Agent and a counterpart hereof
shall have been executed on behalf of the Collateral Agent, and thereafter
shall be binding upon such Grantor and the Collateral Agent and their
respective successors and assigns, and shall inure to the benefit of such
Grantor, the Collateral Agent and the other Secured Parties and their
respective permitted successors and assigns, except that no Grantor shall have
the right to assign or transfer its rights or obligations hereunder or any
interest herein or in the Collateral (and any such assignment or transfer shall
be void) except as expressly permitted by each of the other Loan Documents.

 

SECTION 8.04.                 Successors and Assigns. 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; and all covenants, promises
and agreements by or on behalf of any Grantor or the Collateral Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.

 

SECTION 8.05.                 GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.

 

SECTION 8.06.                 Waivers; Amendment; Several Agreement. (a)  No
failure or delay of the Collateral Agent in exercising any power or right
hereunder 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 Collateral Agent hereunder and of the other Secured Parties under the other
Loan Documents are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provisions of this Agreement
or any other Loan Document or consent to any departure by any Grantor 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. No
notice to or demand on any Grantor in any case

 

24

 

shall entitle such Grantor or
any other Grantor to any other or further notice or demand in similar or other
circumstances.

 

(b)                                 Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into among the
Borrower, the Collateral Agent and the Grantors with respect to which such
waiver, amendment or modification is to apply, subject to any consents required
in accordance with Section 9.08 of the Credit Agreement.

 

(c)                                  This
Agreement shall be construed as a separate agreement with respect to each
Grantor and may be amended, modified, supplemented, waived or released
with respect to any Grantor without the approval of any other Grantor and
without affecting the obligations of any other Grantor hereunder.

 

SECTION 8.07.                 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 DIRECTLY OR INDIRECTLY 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 8.07.

 

SECTION 8.08.                 Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby (it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). 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. It is understood and
agreed among the parties that this Agreement shall create separate security
interests in the Collateral securing the Obligations as provided in Section 2.01,
and that any determination by any court with jurisdiction that the security
interest securing any Obligation or class of Obligations is invalid for
any reason shall not in and of itself invalidate the Security Interests
securing any other Obligations hereunder.

 

SECTION 8.09.                 Counterparts. This Agreement may be executed in two or
more 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 8.03. Delivery of an executed signature page to
this Agreement by facsimile transmission or .pdf Adobe file shall be effective
as delivery of a manually executed counterpart hereof.

 

SECTION 8.10.                 Headings. Article and Section headings used herein
are for the purpose 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.

 

SECTION 8.11.                 Jurisdiction; Consent to Service of Process. (a)  Each
party hereto 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

 

25

 

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 court 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
Collateral Agent or any other Secured Party may otherwise have to bring
any action or proceeding relating to this Agreement or the other Loan Documents
against any Grantor or its properties in the courts of any jurisdiction.

 

(b)                                 Each
party hereto 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 (c) 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 9.15 of the Credit Agreement. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

 

SECTION 8.12.                 Termination. (a)  This Agreement and the Security
Interests (i) shall automatically terminate when (a) all the
Obligations (other than contingent indemnification obligations not then claimed
or due) have been paid in full, (b) the Lenders have no further commitment
to lend under the Credit Agreement or to issue or participate in Letters of
Credit and (c) the LC Exposure has been reduced to zero (at which time the
Collateral Agent shall execute and deliver to the Grantors, at the Grantors’
expense, all UCC termination statements and other documents which the Grantors
shall reasonably request to evidence such termination) and (ii) shall
continue to be effective or shall be reinstated, as the case may be, if at
any time any payment in respect of any Obligation is rescinded or must
otherwise be restored by any Secured Party upon any bankruptcy or
reorganization of any Grantor or otherwise. Any execution and delivery of
termination statements or documents pursuant to this Section 8.12(a) shall
be without recourse to or warranty by the Collateral Agent. A Subsidiary
Guarantor shall automatically be released from its obligations hereunder and
the Security Interests in the Collateral of such Subsidiary Guarantor shall be
automatically released in the event that the Equity Interests of such
Subsidiary Guarantor shall be sold, transferred or otherwise disposed of to a
Person that is not an Affiliate of Borrower such that such Person is no longer
a Subsidiary of Borrower in accordance with the terms of each Loan Document.

