Document:

EXHIBIT 10.21

 

AMENDED AND
RESTATED

INTERCREDITOR AGREEMENT

 

AMENDED AND
RESTATED INTERCREDITOR AGREEMENT, dated as of February 17, 2004, among
DEUTSCHE BANK TRUST COMPANY AMERICAS, as Credit Agent, WILMINGTON TRUST
COMPANY, as Second Priority Noteholder Agent and as 2004 Noteholder Agent, and
PLIANT CORPORATION.

 

W I T N E S S E T H :

 

WHEREAS, the Company (such term and each other capitalized term used
herein having the meanings set forth in Section 1 below), Deutsche Bank
Trust Company Americas, in its capacity as collateral agent under the Existing
Credit Agreement, and Wilmington Trust Company, in its capacity as trustee
under the 2003 Indenture, are parties to the Intercreditor Agreement dated as
of May 30, 2003 (the “Existing Intercreditor Agreement”);

 

WHEREAS, the Company, certain Subsidiaries of the Company, certain
lenders, Credit Suisse First Boston, acting through its Cayman Islands Branch,
as administrative agent and documentation agent, Deutsche Bank Trust Company
Americas, as collateral agent, General Electric Capital Corporation, as
co-collateral agent, and JPMorgan Chase Bank, as syndication agent, are parties
to the Credit Agreement dated as of February 17, 2004 (as amended,
supplemented or otherwise modified from time to time, the “New Credit
Agreement”);

 

WHEREAS, the Company, certain Subsidiaries of the Company and the 2004
Trustee have entered into the Indenture dated as of February 17, 2004 (as
amended, supplemented or otherwise modified from time to time, the “2004
Indenture”), pursuant to which the 2004 Notes are governed;

 

WHEREAS, the New Credit Agreement and the 2004 Notes Indenture, and the
Indebtedness incurred in respect thereof, have refinanced and replaced the
Existing Credit Agreement in its entirety, and each of the New Credit Agreement
and the 2004 Notes Indenture constitutes a Future First-Lien Credit Facility
designated by the Company as a “Senior Credit Agreement” pursuant to
Section 5.6 of the Existing Intercreditor Agreement;

 

WHEREAS, the Obligations of the Company under the New Credit Agreement,
the 2003 Indenture and the 2004 Indenture are secured (together with certain
other obligations) by various assets of the Company and certain Subsidiaries
thereof and, pursuant to Section 5.6 of the Existing Intercreditor Agreement,
the Company, the Second Priority Noteholder Agent and the 2004 Noteholder Agent
desire to amend and restate the Existing Intercreditor Agreement to provide for
the relative priority of their respective Liens on and security interests in
the Common Collateral and certain other rights, priorities and limitations in
connection with the exercise of remedies in respect of the Common Collateral;
and

 

 

WHEREAS, it is a condition precedent to the making of loans and the
issuance of letters of credit under the New Credit Agreement and to the
issuance of the 2004 Notes that the parties hereto enter into this Agreement;

 

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
and obligations herein set forth and for other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree to amend and restate the
Existing Intercreditor Agreement in its entirety as follows:

 

Section 1.                                          Definitions.  As used in this Agreement, the
following terms have the meanings specified below:

 

“2003 Indenture” means the Indenture dated as of May 30,
2003 (as amended, supplemented or otherwise modified from time to time),
pursuant to which the 2003 Notes are governed.

 

“2003 Notes” means (a) the initial $250,000,000 in principal
amount of 111/8% Senior Secured Notes due 2009 issued by
the Company under the 2003 Indenture, (b) the exchange notes issued in exchange
therefor as contemplated by the Registration Rights Agreement dated as of May
30, 2003, between the Company and the Initial Purchasers (as defined therein)
and (c) any additional notes issued under the 2003 Indenture by the Company, to
the extent permitted by the Indentures and the Senior Credit Agreement.

 

“2003 Trustee” means Wilmington Trust Company, in its capacity
as trustee under the 2003 Indenture and collateral agent under the Security
Documents (as defined in the 2003 Indenture), and any successor trustee and
collateral agent thereunder.

 

“2004 Indenture” has the meaning set forth in the recitals
hereto.

 

“2004 Noteholder Agent” means the 2004 Trustee and also includes
its successors hereunder as agent for the 2004 Noteholders (or if there is more
than one such successor agent, such agents representing the 2004 Noteholders
holding a majority of the 2004 Noteholder Claims) under the 2004 Noteholder
Documents in accordance with Section 5.8(b), exercising substantially the
same rights and powers, or if there is no acting 2004 Noteholder Agent under
the Senior Indenture, the Required Lenders with respect thereto.

 

“2004 Noteholder Claims”
means all Obligations in respect of the 2004 Notes or arising under the 2004
Noteholder Documents or any of them.

 

“2004 Noteholder Collateral”
means all of the assets of any Grantor, whether real, personal or mixed, with
respect to which a Lien is granted as security for any 2004 Noteholder Claim.

 

“2004 Noteholder Collateral
Documents” means the Security Documents (as defined in the 2004
Indenture) and any other document or instrument pursuant to which a Lien is
granted by any Grantor to secure any 2004 Noteholder Claims or under which
rights or remedies with respect to any such Lien are governed.

 

2

 

“2004 Noteholder Documents”
means (a) the 2004 Indenture, the 2004 Notes, the 2004 Noteholder
Collateral Documents and any document or instrument evidencing or governing any
Other First-Priority Obligations (as defined in the 2004 Indenture) and
(b) any other related document or instrument executed and delivered
pursuant to any 2004 Noteholder Document described in clause (a) above
evidencing or governing any Obligations thereunder.

 

“2004 Noteholder Liens” means Liens on the Common Collateral
created under the 2004 Noteholder Collateral Documents to secure the 2004
Noteholder Claims.

 

“2004
Noteholder Pledge Agreement” means the Pledge Agreement, dated as of
February 17, 2004, among the Company, the other Grantors and the 2004
Trustee.

 

“2004 Noteholders” means the Persons
holding 2004 Noteholder Claims, including the 2004 Noteholder Agent.

 

“2004 Notes” means (a) the $306,000,000 principal amount at
maturity of 111/8% Senior Secured Discount Notes due 2009
to be issued by the Company, (b) the exchange notes issued in exchange therefor
as contemplated by the Registration Rights Agreement dated as of
February 17, 2004, between the Company and the Initial Purchasers (as
defined therein) and (c) any additional notes issued under the 2004 Indenture
by the Company, to the extent permitted by the Indentures and the Senior Credit
Agreement.

