Document:

Exhibit
4.2

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT dated as
of October 18, 2004 (the “Agreement”) is entered into by and between
Polypore International, Inc., a Delaware Corporation (the “Company”) and
J.P.  Morgan Securities Inc. (the “Initial
Purchaser”).

 

The Company and the Initial Purchaser are
parties to the Purchase Agreement dated October 1, 2004 (the “Purchase
Agreement”), which provides for the sale by the Company to the Initial
Purchaser of $300,000,000 aggregate principal amount at maturity of the Company’s
Senior Discount Notes due 2012 (the “Securities”).  As an inducement to the Initial Purchaser to
enter into the Purchase Agreement, the Company has agreed to provide to the
Initial Purchaser and its direct and indirect transferees the registration
rights set forth in this Agreement.  The
execution and delivery of this Agreement is a condition to the closing under
the Purchase Agreement.

 

In consideration of the foregoing, the
parties hereto agree as follows:

 

1.                                       Definitions.  As used in this Agreement, the following
terms shall have the following meanings:

 

“Business Day” shall mean any day that is not
a Saturday, Sunday or other day on which commercial banks in New York City are
authorized or required by law to remain closed.

 

“Closing Date” shall mean the Closing Date as
defined in the Purchase Agreement.

 

“Company” shall have the meaning set forth in
the preamble and all references herein to the Company shall also include the
Company’s successors.

 

“Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended from time to time.

 

“Exchange Dates” shall have the meaning set
forth in Section 2(a)(ii) hereof.

 

“Exchange Offer” shall mean the exchange
offer by the Company of Exchange Securities for Registrable Securities pursuant
to Section 2(a) hereof.

 

“Exchange Offer Registration” shall mean a
registration under the Securities Act effected pursuant to Section 2(a)
hereof.

 

“Exchange Offer Registration Statement” shall
mean an exchange offer registration statement on Form S-4 (or, if applicable,
on another appropriate form) and all amendments and supplements to such
registration statement, in each case, including the Prospectus contained
therein, all exhibits thereto and any document incorporated by reference therein.

 

“Exchange Securities” shall mean senior
discount notes issued by the Company under the Indenture containing terms
identical to the Securities (except that the Exchange

 

 

Securities will not be subject to
restrictions on transfer or to any increase in annual interest rate or accreted
value for failure to comply with this Agreement) and to be offered to Holders
of Securities in exchange for securities pursuant to the Exchange Offer.

 

“Holders” shall mean the Initial Purchaser,
for so long as it owns any Registrable Securities, and each of its successors,
assigns and direct and indirect transferees who become owners of Registrable
Securities under the Indenture; provided that for purposes of Sections 4 and 5
of this Agreement, the term “Holders” shall include Participating
Broker-Dealers.

 

“Indenture” shall mean the Indenture relating
to the Securities dated as of October 18, 2004 between the Company and The
Bank of New York, as trustee, and as the same may be amended from time to time
in accordance with the terms thereof.

 

“Initial Purchaser” shall have the meaning
set forth in the preamble.  “Inspector”
shall have the meaning set forth in Section 3(m) hereof.

 

“Majority Holders” shall mean the Holders of
a majority of the aggregate principal amount at maturity of outstanding
Registrable Securities; provided that whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities owned directly or indirectly by the Company
or any of its affiliates shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage or
amount.  The majority of the aggregate
principal amount at maturity of outstanding Registrable Securities shall be
calculated, on the relevant date of determination, by dividing (a) the
principal amount at maturity, as of such date of determination, of Registrable
Securities, the Holders of which have so consented by (b) the aggregate
principal amount at maturity, as of such date of determination, of the
Registrable Securities then outstanding.

 

“Participating Broker-Dealers” shall have the
meaning set forth in Section 4(a) hereof.

 

“Person” shall mean an individual,
partnership, limited liability company, corporation, trust or unincorporated
organization, or a government or agency or political subdivision thereof

 

“Prospectus” shall mean the prospectus
included in a Registration Statement, including any preliminary prospectus, and
any such prospectus as amended or supplemented by any prospectus supplement,
including a prospectus supplement with respect to the terms of the offering of
any portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to such prospectus, and
in each case including any document incorporated by reference therein.

 

“Purchase Agreement” shall have the meaning
set forth in the preamble.

 

“Registrable Securities” shall mean the
Securities; provided that the Securities shall cease to be Registrable
Securities (i) when a Registration Statement with respect to such Securities
has been declared effective under the Securities Act and such Securities have
been exchanged or disposed of pursuant to such Registration Statement, (ii)
when such Securities are

 

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eligible to be sold pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the
Securities Act or (iii) when such Securities cease to be outstanding.

 

“Registration Default” shall have the meaning
set forth in Section 2(d) hereof.

 

“Registration Expenses” shall mean any and
all expenses incident to performance of or compliance by the Company with this
Agreement, including without limitation (i) all SEC stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
fees and expenses incurred in connection with compliance with state securities
or blue sky laws (including reasonable fees and disbursements of counsel for
any Underwriters or Holders in connection with blue sky qualification of any
Exchange Securities or Registrable Securities), (iii) all expenses of any
Persons in preparing or assisting in preparing, word processing, printing and
distributing any Registration Statement, any Prospectus and any amendments or
supplements thereto, any underwriting agreements, securities sales agreements
or other similar agreements and any other documents relating to the performance
of and compliance with this Agreement, (iv) all rating agency fees, (v) all
fees and disbursements relating to the qualification of the Indenture under
applicable securities laws, (vi) the fees and disbursements of the Trustee and
its counsel, (vii) the fees and disbursements of counsel for the Company and,
in the case of a Shelf Registration Statement, the fees and disbursements of
one counsel for the Holders (which counsel shall be selected by the Majority
Holders and which counsel may also be counsel for the Initial Purchaser) and
(viii) the fees and disbursements of the independent registered public
accounting firm of the Company, including the expenses of any special audits or
“comfort” letters required by or incident to the performance of and compliance
with this Agreement, but excluding fees and expenses of counsel to the
Underwriters (other than fees and expenses set forth in clause (ii) above) or
the Holders and underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of Registrable Securities by a Holder.

 

“Registration Statement” shall mean any
registration statement of the Company that covers any of the Exchange
Securities or Registrable Securities pursuant to the provisions of this
Agreement and all amendments and supplements to any such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and any document
incorporated by reference therein.

 

“SEC” shall mean the United States Securities
and Exchange Commission.  “Securities”
shall have the meaning set forth in the preamble.

 

“Securities Act” shall mean the Securities
Act of 1933, as amended from time to time. 
“Shelf Effectiveness Period” shall have the meaning set forth in Section 2(b)
hereof.  “Shelf Registration” shall mean
a registration effected pursuant to Section 2(b) hereof.

 

“Shelf Registration Statement” shall mean a “shelf’
registration statement of the Company that covers all the Registrable
Securities (but no other securities unless approved by the Holders whose
Registrable Securities are to be covered by such Shelf Registration Statement)
on an appropriate form under Rule 415 under the Securities Act, or any similar
rule that may be adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and any
document incorporated by reference therein.

 

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“Staff’ shall mean the staff of the SEC.

 

“Trust Indenture Act” shall mean the Trust
Indenture Act of 1939, as amended from time to time.

 

“Trustee” shall mean the trustee with respect
to the Securities under the Indenture.  “Underwriter”
shall have the meaning set forth in Section 3 hereof.

 

“Underwritten Offering” shall mean an
offering in which Registrable Securities are sold to an Underwriter for
reoffering to the public.

 

2.                                       Registration
Under the Securities Act.  (a)  To the extent not prohibited by any
applicable law or applicable interpretations of the Staff, the Company shall
use its reasonable best efforts to (i) cause to be filed an Exchange Offer
Registration Statement covering an offer to the Holders to exchange all the
Registrable Securities for Exchange Securities and (ii) have such Registration
Statement remain effective until the earlier of 180 days after the closing of
the Exchange Offer (as such period may be extended pursuant to the penultimate
paragraph of Section 3 of this Agreement) and the date on which all
Participating Broker-Dealers and the Initial Purchaser have sold all Exchange
Securities held by them.  The Company
shall commence the Exchange Offer promptly after the Exchange Offer
Registration Statement is declared effective by the SEC and use their
reasonable best efforts to complete the Exchange Offer not later than 270 days
after the Closing Date.

 

The Company shall commence the Exchange Offer
by mailing the related Prospectus, appropriate letters of transmittal and other
accompanying documents to each Holder stating, in addition to such other
disclosures as are required by applicable law:

 

(i)                                     that the Exchange
Offer is being made pursuant to this Agreement and that all Registrable
Securities validly tendered and not properly withdrawn will be accepted for
exchange;

 

(ii)                                  the dates of
acceptance for exchange (which shall be a period of at least 20 Business Days
from the date such notice is mailed) (the “Exchange Dates”);

 

(iii)                               that any Registrable
Security not tendered will remain outstanding and continue to accrue interest
but will not retain any rights under this Agreement;

 

(iv)                              that any Holder electing
to have a Registrable Security exchanged pursuant to the Exchange Offer will be
required to surrender such Registrable Security, together with the appropriate
letters of transmittal, to the institution and at the address (located in the
Borough of Manhattan, The City of New York) and in the manner specified in the
notice, prior to the close of business on the last Exchange Date; and

 

(v)                                 that any Holder will
be entitled to withdraw its election, not later than the close of business on
the last Exchange Date, by sending to the institution and at the address
(located in the Borough of Manhattan, The City of New York) specified in the
notice, a telegram, telex, facsimile transmission or letter setting forth the
name of such Holder, the principal amount at maturity of Registrable Securities
delivered for

 

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exchange and a statement that such Holder is
withdrawing its election to have such Securities exchanged.

 

As a condition to participating in the
Exchange Offer, a Holder will be required to represent to the Company that (i)
any Exchange Securities to be received by it will be acquired in the ordinary
course of its business, (ii) at the time of the commencement of the Exchange
Offer it has no arrangement or understanding with any Person to participate in
the distribution (within the meaning of the Securities Act) of the Exchange
Securities in violation of the provisions of the Securities Act, (iii) it is
not an “affiliate”.  (within the meaning
of Rule 405 under the Securities Act) of the Company and (iv) if such Holder is
a broker-dealer that will receive Exchange Securities for its own account in
exchange for Registrable Securities that were acquired as a result of
market-making or other trading activities, then such Holder will deliver a
Prospectus in connection with any resale of such Exchange Securities.

 

As soon as practicable after the last Exchange
Date, the Company shall:

 

(i)                                     accept for
exchange Registrable Securities or portions thereof validly tendered and not
properly withdrawn pursuant to the Exchange Offer; and

 

(ii)                                  deliver, or cause to
be delivered, to the Trustee for cancellation all Registrable Securities or
portions thereof so accepted for exchange by the Company and issue, and cause
the Trustee to promptly authenticate and deliver to each Holder; Exchange
Securities equal in principal amount at maturity to the principal amount at maturity
of the Registrable Securities surrendered by such Holder.

 

The Company shall use its reasonable best
efforts to complete the Exchange Offer as provided above and shall comply with
the applicable requirements of the Securities Act, the Exchange Act and other
applicable laws and regulations in connection with the Exchange Offer.  The Exchange Offer shall not be subject to
any conditions, other than that the Exchange Offer does not violate any
applicable law or applicable interpretations of the Staff.

 

(b)                                 In the event that (i)
the Company determines that the Exchange Offer Registration provided for in Section 2(a)
above is not available or may not be completed as soon as practicable after the
last Exchange Date because it would violate any applicable law or applicable
interpretations of the Staff; (ii) the Exchange Offer is not for any other
reason completed within 270 days after the Closing Date or (iii) the Initial
Purchaser shall so request in connection with any offering or sale of
Registrable Securities that are not eligible to be exchanged for Exchange
Securities in the Exchange Offer, the Company shall use its reasonable best
efforts to cause to be filed as soon as practicable after such determination,
date or request, as the case may be, a Shelf Registration Statement providing
for the sale of all the Registrable Securities by the Holders thereof and to
have such Shelf Registration Statement declared effective by the SEC.

 

In the event that the Company is required to
file a Shelf Registration Statement pursuant to clause (iii) of the preceding
sentence, the Company shall use its reasonable best efforts to file and have
declared effective by the SEC both an Exchange Offer Registration Statement
pursuant to Section 2(a) with respect to all Registrable Securities and a
Shelf

 

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Registration Statement (which may be a
combined Registration Statement with the Exchange Offer Registration Statement)
with respect to offers and sales of Registrable Securities held by the Initial
Purchaser after completion of the Exchange Offer.

 

The Company agrees to use its reasonable best
efforts to keep the Shelf Registration Statement continuously effective until
the expiration of the period referred to in Rule 144(k) under the Securities
Act with respect to the Registrable Securities or such shorter period that will
terminate when all the Registrable Securities covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement (the “Shelf
Effectiveness Period”).  The Company
further agrees to supplement or amend the Shelf Registration Statement and the
related Prospectus if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registration or if reasonably requested by a
Holder of Registrable Securities with respect to information relating to such
Holder, and to use their reasonable best efforts to cause any such amendment to
become effective and such Shelf Registration Statement and Prospectus to become
usable as soon as thereafter practicable. 
The Company agrees to furnish to the Holders of Registrable Securities
copies of any such supplement or amendment promptly after its being used or
filed with the SEC.

 

(c)                                  The Company shall pay
all Registration Expenses in connection with the registration pursuant to Section 2(a)
and Section 2(b) hereof.  Each
Holder shall pay all underwriting discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of such Holder’s Registrable
Securities pursuant to the Shelf Registration Statement.

 

(d)                                 An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf
Registration Statement pursuant to Section 2(b) hereof will not be deemed
to have become effective unless it has been declared effective by the SEC.

 

In the event that (i) the Exchange Offer
Registration Statement is not declared effective on or prior to the 240th day
after the Closing Date, (ii) the Shelf Registration Statement, if required
hereby, is not declared effective on.  or
prior to the 240th day after the Closing Date (or, in the case of a Shelf
Registration Statement requested by the Initial Purchaser pursuant to clause
(iii) of Section 2(b), on or prior to the latter of the 270th day after
the Closing Date and the 30th day after such request) or (iiii) after the
Exchange Offer Registration Statement is declared effective, the Exchange Offer
is not consummated on or before the 270th day after the Closing Date (each such
event referred to in clauses (i), (ii) and (iii) hereof, a “Registration
Default”), the interest rate on the Registrable Securities will be increased by
1.00% per annum over the rate otherwise in effect, in each case, until the
Exchange Offer Registration Statement or the Shelf Registration Statement, if
required hereby, is declared effective by the SEC or the Exchange Offer is
completed or the Securities become freely tradable under the Securities Act.

 

If the Shelf Registration Statement has been
declared effective and thereafter either ceases to be effective or the
Prospectus contained therein ceases to be usable at any time during the Shelf
Effectiveness Period, and such failure to remain effective or usable exists for
more than 30 days (whether or not consecutive) in any 12-month period, then the
interest rate on the Registrable Securities will be increased by 1.00% per
annum over the rate otherwise in effect commencing on the 31st day in such
12-month period and ending on such date that the Shelf

 

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Registration Statement has again been
declared effective or the Prospectus again becomes usable.

 

All additional interest that accrues prior to
October 1, 2008, at the Company’s option, shall either be added to the
accreted value of each note or paid in cash, and all additional interest that
accrues on or after October 1, 2008 shall be payable in cash on each
interest payment date specified by the Indenture to the holders of record
entitled to receive the interest payment to be made on such date.

 

(e)                                  Without limiting the
remedies available to the Initial Purchaser and the Holders, the Company
acknowledges that any failure by the Company to comply with its obligations
under Section 2(a) and Section 2(b) hereof may result in material
irreparable injury to the Initial Purchaser or the Holders for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the Initial
Purchaser or any Holder may obtain such relief as may be required to
specifically enforce the Company’s obligations under Section 2(a) and Section 2(b)
hereof.