 

(b)                                 Upon
any sale or other transfer by any Grantor of any Collateral that is permitted
under the Credit Agreement or, upon the effectiveness of any written consent to
the release of the security interests granted hereby in any Collateral pursuant
to Section 9.08 of the Credit Agreement, security interests in such
Collateral shall be automatically released. In connection with such release,
the Collateral Agent shall execute and deliver to any Grantor, at such Grantor’s
expense, all UCC termination statements and other documents that such Grantor
shall reasonably request to evidence such termination or release. Any execution
and delivery of UCC termination statements and similar documents pursuant to
this Section 8.12(b) shall be without recourse to or warranty by the
Collateral Agent.

 

SECTION 8.13.                 Additional Grantors. To the extent any Domestic Subsidiary
shall be required to become a Grantor pursuant to any Loan Document, upon
execution and delivery by the Collateral Agent and such Domestic Subsidiary of
an instrument in the form of Annex I hereto, such Domestic
Subsidiary shall become a Grantor hereunder with the same force and effect as
if originally named as a Grantor herein. Each such Domestic Subsidiary shall at
such time deliver to the Collateral Agent a completed

 

26

 

Perfection Certificate. The
execution and delivery of any such instrument shall not require the consent of
any other Grantor hereunder. The rights and obligations of each Grantor thereunder
shall remain in full force and effect notwithstanding the addition of any new
Grantor as a party to this Agreement.

 

SECTION 8.14.                 Financing Statements. Each Grantor hereby irrevocably
authorizes the Collateral Agent at any time and from time to time to file in
any relevant jurisdiction (a) any filing with the United States Patent and
Trademark Office or United States Copyright Office (or any successor office or
any similar office in any other country), (b) any initial financing
statements (including fixture filings) and amendments thereto that contain the
information required by Article 9 of the Uniform Commercial Code of
each applicable jurisdiction for the filing of any financing statement or
amendment relating to the Collateral, including (i) whether such Grantor
is an organization, the type of organization and any organizational
identification number issued to such Grantor, (ii) any financing or
continuation statements or other documents without the signature of such
Grantor where permitted by law, including the filing of a financing statement
describing the Collateral as “all assets in which the Grantor now owns or
hereafter acquires rights, and the proceeds thereof” and (iii) in the case
of a financing statement filed as a fixture filing or covering Collateral
constituting minerals or the like to be extracted or timber to be cut, a
sufficient description of the real property to which such Collateral relates,
and (c) any other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interests granted by each
Grantor without the signature of any Grantor. Each Grantor agrees to provide
all information described in the immediately preceding sentence to the
Collateral Agent promptly upon request. Copies of such financing statements, as
filed, should be sent promptly to the Borrower at its address provided in Section 9.01
of the Credit Agreement.

 

SECTION 8.15.                 No Deemed Dividend. Notwithstanding the foregoing, no Loan
Party shall be required to take any action pursuant to this Agreement that the
Borrower has reasonably determined would either result in adverse tax
consequences under Section 956 of the Code or would contravene any
applicable law, rule or regulation.

 

SECTION 8.16.                 Collateral Agent Appointed Attorney-in-Fact. Each Grantor
hereby appoints the Collateral Agent the attorney-in-fact of such Grantor for
the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may deem
necessary to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest. Without limiting the generality of the foregoing,
the Collateral Agent shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of substitution either in
the Collateral Agent’s name or in the name of such Grantor, (a) to
receive, endorse, assign or deliver any and all notes, acceptances, checks,
drafts, money orders or other evidences of payment relating to the Collateral
or any part thereof; (b) to demand, collect, receive payment of, give
receipt for and give discharges and releases of all or any of the Collateral; (c) to
ask for, demand, sue for, collect, receive and give acquittance for any and all
moneys due or to become due under and by virtue of any Collateral; (d) to
sign the name of any Grantor on any invoice or bill of lading relating to any
of the Collateral; (e) to send verifications of Accounts to any Account
Debtor; (f) to commence and prosecute any and all suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to collect
or otherwise realize on all or any of the Collateral or to enforce any rights
in respect of any Collateral; (g) to settle, compromise, compound, adjust
or defend any actions, suits or proceedings relating to all or any of the
Collateral; (h) with 2 days prior notice to the Grantor to notify, or to
require any Grantor to notify Account Debtors to make payment directly to the
Collateral Agent; and (i) to use, sell, assign, transfer, pledge, make any
agreement with respect to or otherwise deal with all or any of the Collateral,
and to do all other acts and things necessary to carry out the purposes of this
Agreement, as fully and completely as though the Collateral Agent were the
absolute owner of the Collateral for all purposes; provided that nothing
herein contained shall be construed as requiring or obligating the Collateral
Agent to make any commitment or to make any inquiry