 

“2004 Notes First Lien Collateral” means, at all times prior to
(but not on or after) the 2004 Notes First Lien Transition Date, the 2004
Noteholder Collateral (other than the Senior Lender First Lien Collateral).

 

“2004 Notes First Lien Transition Date” means the earlier of
(a) the date of the Discharge of 2004 Noteholder Claims and (b) the
date on which (i) the 2004 Notes First Lien Collateral shall have been
released from all Liens created under the 2004 Noteholder Documents and
(ii) the 2004 Noteholder Documents do not require the release of the
Senior Lender Liens on the 2004 Notes First Lien Collateral or otherwise
prohibit such Liens; provided, however, that if on the earlier of
the dates referred to in clauses (a) and (b) above (i) any Insolvency or
Liquidation Proceeding is proceeding or (ii) any action has been taken by
the 2004 Trustee or the 2004 Noteholders to enforce the 2004 Noteholder Liens
in respect of the 2004 Notes First Lien Collateral, then such date shall not be
the 2004 Notes First Lien Transition Date.

 

“2004 Notes Second Priority Claims” means the Senior Lender
Claims, the Noteholder Claims (other than the 2004 Noteholder Claims) and any
other Second-Priority Obligations (as defined in the 2004 Indenture).

 

“2004 Notes Second Priority Collateral Documents” means the
Senior Lender Collateral Documents, the Noteholder Collateral Documents (other
than the 2004 Noteholder Collateral Documents) and the Other Second Priority
Collateral Documents.

 

“2004 Notes Second Priority Secured Parties” means the Persons
holding 2004 Notes Second Priority Claims.

 

3

 

“2004 Trustee” means Wilmington Trust Company, in its capacity
as trustee under the 2004 Indenture and collateral agent under the Security
Documents (as defined in the 2004 Indenture), and any successor trustee and
collateral agent thereunder.

 

“Affiliate” means any Person that would be an “Affiliate” under
the Indentures or the Senior Credit Agreement.

 

“Agreement” means this Agreement, as amended, renewed, extended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.

 

“Bank Indebtedness” means any and all amounts payable under or
in respect of the Credit Agreement, including principal, premium (if any),
interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company  or any Subsidiary whether or not a claim for
post-filing interest is allowed in such proceedings), fees, charges, expenses,
reimbursement obligations, guarantees and all other amounts payable thereunder
or in respect thereof.

 

“Bankruptcy Law”
means Title 11 of the United States Code and any similar Federal, state or
foreign law for the relief of debtors.

 

“Business Day”
means any day other than a Saturday, a Sunday or a day that is a legal holiday
under the laws of the State of New York or on which banking institutions in the
State of New York are required or authorized by law or other governmental
action to close.

 

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

 

“Cash Management Obligations” means, with respect to any Person,
all obligations of such Person in respect of overdrafts and related liabilities
owed to any other Person that arise from treasury, depositary or cash
management services or in connection with any automated clearing house
transfers of funds or any similar transactions.

 

“Common Collateral” means all of the assets of any Grantor,
whether real, personal or mixed, that are subject to both Senior Liens and
Junior Liens.

 

“Company” means Pliant Corporation, a Utah corporation.

 

“Comparable Obligations Collateral Document” means, in relation
to any Common Collateral subject to any Senior Lien created under any Senior
Obligations Collateral Document, that Junior Obligations Collateral Document
that creates a Lien on the same Common Collateral, granted by the same Grantor.

 

“Credit Agent” means the Credit Agreement Collateral Agent and
also includes its successors hereunder as collateral agent for the Senior
Lenders (or if there is more than one such successor agent, such agents
representing the Senior Lenders holding a majority of the Senior Lender Claims)
under the Senior Credit Agreement in accordance with Section 5.8(a),

 

4

 

exercising substantially the same rights and powers, or if there is no
acting Credit Agent under the Senior Credit Agreement, the Required Lenders.

 

“Credit Agreement”
means the credit agreement dated as of February 17, 2004, among the
Company, the subsidiaries of the Company party thereto, the financial
institutions party thereto as lenders, Credit Suisse First Boston, acting
through its Cayman Islands Branch, as administrative agent and documentation
agent, Deutsche Bank Trust Company Americas, as collateral agent, General
Electric Capital Corporation, as co-collateral agent, and JPMorgan Chase Bank,
as syndication agent, together with related documents thereto including any
guarantee agreements and security documents, as further amended, modified,
supplemented, restated, renewed, refunded, replaced, restructured, repaid or
refinanced from time to time (including any agreement extending the maturity
thereof or increasing the amount of available borrowings thereunder or adding
Restricted Subsidiaries (as defined in the Indentures) of the Company as
additional borrowers or guarantors thereunder) whether with the original agents
and lenders or otherwise and whether provided under the original credit
agreement or other credit agreements or otherwise.

 

“Credit Agreement Collateral Agent” means Deutsche Bank Trust
Company Americas, in its capacity as collateral agent under the New Credit
Agreement and the Security Documents (as defined in the New Credit Agreement),
and any successor collateral agent thereunder.

 

“Credit Facilities” means one or more (a) debt facilities
(including the Credit Agreement) or commercial paper facilities providing for
revolving credit loans, term loans, receivables financing (including through
the sale of receivables to lenders or to special purpose entities formed to
borrow from lenders against such receivables) or letters of credit,
(b) debt securities, indentures or other forms of debt financing
(including convertible or exchangeable debt instruments) or
(c) instruments or agreements evidencing any other Indebtedness, in each case,
as amended, supplemented, modified, extended, renewed, restated or refunded in
whole or in part from time to time.

 

“Discharge of 2004
Noteholder Claims” means, except to the extent otherwise provided in
Section 5.8(b), payment in full in cash of (a) the principal of and
interest and premium, if any, on all Indebtedness outstanding under the 2004
Noteholder Documents or, with respect to letters of credit outstanding
thereunder, delivery of cash collateral or backstop letters of credit in
respect thereof in compliance with the 2004 Noteholder Documents, as
applicable, in each case after or concurrently with termination of all
commitments to extend credit thereunder and (b) any other 2004 Noteholder
Claims that are due and payable or otherwise accrued and owing at or prior to
the time such principal, interest and premium are paid.