 

3.                                       Registration
Procedures.  In connection with its
obligations pursuant to Section 2(a) and Section 2(b) hereof, the
Company shall as expeditiously as possible:

 

(a)                                  prepare and file with
the SEC a Registration Statement on the appropriate form under the Securities
Act, which form (x) shall be selected by the Company, (y) shall, in the case of
a Shelf Registration, be available for the sale of the Registrable Securities
by the selling Holders thereof and (z) shall comply as to form in all material
respects with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith; and use its reasonable
best efforts to cause such Registration Statement to become effective and
remain effective for the applicable period in accordance with Section 2
hereof;

 

(b)                                 prepare and file with
the SEC such amendments and post-effective amendments to each Registration
Statement as may be necessary to keep such Registration Statement effective for
the applicable period in accordance with Section 2 hereof and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the Securities Act; and
keep each Prospectus current during the period described in Section 4(3)
of and Rule 174 under the Securities Act that is applicable to transactions by
brokers or dealers with respect to the Registrable Securities or Exchange
Securities;

 

(c)                                  in the case of a
Shelf Registration, furnish to each Holder of Registrable Securities, to
counsel for the Initial Purchaser, to counsel for such Holders and to each
Underwriter of an Underwritten Offering of Registrable Securities, if any,
without charge, as many copies of each Prospectus, including each preliminary Prospectus,
and any amendment or supplement thereto, in order to facilitate the sale or
other disposition of the Registrable Securities thereunder; and the Company
consents to the use of such Prospectus and any amendment or supplement thereto
in accordance with applicable law by each of the selling Holders of Registrable
Securities and any such Underwriters in connection with the offering and sale
of the Registrable Securities covered by and in the manner described in such
Prospectus or any amendment or supplement thereto in accordance with applicable
law;

 

7

 

(d)                                 use its reasonable
best efforts to register or qualify the Registrable Securities under all
applicable state securities or blue sky laws of such jurisdictions as any
Holder of Registrable Securities covered by a Registration Statement shall
reasonably request in writing by the time the applicable Registration Statement
is declared effective by the SEC; cooperate with the Holders in connection with
any filings required to be made with the National Association of Securities
Dealers, Inc.; and do any and all other acts and things that may be reasonably
necessary or advisable to enable each Holder to complete the disposition in
each such jurisdiction of the Registrable Securities owned by such Holder;
provided, that the Company shall not be required to (i) qualify as a foreign
corporation or other entity or as a dealer in securities in any such
jurisdiction where it would not otherwise be required to so qualify, (ii) file
any general consent to service of process in any such jurisdiction or (iii)
subject itself to taxation in any such jurisdiction if it is not so subject;

 

(e)                                  in the case of a
Shelf Registration, notify each Holder of Registrable Securities, counsel for
such Holders and counsel for the Initial Purchaser promptly and, if requested
by any such Holder or counsel, confirm such advice in writing (i) when a
Registration Statement has become effective and when any post-effective
amendment thereto has been filed and becomes effective, (ii) of any request by
the SEC or any state securities authority for amendments and supplements to a
Registration Statement and Prospectus or for additional information after the
Registration Statement has become effective, (iii) of the issuance by the SEC
or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings
for that purpose, (iv) if, between the effective date of a Registration Statement
and the closing of any sale of Registrable Securities covered thereby, the
representations and warranties of the Company contained in any underwriting
agreement, securities sales agreement or other similar agreement, if any,
relating to an offering of such Registrable Securities cease to be true
and.  correct in all material respects or
if the Company receives any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation of any proceeding for such purpose, (v) of the happening of any
event during the period a Shelf Registration Statement is effective that makes
any statement made in such Registration Statement or the related Prospectus
untrue in any material respect or that requires the making of any changes in
such Registration Statement or Prospectus in order to make the statements
therein not misleading and (vi) of any determination by the Company that a
post-effective amendment to a Registration Statement would be appropriate;

 

(f)                                    use its reasonable
best efforts to obtain the withdrawal of any order suspending the effectiveness
of a Registration Statement at the earliest possible moment and provide
immediate notice to each Holder of the withdrawal of any such order;

 

(g)                                 in the case of a Shelf
Registration, furnish to each Holder of Registrable Securities, without charge,
at least one conformed copy of each Registration Statement and any
post-effective amendment thereto (without any documents incorporated therein by
reference or exhibits thereto, unless requested);

 

(h)                                 in the case of a Shelf
Registration, cooperate with the selling Holders of Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends and
enable such

 

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Registrable Securities to be issued in such denominations and
registered in such names (consistent with the provisions of the Indenture) as
the selling Holders may reasonably request at least one Business Day prior to
the closing of any sale of Registrable Securities;

 

(i)                                     in the case of a
Shelf Registration, upon the occurrence of any event contemplated by Section 3(e)(v)
hereof, use its reasonable best efforts to prepare and file with the SEC a
supplement or post-effective amendment to a Registration Statement or the
related Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to purchasers of
the Registrable Securities, such Prospectus will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and the Company shall notify the Holders of Registrable
Securities to suspend use of the Prospectus as promptly as practicable after
the occurrence of such an event, and such Holders hereby agree to suspend use
of the Prospectus until the Company has amended or supplemented the Prospectus
to correct such misstatement or omission;

 

(j)                                     a reasonable time
prior to the filing of any Registration Statement, any Prospectus, any
amendment to a Registration Statement or amendment or supplement to a
Prospectus or of any document that is to be incorporated by reference into a
Registration Statement or a Prospectus after initial filing of a Registration
Statement, provide copies of such document to the Initial Purchaser and their
counsel (and, in the case of a Shelf Registration Statement, to the Holders of
Registrable Securities and their counsel) and make such of the representatives
of the Company as shall be reasonably requested by the Initial Purchaser or
their counsel (and, in the case of a Shelf Registration Statement, the Holders
of Registrable Securities or their counsel) available for discussion of such
document; and the Company shall not, at any time after initial filing of a
Registration Statement, file any Prospectus, any amendment of or supplement to
a Registration Statement or a Prospectus, or any document that is to be
incorporated by reference into a Registration Statement or a Prospectus, of
which the Initial Purchaser and their counsel (and, in the case of a Shelf
Registration Statement, the Holders of Registrable Securities and their
counsel) shall not have previously been advised and furnished a copy or to
which the Initial Purchaser or their counsel (and, in the case of a Shelf
Registration Statement, the Holders or their counsel) shall object;

 

(k)                                  obtain a CUSIP number
and International Securities Identification Number (“ISIN”) for all Exchange
Securities or Registrable Securities, as the case may be, not later than the
effective date of a Registration Statement, and provide the Trustee with
printed certificates for such Exchange Securities or Registrable Securities, in
a form eligible for deposit with The Depository Trust Company;

 

(l)                                     cause the
Indenture to be qualified under the Trust Indenture Act in connection with the registration
of the Exchange Securities or Registrable Securities, as the case may be;
cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in accordance
with the terms of the Trust Indenture Act; and execute, and use its reasonable
best efforts to cause the Trustee to execute, all documents as may be required
to effect such changes and all other forms and documents required to be filed
with the SEC to enable the Indenture to be so qualified in a timely manner;

 

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(m)                               in the case of a Shelf
Registration, make available for inspection by a representative of the Holders
of the Registrable Securities (an “Inspector”), any Underwriter participating
in any disposition pursuant to such Shelf Registration Statement, and attorneys
and accountants designated by the Holders, at reasonable times and in a
reasonable manner, all pertinent financial and other records, documents and
properties of the Company, and cause the officers, directors and employees of
the Company to supply all information reasonably requested by any such
Inspector, Underwriter, attorney or accountant in connection with a Shelf
Registration Statement; provided that if any such information is identified by
the Company as being confidential or proprietary, each Person receiving such
information shall take such actions as are reasonably necessary to protect the
confidentiality of such information to the extent such action is otherwise not
inconsistent with, an impairment of or in derogation of the rights and
interests of any Inspector, Holder or Underwriter;

 

(n)                                 in the case of a Shelf
Registration, use its reasonable best efforts to cause all Registrable
Securities to be listed on any securities exchange or any automated quotation
system on which similar securities issued or guaranteed by the Company are then
listed if requested by the Majority Holders, to the extent such Registrable
Securities satisfy applicable listing requirements;

 

(o)                                 if reasonably
requested by any Holder of Registrable Securities covered by a Registration
Statement, promptly incorporate in a Prospectus supplement or post-effective
amendment such information with respect to such Holder as such Holder reasonably
requests to be included therein and make all required filings of such
Prospectus supplement or such post-effective amendment as soon as the Company
has received notification of the matters to be incorporated in such filing; and

 

(p)                                 in the case of a Shelf
Registration, enter into such customary agreements and take all such other
actions in connection therewith (including those requested by the Holders of a
majority in principal amount at maturity of the Registrable Securities being
sold) in order to expedite or facilitate the disposition of such Registrable
Securities including, but not limited to, an Underwritten Offering and in such
connection, (i) to the extent possible, make such representations and
warranties to the Holders and any Underwriters of such Registrable Securities
with respect to the business of the Company and its subsidiaries, the
Registration Statement, Prospectus and documents incorporated by reference or
deemed incorporated by reference, if any, in each case, in form, substance and
scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested, (ii) obtain opinions of
counsel to the Company (which counsel and opinions, in form, scope and
substance, shall be reasonably satisfactory to the Holders and such
Underwriters and their respective counsel) addressed to each selling Holder and
Underwriter of Registrable Securities, covering the matters customarily covered
in opinions requested in underwritten offerings, (iii) obtain “comfort” letters
from the independent registered public accounting firm of the Company (and, if
necessary, any other certified public accountant of any subsidiary of the
Company, or of any business acquired by the Company for which financial
statements and financial data are or are required to be included in the
Registration Statement) addressed to each selling Holder and Underwriter of
Registrable Securities, such letters to be in customary form and covering
matters of the type customarily covered in “comfort” letters in connection with
underwritten offerings and (iv) deliver such documents and certificates as may
be reasonably requested by the Holders

 

10

 

of a majority in principal amount at maturity of the Registrable
Securities being sold or the Underwriters, and which are customarily delivered
in underwritten offerings, to evidence the continued validity of the
representations and warranties of the Company made pursuant to clause (i) above
and to evidence compliance with any customary conditions contained in an
underwriting agreement.

 

In the case of a Shelf Registration Statement
the Company may require each Holder of Registrable Securities to furnish to the
Company such information regarding such Holder and the proposed disposition by
such Holder of such Registrable Securities as the Company may from time to time
reasonably request in writing.

 

In the case of a Shelf Registration
Statement, each Holder of Registrable Securities agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 3(e)(iii) or 3(e)(v) hereof, such Holder will forthwith
discontinue disposition of Registrable Securities pursuant to a Registration
Statement until such Holder’s receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(i) hereof and, if so directed
by the Company, such Holder will deliver to the Company all copies in its
possession, other than permanent file copies then in such Holder’s possession,
of the Prospectus covering such Registrable Securities that is current at the
time of receipt of such notice.

 

If the Company shall give any such notice to
suspend the disposition of Registrable Securities pursuant to a Registration
Statement, the Company shall extend the period during which the Registration
Statement shall be maintained effective pursuant to this Agreement by the
number of days during the period from and including the date of the giving of
such notice to and including the date when the Holders shall have received
copies of the supplemented or amended Prospectus necessary to resume such
dispositions.  The Company may give any
such notice only twice during any 365-day period and any such suspensions shall
not exceed 30 days for each suspension and there shall not be more than two
suspensions in effect during any 365-day period.

 

The Holders of Registrable Securities covered
by a Shelf Registration Statement who desire to do so may sell such Registrable
Securities in an Underwritten Offering. 
In any such Underwritten Offering, the investment banker or investment
bankers and manager or managers (the “Underwriters”) that will administer the
offering will be selected by the Majority Holders of the Registrable Securities
included in such offering.

 

4.                                       Participation
of Broker-Dealers in Exchange Offer. 
(a)  The Staff has taken the
position that any broker-dealer that receives Exchange Securities for its own
account in the Exchange Offer in exchange for Securities that were acquired by
such broker-dealer as a result of market-making or other trading activities (a “Participating
Broker-Dealer”) may be deemed to be an “underwriter” within the meaning of the
Securities Act and must deliver a prospectus meeting the requirements of the Securities
Act in connection with any resale of such Exchange Securities.

 

The Company understands that it is the Staffs
position that if the Prospectus contained in the Exchange Offer Registration
Statement includes a plan of distribution containing a statement to the above
effect and the means by which Participating Broker-Dealers

 

11

 

may resell the Exchange Securities, without
naming the Participating Broker-Dealers or specifying the amount of Exchange
Securities owned by them, such Prospectus may be delivered by Participating
Broker-Dealers to satisfy their prospectus delivery obligation under the
Securities Act in connection with resales of Exchange Securities for their own
accounts, so long as the Prospectus otherwise meets the requirements of the
Securities Act.

 

(b)                                 In light of the above,
and notwithstanding the other provisions of this Agreement, the Company agrees
to amend or supplement the Prospectus contained in the Exchange Offer
Registration Statement, as would otherwise be contemplated by Section 3(i),
for a period of up to the earlier of 180 days after the last Exchange Date (as
such period may be extended pursuant to the penultimate paragraph of Section 3
of this Agreement) and the date on which all Participating Broker-Dealers and
Initial Purchaser have sold all Exchange Securities held by them, if requested
by the Initial Purchaser or by one or more Participating Broker-Dealers, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above.  The Company
further agrees that Participating Broker-Dealers shall be authorized to deliver
such Prospectus during such period in connection with the resales contemplated
by this Section 4.

 

(c)                                  The Initial Purchaser
shall have no liability to the Company or any Holder with respect to any
request that they may make pursuant to Section 4(b) above.

 

5.                                       Indemnification
and Contribution.  (a)  The Company agrees to indemnify and hold
harmless each Initial Purchaser and each Holder, their respective affiliates,
directors and officers and each Person, if any, who controls any Initial
Purchaser or any Holder within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, legal
fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted, as such fees and expenses are incurred),
joint or several, that arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or any Prospectus or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages or liabilities
arise out of, or are based upon any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with any
information relating to any Initial Purchaser or any Holder furnished to the
Company in writing through the J.P. 
Morgan Securities Inc. or any selling Holder expressly for use
therein.  In connection with any
Underwritten Offering permitted by Section 3, the Company will also
indemnify the Underwriters, if any, selling brokers, dealers and similar
securities industry professionals participating in the distribution, their
respective affiliates and each Person who controls such Persons (within the
meaning of the Securities Act and the Exchange Act) to the same extent as
provided above with respect to the indemnification of the Holders, if requested
in connection with any Registration Statement.

 

(b)                                 Each Holder agrees,
severally and not jointly, to indemnify and hold harmless the Company, the
Initial Purchaser and the other selling Holders, their respective affiliates,
the directors of the Company, each officer of the Company who signed the

 

12

 

Registration Statement and each Person, if any, who controls the
Company, any Initial Purchaser and any other selling Holder within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act
to the same extent as the indemnity set forth in paragraph (a) above, but only
with respect to any losses, claims, damages or liabilities that arise out of,
or are based upon, any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with any information
relating to such Holder furnished to the Company in writing by such Holder
expressly for use in any Registration Statement and any Prospectus.

 

(c)                                  If any suit, action,
proceeding (including any governmental or regulatory investigation), claim or
demand shall be brought or asserted against any Person in respect of which
indemnification may be sought pursuant to either paragraph (a) or (b) above,
such Person (the “Indemnified Person”) shall promptly notify the Person against
whom such indemnification may be sought (the “Indemnifying Person”) in writing;
provided, that the failure to notify the Indemnifying Person shall not relieve
it from any liability that it may have under this Section 5 except to the
extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided, further, that the
failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under this Section 5.  If any such proceeding shall be brought or
asserted against an Indemnified Person and it shall have notified the
Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others entitled to indemnification pursuant to this Section 5
that the Indemnifying Person may designate in such proceeding and shall pay the
fees and expenses of such counsel related to such proceeding, as incurred.  In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary; (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person; (iii) the Indemnified Person shall have reasonably concluded that there
may be legal defenses available to it that are different from or in addition to
those available to the Indemnifying Person; or (iv) the named parties in any
such proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them.  It is understood
and agreed that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred.  Any
such separate firm (x) for any Initial Purchaser, its affiliates, directors and
officers and any control Persons of such Initial Purchaser shall be designated
in writing by the Initial Purchaser, (y) for any Holder, its affiliates,
directors and officers and any control Persons of such Holder shall be
designated in writing by the Majority Holders and (z) in all other cases shall
be designated in writing by the Company. 
The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify each Indemnified Person from and against any loss or
liability by reason of such settlement or judgment.  No Indemnifying Person shall, without the
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and

 

13

 

indemnification could have been sought hereunder by such Indemnified
Person, unless such settlement (A) includes an unconditional release of such
Indemnified Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to or any admission
of fault, culpability or a failure to act by or on behalf of any Indemnified
Person.

 

(d)                                 If the indemnification
provided for in paragraphs (a) and (b) above is unavailable to an Indemnified
Person or insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each Indemnifying Person under such paragraph, in
lieu of indemnifying such Indemnified Person thereunder, shall contribute to
the amount paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company from the offering of
the Securities and the Exchange Securities, on the one hand, and by the Holders
from receiving Securities or Exchange Securities registered under the
Securities Act, on the other hand, or (ii) if the allocation provided by clause
(i) is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) but also the
relative fault of the Company on the one hand and the Holders on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations.  The relative fault of
the Company on the one hand and the Holders on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by the Holders
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

 

(e)                                  The Company and the
Holders agree that it would not be just and equitable if contribution pursuant
to this Section 5 were determined by pro rata allocation (even if the
Holders were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in paragraph (d) above.  The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Person in connection with any such action
or claim.  Notwithstanding the provisions
of this Section 5, in no event shall a Holder be required to contribute
any amount in excess of the amount by which the total price at which the
Securities or Exchange Securities sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.

 

(f)                                    The remedies
provided for in this Section 5 are not exclusive and shall not limit any
rights or remedies that may otherwise be available to any Indemnified Person at
law or in equity.

 

(g)                                 The indemnity and
contribution provisions contained in this Section 5 shall remain operative
and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of the Initial Purchaser
or any Holder,

 

14

 

their respective affiliates or any Person controlling any Initial
Purchaser or any Holder, or by or on behalf of the Company, its respective
affiliates or the officers or directors of or any Person controlling the
Company, (iii) acceptance of any of the Exchange Securities, and (iv) any sale
of Registrable Securities pursuant to a Shelf Registration Statement.