 

27

 

as to the nature or sufficiency
of any payment received by the Collateral Agent, or to present or file any
claim or notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered thereby.
The Collateral Agent and the other Secured Parties shall be accountable only
for amounts actually received as a result of the exercise of the powers granted
to them herein, and neither they nor their officers, directors, employees or
agents shall be responsible to any Grantor for any act or failure to act
hereunder, except for their own gross negligence, willful misconduct or bad
faith.

 

28

 

IN WITNESS
WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.

 

 

	
   

  	
  POLYMER GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BONLAM (S.C.), INC.

  
	
   

  	
  CHICOPEE, INC.

  
	
   

  	
  DOMINION TEXTILE (USA) INC.

  
	
   

  	
  FABPRO ORIENTED POLYMERS, INC.

  
	
   

  	
  FABRENE CORP.

  
	
   

  	
  FABRENE GROUP L.L.C.

  
	
   

  	
  FIBERGOL CORPORATION

  
	
   

  	
  FIBERTECH GROUP, INC.

  
	
   

  	
  FNA ACQUISITION, INC.

  
	
   

  	
  FNA POLYMER CORP.

  
	
   

  	
  LORETEX CORPORATION

  
	
   

  	
  PGI EUROPE, INC.

  
	
   

  	
  PGI POLYMER, INC.

  
	
   

  	
  PNA CORP.

  
	
   

  	
  POLY-BOND INC.

  
	
   

  	
  POLYIONIX SEPARATION TECHNOLOGIES, INC.

  
	
   

  	
  PRISTINE BRANDS CORPORATION

  
	
   

  	
  TECHNETICS
  GROUP, INC.,

  as Subsidiary Guarantors

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
   

  	
  CITICORP NORTH AMERICA, INC.,

  
	
   

  	
   

  	
  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	 

	
   

  	
   

  	
  Name:

  	 

	
   

  	
   

  	
  Title:

  	 

 

2

 

SCHEDULE I

Security Agreement

 

DOMESTIC SUBSIDIARIES

 

	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BONLAM (S.C.), INC.

  	
   

  	
   

  
	
  CHICOPEE, INC.

  	
   

  	
   

  
	
  DOMINION TEXTILE (USA) INC.

  	
   

  	
   

  
	
  FABPRO ORIENTED POLYMERS, INC.

  	
   

  	
   

  
	
  FABRENE CORP.

  	
   

  	
   

  
	
  FABRENE GROUP L.L.C.

  	
   

  	
   

  
	
  FIBERGOL CORPORATION

  	
   

  	
   

  
	
  FIBERTECH GROUP, INC.

  	
   

  	
   

  
	
  FNA ACQUISITION, INC.

  	
   

  	
   

  
	
  FNA POLYMER CORP.

  	
   

  	
   

  
	
  LORETEX CORPORATION

  	
   

  	
   

  
	
  PGI EUROPE, INC.

  	
   

  	
   

  
	
  PGI POLYMER, INC.

  	
   

  	
   

  
	
  PNA CORP.

  	
   

  	
   

  
	
  POLY-BOND INC.

  	
   

  	
   

  
	
  POLYIONIX SEPARATION TECHNOLOGIES, INC.

  	
   

  	
   

  
	
  PRISTINE BRANDS CORPORATION

  	
   

  	
   

  
	
  TECHNETICS GROUP, INC.