 

“Discharge of Senior Lender
Claims” means, except to the extent otherwise provided in Section 5.8(a), payment in full
in cash of (a) the principal of and interest and premium, if any, on all
Indebtedness outstanding under the First-Lien Credit Facilities or, with
respect to letters of credit outstanding thereunder, delivery of cash
collateral or backstop letters of credit in respect thereof in compliance with
such First-Lien Credit Facilities, as applicable, in each case after or
concurrently with termination of all commitments to extend credit thereunder

 

5

 

and (b) any other Senior Lender Claims that are due and payable or
otherwise accrued and owing at or prior to the time such principal, interest
and premium are paid.

 

“Discharge of Senior Obligations” means (a) with respect to
the Senior Lender Claims and the Senior Lender First Lien Collateral, the
Discharge of Senior Lender Claims, and (b) with respect to the 2004
Noteholder Claims and the 2004 Notes First Lien Collateral, the Discharge of
2004 Noteholder Claims.

 

“Existing Credit Agreement” means the Credit Agreement dated as
of September 30, 1997, as amended and restated as of May 31, 2000,
among the Company, Aspen Industrial, S.A. de C.V., the lenders party thereto,
Deutsche Bank Trust Company Americas (f/k/a Bankers Trust Company), as
administrative agent and collateral agent, JPMorgan Chase Bank (f/k/a The Chase
Manhattan Bank), as syndication agent, and The Bank of Nova Scotia, as
documentation agent, as amended to the date hereof.

 

“Existing Intercreditor Agreement” has the meaning set forth in
the recitals hereto.

 

“Fair Market Value” means, with respect to any asset or property,
the price which would be negotiated in an arm’s-length, free market
transaction, for cash, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction.  In connection with any
sale or disposition of any Common Collateral, or the receipt of any proceeds in
respect of any insurance policy covering any Common Collateral, the Fair Market
Value of the Senior Lender First Lien Collateral and 2004 Notes First Lien
Collateral the subject of such sale, disposition or insurance award shall be
determined in good faith by the Board of Directors of the Company; provided,
however, that if the aggregate amount of gross proceeds received in
connection with such sale, disposition or insurance award exceeds $20.0
million, the Fair Market Value of such Senior Lender First Lien Collateral and
2004 Notes First Lien Collateral shall be determined by an investment banking
firm, accounting firm or appraisal firm of national standing selected by the
Company that is not an Affiliate of the Company; and provided further, however,
that in connection with any Insolvency or Liquidation Proceeding, such Fair
Market Value shall be determined by the court or other body with jurisdiction
over such proceeding.

 

“First-Lien Credit Facilities” means (a) the Credit Facilities
provided pursuant to the Credit Agreement and (b) any other Credit Facility,
that, in the case of both clauses (a) and (b), is secured by a Permitted
Lien (as defined in the applicable Indenture) described in clause (a) of
the definition thereof (in the case of the 2003 Indenture) and
clause (a)(2) of the definition thereof (in the case of the 2004
Indenture) and (except for the Credit Facilities provided pursuant to the New
Credit Agreement) is designated by the Company as a “First-Lien Credit
Facility” for purposes of the applicable Indenture.

 

“Future First-Lien Credit
Facility” means any First-Lien Credit Facility (other than the New
Credit Agreement).

 

“Future Other First-Lien
Obligations” means all Obligations of the Company or any other
Grantor in respect of Cash Management Obligations or Hedging Obligations that
are

 

6

 

designated by the Company as “Credit Agreement Obligations” for purposes
of the applicable Indenture (other than any Senior Lender Cash Management
Obligations and Senior Lender Hedging Obligations).

 

“Grantors” means
the Company and each of the Subsidiaries that has executed and delivered a
Senior Obligations Collateral Document or a Junior Obligations Collateral
Document.

 

“Hedging Obligations”
means, with respect to any Person, all obligations and liabilities of such
Person in respect of any Swap Agreement.

 

“Indebtedness”
means and includes all obligations that constitute “Indebtedness” within the
meaning of the Indentures or the Senior Credit Agreement.

 

“Indentures” means the 2003 Indenture and the 2004 Indenture.

 

“Insolvency or Liquidation
Proceeding” means (a) any voluntary or involuntary case or
proceeding under any Bankruptcy Law with respect to any Grantor, (b) any
other voluntary or involuntary insolvency, reorganization or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding with respect to any Grantor or with respect to any of their
respective assets, (c) any liquidation, dissolution, reorganization or winding
up of any Grantor whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy or (d) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of any Grantor.

 

“Junior Collateral Agent” means (a) with respect to the
Senior Lender First Lien Collateral, the Second Priority Noteholder Agent and
the 2004 Noteholder Agent, and (b) at all times prior to (but not on or
after) the 2004 Notes First Lien Transition Date, with respect to the 2004
Notes First Lien Collateral, the Credit Agent and the Second Priority
Noteholder Agent.

 

“Junior Liens” means (a) in respect of the Senior Lender First
Lien Collateral, the Noteholder Liens on such Common Collateral, and
(b) at all times prior to (but not on or after) the 2004 Notes First Lien
Transition Date, in respect of the 2004 Notes First Lien Collateral, the Senior
Lender Liens on such Common Collateral and the Noteholder Liens (other than the
2004 Noteholder Liens) on such Common Collateral.

 

“Junior Obligations” means (a) with respect to the Senior Lender
Claims (to the extent such Senior Lender Claims are secured by the Senior
Lender First Lien Collateral), the Noteholder Claims, and (b) at all times
prior to (but not on or after) the 2004 Notes First Lien Transition Date, with
respect to the 2004 Noteholder Claims (to the extent such 2004 Noteholder
Claims are secured by the 2004 Notes First Lien Collateral), the 2004 Notes
Second Priority Claims.

 

“Junior Obligations Collateral Documents” means (a) with respect
to the Senior Lender First Lien Collateral, the Noteholder Collateral
Documents, and (b) at all times prior to (but not on or after) the 2004 Notes
First Lien Transition Date, with respect to the 2004 Notes First Lien
Collateral, the 2004 Notes Second Priority Collateral Documents.

 

7

 

“Junior Obligations Documents” means (a) with respect to
the Noteholder Claims (as Junior Obligations), the Noteholder Documents, and
(b) at all times prior to (but not on or after) the 2004 Notes First Lien
Transition Date, with respect to the 2004 Notes Second Priority Claims (as
Junior Obligations), the Senior Lender Documents, the Noteholder Documents
(other than the 2004 Noteholder Documents) and the Other Second Priority
Documents.