 

6.                                       General.

 

(a)                                  No Inconsistent Agreements.  The Company represents, warrants and agrees
that (i) the rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent with the rights granted to the holders of any
other outstanding securities issued or guaranteed by the Company under any
other agreement and (ii) the Company has not entered into, or on or after the
date of this Agreement will not enter into, any agreement that is inconsistent
with the rights granted to the Holders of Registrable Securities in this
Agreement or otherwise conflicts with the provisions hereof.

 

(b)                                 Amendments and Waivers.  The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of Holders of at
least a majority in aggregate principal amount at maturity of the outstanding
Registrable Securities affected by such amendment, modification, supplement,
waiver or consent (with such majority being calculated in a manner consistent
with the calculation described in the definition of “Majority Holders”);
provided that no amendment, modification, supplement, waiver or consent to any
departure from the provisions of Section 5 hereof shall be effective as
against any Holder of Registrable Securities unless consented to in writing by
such Holder.  Any amendments,
modifications, supplements, waivers or consents pursuant to this Section 6(b)
shall be by a writing executed by each of the parties hereto.

 

(c)                                  Notices. 
All notices and other communications provided for or permitted hereunder
shall be made in writing by hand-delivery, registered first-class mail, telex,
telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder,
at the most current address given by such Holder to the Company by means of a
notice given in accordance with the provisions of this Section 6(c), which
address initially is, with respect to the Initial Purchaser, the address set
forth in the Purchase Agreement; (ii) if to the Company, initially at the
Company’s address set forth in the Purchase Agreement and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 6(c); and (ill) to such other persons at their respective
addresses as provided in the Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the provisions of this Section 6(c).  All such notices and communications shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt is
acknowledged, if telecopied; and on the next Business Day, if timely delivered
to an air courier guaranteeing overnight delivery.  Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person giving the same to
the Trustee, at the address specified in the Indenture.

 

(d)                                 Successors and Assigns.  This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that

 

15

 

nothing herein shall be deemed to permit any assignment, transfer or
other disposition of Registrable Securities in violation of the terms of the
Purchase Agreement or the Indenture.  If
any transferee of any Holder shall acquire Registrable Securities in any
manner, whether by operation of law or otherwise, such Registrable Securities
shall be held subject to all the terms of this Agreement, and by taking and
holding such Registrable Securities such Person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement and such Person shall be entitled to receive the benefits
hereof.  The Initial Purchaser (in its
capacity as Initial Purchaser) shall have no liability or obligation to the
Company with respect to any failure by a Holder to comply with, or any breach
by any Holder of, any of the obligations of such Holder under this Agreement.

 

(e)                                  Purchases and Sales of Securities.  The Company shall not, and shall use its
reasonable best efforts to cause its affiliates (as defined in Rule 405 under
the Securities Act) not to, purchase and then resell or otherwise transfer any
Registrable Securities.

 

(f)                                    Third Party Beneficiaries.  Each Holder shall be a third party
beneficiary to the agreements made hereunder between the Company, on the one
hand, and the Initial Purchaser, on the other hand, and shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights or the rights of other Holders
hereunder.

 

(g)                                 Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

 

(h)                                 Headings. 
The headings in this Agreement are for convenience of reference only,
are not a part of this Agreement and shall not limit or otherwise affect the
meaning hereof.

 

(i)                                     Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

 

(j)                                     Miscellaneous.  This Agreement contains the entire agreement
between the parties relating to the subject matter hereof and supersedes all
oral statements and prior writings with respect thereto.  If any term, provision, covenant or
restriction contained in this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable or against public policy, the
remainder of the terms, provisions, covenants and restrictions contained herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.  The Company and the
Initial Purchaser shall endeavor in good faith negotiations to replace the
invalid, void or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, void or
unenforceable provisions.

 

16

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.

 

	
   

  	
  POLYPORE INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Lynn Amos

  	
   

  
	
   

  	
  Name:  Lynn Amos

  
	
   

  	
  Title:  Chief Financial Officer, Secretary and

  Treasurer

  

 

Confirmed and accepted as of the date first above written:

 

	
  J.P. MORGAN SECURITIES INC.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  

 

[Registration Rights Agreement
Signature Page]

 

 

IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.

 

	
   

  	
  POLYPORE INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

Confirmed and accepted as of the date first above written:

 

	
  J.P. 
  MORGAN SECURITIES INC.

  
	
   

  
	
  By:

  	
  /s/ G.S. Benson

  	
   

  
	
  Name: 
  G.S. Benson

  
	
  Title: 
  Vice President

  

 

 

 

 

[Registration Rights Agreement
Signature Page]Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

by and among

 

POLYPORE INC.

 

AND THE SELLERS NAMED HEREIN,

 

 

and

 

 

PP ACQUISITION CORPORATION

 

 

dated as of January 30, 2004

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Basic
  Transaction

  	
   

  
	
   

  	
  (a)

  	
  Purchase and Sale of
  the Shares

  	
   

  
	
   

  	
  (b)

  	
  The Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Representations
  and Warranties of the Company and the Sellers

  	
   

  
	
   

  	
  (a)

  	
  Authorization of
  Transaction

  	
   

  
	
   

  	
  (b)

  	
  Noncontravention

  	
   

  
	
   

  	
  (c)

  	
  Brokers’ Fees

  	
   

  
	
   

  	
  (d)

  	
  Title

  	
   

  
	
   

  	
  (e)

  	
  Capitalization

  	
   

  
	
   

  	
  (f)

  	
  Subsidiaries

  	
   

  
	
   

  	
  (g)

  	
  Financial
  Statements

  	
   

  
	
   

  	
  (h)

  	
  Absence of Certain Developments

  	
   

  
	
   

  	
  (i)

  	
  Undisclosed Liabilities

  	
   

  
	
   

  	
  (j)

  	
  Legal
  Compliance

  	
   

  
	
   

  	
  (k)

  	
  Tax Matters

  	
   

  
	
   

  	
  (1)

  	
  Real Property and Assets

  	
   

  
	
   

  	
  (m)

  	
  Intellectual
  Property

  	
   

  
	
   

  	
  (n)

  	
  Contracts

  	
   

  
	
   

  	
  (o)

  	
  Insurance

  	
   

  
	
   

  	
  (p)

  	
  Litigation

  	
   

  
	
   

  	
  (q)

  	
  Employees

  	
   

  
	
   

  	
  (r)

  	
  Employee
  Benefits

  	
   

  
	
   

  	
  (s)

  	
  Environmental
  Matters

  	
   

  
	
   

  	
  (t)

  	
  Certain
  Business Relationships with the Company

  	
   

  
	
   

  	
  (u)

  	
  Products
  Liability

  	
   

  
	
   

  	
  (v)

  	
  Customers
  and Suppliers

  	
   

  
	
   

  	
  (w)

  	
  Prohibited
  Payments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Representations and
  Warranties of the Buyer

  	
   

  
	
   

  	
  (a)

  	
  Organization of the Buyer

  	
   

  
	
   

  	
  (b)

  	
  Authorization of
  Transaction

  	
   

  
	
   

  	
  (c)

  	
  Noncontravention

  	
   

  
	
   

  	
  (d)

  	
  Brokers’ Fees

  	
   

  
	
   

  	
  (e)

  	
  Availability
  of Funds

  	
   

  
	
   

  	
  (f)

  	
  Acquisition of
  the Shares for Investment

  	
   

  
	
   

  	
  (g)

  	
  Other Matters

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Pre-Closing
  Covenants

  	
   

  
	
   

  	
  (a)

  	
  General

  	
   

  

 

i

 

	
   

  	
  (b)

  	
  Notices
  and Consents

  	
   

  
	
   

  	
  (c)

  	
  Operation
  of Business

  	
   

  
	
   

  	
  (d)

  	
  Equity
  Issuances; Dividends and Distributions

  	
   

  
	
   

  	
  (e)

  	
  Restrictions on Transfer

  	
   

  
	
   

  	
  (f)

  	
  Preservation of Business

  	
   

  
	
   

  	
  (g)

  	
  Access
  to Books and Records and Customers and Suppliers

  	
   

  
	
   

  	
  (h)

  	
  Notice
  of Developments

  	
   

  
	
   

  	
  (i)

  	
  No
  Additional Representations or Warranties

  	
   

  
	
   

  	
  (j)

  	
  Disclaimer
  Regarding Estimates and Projections

  	
   

  
	
   

  	
  (k)

  	
  Financing

  	
   

  
	
   

  	
  (1)

  	
  No
  Solicitation

  	
   

  
	
   

  	
  (m)

  	
  2003 Audited Financial
  Statements

  	
   

  
	
   

  	
  (n)

  	
  Selling Expense Schedule

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Post-Closing
  Covenants

  	
   

  
	
   

  	
  (a)

  	
  General

  	
   

  
	
   

  	
  (b)

  	
  Litigation
  Support

  	
   

  
	
   

  	
  (c)

  	
  Tax Matters

  	
   

  
	
   

  	
  (d)

  	
  Performance of
  Obligations by the Buyer

  	
   

  
	
   

  	
  (e)

  	
  Directors’ and
  Officers’ Indemnification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Conditions to
  Obligation to Close

  	
   

  
	
   

  	
  (a)

  	
  Conditions to
  Obligation of the Buyer

  	
   

  
	
   

  	
  (b)

  	
  Conditions to
  Obligation of the Sellers

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Remedies for
  Breaches of this Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Termination

  	
   

  
	
   

  	
  (a)

  	
  Termination of Agreement

  	
   

  
	
   

  	
  (b)

  	
  Effect
  of Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Miscellaneous

  	
   

  
	
   

  	
  (a)

  	
  Press Releases
  and Public Announcements

  	
   

  
	
   

  	
  (b)

  	
  Third-Party Beneficiaries

  	
   

  
	
   

  	
  (c)

  	
  Entire
  Agreement

  	
   

  
	
   

  	
  (d)

  	
  Succession and Assignment

  	
   

  
	
   

  	
  (e)

  	
  Counterparts

  	
   

  
	
   

  	
  (f)

  	
  Headings

  	
   

  
	
   

  	
  (g)

  	
  Notices

  	
   

  
	
   

  	
  (h)

  	
  Governing Law; Jurisdiction

  	
   

  
	
   

  	
  (i)

  	
  Amendments
  and Waivers

  	
   

  
	
   

  	
  (j)

  	
  Severability

  	
   

  
	
   

  	
  (k)

  	
  Expenses

  	
   

  
	
   

  	
  (1)

  	
  Construction

  	
   

  
	
   

  	
  (m)

  	
  Incorporation
  of Exhibits and Schedules

  	
   

  
	
   

  	
  (n)

  	
  Disclosure
  Schedule

  	
   

  

 

ii

 

EXHIBITS

 

	
  Exhibit A

  	
   

  	
  Historical Financial
  Statements

  
	
  Exhibit B

  	
   

  	
  Terms of Transition
  Services Agreement

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  
	
   

  
	
  Indebtedness
  Schedule (§2(b)(ii)(B))

  
	
  Seller Disclosure
  Schedule (§3 and §5(h)(i))

  
	
  Buyer Disclosure
  Schedule (§4)

  
	
  Notice
  Schedule (§10(g))

  

 

iii

 

STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement is made as of
January 30, 2004, by and among PP Acquisition Corporation, a Delaware
corporation (the “Buyer”), Polypore Inc., a Delaware corporation (the “Company”),
and the persons listed as Shareholders on the signature pages hereto
(collectively referred to herein as “Sellers” and individually as “Seller”).
The Buyer, the Company and the Sellers are each referred to in this Agreement
as a “Party” and collectively as the “Parties.”

 

The authorized capital stock of the Company consists
of 20,000 shares of Class A Preferred Stock, par value $.01 per share (the “Class
A Preferred”), 10,000 shares of Class B-1 Preferred Stock, par value $.01
per share (the “Class B-1 Preferred”), 5,000 shares of Class B-2
Preferred Stock, par value $.01 per share (the “Class B-2 Preferred”),
40,000 shares of Class C Preferred Stock, par value $.01 per share (the “Class
C Preferred” and together with the Class A Preferred, Class B-1 Preferred
and Class B-2 Preferred, the “Preferred Stock”), 250,000 shares of Class
A Common Stock, par value $.01 per share (the “Class A Common”), 50,000
shares of Class B Common Stock, par value $.01 per share (the “Class B
Common”) 25,000 shares of Class C Common Stock, par value $.01 per share
(the “Class C Common” and together with the Class A Common and Class B
Common, the “Common Stock”). The Class B Common and Class C Common are convertible
into shares of Class A Common.

 

As of the date of
this Agreement, there are 14,000 outstanding shares of Class A Preferred (the “Preferred
Shares”), 141,292 outstanding shares of Class A Common (the “Class A
Shares”), 6,040 outstanding shares of Class B Common (the “Class B
Shares”) and 7,754 outstanding shares of Class C Common (the “Class C
Shares”). The Preferred Shares, Class A Shares, Class B Shares and the
Class C Shares are collectively referred to in this Agreement as the “Shares.”
There are no shares of Class B-1 Preferred, Class B-2 Preferred, or Class C
Preferred outstanding as of the date of this Agreement.

 

The persons listed
as Shareholders on the signature pages hereto (collectively referred to herein
as “Shareholders” and individually as a “Shareholder”) own
beneficially and of record all of the issued and outstanding Shares. The Buyer
desires to purchase from each of the Shareholders, and each of the Shareholders
desires to sell to the Buyer, all of the Shares owned by such Shareholder as of
the Closing Date, subject to the terms and conditions set forth in this
Agreement.

 

NOW, THEREFORE, in
consideration of the premises and the mutual promises herein made, and in
consideration of the representations, warranties and covenants contained
herein, the Parties agree as follows.

 

1.           
Definitions.

 

“2003 Audited
Financial Statements” means the Company’s audited balance sheet and statements
of income, stockholders’ equity and cash flows as of and for the fiscal year
ended January 3, 2004.

 

 

“Affiliate” has the meaning set forth in Rule
12b-2 of the regulations promulgated under the Securities Exchange Act.

 

“Asbestos” includes chrysotile, amosite,
crocidolite, tremolite asbestos, anthophyllite asbestos, actinolite asbestos,
asbestos winchite, asbestos richterite, and any of these minerals that have
been chemically treated and/or altered and any asbestiform variety, type or
component thereof and any Asbestos-Containing Material.

 

“Asbestos-Containing Material” means any material
containing Asbestos, including, without limitation, any Asbestos-containing
products, automotive or industrial parts or components, equipment, improvements
to real property and any other material that contains asbestos in any chemical
or physical form.

 

“Buyer” has the meaning set forth in the
preface above.

 

“Cash” means cash and cash equivalents
(including marketable securities and short term investments and checks received
by the Company prior to the Closing Date) calculated in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.

 

“Class A Common” has the meaning set forth in
the preface above.

 

“Class A Preferred” has the meaning set forth
in the preface above.

 

“Class A Shares” has the meaning set forth in
the preface above.

 

“Class B Common” has the meaning set forth in
the preface above.

 

“Class B Shares” has the meaning set forth in
the preface above.

 

“Class B-l Preferred” has the meaning set forth
in the preface above.

 

“Class B-2 Preferred” has the meaning set forth
in the preface above.

 

“Class C Common” has the meaning set forth in
the preface above.

 

“Class C Preferred” has the meaning set forth
in the preface above.

 

“Class C Shares” has the meaning set forth in
the preface above.

 

“Closing” has the meaning set forth in §2(b)(i)
below.

 

“Closing Cash Consideration” has the meaning
set forth in §2(a) below.

 

“Closing Date” has the meaning set forth in
§2(b)(i) below.

 

“Closing Transactions”
has the meaning set forth in §2(b)(ii) below.

 

2

 

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

 

“Commitments” has the meaning set forth in
§4(e) below. 

 

“Common Stock” has the meaning set forth in the
preface above.

 

“Company” has the meaning set forth in the
preface above. 

 

“Company Representative” has the meaning set
forth in §5(k) below.

 

“Competition Laws” means United States or
foreign statutes, rules, regulations, orders, decrees, administrative and
judicial doctrines and other laws that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade, including without limitation the Hart-Scott-Rodino Act and
the EC Merger Regulation.

 

“Confidentiality Agreement” has the meaning set
forth in §5(g) below.

 

“Constitutive Documents” means, with respect to
any Person, such Person’s articles or certificate of incorporation and by-laws,
certificate of formation and limited liability company agreement or operating
agreement, trust agreement or other constitutive documents, as applicable.

 

“Credit Agreement” means that certain Credit
Agreement, dated as of December 15, 1999, as amended from time to time,
among the Company, Daramic Holdings S.A., Daramic S.A., certain Subsidiaries of
the Company, the lenders party thereto and The Chase Manhattan Bank, as
Administrative Agent.

 

“Debt Financing” has the meaning set forth in
§4(e) below.

 

“Disclosure Schedule” has the meaning set forth
in §3 below.

 

“EBITDA” means the sum, for the Company and its
Subsidiaries (determined on a consolidated basis without duplication in
accordance with GAAP), of the following: (a) net earnings (or loss) after taxes
for such period plus (b) amounts deducted from net revenues for such
period in determining such net earnings (or loss) on account of (i) interest
expense, (ii) federal, state or foreign income taxes and (iii) depreciation and
amortization minus (c) non-recurring gains for such period plus
(d) non-recurring losses for such period plus (e) any Selling Expenses
paid or accrued during such period. Notwithstanding the foregoing, EBITDA shall
not include any unrealized foreign currency translation gains or losses
resulting from the remeasurement of United States dollar-denominated
indebtedness (including, without limitation, the loans outstanding under the
Credit Agreement) of any entity into the functional currency of such entity (if
such functional currency is a currency other than United States dollars) for
financial reporting purposes.