  	
   

  	
   

  

 

 

Annex I to the

Security Agreement

 

Form of Joinder Agreement

 

SUPPLEMENT NO.       
dated as of
[               ],
to the Security Agreement (the “Security Agreement”) dated as of
[            ], 2005,
among POLYMER GROUP, INC., a Delaware corporation (the “Borrower”),
each Domestic Subsidiary of the Borrower listed on Schedule I
thereto (collectively, together with each Domestic Subsidiary that becomes a
party thereto, the “Subsidiary Guarantors” and, together with Borrower,
the “Grantors”), and CITICORP NORTH AMERICA, INC., as collateral agent
(the “Collateral Agent”) on behalf of the Secured Parties (as defined in
the Credit Agreement).

 

A.                                   Reference
is made to (a) the Credit Agreement dated as of [               ],
2005 (as amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among the Borrower, the Collateral Agent, Citicorp North
America, Inc., as administrative agent 
(in such capacity and together with any successors in such capacity, the
“Administrative Agent”) for the Lenders (as defined herein), as
documentation agent (in such capacity, the “Documentation Agent”) and as
syndication agent (in such capacity, the “Syndication Agent”), and
Citigroup Global Markets Inc. (“CGMI”), as sole lead arranger and sole
bookrunner (in such capacity, the “Lead Arranger”), and the lending
institutions from time to time party thereto (the “Lenders”), (b) the
Guarantee Agreement dated as of [               ],
2005 (as amended, supplemented or otherwise modified from time to time, the “Guarantee
Agreement”), among the Domestic Subsidiaries and the Collateral Agent, and (c) the
Pledge Agreement dated [               ],
2005 among certain Grantors and the Collateral Agent (as amended, supplemented
or otherwise modified from time to time, the “Pledge Agreement” and,
together with the Security Agreement and the Guarantee Agreement, the “Collateral
Documents”).

 

B.                                     Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Security Agreement.

 

C.                                     Pursuant
to Section 5.16 of the Credit Agreement, each Domestic Subsidiary of the Borrower
that was not in existence or not a Domestic Subsidiary on the date of the
Credit Agreement is required to enter into the Collateral Documents upon
becoming a Domestic Subsidiary. Each of the Collateral Documents provides that
such Domestic Subsidiary may become a party to the Collateral Documents by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Domestic Subsidiary (the “New Domestic Subsidiary”) is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a party to the Collateral Documents.

 

Accordingly,
the Collateral Agent and the New Domestic Subsidiary agree as follows:

 

SECTION 1.                                In
accordance with Section 5.16 of the Credit Agreement, the New Domestic
Subsidiary by its signature below becomes a Grantor and Pledgor under each of
the Collateral Documents with the same force and effect as if originally named
therein as a party thereto and hereby (a) agrees to all terms and
provisions of the Collateral Documents applicable to it as a Grantor and
Pledgor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Grantor and Pledgor thereunder
are true and correct in all material respects on and as of the date hereof
(except to the extent such representations and warranties relate to an earlier
date and in such case they shall be true and correct in all material respects
as of such date). In furtherance of the foregoing, the New Domestic Subsidiary,
as security for the payment and performance in full of the Obligations (as
defined in the Security Agreement), does hereby create and grant to the
Collateral Agent, its permitted successors

 

 

and assigns, for the benefit of the Secured Parties and their permitted
successors and assigns, a security interest in and lien on all of the New
Domestic Subsidiary’s right, title and interest in and to the Collateral (as
defined in the Security Agreement) of the New Domestic Subsidiary. Each of the
Collateral Documents is hereby incorporated herein by reference.

 

SECTION 2.                                The
New Domestic Subsidiary represents and warrants to the Collateral Agent and the
other Secured Parties that this Supplement has been duly authorized, executed
and delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except that the
enforcement thereof may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors’ rights generally.

 

SECTION 3.                                This
Supplement may be executed in counterparts (and by different parties
hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract. This
Supplement shall become effective when the Collateral Agent shall have received
counterparts of this Supplement that, when taken together, bear the signatures
of the New Domestic Subsidiary and the Collateral Agent. Delivery of an
executed signature page to this Supplement by facsimile transmission shall
be as effective as delivery of a manually signed counterpart of this
Supplement.