 

“Junior Obligations Secured Parties” means (a) with respect to
the Senior Lender First Lien Collateral, the Noteholders, and (b) at all times
prior to (but not on or after) the 2004 Notes First Lien Transition Date, with
respect to the 2004 Notes First Lien Collateral, the 2004 Notes Second Priority
Secured Parties.

 

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

 

“Mark-to-Market Value” means, with respect to any Swap Agreement
under which any Hedging Obligations were incurred at any time, the maximum
aggregate amount (giving effect to any netting agreements) that the Company and
the Subsidiaries would be required to pay if such Swap Agreement were terminated
at such time by reason of a default on the part of the Company.

 

“New Credit Agreement” has the meaning set forth in the recitals
hereto.

 

“Noteholder Claims” means all Obligations in respect of the
Notes or arising under the Noteholder Documents or any of them.

 

“Noteholder Collateral Documents” means the Second Priority
Noteholder Collateral Documents, the 2004 Noteholder Collateral Documents and
the Other Noteholder Collateral Documents.

 

“Noteholder Documents” means the Second Priority Noteholder
Documents, the 2004 Noteholder Documents and the Other Noteholder Documents.

 

“Noteholder Liens” means Liens on the Common Collateral created
under the Noteholder Collateral Documents to secure the Noteholder Claims.

 

“Noteholders” means the Persons holding Noteholder Claims.

 

“Notes” means the 2003 Notes and the 2004 Notes.

 

“Obligations”
means any and all obligations with respect to the payment of (a) any
principal of or interest (including interest accruing on or after the
commencement of any Insolvency or Liquidation Proceeding, whether or not a
claim for post-filing interest is allowed in such proceeding) or premium on any
Indebtedness, including any reimbursement obligation in respect of any letter
of credit, (b) any fees, indemnification obligations, expense
reimbursement

 

8

 

obligations or other liabilities payable under the documentation
governing any Indebtedness, (c) any obligation to post cash collateral in
respect of letters of credit and any other obligations or (d) any Cash
Management Obligations or Hedging Obligations.

 

“Other Noteholder Collateral Documents” means any document or
instrument pursuant to which a Lien is granted by any Grantor to secure any
Secondary Collateral Obligations (other than Noteholder Claims).

 

“Other Noteholder Documents” means (a) any document or
instrument evidencing or governing any Secondary Collateral Obligations (as
defined in the 2004 Indenture) (other than Noteholder Claims) and (b) any
other related document or instrument executed and delivered pursuant to any
Other Noteholder Document described in clause (a) above evidencing or
governing any Obligations thereunder.

 

“Other Second Priority Collateral Documents” means, at all times
prior to (but not on or after) the 2004 Notes First Lien Transition Date, any
document or instrument pursuant to which a Lien is granted by any Grantor to
secure any Second-Priority Obligations (as defined in the 2004 Indenture) other
than Senior Lender Claims and Second Priority Noteholder Claims.

 

“Other Second Priority Documents” means, at all times prior to
(but not on or after) the 2004 Notes First Lien Transition Date, (a) any
document or instrument evidencing or governing any Second-Priority Obligations
(as defined in the 2004 Indenture) (other than Senior Lender Claims and Second
Priority Noteholder Claims) and (b) any other related document or
instrument executed and delivered pursuant to any Other Second Priority
Document described in clause (a) above evidencing or governing any
Obligations thereunder.

 

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

 

“Pledged Collateral”
means (a) the Common Collateral in the possession or under the control of the
Credit Agent (or its agents or bailees), to the extent that possession or
control thereof is necessary to perfect a Lien thereon under the Uniform
Commercial Code (or equivalent legislation of other jurisdictions), and (b) the
“Pledged Securities” under, and as defined in, the 2004 Noteholder Pledge
Agreement.  The Pledged Collateral shall
include (a) the Collection Deposit Accounts, Cash Concentration Accounts and
General Funds Account (each as defined in the Senior Lender Collateral
Documents) required to be maintained pursuant to the Senior Lender Collateral
Documents, and each other deposit account of any Grantor that is subject to a
control agreement for the benefit of the Credit Agent pursuant to the Senior
Lender Collateral Documents, and (b) the Notes Collateral Account (as defined
in the 2004 Indenture) required to be maintained pursuant to the 2004
Noteholder Documents.

 

“Recovery” has
the meaning set forth in Section 6.5.

 

“Required Lenders”
means, (a) with respect to any amendment or modification of the Senior
Credit Agreement, or any termination or waiver of any provision of the Senior
Credit Agreement, or any consent or departure by the Company or any of the
Subsidiaries therefrom, or consent of the Required Lenders required under this
Agreement, those Senior Lenders the

 

9

 

approval of which is required to approve such amendment or modification
of, termination or waiver of any provision of or consent or departure from the
Senior Credit Agreement (or would be required to effect such consent under this
Agreement if such consent were treated as an amendment of the Senior Credit
Agreement) and (b) with respect to any amendment or modification of the
Senior Indenture, or any termination or waiver of any provision of the Senior
Indenture, or any consent or departure by the Company or any of the
Subsidiaries therefrom, or consent of the Required Lenders required under this
Agreement, those 2004 Noteholders the approval of which is required to approve
such amendment or modification of, termination or waiver of any provision of or
consent or departure from the Senior Indenture (or would be required to effect
such consent under this Agreement if such consent were treated as an amendment
of the Senior Indenture).

 

“Secondary Collateral Obligations” has the meaning assigned to
such term in the 2004 Indenture.

 

“Second Priority Noteholder Agent” means the 2003 Trustee or,
following the payment in full of the principal of and interest and premium, if
any, on all Indebtedness under the 2003 Indenture, the agent representing the
Second Priority Noteholders holding a majority of the Second Priority Noteholder
Claims, exercising substantially the same rights and powers.

 

“Second Priority Noteholder
Claims” means all Obligations in respect of the 2003 Notes or
arising under the Second Priority Noteholder Documents or any of them.

 

“Second Priority Noteholder
Collateral” means all the assets of any Grantor, whether real,
personal or mixed, with respect to which a Lien is granted as security for any
Second Priority Noteholder Claim.

 

“Second Priority Noteholder
Collateral Documents” means the Security Documents (as defined in
the 2003 Indenture) and any other document or instrument pursuant to which a
Lien is granted by any Grantor to secure any Second Priority Noteholder Claims
or under which rights or remedies with respect to any such Lien are governed.