 

“EC Merger Regulation” means Council Regulation
No. 4064/89 of the European Community.

 

3

 

“Employee” means a person employed by the
Company or any of its Subsidiaries.

 

“Employee Pension Benefit Plan” has the meaning
set forth in ERISA §3(2).

 

“Employee Welfare Benefit Plan” has the meaning
set forth in ERISA §3(1).

 

“Environmental Law” shall mean any foreign,
federal, state, or local law, statute, rule, regulation, order or other requirement
of law relating to (A) the manufacture, transport, use, emission, treatment,
storage, disposal, exposure, release or threatened release of pollutants,
contaminants, chemicals or wastes, or (B) the protection of employee health and
safety or the environment (including, without limitation, natural resources,
air, and surface or subsurface land or waters).

 

“Equity Financing”
has the meaning set forth in §4(e) below.

 

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

 

“Financial Statements” has the meaning set
forth in §3(g) below.

 

“Funded Indebtedness” has the meaning set forth
in §2(b)(ii)(B) below.

 

“GAAP” means United States generally accepted
accounting principles as in effect from time to time.

 

“Hart-Scott-Rodino Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“Hazardous Substance” means any pollutant,
contaminant, chemical, waste, or any other carcinogenic, toxic or hazardous
substances or materials, including but not limited to Asbestos or Asbestos
Containing Material, petroleum, including crude oil and any fractions thereof,
or other wastes, chemicals, substances or materials subject to regulation or
remediation under any Environmental Law.

 

“Indemnified Parties” has the meaning set forth
in §6(e) below.

 

“Intellectual Property” means all patents,
patent applications, patent disclosures and inventions; trademarks, service
marks, trade dress, logos, trade names, corporate names and Internet domain
names, together with all goodwill associated therewith (including all
translations, adaptations, derivations and combinations of the foregoing);
copyrights and copyrightable works; and registrations, applications and
renewals for any of the foregoing.

 

“Knowledge” means, with respect to (i) the
Company, the actual knowledge of Jerry Zucker, Lynn Amos, Frank Nasisi, Stefan
Geyler, Brad Reed, Rob Whitsett and Jeff Winkler and (ii) Buyer, the actual
knowledge of Kevin Kruse, David Barr and Mike Graff.

 

“Leased Real Property” has the meaning set
forth in §3(l)(ii) below.

 

4

 

“Liquidation Value” shall mean the sum of
$1,000, with respect to each outstanding share of Class A Preferred.

 

“Material Adverse Effect” means, with respect
to the Company or its Subsidiaries, an event, occurrence or circumstance that
has had or is reasonably likely to have a material adverse effect on the
business, assets, financial condition or results of operations of the Company
and its Subsidiaries taken as a whole; provided,
however, that the term “Material Adverse Effect” shall not include
any effect attributable to (i) any event, occurrence, circumstance or trend,
including but not limited to a diminution in value, relating to the Company or
its Subsidiaries, their business, assets, financial condition or results of
operations that, to the Knowledge of the Buyer, exist as of the date hereof;
(ii) a change (after the date hereof) in law or GAAP or the interpretation
thereof that applies generally to the industry in which the Company and its
Subsidiaries operate that does not have a disproportionate and adverse effect
on the Company and its Subsidiaries; (iii) any change or event relating to the
general economy of any nation or region in which the Company or any of its
Subsidiaries operates that does not have a disproportionate and adverse effect
on the Company and its Subsidiaries; and (iv) any change or event relating to
the industries in which the Company or any of its Subsidiaries operates that
does not have a disproportionate and adverse effect on the Company and its
Subsidiaries.

 

“Most Recent Balance Sheet” means the balance
sheet contained within the Most Recent Financial Statements.

 

“Most Recent Financial Statements” has the
meaning set forth in §3(g) below.

 

“Most Recent Fiscal Month End” has the meaning
set forth in §3(g) below.

 

“Most Recent Fiscal Year End” has the meaning
set forth in §3(g) below.

 

“Ordinary Course of Business” means the
ordinary course of business consistent with past custom and practice.

 

“Owned Real Property” has the meaning set forth
in §3(l)(i) below.

 

“Party” and “Parties” have the meanings
set forth in the preface above.

 

“Permitted Liens” means (i) mechanic’s,
materialmen’s and similar liens arising in the Ordinary Course of Business for
sums not yet due and payable, (ii) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings to the extent reserves or other appropriate provisions that are required
by GAAP have been made therefore, (iii) purchase money liens and liens securing
rental payments under capital lease arrangements, (iv) other liens arising in
the Ordinary Course of Business and not incurred in connection with the
borrowing of money which would not be reasonably expected to have a Material
Adverse Effect, (v) zoning, building and other land use laws imposed by any
governmental authority; (vi) easements, covenants, conditions, restrictions and
other similar matters of record affecting title and such other title defects
which would not be reasonably expected to have a Material Adverse Effect, (vii)
any matters of record that would be disclosed in a current title commitment
which would not be reasonably expected to have a Material

 

5

 

Adverse
Effect, (viii) matters that would be disclosed by an accurate survey which
would not be reasonably expected to have a Material Adverse Effect; and (ix)
with respect to real property located outside of the United States, any other
liens, encumbrances, restrictions or other defects customarily accepted by
buyers in such jurisdiction which would not be reasonably expected to have a
Material Adverse Effect.

 

“Person” means an individual, a partnership, a
limited liability company, a corporation, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization or a
governmental entity (or any department, agency or political subdivision
thereof).

 

“Plans” has the meaning set forth in §3(r)(i)
below.

 

“Preferred Shares” has the meaning set forth in
the preface above.

 

“Preferred Stock” has the meaning set forth in
the preface above.

 

“Real Property Leases” has the meaning set
forth in §3(l)(ii) below.

 

“Securities Act” means the Securities Act of
1933, as amended.

 

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

 

“Stockholders Agreement” means that certain
Stockholders Agreement, dated November 18, 1994, among the Company and the
Stockholders of the Company listed therein, as amended.

 

“Security Interest” means any mortgage, pledge,
lien, encumbrance, charge or other security interest.

 

“Seller” and “Sellers” have the meanings
set forth in the preface above.

 

“Selling Expenses” means the fees, expenses,
charges and other payments incurred or otherwise payable by the Company or any
of its Subsidiaries specifically related to the transactions contemplated by
this Agreement, which shall include, without limitation, (a) the fees,
expenses, charges and other payments to counsel, accountants, financial
advisors or investment bankers of the Company and its Subsidiaries arising out
of the transactions contemplated by this Agreement, (b) all amounts due to any
employee or consultant of the Company or its Subsidiaries in respect of any
stay bonuses, severance payments, change of control payments or other similar
payments arising (i) solely from the consummation of the transactions
contemplated by this Agreement (provided that amounts due in respect of any stay
bonuses and other similar payments shall be deemed to arise solely from the
consummation of the transactions contemplated by this Agreement) and (ii) that
do not require any subsequent action by the Buyer, the Company or any
Subsidiary following the Closing to make such amounts due, including
termination of the employment of such person , (c) any premium, make whole
payment or similar penalties due to any lender of the Company or its
Subsidiaries arising from the transactions contemplated hereby, including
repayment of the Funded Indebtedness, and (d) the net amount of any prepayments
of Funded Indebtedness made after January 3, 2004, including any premium,
make whole payment or similar penalties relating thereto.

 

6

 

“Shareholder” and “Shareholders” have
the meanings set forth in the preface above.

 

“Shares” has the meaning set forth in the
preface above.

 

“Subsidiary” means any corporation, limited
liability company, partnership or other entity with respect to which a
specified Person (or a Subsidiary thereof) owns, directly or indirectly, a
majority of the common stock or equity interests or has the power to vote or
direct the voting of sufficient securities to elect a majority of the directors
or managers, as the case may be.

 

“Tax” or “Taxes” mean all federal,
state, local and foreign net income, gross income, gross receipts, sales, use,
ad valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, windfall profits, customs, duties or other taxes, together
with interest and any penalties.

 

“Termination Date Extension Event” means the
occurrence and continuation of any of the following to Frank Nasisi (a) his
death, (b) his resignation as chief operating officer of the Company or (c) if,
as a result of health reasons, he experiences a meaningful deterioration in the
performance of his duties as chief operating officer compared to his past performance
and activity level.

 

“Tax Return” means any return, declaration,
report, claim for refund or information return or statement relating to Income
Taxes, including any schedule or attachment thereto, and including any
amendment thereof.

 

“Transaction” has the meaning set forth in
§5(1) below.

 

2.            
Basic Transaction.

 

(a) Purchase
and Sale of the Shares. At the Closing, upon the terms and subject to
the conditions set forth in this Agreement, each of the Sellers shall sell,
assign, transfer and convey to the Buyer, and the Buyer shall purchase and
acquire from each of the Sellers, all of the Shares owned by such Seller free
and clear of any Security Interests, against payment at the Closing of an
aggregate amount equal to the portion of the Closing Cash Consideration set
forth below.

 

The term “Closing Cash Consideration” means (i)
$1,150,000,000, minus (ii) all principal and accrued interest in respect
of the Funded Indebtedness of the Company and its Subsidiaries outstanding
immediately prior to the Closing Date that will be repaid pursuant to
§2(b)(ii)(B) on the Closing Date, plus the amount of Cash of the Company
and its Subsidiaries determined on a consolidated basis on January 3, 2004
as reflected on the 2003 Audited Financial Statements, minus the
aggregate amount of the Selling Expenses (determined without any duplication
related to Funded Indebtedness). Closing Cash Consideration shall be subject to
a one-time reduction in the amount of the sum of (A) any accrued current
Taxes incurred in and payable for the fiscal year ended January 3, 2004 as
reflected on the 2003 Audited Financial Statements plus (B) in the event
the Company receives written notice from the IRS prior to the Closing Date that
the IRS has disallowed the Company’s §338(g) election with respect to the
purchase of stock described in §(3)(k) of the Disclosure Schedule, an amount
equal to the Taxes the Company would be obligated to pay as a result of failing
to make a timely §338(g) election

 

7

 

with
respect to such purchase, without taking into account the transactions
contemplated by this Agreement; provided that
the amount of the one-time reduction for amounts under clauses (A) and (B)
shall in no event exceed $12.5 million in the aggregate. Closing Cash
Consideration shall also be subject to a one-time reduction if the EBITDA as
derived from the 2003 Audited Financial Statements (“2003 EBITDA”) is less than
$124.3 million, but greater than $119.3 million, by an amount equal to the
product of (x) 8.65 times (y) the difference of $124.3 million minus
the greater of (A) 2003 EBITDA and (B) $119.3 million; provided, that the
amount of clause (y) shall not, in any event, exceed more than $5.0 million,
and the reduction in Closing Cash Consideration shall not, in any event, exceed
$43.25 million.

 

The Closing Cash Consideration shall be allocated
among the Sellers holding Class A Preferred, in amounts equal to the product of
(i) the number of shares of Class A Preferred held by each such Seller multiplied
by (ii) the Liquidation Value thereof, plus (iii) all accrued and unpaid
dividends thereon, with the remaining Closing Cash Consideration to be
allocated among the Shareholders in proportion to their respective holdings of
Class A Shares (or rights to acquire Class A Shares).

 

(b) The
Closing.

 

(i)           
The closing of the
transactions contemplated by this Agreement (the “Closing”) shall take
place at the offices of Willkie Farr & Gallagher LLP, 787 Seventh Avenue,
New York, New York at 10:00 a.m. on the second business day following full
satisfaction or due waiver of all of the closing conditions set forth in §7
hereof (other than those to be satisfied at the Closing) or at such other
location or on such other date as is mutually agreeable to the Buyer and the
Sellers. The date and time of the Closing are herein referred to as the “Closing
Date.”

 

(ii)          
Subject to the terms
and conditions set forth in this Agreement, the Parties hereto shall consummate
the following transactions (the “Closing Transactions”) on the Closing
Date:

 

(A)         
the Buyer shall
deliver to each of the holders of Shares such Shareholder’s portion of the
Closing Cash Consideration (as determined in accordance with §2(a) herein), by
wire transfer of immediately available funds to one or more accounts designated
by the Sellers to the Buyer prior to the Closing;

 

(B)          
the Buyer shall
repay, or cause to be repaid, on behalf of the Company and its Subsidiaries all
amounts necessary to discharge fully the then outstanding balance of all
indebtedness for borrowed money, including the indebtedness listed on the
attached Indebtedness Schedule (such amount, in the aggregate, the
“Funded Indebtedness;” provided that Funded Indebtedness shall not
include any indebtedness of Buyer or any indebtedness of the Company or any of
its Subsidiaries incurred to finance the Closing Cash Consideration) by wire
transfer of immediately available funds as directed by the holders of the
Funded Indebtedness at or prior to the Closing, and the Company shall deliver
to the Buyer all appropriate payoff letters and shall make arrangements
reasonably

 

8

 

satisfactory to the Buyer
for such holders to deliver releases and canceled notes at the Closing;

 

(C)          
the Sellers shall
deliver to the Buyer certificates, duly endorsed in blank or accompanied by
duly executed stock powers, representing all Shares of the Company issued and
outstanding as of the Closing;

 

(D)         
the Buyer, the
Company and the Sellers shall make such other deliveries as are required by and
in accordance with §7 hereof.

 

3.            
Representations and Warranties of the Company and the Sellers. The Company, with respect to the Company
and its Subsidiaries, as applicable, and each Seller, severally with respect to
itself and not jointly with respect to any of the other Sellers, hereby
represent and warrant to the Buyer that the statements contained in this §3 are
correct and complete as of the date of this Agreement and shall be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this §3),
except as set forth in the disclosure schedule accompanying this Agreement
(the “Disclosure Schedule”). The Disclosure Schedule shall be
arranged in paragraphs corresponding to the lettered paragraphs contained in
this §3; provided, however, that
any event, fact or circumstance disclosed in any lettered paragraph of the
Disclosure Schedule shall be deemed to be a disclosure for purposes of all
other lettered paragraphs of the Disclosure Schedule, to the extent the
applicability of such disclosure is reasonably ascertainable.

 

(a)  Authorization
of Transaction.  The Company has full corporate power and
authority and each Seller has full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder.  This Agreement
constitutes the valid and legally binding obligation of the Company and each
Seller, enforceable in accordance with its terms and conditions.

 

(b)  Noncontravention. 
Other than as set forth on §3(b) of the Disclosure Schedule, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, shall (i) violate any statute, regulation,
rule, injunction, judgment, order, decree or ruling of any government,
governmental agency or court to which any of the Sellers, the Company or its
Subsidiaries is subject or any provision of the Constitutive Documents of any
of the Sellers, the Company or its Subsidiaries or (ii) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or cancel, or
require any notice or consent under any agreement, contract, lease, license or
instrument to which any of the Sellers, the Company or any of its Subsidiaries
is a party or by which any of them are bound or to which any of their assets
are subject, except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation or failure to give notice
would not have a Material Adverse Effect or a material adverse effect on the
ability of the Sellers, the Company or any of its Subsidiaries to consummate
the transactions contemplated by this Agreement.  Except for applicable
requirements of Competition Laws, including the Hart-Scott-Rodino Act and the
EC Merger

 

9

 

Regulation,
none of the Sellers, the Company or its Subsidiaries is required to give any
notice to, make any filing with, or obtain any authorization, consent or
approval of any government or governmental agency in order for the Sellers and
the Company to consummate the transactions contemplated by this Agreement,
except where the failure to give notice, to file or to obtain any
authorization, consent or approval would not have a Material Adverse Effect or
a material adverse effect on the ability of the Sellers or the Company to
consummate the transactions contemplated by this Agreement.

 

(c)  Brokers’ Fees. 
Neither the Sellers, the Company nor any of its Subsidiaries has any liability
or obligation to pay any fees or commissions to any broker, finder or
investment banker with respect to the transactions contemplated by this
Agreement for which the Buyer could become liable or obligated, except for the
fee of J.P. Morgan Securities Inc.

 

(d)  Title. 
Other than as set forth on §3(d) of the Disclosure Schedule, the Company or one
of its Subsidiaries has good and valid title to, or a valid leasehold interest
in, the material tangible personal property that is reflected on the Most
Recent Balance Sheet, free and clear of any Security Interest other than
Permitted Liens.

 

(e)  Capitalization.  §3(e) of the Disclosure
Schedule sets forth for the Company (A) the number of shares of authorized
capital stock of each class of its capital stock, (B) the number of issued and
outstanding shares of each class of its capital stock, and (C) the number of
shares of its capital stock held in treasury. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification would not have a Material
Adverse Effect. The Company has full corporate power and authority to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it. All of the issued and outstanding shares of capital stock of
the Company have been duly authorized and are validly issued, fully paid and
nonassessable.  Each Shareholder holds of record and owns beneficially all
of his or its Shares of the Company, free and clear of any restrictions on
transfer and Security Interests (other than restrictions under the Securities
Act and state securities laws and the Stockholders Agreement). Except as set
forth on §3(e) of the Disclosure Schedule, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other contracts or commitments that could require any
Shareholder to sell, transfer or otherwise dispose of any capital stock of the
Company or that could require the Company to issue, sell or otherwise cause to
become outstanding any of its capital stock (in each case, other than this
Agreement and the Stockholders Agreement).  There are no outstanding stock
appreciation, phantom stock or similar rights with respect to the
Company.  Except for the Stockholders Agreement, there are no voting
trusts, proxies or other agreements or understandings with respect to the
voting of any capital stock of the Company.