 

SECTION 4.                                The
New Domestic Subsidiary hereby represents and warrants that (a) all
information set forth in the Perfection Certificate, including the schedules
annexed thereto, has been duly prepared, completed and executed and the
information set forth therein is correct and complete in all material respects
and (b) set forth on Schedule II attached hereto is a true and
correct schedule describing the securities of the New Domestic Subsidiary
being pledged hereunder.

 

SECTION 5.                                Except
as expressly supplemented thereby, each of the Collateral Documents shall
remain in full force and effect.

 

SECTION 6.                                THIS
SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

 

SECTION 7.                                In
case any one or more of the provisions contained in this Supplement should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and in the
Collateral Documents shall not in any way be affected or impaired thereby (it
being understood that the invalidity a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision
in any other jurisdiction). The parties hereto 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 8.                                All
communications and notices hereunder shall be in writing and given as provided
in Section 8.01 of the Security Agreement. All communications and notices
hereunder of the New Domestic Subsidiary shall be given to it at the address
set forth under its signature below.

 

SECTION 9.                                The
New Domestic Subsidiary agrees to reimburse the Collateral Agent for its
reasonable out-of-pocket expenses in connection with this Supplement, including

 

2

 

the reasonable fees, other charges and disbursements of counsel for the
Collateral Agent in each case in accordance with the terms of the Credit
Agreement.

 

IN WITNESS
WHEREOF, the New Domestic Subsidiary and the Collateral Agent have duly
executed this Supplement to the Security Agreement as of the day and year first
above written.

 

3

 

	
   

  	
  [Name
  of New Subsidiary]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CITICORP
  NORTH AMERICA, INC.,

  as Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

S-1

 

SCHEDULE I

to
the Joinder Agreement

 

Guarantors

 

 

SCHEDULE II

to
the Joinder Agreement

 

Pledged
Securities of the New Grantor

 

PLEDGED STOCK

 

	
  Issuer

  	
   

  	
  Number of

  Certificate

  	
   

  	
  

  Registered Owner

  	
   

  	
  Number and

  Class of Shares

  	
   

  	
  Percentage

  of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

DEBT SECURITIES

 

	
  Issuer

  	
   

  	
  Principal Amount

  	
   

  	
  Date of Note

  	
   

  	
  Maturity Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Annex II to the

Security Agreement

 

Form of Perfection Certificate

 

 

Annex III to
the Security Agreement

 

FORM OF NOTICE TO BAILEE OF SECURITY INTEREST IN COLLATERAL

 

CERTIFIED MAIL
— RETURN RECEIPT REQUESTED

 

[                    ],
200[  ]

 

TO:                            [Bailee’s
Name]

                                                [Bailee’s
Address]

 

Re:                               [Borrower]

 

Ladies and Gentlemen:

 

In connection
with that certain Security Agreement, dated as of  [               ],
2005 (the “Security Agreement”), made by Borrower, the Grantors party
thereto and Citicorp North America, Inc. (“Citicorp”), as
Collateral Agent, we have granted to the Collateral Agent a security interest
in substantially all of our personal property, including our inventory.

 

This letter
constitutes notice to you, and your signature below will constitute your
acknowledgment, of the Collateral Agent’s continuing security interests in all
goods with respect to which you are acting as bailee. Until you are notified in
writing to the contrary by the Collateral Agent, however, you may continue
to accept instructions from us regarding the delivery of goods stored by you.

 

Your
acknowledgment also constitutes a waiver and release, for the Collateral Agent’s
benefit, of any and all claims, liens, including bailee’s liens, and demands of
every kind which you have or may later have against such property
(including any right to include such property in any secured financing to which
you may become party).

 

In order to
complete our records, kindly have a duplicate of this letter signed by an
officer of your company and return same to us at your earliest convenience. 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
  Receipt acknowledged, confirmed and
  approved:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [BAILEE]

  	
  [APPLICABLE GRANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Name:

  
	
   

  	
  Title:

  	
   

  	
  Title:

  
						

 

cc:                                 Citicorp
North America, Inc.

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