 

“Second Priority Noteholder
Documents” means (a) the 2003 Indenture, the 2003 Notes, the
Second Priority Noteholder Collateral Documents and any document or instrument
evidencing or governing any Other Second-Lien Obligations (as defined in the
2003 Indenture) other than 2004 Noteholder Claims and the Senior Lender Claims
and (b) any other related document or instrument executed and delivered
pursuant to any Second Priority Noteholder Document described in
clause (a) above evidencing or governing any Obligations thereunder.

 

“Second Priority Noteholder
Mortgages” means a collective reference to each mortgage, deed of
trust and any other document or instrument under which any Lien on real
property owned by any Grantor is granted to secure any Second Priority Noteholder
Claims or under which rights or remedies with respect to any such Liens are
governed.

 

“Second Priority Noteholders” means the Persons
holding Second Priority Noteholder Claims.

 

10

 

“Senior Agreement” means (a) with respect to the Senior
Lender Claims, the Senior Credit Agreement, and (b) with respect to the
2004 Noteholder Claims, the Senior Indenture.

 

“Senior Collateral Agent” means (a) with respect to the Senior
Lender First Lien Collateral, the Credit Agent, and (b) with respect to the
2004 Notes First Lien Collateral, the 2004 Noteholder Agent.

 

“Senior Credit Agreement” means the New Credit Agreement; provided
that if at any time a Discharge of Senior Lender Claims occurs with respect to
the New Credit Agreement (without giving effect to Section 5.8(a)), then,
to the extent provided in Section 5.8(a), the term “Senior Credit
Agreement” means the Future First Lien Credit Facility designated by the
Company as the “Senior Credit Agreement” in accordance with such Section.

 

“Senior Indenture” means the 2004 Indenture; provided
that if, at any time a Discharge of 2004 Noteholder Claims occurs with respect
to the 2004 Indenture (without giving effect to Section 5.8(b)), then, to
the extent provided in Section 5.8(b), the term “Senior Indenture” means
the 2004 Noteholder Document designated by the Company as the “Senior
Indenture” in accordance with such Section.

 

“Senior Lender Cash Management Obligations”
means any Cash Management Obligations secured by any Common Collateral
under the same Senior Lender Collateral Documents that secure Obligations under
the Senior Credit Agreement.

 

“Senior Lender Claims”
means (a) all Bank Indebtedness and all other Indebtedness outstanding under
one or more of any other First-Lien Credit Facilities, including any Future
First-Lien Credit Facilities, the Indebtedness under each of which
(i) constitutes Permitted Debt (as defined in the applicable Indenture) or
is otherwise permitted by the applicable Indenture, (ii) is designated by the
Company as “Credit Agreement Obligations” for purposes of the applicable
Indenture and (iii) is secured by a Permitted Lien (as defined in the
applicable Indenture) described in clause (a) of the definition thereof (in the
case of the 2003 Indenture) or clause (a)(2) of the definition thereof (in
the case of the 2004 Indenture), (b) all other Obligations (not constituting
Indebtedness) of the Company or any Grantor under the Credit Agreement or any
such other First-Lien Credit Facility, including all Senior Lender Hedging
Obligations and Senior Lender Cash Management Obligations, and (c) all Future
Other First-Lien Obligations.  Senior
Lender Claims shall include all interest accrued or accruing (or that would,
absent the commencement of an Insolvency or Liquidation Proceeding, accrue)
after the commencement of an Insolvency or Liquidation Proceeding in accordance
with and at the rate specified in the relevant Senior Lender Document whether
or not the claim for such interest is allowed as a claim in such Insolvency or
Liquidation Proceeding.  Notwithstanding
anything to the contrary contained in the first sentence of this definition,
any Obligation under the Senior Lender Documents or any Future First-Lien
Credit Facility (including any Cash Management Obligations or Hedging
Obligations) shall constitute a “Senior
Lender Claim” if the Credit Agent or the relevant Senior Lender or
Senior Lenders shall have received a written representation from the Company in
or in connection with the Senior Lender Documents evidencing such Obligation
that such Obligation constitutes a “Credit Agreement Obligation” under and as
defined in the applicable Indenture (whether or not such Obligation is at any
time determined not to have been

 

11

 

permitted to be incurred under the applicable Indenture).  Notwithstanding the foregoing, (a) not
more than $8,500,000, in the aggregate, of the amount of Senior Lender Cash
Management Obligations and the Mark-to-Market Value of Senior Lender Hedging
Obligations will be included as Senior Lender Claims at any time (it being
understood and agreed that (i) the aggregate amount of Senior Lender Cash
Management Obligations and Mark-to-Market Value of Senior Hedging Obligations
to be included as Senior Lender Claims at any time will be allocated (A) first,
to the Senior Lender Cash Management Obligations arising out of Cash Management
Arrangements with Wachovia Bank N.A. (or any of its affiliates); provided
that the amount allocated pursuant to this clause (A) shall not exceed
$5,000,000; (B) second, to the Senior Hedging Obligations arising out of Swap
Agreements with JPMorgan Chase Bank (or any of its affiliates) in effect on the
date hereof; provided that the amount allocated pursuant to this clause
(B) shall not exceed $8,500,000 minus the amount allocated pursuant to clause
(A); and (C) third, pro rata among the remaining Senior Lender Cash Management
Obligations and Senior Lender Hedging Obligations (based on the respective
amounts (or Mark-to-Market Values, as applicable) of such Obligations) at such
time and (ii) any portion of any Senior Lender Cash Management Obligations
or Senior Lender Hedging Obligations excluded from being Senior Lender Claims
pursuant to this sentence will, with respect to the Senior Lender Claims, be
treated as Noteholder Claims and, therefore, Junior Obligations with respect to
the Senior Lender Claims for purposes of this Agreement) and (b) each
reference in this definition to any term defined in (or by reference to a term
defined in) both Indentures shall have the meaning assigned to such term in the
(i) 2003 Indenture for purposes of determining the Senior Obligations with
respect to the Second Priority Noteholder Claims and (ii) the 2004 Indenture
for purposes of defining the Senior Obligations with respect to the 2004
Noteholder Claims.

 

“Senior Lender Collateral”
means all of the assets of any Grantor, whether real, personal or mixed, with
respect to which a Lien is granted as security for any Senior Lender Claim.