 

(f)  Subsidiaries.
The Company does not have any ownership interest in any corporation,
partnership, limited liability company, joint venture or other Person other
than those entities set forth on §3(f) of the Disclosure Schedule.  Other
than as set forth on §3(f) of the Disclosure Schedule and other than
director qualifying shares, all of the equity interests of such entities are
owned directly or indirectly by the Company.  All of the issued and outstanding
shares of

 

 

10

 

common
stock or equity interests of each of the Company’s Subsidiaries have been duly
authorized, validly issued and are fully paid and nonassessable and are owned
beneficially and of record by the Company or another Subsidiary free and clear
of all liens, claims or other encumbrances or rights of third parties other
than liens and encumbrances relating to the Credit Agreement. There are no
outstanding options, warrants or rights to purchase or acquire any capital
stock or other equity interests of any of its Subsidiaries, and there are no
contracts, commitments, understandings, arrangements or restrictions by which
the Company or any of its Subsidiaries is bound to sell or issue any additional
shares of capital stock or equity interests of such Subsidiary.

 

(g)  Financial Statements.  Attached
hereto as Exhibit A are the following financial statements (collectively
the “Financial Statements”): (i) the Company’s audited balance sheet and
statements of income, stockholders’ equity and cash flows as of and for the
year ended December 29, 2001 and December 28, 2002 (the “Most
Recent Fiscal Year End”) and (ii) the Company’s unaudited balance sheet and
statements of income and cash flows (the “Most Recent Financial Statements”)
as of and for the period beginning December 29, 2002 and ended
November 30, 2003 (the “Most Recent Fiscal Month End”). The
Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby and present fairly in
all material respects the financial condition of the Company as of such dates
and the results of operations of the Company for such periods, provided that the Most Recent Financial
Statements are subject to normal year end adjustments and lack footnotes and
other presentation items.

 

(h)  Absence
of Certain Developments.  Except as set forth on §3(h) of the
Disclosure Schedule or otherwise contemplated by this Agreement, since the
Most Recent Fiscal Month End, there has not been any Material Adverse Effect.
In addition to the foregoing, since that date and except as set forth on §3(h)
of the Disclosure Schedule, the Company and its Subsidiaries have operated in
the Ordinary Course of Business and neither the Company nor any of its
Subsidiaries has:

 

(i)           
borrowed any amount
or incurred any material liabilities, except amounts borrowed or liabilities
incurred in the Ordinary Course of Business or under contracts entered into in
the Ordinary Course of Business;

 

(ii)          
mortgaged, pledged or
subjected to any material lien, charge or other encumbrance, any material
portion of its assets, except for Permitted Liens arising in the Ordinary
Course of Business;

 

(iii)         
sold, assigned,
licensed or transferred any Owned Real Property, Leased Real Property or any
material portion of its other tangible assets, except in the Ordinary Course of
Business;

 

(iv)         
sold, assigned or
transferred any material patents, trademarks, trade names, copyrights, trade
secrets or other intangible assets;

 

11

 

(v)          
made any material
capital expenditures or commitments therefor outside the Ordinary Course of
Business or failed to make any material capital expenditures that otherwise
would have been made in the Ordinary Course of Business;

 

(vi)         
entered into,
materially amended or modified, or waived any material rights with respect to,
any material agreement, contract, lease or license outside the Ordinary Course
of Business;

 

(vii)        
issued, sold or
transferred any of its equity securities, securities convertible into its
equity securities or warrants, options or other rights to acquire its equity
securities, or any notes, bonds or debt securities;

 

(viii)       
declared or paid any
dividend, made any distribution on its capital stock or equity interests,
redeemed or purchased any shares of its capital stock or equity interests, or
paid any management or other fees to any Shareholder or any Affiliates of any
Shareholder; provided, that the
Company may pay a cash dividend to the Shareholders as long as the amount of
such cash dividend is obtained solely from either (A) Cash of the Company
existing on January 3, 2004 and deducted from the definition of Closing
Cash Consideration or (B) Funded Indebtedness of the Company that is repaid at
or prior to the Closing (including any interest, expenses or fees incurred in
connection with the borrowing), and the payment of such cash dividend does not
subject the Company to any adverse Tax consequences, including any withholding
Tax obligation;

 

(ix)          
increased the
compensation of any officer or other key management employee, or entered into
any material employment, severance, bonus or consulting agreement or other
material compensation agreement or caused or suffered any cancellation or
material amendment thereof, other than cost of living or merit increases
granted in the Ordinary Course of Business;

 

(x)           
waived, released,
cancelled or forgiven any debts, claims or rights (or series of debts, claims
or rights) involving, individually or in the aggregate, consideration in excess
of $500,000;

 

(xi)          
(A) acquired (by
merger, consolidation, acquisition of stock, other securities or assets or
otherwise), (B) made a capital investment in, (C) made a loan advance or
agreement to loan or advance to, (D) entered into any joint venture,
partnership or other similar arrangement for the conduct of business with, or (E)
guaranteed any indebtedness for borrowed money of, any Person or any portion of
the assets of any Person that constitutes a division or operating unit of such
Person;

 

(xii)         
suffered any theft,
damage, destruction or casualty loss affecting its business or any of their
respective assets in excess of $250,000 in any single instance or $500,000 in
the aggregate, whether or not covered by insurance;

 

 

12

 

(xiii)        
paid, discharged,
cancelled, compromised or satisfied any material liability other than any such
payment, discharge, cancellation, compromise or satisfaction made in the
Ordinary Course of Business;

 

(xiv)       
commenced or settled
any material legal, administrative or arbitral proceeding;

 

(xv)        
made or changed any
material Tax election, filed any amended material Tax Return, entered into any
material closing agreement or settled any material Tax claim or assessment,
surrendered any right to claim a refund of Taxes or consented to any extension
or waiver of the limitation period applicable to any material Tax claim or
assessment;

 

(xvi)       
between
November 30, 2003 and January 3, 2004, either failed to manage its
working capital in the Ordinary Course of Business or suffered any material
reduction in working capital not in the Ordinary Course of Business; or

 

(xvii)       committed to do any of the foregoing.

 

(i)  Undisclosed
Liabilities. Neither the Company nor any of its Subsidiaries has any
liability (whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), except for (i) liabilities set forth on the Most Recent
Balance Sheet (including any notes thereto), (ii) liabilities under agreements,
contracts, leases, licenses and other arrangements (x) listed in §3(m)(i) or
§3(n) of the Disclosure Schedule or (y) that were entered into in the
Ordinary Course of Business since November 30, 2003 that are not required
to be listed on the Disclosure Schedules, (iii) liabilities reflected on the
Disclosure Schedule, (iv) liabilities that have arisen in the Ordinary Course
of Business, since November 30, 2003, and (v) liabilities that,
individually or in the aggregate, would not have a Material Adverse Effect.
Except as otherwise disclosed in the Financial Statements, none of the Company
or any of its Subsidiaries is directly or indirectly liable upon or with
respect to (by discount, repurchase agreements or otherwise), or obliged in any
other way to provide funds in respect of, or to guarantee or assume, any debt,
obligation or dividend of any Person other than the Company or any of its
wholly-owned Subsidiaries, except endorsements in the ordinary course of
business in connection with the deposit, in banks or other financial
institutions, of items for collection.  Except as otherwise disclosed in
the Financial Statements, neither the Company nor any of its Subsidiaries has
any obligation for borrowed money, any obligation that is evidenced by any note
or other similar instrument or any capitalized lease obligation.

 

(j)  Legal
Compliance.

 

(i)           
Except as set forth
on §3(j) of the Disclosure Schedule, the Company and its Subsidiaries are in
compliance with all applicable statutes, laws, ordinances, rules, orders and
regulations of federal, state, local and foreign governments (and all agencies
thereof), except where the failure to comply would not have a Material Adverse
Effect. Except as set forth on §3(j) of the Disclosure Schedule, neither of the
Company nor any

 

13

 

of its Subsidiaries has
received any communication (written or, to the Knowledge of the Company, oral)
from any governmental authority or any other Person that alleges that either of
the Company or any of its Subsidiaries is not in compliance with all applicable
foreign, federal, state or local laws, rules or regulations, except where such
communication alleges a failure to comply that would not reasonably be expected
to have a Material Adverse Effect.

 

(ii)          
The Company and its
Subsidiaries have obtained each material permit, approval, consent,
authorization, license, variance, or permission required under any applicable
statutes, laws, ordinances, rules, orders and regulations of federal, state,
local and foreign governments (and all agencies thereof) that is necessary or
appropriate for the operations of the Company and its Subsidiaries, except in
the case where the failure to have such permit, approval, consent, license,
variance or permission would not reasonably be expected to have a Material
Adverse Effect. Each such material permit, approval, consent, authorization,
license, variance, and permission, is in full force and effect and no proceeding
is pending or, to the Knowledge of Sellers, threatened, to revoke or limit any
such permit, approval, consent, authorization, license, variance, or
permission, except for failures to be in full force and effect, revocations or
limitations that would not reasonably be expected to have a Material Adverse
Effect. Except as set forth in §3(j) of the Disclosure Schedule:

 

(A)         
the Company or its
Subsidiaries (as applicable) is, and at all times since November 30, 2003
have been, in compliance with all of the terms and requirements of each such
material permit, approval, consent, authorization, license, variance, and
permission, except where failure to comply would not reasonably be expected to
have a Material Adverse Effect; and

 

(B)          
since
November 30, 2003, neither the Sellers nor the Company or its Subsidiaries
has received any communication (written or oral) from any governmental
authority or any other Person regarding (y) any actual, alleged, possible, or
potential violation of or failure to comply with any term or requirement of any
such material permit, approval, consent, authorization, license, variance, or
permission, or (z) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to any
such permit, approval, consent, authorization, license, variance, or
permission, except where such communication relates to matters that would not
reasonably be expected to have a Material Adverse Effect.

 

(k)  Tax Matters. Except as set forth on §3(k) of the
Disclosure Schedule:

 

(i)           
Each of the Company
and its Subsidiaries has timely filed all material Tax Returns required to be
filed by it, and each of the Company and its Subsidiaries has paid all material
Taxes due and payable by it.

 

14

 

(ii)          
No material
deficiency or proposed adjustment relating to Taxes that has not been resolved
or settled has been proposed, asserted or assessed by any taxing authority against
the Company or any of its Subsidiaries.

 

(iii)         
The Company and its
Subsidiaries have withheld and paid all material Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third party.

 

(iv)         
§3(k) of the
Disclosure Schedule lists those Tax Returns that currently are the subject
of audit or for which written notice of intent to audit has been received. The
Company has made available to the Buyer copies of all Tax Returns filed and all
examination reports and written statements of deficiencies assessed against or
agreed to by the Company or any of its Subsidiaries since January 1, 2001.

 

(v)          
Neither the Company
nor any of its Subsidiaries has waived any statute of limitations in respect of
material Taxes or agreed to any extension of time with respect to a material
Tax assessment or deficiency.

 

(vi)         
Neither the Company
nor any of its Subsidiaries is a party to any Tax allocation or sharing
agreement with any Person.

 

(vii)        
No claim has been
made by any Tax authority in a jurisdiction where the Company (or any of its
Subsidiaries, as applicable) does not currently file a Tax Return that it is or
may be subject to Tax by such jurisdiction.

 

(viii)       
None of the Company
or any of its Subsidiaries has any outstanding request for an extension of time
within which to pay any material Taxes or file any material Tax Returns.

 

(ix)          
None of the Company
or any of its Subsidiaries is a party to any agreement, contract, arrangement
or plan that has resulted or would result, separately or in the aggregate, in
(A) the payment of any “excess parachute payment” within the meaning of
§ 280G of the Code or (B) the loss of any deduction under § 162(m) of
the Code.

 

(x)           
The Company is not,
and has not been at any time during the applicable period specified in
§ 897(c)(l)(A)(ii) of the Code, a “United States real property holding
corporation” within the meaning of § 897(c)(2) of the Code.

 

(1)  Real
Property and Assets.

 

(i)           
§3(l)(i) of the
Disclosure Schedule lists and describes briefly all real property owned by
the Company or any of its Subsidiaries (the “Owned Real Property”). With
respect to each such parcel of Owned Real Property and except for matters that
would not be reasonably expected to have a Material Adverse Effect or as
otherwise disclosed on §3(l)(i) of the Disclosure Schedule: (a) the Company or
its Subsidiaries has good and marketable fee simple title to the parcel and the
improvements located thereon,

 

15

 

free and clear of all
Security Interests, except Permitted Liens; (b) there are no leases, subleases,
options or other agreements, written or oral, granting to any party or parties
the right of use or occupancy or the right to otherwise obtain title of such
parcel or any portion thereto (except for which public notice has been provided
or has been disclosed in a survey); and (c) there are no parties (other than
the Company and/or any of its Subsidiaries) who are in possession of or who are
using any such parcel.

 

(ii)          
§3(l)(ii) of the
Disclosure Schedule lists all real property leased or subleased by the
Company and/or any of its Subsidiaries (the “Leased Real Property”). The
Company has made available to the Buyer a correct and complete copy of the
leases and subleases and all material amendments for the Leased Real Property
(the “Real Property Leases”). To the Knowledge of the Company, each
lease and sublease for the Leased Real Property is valid, binding, enforceable
and in full force and effect in all material respects, and neither the Company
nor any of its Subsidiaries has received a current notice of default under any
such lease or sublease and the Company has not received any notice indicating
that any other party to such leases is in material default, except where the
invalidity, nonbinding nature, unenforceability, ineffectiveness or default
would not be reasonably expected to have a Material Adverse Effect.

 

(iii)         
The Leased Real
Property and Owned Real Property comprise all of the material real property
currently used in connection with the conduct of the business of the Company
and any of its Subsidiaries.

 

(m)  Intellectual
Property.

 

(i)           
§3(m)(i) of the
Disclosure Schedule identifies each patent or registered Intellectual
Property, or application therefor, owned by the Company or any of its
Subsidiaries, and each material written license or other agreement or material
oral agreement that would be reasonably considered to exist (excluding
off-the-shelf software license agreements) pursuant to which the Company or any
of its Subsidiaries has granted to any third party, or has been granted by any
third party, any rights in the Intellectual Property.

 

(ii)          
With respect to each
material item of Intellectual Property other than the license agreements
identified in §3(m)(i) of the Disclosure Schedule, and except as otherwise indicated
on §3(m)(i) of the Disclosure Schedule:

 

(A)         
the Company and/or
its Subsidiaries owns all right, title and interest in and to such item of
Intellectual Property, free and clear of any Security Interest, license or
other restriction;

 

(B)          
to the Knowledge of
the Company, such item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling or charge; and

 

16

 

(C)          
no action, suit,
proceeding, hearing, investigation, written claim or written demand is pending
or, to the Knowledge of the Company, is threatened which challenges the
legality, validity, enforceability, use or ownership of such item of
Intellectual Property;

 

(iii)          
With respect to each
agreement identified in §3(m)(i) of the Disclosure Schedule:

 

(A)         
neither the Company
nor any of its Subsidiaries, nor to the Knowledge of the Company, any other
party to any such agreement is in material breach or default thereof; and

 

(B)          
neither the Company
nor any of its Subsidiaries has repudiated any provision thereof, nor has the
Company received any notice that any other party to any such agreement has
repudiated any provision thereof; and

 

(C)          
each such agreement
is in full force and effect as to the Company or any of its Subsidiaries, and
the Company has not received any notice that would indicate that any such
agreement is not in full force and effect as to each other party thereto.

 

(iv)         
Neither the Company
nor any of its Subsidiaries has received notice of any claim that it is
infringing the Intellectual Property of any third party that would have a
material effect on the Company or its Subsidiaries, and the Company has no Knowledge
of any infringement by any third party of any material Intellectual Property
owned or used by the Company or any of its Subsidiaries.

 

(n)  Contracts. 
§3(n) of the Disclosure Schedule lists the following written agreements,
or material oral agreements that would be reasonably considered to exist that
were entered into and known by the Company, to which the Company or its
Subsidiaries is a party:

 

(i)           
any agreement for the
lease of personal or real property to or from any Person providing for lease
payments in excess of $1,000,000 per annum;

 

(ii)          
any agreement for the
purchase of products or services (in each case, other than agreements evidenced
by purchase orders), under which the undelivered balance of such products and
services has a selling price in excess of $2,500,000;

 

(iii)         
any agreement for the
sale of products or services (in each case, other than agreements evidenced by
purchase orders), under which the undelivered balance of such products or
services has a sales price in excess of $2,500,000;

 

(iv)         
any agreement
concerning a partnership or joint venture;

 

(v)          
any agreement under
which it has created, incurred, assumed or guaranteed any indebtedness for
borrowed money in excess of $1,000,000 or any

 

17

 

capitalized lease
obligation, in excess of $250,000 or under which it has imposed a Security
Interest on any of its assets, tangible or intangible;

 

(vi)         
any non-competition
agreement which materially restricts the ability of the Company or any of its
Subsidiaries to freely conduct its business;

 

(vii)        
any agreement with
any of the Sellers and their Affiliates which will survive the Closing, the
default of which would result in a Material Adverse Effect;

 

(viii)       
any collective
bargaining agreement;

 

(ix)          
any agreement for
employment on a full-time, part-time, consulting or other basis with respect to
any individual who received total compensation in 2002 in excess of $250,000 or
who has an annual base compensation for 2003 in excess of $250,000, or any
agreement providing severance benefits to any such person in excess of
$250,000;

 

(x)           
any agreement under
which it has advanced or loaned any amount to any of its directors, officers,
managers and Employees outside the Ordinary Course of Business;

 

(xi)          
any other agreement,
the default of which would result in a Material Adverse Effect; or

 

(xii)         
any agreement
regulating or controlling or otherwise affecting the voting or disposition of
any capital stock or other proprietary interest of the Company or any of its
Subsidiaries and any shareholder agreement or agreement relating to the
issuance of any securities of the Company or any of its Subsidiaries or the
granting of any registration rights with respect thereto and which agreement
does not terminate at or prior to Closing.

 

The Company has made
available to the Buyer a correct and complete copy of each written agreement or
a summary of each material oral agreement listed in §3(n) of the Disclosure
Schedule. Each such agreement is a valid and binding agreement of the Company
or one of its Subsidiaries, as the case may be, and is in full force and effect
and the Company has not received any notice that any such agreement is not a
valid and binding agreement of each other party thereto. Neither the Company
nor any of its Subsidiaries, and the Company has not received any notice that
any other Person party thereto, is in default under any such agreements, and no
event has occurred, or, to the Knowledge of the Company, is alleged to have
occurred, which constitutes or with lapse of time or giving of notice or both,
would constitute a default under any such agreement, except, in each case, for
such defaults which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(o)  Insurance.
§3(o) of the Disclosure Schedule describes each material insurance policy
maintained by or on behalf of the Company or any of its Subsidiaries. All of
such insurance policies are in full force and effect, and to the Knowledge of
the Company, the Company and its Subsidiaries are not in material default with
respect to their obligations under any of such

 

18

 

insurance
policies. To the Company’s Knowledge, there are no material claims by the
Company or any of its Subsidiaries under any of such policies relating to the
business, assets or properties of the Company or its Subsidiaries as to which
any insurance company is denying liability or defending under a reservation of
rights or similar clause.

 

(p)  Litigation.
§3(p) of the Disclosure Schedule sets forth each instance in which the
Company or any of its Subsidiaries or any of their respective property and
assets (i) is subject to any outstanding injunction, judgment, order, decree or
ruling or (ii) is a party or, to the Knowledge of the Company, is threatened to
be made a party, to any action, suit, proceeding, hearing or investigation of,
in or before any court or quasi-judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator, except
where such injunction, judgment, order, decree, ruling, action, suit, proceeding,
hearing or investigation is not reasonably expected to have a Material Adverse
Effect.

 

(q)  Employees.
§3(q) of the Disclosure Schedule sets forth each material collective
bargaining agreement or similar written understanding to which the Company or
any of its Subsidiaries is a party. Except as set forth in §3(q) of the
Disclosure Schedule, neither the Company nor any of its Subsidiaries is
currently experiencing, or has experienced within the past three years, (i) any
strike, picketing, or work stoppage, or (ii) any material grievance, claim of
unfair labor practices or other collective bargaining dispute, and, to the
Knowledge of the Company, nothing contained in clauses (i) and (ii) have been
threatened with respect to any employees employed by the Company or any of its
Subsidiaries. The Company believes that its employee relations are
satisfactory.

 

(r)  Employee
Benefits.

 

(i)           
§3(r) of the
Disclosure Schedule sets forth all of the current material Employee
Pension Benefit Plans, Employee Welfare Benefit Plans and all other material
employee benefits, compensation and fringe benefit plans, policies and programs
maintained or contributed to by the Company or any of its Subsidiaries with
respect to current or former employees of the Company or any of its
Subsidiaries (the “Plans”). The Company has provided or made available
to the Buyer (a) a copy of each of the Plans, including all amendments thereto,
(b) any trust agreements thereunder, (c) each summary plan description, (d) the
most recent favorable determination letter issued by the Internal Revenue
Service, if applicable, and (3) the most recent actuarial valuation with
respect to any Plan covered by Title IV of ERISA.

 

(ii)          
Each Plan is in
compliance in all material respects with the applicable requirements of law,
including, if applicable, ERISA and the Code.

 

(iii)         
Each Plan which is
intended to qualify under §401 (a) of the Code has received a favorable
determination letter that it is so qualified, and, to the Knowledge of the
Company, there exist no facts or circumstances which would cause any of such
favorable determination letters to be revoked.

 

19

 

(iv)         
All material
contributions required to have been made by the Company or any of its
Subsidiaries to any Plan under the terms of any such Plan or pursuant to any
applicable collective bargaining agreement or applicable law (including,
without limitation, ERISA and the Code) have been timely made in all material
respects.

 

(v)          
Except as set forth
on §3(r)(v) of the Disclosure Schedule, none of the Plans is a “multiemployer
plan” as defined in Section 3(37) of ERISA, and neither the Company nor
any of its Subsidiaries has withdrawn at any time within the preceding six
years from any multiemployer plan, and incurred any material withdrawal
liability which remains unsatisfied.

 

(vi)         
No Plan that is
subject to Section 302 of ERISA or Section 412 of the Code has
incurred any material “accumulated funding deficiency” within the meaning of
Section 302 of ERISA or Section 412 of the Code, whether or not
waived, and no material liability (other than for annual premiums) to the
Pension Benefit Guaranty Corporation has been incurred by the Company or any of
its Subsidiaries with respect to any such Plan. There has been no “reportable
event” within the meaning of Section 4043 of ERISA with respect to any
Plan subject to Title IV of ERISA which would require the giving of notice or
any other event requiring disclosure under Section 4041(c)(3)(C) or
4063(a) of ERISA.

 

(vii)        
Neither the Company
nor any of its Subsidiaries has incurred any material liability pursuant to
Title IV of ERISA as a result of any of them being treated as a single employer,
within the meaning of Section 414(b) or 414(c) of the Code, with any other
trade or business other than the Company or any of its Subsidiaries, and to the
Knowledge of the Company, no facts exist which could reasonably form the basis
for any such material liability.

 

(viii)       
Except as set forth
on §3(r)(viii) of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries or any Plan has any present or future obligation to make any
material payment to, or with respect to any present or former employee of the
Company or any of its Subsidiaries pursuant to, any retiree medical benefit
plan.

 

(ix)          
The most recent
actuarial report prepared for each Plan covered by Title IV of ERISA accurately
sets forth the fair value of the assets and liabilities, based on the actuarial
assumptions contained in such report, of each such Plan, and, since the date of
such report, no event has occurred that has had, or would reasonably be
expected to have, a material adverse effect on the funded status of any such
Plan.

 

(s)  Environmental Matters.

 

(i)           
Except as described
in or referred to in the reports and other documents listed in §3(s) of the
Disclosure Schedule or as otherwise disclosed in §3(s) of the Disclosure
Schedule, each of the Company and its Subsidiaries is in material compliance
with all applicable Environmental Laws. The Company and its Subsidiaries have

 

20

 

obtained, and are in
material compliance with, all material permits and authorizations required
under applicable Environmental Laws.

 

(ii)          
Except as described
in or referred to in the reports and other documents listed in §3(s) of the
Disclosure Schedule or as otherwise disclosed in §3(s) of the Disclosure
Schedule, and except for such releases as occur pursuant to environmental
permits or as otherwise authorized by Environmental Laws, to the Knowledge of
the Company: (A) there are and have been no material releases or threatened
releases of Hazardous Substances at, on, or into any real property currently
owned or leased by the Company or its Subsidiaries, and (B) there are and have
been no material releases or threatened releases of Hazardous Substances at,
on, or into any real property formerly owned or leased, by the Company or its
Subsidiaries that could, in either (A) or (B), be reasonably expected to result
in liability, expense or obligation of the Company or its Subsidiaries of $5.0
million or more, individually or in the aggregate, under any Environmental Law.

 

(iii)         
Except as described
in or referred to in the reports and other documents listed in §3(s) of the
Disclosure Schedule or as otherwise disclosed in §3(s) of the Disclosure
Schedule, none of the Company and any of its Subsidiaries is a party, whether
as a direct signatory or as successor, assign or, to the Knowledge of the
Company, otherwise bound, to any agreement under which the Company or its
Subsidiaries is obligated by any representation, warranty, indemnification,
covenant, restriction or other undertaking concerning compliance with
Environmental Laws that could be reasonably expected to result in material
liability, expense or obligation of the Company or its Subsidiaries.

 

(iv)         
Except as described
in or referred to in the reports and other documents listed in §3(s) of the
Disclosure Schedule or as otherwise disclosed in §3(s) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has received from any
governmental authority or other party any written notice of violation or
alleged violation of, non-compliance with, liability or potential liability
under Environmental Laws, other than notices in respect of violations,
non-compliance or liability that would not be reasonably expected to have a Material
Adverse Effect.

 

(v)          
The Company and its
Subsidiaries have not owned or operated at any property or facility except
those set forth or referenced on §3(s) of the Disclosure Schedule; provided, that the Company makes no
representation or warranty under this clause (v) with regard to any property or
facility prior to its acquisition by the Company or its Subsidiaries or with
respect to any property or facility owned by a Subsidiary prior to the
acquisition of such Subsidiary by the Company or its Subsidiaries.

 

(vi)         
Except as described
in or referred to in the reports and other documents listed in §3(s) of the
Disclosure Schedule or as otherwise disclosed in §3(s) of the Disclosure
Schedule, no judicial proceeding or governmental or administrative action is
pending or, to the Knowledge of the Company, threatened, under any
Environmental Law pursuant to which the Company or any of its Subsidiaries is
or is reasonably expected to

 

21

 

be named as a party and
which, if adversely determined, would reasonably be expected to result in a
Material Adverse Effect.

 

(vii)        
Except as described
in or referred to in the reports and other documents listed in §3(s) of the
Disclosure Schedule or as otherwise disclosed in §3(s) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has entered into any
agreement with any party or is subject to any order or decree from any
governmental authority pursuant to which the Company or any of its Subsidiaries
has assumed responsibility for the remediation of any condition resulting from
the release, treatment, storage or disposal of Hazardous Substances, except for
any such agreements, orders or decree that has been fully satisfied, discharged,
or otherwise terminated and no longer poses a material threat of liability,
expense or obligation to the Company and its Subsidiaries or the performance of
which would not be reasonably expected to result in a Material Adverse Effect.

 

(viii)       
The Company has
provided or made available to Buyer or its representatives copies of all (i)
material notices, demands, claims or actions against the Company or the
Subsidiaries pursuant to any Environmental Law and (ii) material reports and
documentation, in each case issued in the past three years and within the
Company’s or any of its Subsidiaries possession, related to all material
investigations, audits or assessments of environmental conditions at any
property or facility that the Company or any of its Subsidiaries owns or
operates or the Company’s or any of its Subsidiaries’ compliance with
Environmental Law.

 

(ix)          
Except as described
in or referred to in the reports and other documents listed in §3(s) of the
Disclosure Schedule or as otherwise disclosed in §3(s) of the Disclosure
Schedule, to the Knowledge of the Company, there are no Asbestos-Containing
Materials contained in the Company’s products. There is no pending or, to the
Company’s Knowledge, threatened claim against the Company or any of its
Subsidiaries involving, relating to, or arising out of Asbestos or any
Asbestos-Containing Material or the exposure to or release thereof.

 

(x)           
This §3(s) contains
the sole and exclusive representations and warranties of the Company and the
Sellers with respect to any environmental matters (with respect to the Company
and its Subsidiaries), including, without limitation, any arising under any
Environmental Requirements or relating to Hazardous Substances.

 

(t)  Certain Business Relationships
with the Company. Except as disclosed in the notes to the
Financial Statements or §3(t) of the Disclosure Schedule, none of the Sellers
or any of their respective Affiliates or any officer or director of the Company
or any of its Subsidiaries have been involved in any material business
arrangement or relationship with the Company or any of its Subsidiaries within
the past 24 months, other than in his, her or its capacity as a director,
officer, employee or securityholder of the Company or any of its Subsidiaries.

 

(u)  Products
Liability. Except as set forth on §3(u) of the Disclosure Schedule,
there are not presently pending or, to the Knowledge of the Company,
threatened, civil, criminal or

 

22

 

administrative
actions, suits, demands, claims, hearings, notices of violation,
investigations, proceedings or demand letters relating to any alleged hazard or
alleged defect in design, manufacture, materials or workmanship including,
without limitation, any failure to warn or alleged breach of express or implied
warranty or representation, relating to any product manufactured, distributed
or sold by or on behalf of the Company or any of its Subsidiaries that would
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. §3(u) of the Disclosure Schedule sets forth a true and
complete list of all material product recalls or material written post-sales
warnings involving a product line of the Company or its Subsidiaries, as
opposed to warranty claims in the Ordinary Course of Business (“Recalls”)
and any pending investigations being conducted by the Company, any of its
Subsidiaries or, to the Company’s Knowledge, by any other Person or
governmental or regulatory agency concerning a material Recall relating to any
product manufactured, distributed or sold by or on behalf of the Company or any
of its Subsidiaries.

 

(v)  Customers
and Suppliers. §3(v) of the Disclosure Schedule sets forth a true
and correct list of (a) the 10 largest customers of the Company and its
Subsidiaries on a consolidated basis in terms of gross sales during the nine
month period ended September 27, 2003 and (b) the 10 largest suppliers of
the Company and its Subsidiaries on a consolidated basis in terms of gross
purchases during the nine month period ended September 27, 2003. Except as
otherwise set forth on § 3(v) of the Disclosure Schedule, there are no
ongoing discussions or negotiations with any of the customers or suppliers
involving or in respect of any material price increases in any of the Company’s
or any Subsidiary’s inputs or material price or volume decreases in any of the
Company’s or any Subsidiary’s outputs, in either case, the net effect of which
could reasonably be expected to have a Material Adverse Effect. Except as
otherwise set forth on § 3(v) of the Disclosure Schedule, since
November 30, 2003, there has not been any termination of, or material and
adverse modification, amendment or change to, any business relationship maintained
by the Company or any of its Subsidiaries with any customer or supplier named
in §3(v) of the Disclosure Schedule, and no such customer or supplier has
provided the Company or any of its Subsidiaries with notice of an intent to
terminate or make a material and adverse modification, amendment or change to
its business relationship with the Company or such Subsidiary, as the case may
be. As of the date of this Agreement, and other than as disclosed on §3(v) of
the Disclosure Schedule, no customer or supplier named in §3(v) of the
Disclosure Schedule has given the Company or any of its Subsidiaries
written notice that it is subject to any bankruptcy, insolvency or similar
proceeding.

 

(w)  Prohibited
Payments. The Company and its Subsidiaries have not, directly or
indirectly, (i) made or agreed to make any contribution, payment or gift to any
government official, employee or agent where either the contribution, payment
or gift or the purpose thereof was illegal under the laws of any federal,
state, local or foreign jurisdiction, (ii) made or agreed to make any
contribution, or reimbursed any political gift or contribution made by any
other Persons, to any candidate for federal, state, local or foreign public
office or (iii) paid or delivered any fee, commission or any other sum of money
or item of property, however characterized, to any finder, agent, government
official or other party, in the United States or any other country, which in
any manner relates to the assets, business or operations of the Company or its
Subsidiaries, which, in the case of each of (i) (ii) or (iii), to the Company’s
Knowledge, was

 

23

 

illegal
under any federal, state or local laws (or any rules or regulations thereunder)
of the United States or any other country having jurisdiction.

 

4.            
Representations and Warranties of the Buyer.  The Buyer represents and warrants
to the Sellers that the statements contained in this §4 are correct and
complete as of the date of this Agreement and shall be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this §4).

 

(a)  Organization
of the Buyer.  The Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.

 

(b)  Authorization
of Transaction.  The Buyer has full power and authority (including
full corporate power and authority) to execute and deliver this Agreement and
to perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Buyer, enforceable in accordance with its
terms and conditions.

 

(c)  Noncontravention. 
Neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, shall (i) violate any statute,
regulation, rule, injunction, judgment, order, decree or ruling of any
government, governmental agency or court to which the Buyer is subject or any provision
of its charter or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under any agreement, contract, lease, license or instrument to which the Buyer
is a party or by which it is bound or to which any of its assets is subject,
except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation or failure to give notice would not
have a material adverse effect on the ability of the Buyer to consummate the
transactions contemplated by this Agreement.  Except for applicable
requirements of Competition Laws, including the Hart-Scott-Rodino Act and the
EC Merger Regulation, the Buyer is not required to give any notice to, make any
filing with, or obtain any authorization, consent or approval of any government
or governmental agency in order for the Buyer to consummate the transactions
contemplated by this Agreement, except where the failure to give notice, to
file, or to obtain any authorization, consent or approval would not have a
material adverse effect on the ability of the Buyer to consummate the
transactions contemplated by this Agreement.

 

(d)  Brokers’ Fees. 
The Buyer has no liability or obligation to pay any fees or commissions to any
broker, finder, investment banker or agent with respect to the transactions
contemplated by this Agreement for which any Seller could become liable or
obligated.