 

“Senior Lender Collateral
Documents” means the Security Documents (as defined in the New
Credit Agreement) and any other agreement, document or instrument pursuant to
which a Lien is granted securing any Senior Lender Claims or under which rights
or remedies with respect to such Liens are governed.

 

“Senior Lender Documents”
means the Senior Credit Agreement, the Senior Lender Collateral Documents, and
each of the other agreements, documents and instruments (including each
agreement, document or instrument providing for or evidencing a Senior Lender
Hedging Obligation or Senior Lender Cash Management Obligation) providing for
or evidencing any other Obligation under the Credit Agreement or any Future
First-Lien Credit Facility or any Future Other First-Lien Obligations, and any
other related document or instrument executed or delivered pursuant to any
Senior Lender Document at any time or otherwise evidencing any Indebtedness
arising under any Senior Lender Document.

 

“Senior Lender First Lien Collateral” means, (a) at all
times prior to the 2004 Notes First Lien Transition Date, any and all of the
following assets and properties now owned or at any time hereafter acquired by
any Grantor that constitute Senior Lender Collateral:  (i) all
Accounts Receivable; (ii) all Inventory; (iii) all Payment
Intangibles (including corporate tax refunds and payments made by distributors
and wholesalers to whom loans have been made by

 

12

 

the Company or any of the Subsidiaries), other than any Payment
Intangibles that represent tax refunds in respect of or otherwise relate to
real property, Fixtures, Equipment or Intellectual Property; (iv) all
Investment Property (including capital stock of subsidiaries), marketable
securities and other Financial Assets; (v) all indebtedness owed to the
Company or any of its subsidiaries that arises from cash advances made after
the date hereof to enable the obligor or obligors thereon to acquire Inventory;
(vi) all credit card proceeds of the Company and the Subsidiaries, all
collection accounts, Deposit Accounts, commodity accounts and securities
accounts and any cash or other assets (including Investment Property,
marketable securities and other Financial Assets) in any such accounts (other
than the Notes Collateral Account (as defined in the 2004 Indenture) and any
cash or other assets deposited in the Notes Collateral Account pursuant to the
terms of the 2004 Indenture); (vii) all hedging, commodity or other
derivative contracts (and any cash and other deposits securing the same);
(viii) all permits and licenses related to any of the foregoing (excluding
any permits or licenses related to the ownership or operation of real property,
Fixtures, Equipment or Intellectual Property); (ix) all books and records
related to the foregoing; (x) to the extent evidencing, governing,
securing or otherwise related to the preceding clauses (i) through (x), all
(A) General Intangibles, (B) Chattel Paper, (C) Instruments and
(D) Documents; and (xi) all Products and Proceeds of any and all of
the foregoing in whatever form received, including proceeds of insurance
policies related to Inventory of the Company and the Subsidiaries and including
proceeds of business interruption insurance to the extent related to the first
45 days of the covered period with respect to any business interruption; and
(b) at all times on and after the 2004 Notes First Lien Transition Date,
any and all the Common Collateral.  All
capitalized terms used in this definition and not defined elsewhere in this
Agreement have the meanings assigned to them in the UCC.

 

“Senior Lender Hedging
Obligations” means any Hedging Obligations secured by any Common
Collateral under the same Senior Lender Collateral Documents that secure Obligations
under the Senior Credit Agreement.

 

“Senior Lender Liens” means Liens on the Common Collateral
created under the Senior Lender Collateral Documents to secure the Senior
Lender Claims.

 

“Senior Lenders”
means the Persons holding Senior Lender Claims, including the Credit Agent.

 

“Senior Liens” means (a) in respect of the Senior Lender First
Lien Collateral, the Senior Lender Liens on such Common Collateral, and (b) at
all times prior to (but not on or after) the 2004 Notes First Lien Transition
Date, in respect of the 2004 Notes First Lien Collateral, the 2004 Noteholder
Liens on such Common Collateral.

 

“Senior Obligations” means (a) with respect to the Noteholder
Claims (to the extent such Noteholder Claims are secured by the Senior Lender
First Lien Collateral), the Senior Lender Claims, and (b) at all times
prior to (but not on or after) the 2004 Notes First Lien Transition Date, with
respect to the 2004 Notes Second Priority Claims (to the extent such 2004 Notes
Second Priority Claims are secured by the 2004 Notes First Lien Collateral),
the 2004 Noteholder Claims.

 

13

 

“Senior Obligations Collateral” means (a) at all times
prior to (but not on or after) the 2004 Notes First Lien Transition Date, with
respect to the 2004 Notes Second Priority Claims and the 2004 Notes Second
Priority Secured Parties, the 2004 Notes First Lien Collateral, and (b) with
respect to the Noteholder Claims and the Noteholders, the Senior Lender First
Lien Collateral.

 

“Senior Obligations Collateral Documents” means (a) with respect
to the Senior Lender First Lien Collateral, the Senior Lender Collateral
Documents, and (b) at all times prior to (but not on or after) the 2004 Notes
First Lien Transition Date, with respect to the 2004 Notes First Lien
Collateral, the 2004 Notes Collateral Documents.

 

“Senior Obligations Documents” means (a) with respect to
the Senior Lender Claims, the Senior Lender Documents, and (b) at all times
prior to (but not on or after) the 2004 Notes First Lien Transition Date, with
respect to the 2004 Noteholder Claims, the 2004 Noteholder Documents.

 

“Senior Obligations Secured Parties” means (a) with respect to
the Senior Lender First Lien Collateral, the Senior Lenders, and (b) at all
times prior to (but not on or after) the 2004 Notes First Lien Transition Date,
with respect to the 2004 Notes First Lien Collateral, the 2004 Noteholders.

 

“Subsidiary” means any “Subsidiary” of the Company, as defined
in the Indentures or the Senior Credit Agreement.

 

“Swap Agreement” means any agreement with respect to any swap,
spot, forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial
or pricing indices or measures of economic, financial or pricing risk or value
or any similar transaction or any combination of these transactions.