 

(e)  Availability
of Funds. The Buyer has delivered to the Company complete and correct
executed copies of the documents listed in §4(e) of the Disclosure
Schedule and all other letters, agreements and other documents, excluding
any agreements or understandings with respect to fees (the “Commitments”),
issued to the Buyer or to which the Buyer is a party in connection with (a) the
debt financing of the transactions contemplated hereby (the “Debt Financing”)
and (b) the equity investment by Warburg Pincus Private Equity, VIII, L.P.
and/or one or more of its Affiliates in the transactions contemplated hereby
(the “Equity Financing”).  Assuming

 

24

 

satisfaction
of all applicable conditions set forth in the Commitments and full funding
thereunder of all amounts available under the terms of the Commitments, at the
Closing Date, the Buyer will have sufficient funds to consummate the
transactions contemplated hereby. The Buyer has no reason to believe that cash
shall not be available for the Equity Financing or that the Debt Financing
shall not be funded, and the Buyer has not made any material misrepresentation
in connection with obtaining the Commitments. Buyer shall not modify, amend,
terminate or revoke the Commitments if the effect of such action would
reasonably be likely to prevent the Buyer from receiving the Debt Financing or
the Equity Financing in accordance with the Commitments.

 

(f)  Acquisition of the Shares for
Investment.  The Shares purchased by the Buyer pursuant to this
Agreement are being acquired for investment only and not with a view to any
public distribution thereof, and the Buyer shall not offer to sell or otherwise
dispose of such Shares in violation of any of the registration requirements of
the Securities Act or any comparable state or foreign securities laws.

 

(g)  Other Matters. 
To the knowledge of Buyer, no supplier or customer of the Company or its
Subsidiaries is reasonably likely to seek to materially and adversely amend,
modify or terminate its existing relationship following the entering into this
Agreement by Buyer and the Company or the announcement or consummation of the
transactions contemplated hereby, specifically as a result of the participation
by Buyer and its affiliates in the transactions contemplated by this Agreement.

 

5.            
Pre-Closing Covenants.  The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.

 

(a)  General. 
Each of the Parties shall use commercially reasonable best efforts to take all
action and to do all things necessary, proper or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
§7 below).

 

(b)  Notices and
Consents.  The Sellers and the Company shall use commercially
reasonable best efforts to obtain any third party consents that are required to
be obtained in connection with the consummation of the transaction. Each of the
Parties shall give any notices to, make any filings with, and use commercially
reasonable best efforts to obtain any authorizations, consents and approvals of
governments and governmental agencies which are required to be given, made or
obtained in connection with consummation of the transaction.  Without
limiting the generality of the foregoing, each of the Parties shall file any
notices or other material required under Competition Laws, including any
Notification and Report Forms and related material that it may be required to
file with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the Hart-Scott-Rodino Act and filings with
the European Commission under the EC Merger Regulation, and each of the Parties
shall use commercially reasonable efforts to obtain a waiver from any
applicable waiting periods related thereto, and shall make any further filings
pursuant thereto that may be necessary, proper or advisable in connection
therewith.  Each of the Parties shall bear its own costs and

 

25

 

expenses
in preparing such filings; provided that
the Buyer shall pay all filing fees required under the Hart-Scott-Rodino Act,
the EC Merger Regulation or other Competition Laws.

 

(c)  Operation
of Business.  Neither the Company nor any of its Subsidiaries
shall engage in any practice, take any action, or enter into any transaction of
the sort described in §3(h) above, except as expressly contemplated by this
Agreement.

 

(d)  Equity Issuances; Dividends and
Distributions.  The Company shall not (i) issue, sell or
deliver any shares of its capital stock or issue or sell any securities
convertible into, or options with respect to, or warrants to purchase or rights
to subscribe for, any shares of its capital stock, (ii) effect any
recapitalization, reclassification, stock dividend, stock split or like change
in its capitalization, (iii) amend its articles of incorporation or bylaws,
(iv) make any redemption or purchase of any shares of its capital stock, (v)
declare or pay any dividend or make any distribution on its capital stock or
equity interests, or (vi) pay any management or other fees to the Shareholders
or any of their Affiliates; provided, that
the Company may pay a cash dividend to the Shareholders as long as the amount
of such cash dividend is obtained solely from either (A) Cash of the Company
existing on January 3, 2004 and deducted from the definition of Closing
Cash Consideration or (B) Funded Indebtedness of the Company that is repaid at
or prior to the Closing (including any interest, expenses or fees incurred in
connection with the borrowing), and the payment of such cash dividend does not
subject the Company to any adverse Tax consequences, including any withholding
Tax obligation;

 

(e)  Restrictions
on Transfer.  Prior to Closing, the Sellers shall not sell,
transfer, contribute, distribute or otherwise dispose of any Shares, or agree
to do any of the foregoing.

 

(f)  Preservation
of Business.  The Company and its Subsidiaries shall use
commercially reasonable efforts to keep their respective businesses and
properties substantially intact, including their present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, customers and employees.

 

(g)  Access to Books and Records and
Customers and Suppliers.  The Company and its Subsidiaries
shall permit representatives of the Buyer to have reasonable access at all
reasonable times, and in a manner so as not to interfere with the normal
business operations of the Company or its Subsidiaries, to the premises,
properties, personnel, books, records (including tax records), contracts and
documents of or pertaining to the Company and its Subsidiaries, including,
without limitation, reasonable access to any properties of the Company or any
Subsidiary for the purpose of conducting environmental audit or assessment,
including the taking of reasonable samples from soils, groundwaters, surface
waters, soils, and air; provided, however, that
all such requests for access shall be directed to, and shall be approved by,
the Company or such other person as the Sellers may designate from time to
time. Notwithstanding the foregoing sentence, including the proviso therein, if,
on or after March 1, 2004, the Buyer and the Sellers reasonably determine
in good faith that Frank Nasisi is unlikely to be able to participate in the
financing efforts of the Buyer beginning on or about the date the roadshow for
the contemplated high yield financing is then-scheduled to begin (as confirmed
by the placement agent for such offering), a representative of the Buyer shall
be entitled to be present at the Company’s offices at all reasonable times and
shall be provided with reasonable office space and support (including telephone
and facsimile),

 

26

 

and
such representative shall be entitled to attend as an observer (with no power
or ability to make any decisions on behalf of the Company) such internal
management meetings of the Company as he may reasonably request for the purpose
of becoming familiar with the Company’s business and operations. Prior to the
Closing, the Buyer shall not contact or otherwise communicate with the
customers, employees or suppliers of the Company or any of its Subsidiaries in
connection with the transactions contemplated by this Agreement or in
connection with its observer rights, if any, provided in the immediately
preceding sentence, directly or indirectly, without the prior written consent
of the Sellers. The Buyer reaffirms its obligations under the confidentiality
agreement between the Buyer and the Company, as supplemented (the “Confidentiality
Agreement”), previously executed and delivered in connection with this transaction.

 

(h)  Notice of Developments.

 

(i)           
The Sellers may elect
(x) at any time to notify the Buyer of any development reasonably likely to
cause a breach of any of the representations and warranties in §3(f)-(w) above
and (y) on one occasion, to provide to the Buyer (A) the updates to the
environmental reports listed on §5(h)(i) of the Disclosure Schedule and
(B) a Phase 1 environmental report on the facility located in Prachinburi,
Thailand. Buyer shall have 10 days following the receipt of such environmental
reports to notify the Sellers that it needs up to an additional 20 days to
conduct further investigations with respect to the matters set forth on such
environmental reports. Unless the Buyer has the right to terminate this Agreement
pursuant to §9(a)(ii) below by reason of such development, notice or delivery
and exercises that right within the period of 30 days referred to in §9(a)(ii)
below, the written notice or delivery of such environmental reports pursuant to
this §5(h)(i) shall be deemed to have amended the Disclosure Schedule, to have
qualified the representations and warranties contained in §3 above, and to have
cured any misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of such development or notice or lack of delivery.

 

(ii)          
Each Party shall give
prompt written notice to the other Party of any material adverse development
causing or reasonably expected to result in (i) such Party’s failure to satisfy
the conditions to the other Party’s obligation to consummate the transactions
contemplated in this Agreement in §7(a) or §7(b), as applicable, or (ii) a
breach of any of such Party’s own representations and warranties in §3(a)-(e)
and §4 above, as applicable. No disclosure by any Party pursuant to this
§5(h)(ii), however, shall be deemed to amend or supplement the Disclosure
Schedule or to prevent or cure any misrepresentation or breach of
warranty.

 

(iii)         
Prior to the Closing,
the Buyer shall act in good faith to notify the Sellers if the Buyer reasonably
determines that any condition to closing under §7(a) that has not been
satisfied is not reasonably likely to be satisfied at or prior to the Closing.

 

(i)  No Additional Representations or
Warranties. The Buyer acknowledges that the Sellers, the Company
and its Subsidiaries have not made any representation or warranty, express or
implied, as to the accuracy or completeness of any information regarding the
Sellers, the

 

27

 

Company
or its Subsidiaries, except as expressly set forth in this Agreement or the
Disclosure Schedule, and the Buyer further agrees that the Sellers, the Company
and its Subsidiaries shall not have or be subject to any liability to the Buyer
or any other Person resulting from the distribution to the Buyer, or the
Buyer’s use of, any such information, including, without limitation, the
Descriptive Memorandum prepared by J.P. Morgan Securities Inc. and any
information, document or material provided to or made available to the Buyer in
any “data room,” management presentations or any other form in expectation of
the transactions contemplated by this Agreement. Except for the representations
and warranties expressly set forth in §3, as qualified or supplemented by the
Disclosure Schedule, the Sellers, the Company and its Subsidiaries make no
representation or warranty, express or implied, at law or in equity, in respect
of the Sellers, the Company, its Subsidiaries or any of their respective
assets, liabilities or operations, including, without limitation, any implied
representation or warranty as to the condition, merchantability, suitability or
fitness for a particular purpose, and expressly disclaim any such
representation or warranty. Except for the express representations and
warranties set forth in §3, as qualified or supplemented by the Disclosure
Schedule, the Buyer agrees that it is purchasing the Shares and acquiring the
Company and its Subsidiaries on an “as is” and “where is” basis.

 

(j)  Disclaimer Regarding Estimates
and Projections.  In connection with the Buyer’s
investigation of the Company and its Subsidiaries, the Buyer has received from
the Sellers and/or the Company certain estimates, forecasts, plans and
financial projections of the Company and its Subsidiaries. The Buyer
acknowledges that there are uncertainties inherent in attempting to make such
estimates, forecasts, plans and projections, that the Buyer is familiar with
such uncertainties, that the Buyer is taking full responsibility for making its
own evaluation of the adequacy and accuracy of all estimates, forecasts, plans
and projections so furnished to it (including the reasonableness of the
assumptions underlying such estimates, forecasts, plans and projections), and
that the Buyer shall have no claim against the Sellers and/or the Company or
its Subsidiaries with respect thereto. Accordingly, the Sellers, the Company
and its Subsidiaries make no representation or warranty with respect to such
estimates, forecasts, plans and projections (including any such underlying
assumptions).

 

(k)  Financing.  The Buyer agrees to use
commercially reasonable best efforts to obtain the financing contemplated by
the Commitments as soon as possible on the terms set forth in the Commitments.
The Company agrees to provide, and will cause its Subsidiaries and their
respective officers, directors, employees and accountants (collectively the
foregoing Persons are hereinafter referred to as the “Company
Representatives”) to provide, reasonable and customary cooperation
reasonably requested in connection with the arrangement of such financing,
including without limitation, participation in meetings, due diligence
sessions, road shows, the preparation of offering memoranda, private placement
memoranda, prospectuses and similar documents, the execution and delivery of
any commitment letters, underwriting or placement agreements, pledge and
security documents, other definitive financing documents, or other reasonably
requested certificates or documents, including a certificate of the chief
financial officer of the Company with respect to solvency matters and comfort
letters of accountants and such other certificates or documents as the Buyer
may reasonably request from time to time.

 

28

 

(1)  No Solicitation. 
From and after the date hereof until the earlier of the Closing and the
termination of this Agreement pursuant to §9 hereof, the Company shall not, and
shall not permit or cause any of its Subsidiaries or any Company
Representative, to, directly or indirectly, solicit, initiate or engage in
discussions or negotiations with or provide any information or data to any
Person, encourage submission of any inquiries, proposals or offers by, or take
any other actions intended or designed to facilitate the efforts of any Person,
other than Buyer, relating to (i) the possible acquisition of, or business
combination with, the Company or any of its Subsidiaries (whether by way of
merger, consolidation or otherwise) or the purchase, exchange or other transfer
of any portion of the Company’s or any of its Subsidiaries’ capital stock or
assets (other than in the case of assets, sales of inventory or obsolete or
non-productive assets in the Ordinary Course of Business) or (ii) any other
similar transaction that could reasonably be expected to materially impede,
interfere with or otherwise delay the consummation of the transactions
contemplated hereby (each, a “Transaction”). Upon execution of this
Agreement, the Company shall immediately terminate, and shall cause its
Subsidiaries and all Company Representatives to immediately terminate, all
discussions with any Person (other than Buyer and its Affiliates) concerning
any such Transaction.

 

(m)  2003 Audited Financial Statements.  The
Company shall use commercially reasonable efforts to promptly prepare the 2003
Audited Financial Statements. The Company shall promptly deliver the 2003
Audited Financial Statements to the Buyer as soon as they have been finally
completed and are no longer subject to any further adjustments or discussions
with the Company’s accountants. Following the delivery to the Buyer of the 2003
Audited Financial Statements, the Buyer shall have ten business days to review
the 2003 Audited Financial Statements for the purpose of determining whether
the condition to closing set forth in §7(a)(xi) has been satisfied. Unless the
Buyer notifies the Sellers within ten business days that the condition to
closing set forth in §7(a)(xi) has not been satisfied, such condition to
closing shall be deemed to have been met and the 2003 Audited Financial
Statements shall become the Most Recent Financial Statements, January 3,
2004 shall be the Most Recent Fiscal Month End, the fiscal year ended
January 3, 2004 shall be the Most Recent Fiscal Year End, be deemed to
have replaced the representations and warranties related to the Most Recent
Financial Statements, amended the Disclosure Schedule to the extent
applicable, changed all the references to November 30, 2003 contained
herein to January 3, 2004 (other than in § 3(h)(xvi) which shall
remain November 30, 2003), and to have cured any misrepresentation or
breach of warranty that otherwise might have existed hereunder solely by reason
of the prior Most Recent Financial Statements.

 

(n)  Selling Expense Schedule.  Not
later than 3 days prior to the Closing Date, the Company shall provide the
Buyer with a reasonably detailed schedule setting forth the Selling
Expenses for the purpose of calculating the Closing Cash Consideration.

 

6.            
Post-Closing Covenants.  The Parties agree as follows with respect to
the period following the Closing.

 

(a)  General. 
In the event that at any time after the Closing any further action is necessary
to carry out the purposes of this Agreement, each of the Parties shall take
such further action (including the execution and delivery of such further
instruments and documents) as the other

 

29

 

Party may reasonably
request, all at the sole cost and expense of the requesting Party. The Buyer
agrees to retain records material to the operations of the Company and its
Subsidiaries for the period prior to the Closing and make them available to the
Sellers for a period of three (3) years after the Closing, or, in the
alternative, to notify the Sellers in writing at least 30 days prior to their
disposal at any time prior to the expiration of such period and permit the
Sellers to have access to such records.

 

(b)  Litigation
Support.  In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing
Date involving either of the Company or any of its Subsidiaries, each of the
other Parties shall cooperate with such Party or its counsel in the defense or
contest, make available their personnel, and provide such testimony and access
to their books and records as shall be reasonably requested in connection with
the defense or contest, all at the sole cost and expense of the contesting or
defending Party; provided that
this §6(b) shall not apply with respect to any actual or threatened litigation
or dispute between the Parties.

 

(c)  Tax Matters.

 

(i)           
Transfer Taxes.  The Buyer shall, at its expense,
prepare or cause to be prepared and file or cause to be filed, and the Parties
shall cooperate in the preparation, execution and filing of, all returns,
questionnaires, applications, or other documents regarding any sales, use,
transfer, recording, registration and other fees, and any similar Taxes, which
become payable in connection with the transactions contemplated hereby. All
such taxes and fees shall be paid by the Buyer.

 

(ii)          
Cooperation.  The Parties shall cooperate with each
other to provide each other with such assistance as may be reasonably requested
by them in connection with the preparation of any Tax Returns, and any Tax
audit or other examination in connection with an administrative or judicial
proceeding involving a taxing authority relating to Taxes.

 

(d)  Performance of Obligations by the
Buyer.  Except as otherwise expressly provided by this Agreement,
on or after the Closing Date, the Buyer shall or shall cause the Company to
duly, promptly and faithfully pay, perform and discharge when due, (i) all
obligations and liabilities of whatever kind and nature, primary or secondary,
direct or indirect, absolute or contingent, known or unknown, whether accrued
or unaccrued, whether arising before, on or after the Closing Date, of the
Company, and (ii) any liability or obligation of the Company or its Affiliates
with respect to any of the liabilities described in clause (i), including,
without limitation, any guarantee or obligation to assure performance given or
made by the Company or its Affiliates with respect to any such obligation of
the Company set forth in clause (i) above.