 

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

 

(a)                                       Terms
Generally.  The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase
“without limitation”.  The word “will” shall
be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a)
any definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified in
accordance with this Agreement, (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (c) the words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision hereof, (d) all references herein to Sections shall be construed to
refer to Sections of this Agreement and (e) the words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all

 

14

 

tangible and intangible assets and properties, including cash,
securities, accounts and contract rights. 
Any reference to any Person as a “Senior Collateral Agent”, “Senior
Obligations Secured Party”, “Junior Collateral Agent” or “Junior Obligations
Secured Party” shall be deemed to refer to such Person only in its capacity as
a Senior Collateral Agent, Senior Obligations Secured Party, Junior Collateral
Agent or Junior Obligations Secured Party, as the case may be, and not in any
other capacity under this Agreement.

 

Section 2.                                          Lien Priorities.

 

2.1                                 Subordination.  Notwithstanding the date, manner or order of grant, attachment or
perfection of any Liens on the Common Collateral granted to the Second Priority
Noteholder Agent, the 2004 Noteholder Agent, the Credit Agent, the Junior
Obligations Secured Parties or the Senior Obligations Secured Parties and
notwithstanding any provision of the UCC (or equivalent legislature of other
jurisdictions), or any applicable law or the Noteholder Documents, the Senior
Lender Documents or the Other Second Priority Documents or any other
circumstance whatsoever, each of (a) the Second Priority Noteholder Agent,
on behalf of itself and the Second Priority Noteholders, (b) the 2004
Noteholder Agent, on behalf of itself and the 2004 Noteholders, and
(c) the Credit Agent, on behalf of itself and the Senior Lenders under the
New Credit Agreement, hereby agrees that: 
(i) any Senior Lien on any Common Collateral securing any Senior
Obligations now or hereafter held by or on behalf of the Senior Collateral
Agent or any Senior Obligations Secured Parties or any agent or trustee
therefor shall be senior in all respects and prior to any Junior Lien or other
Lien on such Common Collateral securing the corresponding Junior Obligations;
and (ii) any Junior Lien or other Lien on any Common Collateral now or
hereafter held by or on behalf of any Junior Collateral Agent or any Junior
Obligations Secured Parties or any agent or trustee therefor, regardless of how
acquired, whether by grant, statute, operation of law, subrogation or
otherwise, shall be junior and subordinate in all respects to all Senior Liens
on such Common Collateral securing the corresponding Senior Obligations.  All Senior Liens on any Common Collateral
securing any Senior Obligations shall be and remain senior in all respects and
prior to all Junior Liens or other Liens on such Common Collateral securing the
corresponding Junior Obligations for all purposes, whether or not such Senior
Liens securing any Senior Obligations are subordinated to any Lien securing any
other obligation of the Company, any other Grantor or any other Person.

 

2.2                                 Prohibition on Contesting Liens.  Each of (a) the Second Priority
Noteholder Agent, on behalf of itself and the Second Priority Noteholders,
(b) the 2004 Noteholder Agent, on behalf of itself and the 2004
Noteholders, and (c) the Credit Agent, on behalf of itself and the Senior
Lenders under the New Credit Agreement, agrees that it shall not (and hereby
waives any right to) contest or support any other Person in contesting, in any
proceeding (including any Insolvency or Liquidation Proceeding), the priority,
validity or enforceability of (a) a Senior Lien held by or on behalf of
any of the Senior Obligations Secured Parties in the Common Collateral or
(b) a Junior Lien held by or on behalf of any of the Junior Obligations
Secured Parties in the Common Collateral (in the case of a Lien referred to in
clause (a) or (b) above that is held by (i) a 2004 Noteholder, solely to
secure Obligations in respect of 2004 Notes referred to in clause (a), (b) or
(c) of the definition of the term “2004 Notes” in Section 1 or (ii) a
Second Priority Noteholder, solely to secure Obligations in respect of 2003
Notes referred to in clause (a), (b) or (c) of the definition of the term
“2003 Notes” in Section 1)), as the case may be; provided that
nothing in this Agreement shall be construed to

 

15

 

prevent or impair the rights of the Senior Collateral Agent or any
Senior Obligations Secured Party (in their capacities as such) to enforce this
Agreement, including the priority of the Senior Liens securing the Senior Obligations
as provided in Section 2.1.

 

2.3                                 No New Liens.  So long as the applicable Discharge of Senior Lender Claims has
not occurred, the parties hereto agree that, after the date hereof, if the
Second Priority Noteholder Agent or the 2004 Noteholder Agent or any Noteholder
shall hold any Lien on any assets of the Company or any other Grantor that
(a) would constitute Senior Lender First Lien Collateral if such assets
were Senior Lender Collateral, (b) secure any Noteholder Claims and
(c) are not also subject to the first-priority Lien of the Credit Agent
under the Senior Lender Documents, then the Second Priority Noteholder Agent or
the 2004 Noteholder Agent or such Noteholder, as applicable, upon demand by the
Credit Agent or the Company, will either release such Lien or assign it to the
Credit Agent as security for the Senior Lender Claims (in which case each of
the Second Priority Noteholder Agent and the 2004 Noteholder Agent may retain a
junior lien on such assets subject to the terms hereof).  So long as the 2004 Notes First Priority
Transition Date has not occurred, the parties hereto agree that, after the date
hereof, if the Second Priority Noteholder Agent or the Credit Agent or any
other 2004 Notes Second Priority Secured Party shall hold any Lien on any
assets of the Company or any Grantor that (a) would constitute 2004 Notes
First Lien Collateral if such assets were 2004 Noteholder Collateral,
(b) secure any 2004 Notes Second Priority Claims and (c) are not also
subject to the first-priority Lien of the 2004 Trustee under the 2004
Noteholder Documents, then the Second Priority Noteholder Agent or the Credit
Agent or such 2004 Notes Second Priority Secured Party, as applicable, upon
demand by the 2004 Noteholder Agent or the Company, will either release such
Lien or assign it to the 2004 Noteholder Agent as security for the 2004
Noteholder Claims (in which case each of the Second Priority Noteholder Agent
and the Credit Agent may retain a junior lien on such assets subject to the
terms hereof).

 

Section 3.                                          Enforcement.