 

30

 

(e)  Directors’ and Officers’
Indemnification.

 

(i)           
All rights to
indemnification existing in favor of directors, officers, members, managers, or
employees of the Company and its Subsidiaries as provided in the Constitutive
Documents of the Company and its Subsidiaries, as in effect on the date hereof,
with respect to matters occurring through the Closing Date, will survive the
transactions contemplated hereby and will continue in full force and effect
thereafter for a period of six years.

 

(ii)          
From and after the
Closing, the Buyer shall indemnify, defend and hold harmless the present and
former officers, directors and managers of the Company and its Subsidiaries
(collectively, the “Indemnified Parties”) against all losses, expenses,
claims, damages, liabilities or amounts that are paid in settlement of, or
otherwise in connection with, any claim, action, suit, proceeding or
investigation, based in whole or in part on the fact that such person is or was
a director, officer or manager of the Company or any of its Subsidiaries and
arising out of actions or omissions occurring at or prior to the Closing
(including, without limitation, the transactions contemplated by this
Agreement), in each case to the fullest extent permitted under applicable law
(and shall pay expenses in advance of the final disposition of any such action
or proceeding to each Indemnified Party to the fullest extent permitted under
applicable law).

 

(iii)         
This §6(e) is
intended to be for the benefit of, and shall be enforceable by, the Indemnified
Parties, their heirs and personal representatives and shall be binding on the
Buyer and its successors and assigns.

 

7.            
Conditions to Obligation to Close.

 

(a)  Conditions
to Obligation of the Buyer.  The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:

 

(i)           
the representations
and warranties set forth in §3 above shall be true and correct in all material
respects at and as of the Closing Date, except for representations and
warranties set forth in §3 which are qualified as to materiality or Material
Adverse Effect, which shall be true and correct in all respects at and as of
the Closing Date, taking into account such qualifications;

 

(ii)          
the Company and the
Sellers shall have performed and complied with all of their respective
covenants hereunder in all material respects through the Closing;

 

(iii)         
there shall not be
any injunction, judgment, order, decree, ruling or charge in effect preventing consummation
of any of the transactions contemplated by this Agreement;

 

(iv)         
the Sellers shall
have delivered to the Buyer a certificate to the effect that each of the
conditions specified above in §7(a)(i)-(iii) is satisfied in all respects;

 

(v)          
all applicable
waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act
and other applicable Competition Laws shall have expired or

 

31

 

otherwise been
terminated, and the approval of the European Commission of the transactions
contemplated hereby shall have been obtained pursuant to the EC Merger
Regulation;

 

(vi)         
the Buyer shall have
obtained the Debt Financing contemplated in the Commitments or otherwise
obtained financing on terms reasonably satisfactory to Purchaser, in either
case, in an amount sufficient to enable Purchaser to consummate the
transactions contemplated by this Agreement;

 

(vii)        
the Buyer and certain
of the Sellers shall have executed and delivered a Transition Services
Agreement substantially containing the terms set forth on Exhibit B;

 

(viii)       
during the period
from the date hereof to the Closing, no change, event or effect shall have
occurred that has had, or that is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect;

 

(ix)          
all directors of the
Company and its Subsidiaries shall have tendered their resignations and copies
thereof shall have been delivered to the Buyer;

 

(x)           
the Company, on
behalf of the Sellers, shall deliver to the Buyer, pursuant to
§ 1445(b)(3) of the Code and the Treasury regulations promulgated
thereunder, an affidavit dated no more than 30 days prior to the Closing Date
and signed by a responsible corporate officer of the Company stating that (A)
the Company is not, and has not been at any time during the applicable period
specified in § 897(c)(l)(A)(ii) of the Code, a “United States real
property holding corporation” (as defined in § 897(c)(2) of the Code) and
(B) no interest in the Company constitutes a “United States real property
interest” (as defined in § 897(c) of the Code); and

 

(xi)          
the EBITDA of the
Company for the fiscal year ended January 3, 2004 shall be not less than
$119.3 million as derived from the 2003 Audited Financial Statements.

 

The
Buyer may waive any condition specified in this §7(a) in writing at or prior to
the Closing.

 

(b)  Conditions to Obligation of the
Sellers. The obligation of the Sellers to consummate the transactions
to be performed by them in connection with the Closing is subject to
satisfaction of the following conditions:

 

(i)           
the representations
and warranties set forth in §4 above shall be true and correct in all material
respects at and as of the Closing Date, except for representations and
warranties set forth in §4 which are qualified as to materiality or material
adverse effect, which shall be true and correct in all respects at and as of
the Closing Date, taking into account such qualifications;

 

(ii)          
the Buyer shall have
performed and complied with all of its covenants hereunder in all material
respects through the Closing;

 

32

 

(iii)         
there shall not be
any injunction, judgment, order, decree, ruling or charge in effect preventing
consummation of any of the transactions contemplated by this Agreement;

 

(iv)         
the Buyer shall have
delivered to the Sellers a certificate to the effect that each of the
conditions specified above in §7(b)(i)-(iii) is satisfied in all respects; and

 

(v)          
all applicable
waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act
and other applicable Competition Laws shall have expired or otherwise been terminated,
and the approval of the European Commission of the transactions contemplated
hereby shall have been obtained pursuant to the EC Merger Regulation.

 

The
Sellers may waive any condition specified in this §7(b) in writing at or prior
to the Closing.

 

8.            
Remedies for Breaches of this Agreement.  All of the representations, warranties and
agreements contained herein shall terminate as of the Closing and be of no
further force or effect, except that the agreements set forth in §6 and §10 shall
survive the Closing and continue in full force and effect.

 

9.            
Termination.

 

(a)  Termination of Agreement. 
Certain of the Parties may terminate this Agreement as provided below:

 

(i)           
the Buyer and the
Sellers may terminate this Agreement by mutual written consent at any time
prior to the Closing;

 

(ii)          
the Buyer may
terminate this Agreement by giving written notice to the Sellers at any time
prior to the Closing in the event the Sellers has within the then previous 30
days given the Buyer any notice pursuant to §5(h)(i) above and the development
that is the subject of the notice is reasonably likely to result in the closing
condition set forth in §7(a)(i) or §7(a)(viii) not being satisfied by the
Closing Date;

 

(iii)         
the Buyer may
terminate this Agreement by giving written notice to the Sellers at any time
prior to the Closing (A) in the event that any Seller has breached any material
representation, warranty or covenant contained in this Agreement (other than
the representations and warranties in §3(f)-(w) above in cases where the
Sellers have provided notice pursuant to §5(h)(i)) in any material respect, the
Buyer has notified the Sellers of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach or (B) if the
Closing shall not have occurred on or before the earlier of (x) the date that
is 120 days after the delivery to the Buyer of the 2003 Audited Financial
Statements and (y) June 30, 2004, by reason of the failure of any
condition precedent under §7(a) hereof (unless the failure results primarily
from the Buyer’s inaction or the Buyer itself breaching any representation,
warranty or covenant contained in the Agreement); provided that the date in this clause (y) may be extended to
July 31, 2004, if (1) a Termination Date Extension Event shall have
occurred and is continuing

 

33

 

and the Buyer has so
notified the Sellers and (2) the Buyer shall have delivered to the Sellers
amendments to each of their Commitments that are substantially in the form of
the Commitments but that contain an expiration date on or after July 31,
2004, and otherwise do not contain any amendments or modifications reasonably
likely to prevent the Buyer from receiving the Debt Financing in accordance
with the Commitments; and

 

(iv)         
the Sellers may
terminate this Agreement by giving written notice to the Buyer at any time
prior to the Closing (A) in the event the Buyer has breached any material
representation, warranty or covenant contained in this Agreement in any
material respect, the Sellers has notified the Buyer of the breach, and the
breach has continued without cure for a period of 30 days after the notice of
breach or (B) if the Closing shall not have occurred on or before the earlier
of (x) the date that is 120 days after the delivery to the Buyer of the 2003
Audited Financial Statements and (y) June 30, 2004, by reason of the
failure of any condition precedent under §7(b) hereof (unless the failure
results primarily from a Seller’s inaction or a Seller breaching any
representation, warranty or covenant contained in this Agreement); provided that the date in this clause (y)
may be extended to July 31, 2004, if (1) a Termination Date Extension
Event shall have occurred and is continuing and the Buyer has so notified the
Sellers and (2) the Buyer shall have delivered to the Sellers amendments to
each of their Commitments that are substantially in the form of the Commitments
but that contain an expiration date on or after July 31, 2004, and
otherwise do not contain any amendments or modifications reasonably likely to
prevent the Buyer from receiving the Debt Financing in accordance with the
Commitments.

 

(b)  Effect of Termination. If any Party
terminates this Agreement pursuant to §9(a) above, all rights and obligations
of the Parties hereunder shall terminate without any liability of any Party to
the other Party (except for any liability of any Party then in breach); provided, however, that the
confidentiality provisions contained in the Confidentiality Agreement shall
survive in accordance with the terms thereof.

 

10.          
Miscellaneous.

 

(a)  Press Releases and Public
Announcements.  No Party shall issue any press release or public
announcement relating to the subject matter of this Agreement prior to the
Closing without the prior written approval of the other Party; provided, however, that any Party may make
any public disclosure it believes in good faith based upon the advice of
counsel, is required by applicable law (in which case the disclosing Party
shall use its reasonable best efforts to advise the other Party of such
disclosure and the form and content thereof prior to making the
disclosure).  The Parties agree to prepare and issue mutually acceptable
press releases on or promptly after the Closing announcing the transactions
contemplated hereby.

 

(b)  Third-Party
Beneficiaries.  Except as contemplated by §6(e) above, this
Agreement shall not confer any rights or remedies upon any Person other than
the Parties and their respective successors and permitted assigns.

 

34

 

(c)  Entire
Agreement.  This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof, other than the Confidentiality Agreement, which shall remain in full
force and effect.

 

(d)  Succession
and Assignment.  This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors and
permitted assigns.  No Party may assign either this Agreement or any of
its rights, interests or obligations hereunder without the prior written
approval of the Buyer and the Sellers; provided, however, that
the Buyer shall be permitted without the prior written consent of the other
Parties to assign its rights but not its obligations under this Agreement to
the lenders under the Debt Financing.

 

(e)  Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.

 

(f)  Headings. 
The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

 

(g)  Notices. All
notices, requests, demands, claims and other communications hereunder shall be
in writing. Any notice, request, demand, claim or other communication hereunder
shall be deemed duly given if personally delivered or sent by registered or
certified mail, return receipt requested, postage prepaid, or by reputable
overnight courier and addressed to the intended recipient as set forth below,
or in the case of the Sellers, as set forth on the Notice Schedule hereto:

 

If to the Company:

 

	
   

  	
  Polypore Inc.

  
	
   

  	
  13800 South Lakes Drive

  
	
   

  	
  Charlotte, NC 28273

  
	
   

  	
  Attention:

  	
  Frank Nasisi

  
	
   

  	
   

  	
  Lynn Amos

  
	
   

  	
  Facsimile: (704)
  587-8796

  

 

With a copy to (which
shall not constitute notice to the Company):

 

	
   

  	
  Kirkland & Ellis
  LLP

  
	
   

  	
  200 East Randolph Drive

  
	
   

  	
  Chicago, Illinois 60601

  
	
   

  	
  Attention:

  	
  H. Kurt von Moltke

  
	
   

  	
   

  	
  Carol Anne Huff

  
	
   

  	
  Facsimile: (312)
  861-2200

  

 

35

 

If to the Buyer:

 

	
   

  	
  PP Acquisition
  Corporation

  
	
   

  	
  c/o Warburg Pincus LLC

  
	
   

  	
  466 Lexington Avenue

  
	
   

  	
  New York, NY 10017

  
	
   

  	
  Attention:

  	
  Kewsong Lee

  
	
   

  	
   

  	
  David Barr

  
	
   

  	
  Facsimile:

  	
  (212) 878-9100

  

 

With a copy to (which
shall not constitute notice to the Buyer):

 

	
   

  	
  Willkie Farr &
  Gallagher LLP

  
	
   

  	
  787 Seventh Avenue

  
	
   

  	
  New York, NY 10019-6099

  
	
   

  	
  Attention:

  	
  Steven J. Gartner

  
	
   

  	
  Facsimile:

  	
  (212) 728-9222

  

 

Any
Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including messenger service, telecopy, telex, ordinary mail or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any Party may change the
address to which notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other Party notice in the manner
herein set forth.

 

(h)  Governing
Law; Jurisdiction.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware (i.e., without giving effect to any choice
or conflict of law provision or rule (whether of the State of Delaware or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.) Each of the Parties hereby (a)
irrevocably submits to the exclusive jurisdiction of any state or federal court
sitting in the State of Delaware in any action, suit or proceeding arising out
of or relating to this Agreement and agrees that all claims in respect of the
action or proceeding may be heard and determined in any such court, (b) waives,
and agrees not to assert in any such suit, action or proceeding, any claim that
(i) it is not personally subject to the jurisdiction of such court or of any other
court to which proceedings in such court may be appealed, (ii) such suit,
action or proceeding is brought in an inconvenient forum or (iii) the venue of
such suit, action or proceeding is improper, (c) expressly waives any
requirement for the posting of a bond by the party bringing such suit, action
or proceeding and (d) consents to process being served in any such suit, action
or proceeding by mailing, certified mail, return receipt requested, a copy
thereof to such party at the address in effect for notices hereunder, and
agrees that such services shall constitute good and sufficient service of
process and notice thereof. Nothing in this §10(h) shall affect or limit any
right to serve process in any other manner permitted by law.

 

36

 

(i)  Amendments
and Waivers.  No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by each of the
Parties. No waiver by any Party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.

 

(j)  Severability. 
Any term or provision of this Agreement that is invalid or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability
of the offending term or provision in any other situation or in any other
jurisdiction.

 

(k)  Expenses. 
Each of the Buyer and the Sellers will bear its own costs and expenses
(including without limitation accounting, investment banking and legal fees and
expenses) incurred in connection with this Agreement and the transactions
contemplated hereby; provided that, if and only to the extent that the
Closing occurs, all Selling Expenses shall be paid by the Company with funds
provided by the Buyer, it being understood and agreed that any amounts provided
by the Buyer to pay the Selling Expenses shall be deducted from the Closing
Cash Consideration calculation as contemplated by § 2(a) hereof. No costs
or expenses specifically related to the transactions contemplated by this
Agreement other than the Selling Expenses shall be paid or borne by the Company
or any of its Subsidiaries. Without limiting the generality of the foregoing,
all transfer, documentary, sales, use, stamp, registration and other such
Taxes, and all conveyance fees, recording charges and other fees and charges
(including any penalties and interest) incurred in connection with the
consummation of the transactions contemplated by this Agreement, shall be paid
by the Buyer when due, and the Buyer will, at its own expense, file all
necessary tax returns and other documentation with respect to all such Taxes,
fees and charges, and, if required by applicable law, the Parties will, and
will cause their affiliates to, join in the execution of any such tax returns
and other documentation.

 

(l)  Construction. 
The Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise.

 

(m)  Incorporation of Exhibits and
Schedules.  The Exhibits and Schedules identified in this
Agreement are incorporated herein by reference and made a part hereof.

 

(n)  Disclosure
Schedule.  The inclusion of information in the Disclosure
Schedule shall not be construed as an admission that such information is
material to the Company, its Subsidiaries or the Sellers. In addition, matters
reflected in the Disclosure Schedule are not necessarily limited to
matters required by this Agreement to be reflected in the Disclosure Schedule.
Such additional matters are set forth for informational purposes only and do
not necessarily include other matters of a similar nature.

 

*  *  *  *  *

 

37

 

IN WITNESS WHEREOF, the Parties hereto have executed
this Stock Purchase Agreement as of the date first above written.

 

	
   

  	
  Company:

  	
  POLYPORE INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jerry Zucker

  
	
   

  	
   

  	
  Name:

  	
  Jerry Zucker

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Buyer:

  	
  PP ACQUISITION
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Kewsong Lee

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Sellers:

  	
  /s/ Jerry Zucker

  
	
   

  	
   

  	
  Jerry Zucker

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ James Boyd

  
	
   

  	
   

  	
  James G. Boyd

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CIGNA MEZZANINE
  PARTNERS III, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: CIGNA Investments,
  Inc. (as authorized agent)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  /s/ Robert Eccles

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CONNECTICUT
  GENERAL LIFE INSURANCE COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: CIGNA Investments,
  Inc. (as authorized agent)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  /s/ Robert Eccles

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GOLDER, THOMA,
  CRESSEY FUND III LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: Golder, Thoma,
  Cressey, Rauner, L.P.

  
	
   

  	
   

  	
  Its: General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ B. Rauner

  
	
   

  	
   

  	
  Its:

  	
  Principal

  
						

 

38

 

	
   

  	
   

  	
  J.P. MORGAN
  PARTNERS (BHCA), L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: JPMP Master Fund
  Manager, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  JPMP Capital Corp.

  
	
   

  	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ C. Behrens

  
	
   

  	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE INTERTECH
  GROUP, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jerry Zucker

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE LINCOLN
  NATIONAL LIFE INSURANCE COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: Delaware Investment
  Advisers, a series of Delaware Management Business Trust, Attorney-in-Fact

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  /s/ R. Gordon
  Marsh

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ZB HOLDINGS,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jerry Zucker

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
						

 

39

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