 

3.1                                 Exercise of Remedies.

 

(a)                                       So
long as the applicable Discharge of Senior Obligations has not occurred,
whether or not any Insolvency or Liquidation Proceeding has been commenced by
or against the Company or any other Grantor, (i) each Junior Collateral
Agent and the Junior Obligations Secured Parties will not (A) exercise or
seek to exercise any rights or remedies (including set-off) with respect to any
Common Collateral on which they do not hold the Senior Liens, (B) institute
any action or proceeding with respect to such rights or remedies (including any
action of foreclosure), (C) contest, protest or object to any foreclosure
proceeding or action brought by the Senior Collateral Agent or any Senior
Obligations Secured Party, the exercise of any right under any lockbox
agreement, control agreement, landlord waiver or bailee’s letter or similar
agreement or arrangement to which the Senior Collateral Agent or any Senior
Obligations Secured Party is a party, or any other exercise by any such party,
of any rights and remedies relating to the Common Collateral subject to the
Senior Liens under the Senior Obligations Documents or otherwise, or
(D) object to the forbearance by the Senior Obligations Secured Parties
from bringing or pursuing any foreclosure proceeding or action or any other
exercise of any rights or remedies relating to the Common Collateral subject to
their Senior Liens and (ii) the Senior Collateral Agent and the Senior
Obligations Secured Parties shall have

 

16

 

the exclusive right to enforce rights, exercise remedies (including
set-off and the right to credit bid their debt) and make determinations
regarding the release, disposition or restrictions with respect to the Common Collateral
subject to their Senior Liens without any consultation with or the consent of
any Junior Collateral Agent or any Junior Obligations Secured Party; provided,
that (1) in any Insolvency or
Liquidation Proceeding commenced by or against the Company or any other
Grantor, any Junior Collateral Agent or Junior Obligations Secured Party may
file a claim or statement of interest with respect to the Junior Obligations
and (2) any Junior Collateral Agent or Junior Obligations Secured Party may
take any action (not adverse to the Senior Liens on the Common Collateral
securing the corresponding Senior Obligations, or the rights of the Senior
Collateral Agent or the Senior Obligations Secured Parties to exercise remedies
in respect thereof) in order to preserve or protect its Junior Lien on such
Common Collateral.  In exercising rights
and remedies with respect to the Common Collateral subject to their Senior
Liens, the Senior Collateral Agent and the Senior Obligations Secured Parties
may enforce the provisions of the Senior Obligations Documents and exercise
remedies thereunder, all in such order and in such manner as they may determine
in the exercise of their sole discretion. 
Such exercise and enforcement shall include the rights of an agent
appointed by them to sell or otherwise dispose of Common Collateral subject to
their Senior Liens upon foreclosure, to incur expenses in connection with such
sale or disposition, and to exercise all the rights and remedies of a secured
lender under the Uniform Commercial Code (or the equivalent) of any applicable
jurisdiction and of a secured creditor under Bankruptcy Laws of any applicable
jurisdiction.

 

(b)                                      Each
of (a) the Second Priority Noteholder Agent, on behalf of itself and the
Second Priority Noteholders, (b) the 2004 Noteholder Agent, on behalf of
itself and the 2004 Noteholders, and (c) the Credit Agent, on behalf of
itself and the Senior Lenders under the New Credit Agreement, agrees that it
will not take or receive any Senior Obligations Collateral or any proceeds of
Senior Obligations Collateral in connection with the exercise of any right or
remedy (including set-off) with respect to any Senior Obligations Collateral,
unless and until the applicable Discharge of Senior Obligations has occurred.  Without limiting the generality of the
foregoing, unless and until the applicable Discharge of Senior Obligations has
occurred, except as expressly provided in the proviso in clause (ii) of
Section 3.1(a), the sole right of each Junior Collateral Agent and the Junior
Obligations Secured Parties with respect to the applicable Senior Obligations
Collateral is to hold a Junior Lien on such Common Collateral pursuant to the
Junior Obligations Collateral Documents for the period and to the extent
granted therein and to receive a share of the proceeds thereof, if any, after
the applicable Discharge of Senior Obligations has occurred.

 

(c)                                       Subject
to the proviso in clause (ii) of Section 3.1(a), (i) each Junior
Collateral Agent agrees, in its capacity as a Junior Collateral Agent, for
itself and the applicable Junior Obligations Secured Parties, that such Junior
Collateral Agent and Junior Obligations Secured Parties will not take any
action that would hinder any exercise of remedies undertaken by the
corresponding Senior Collateral Agent or Senior Obligations Secured Parties
under the Senior Obligations Documents, including any sale, lease, exchange,
transfer or other disposition of the applicable Senior Obligations Collateral,
whether by foreclosure or otherwise, and (ii) each Junior Collateral
Agent, on behalf of itself and the applicable Junior Obligations Secured
Parties, hereby waives any and all rights it or such Junior Obligations Secured
Parties may have as a junior lien creditor or otherwise to object to the manner
in which the corresponding Senior Collateral Agent or Senior Obligations
Secured Parties seek to enforce or

 

17

 

collect the Senior Obligations (as such enforcement or collection
relates to the applicable Senior Obligations Collateral) or the Senior Liens
granted in any of the applicable Senior Obligations Collateral, regardless of
whether any action or failure to act by or on behalf of the Senior Collateral
Agent or Senior Obligations Secured Parties is adverse to the interests of the
Junior Obligations Secured Parties.

 

(d)                                      Each
Junior Collateral Agent hereby acknowledges and agrees that no covenant,
agreement or restriction contained in any Junior Obligations Document shall be
deemed to restrict in any way the rights and remedies of the Senior Collateral
Agent or the Senior Obligations Secured Parties with respect to the applicable
Senior Obligations Collateral as set forth in this Agreement and the Senior
Obligations Documents.

 

3.2                                 Cooperation.  Subject to the proviso in clause (ii) of Section 3.1(a),
each Junior Collateral Agent, on behalf of itself and the applicable Junior
Obligations Secured Parties, agrees that, unless and until the applicable
Discharge of Senior Obligations has occurred, it will not commence, or join
with any Person (other than the Senior Obligations Secured Parties and the
Senior Collateral Agent upon the request thereof) in commencing, any
enforcement, collection, execution, levy or foreclosure action or proceeding
with respect to any Junior Lien held by it under any of the Junior Obligations
Documents or otherwise.

 

Section 4.                                          Payments.

 

4.1                                 Application of Proceeds.  As long as the applicable Discharge of
Senior Obligations has not occurred, the Common Collateral subject to any
Senior Lien or proceeds thereof received in connection with the sale or other
disposition of, or collection on, such Common Collateral upon the exercise of
remedies, shall be applied by the Senior Collateral Agent with respect to such
Common Collateral to the Senior Obligations secured by such Senior Lien in such
order as specified in the relevant Senior Obligations Documents until the
applicable Discharge of Senior Obligations has occurred.  Upon any Discharge of Senior Obligations
following such exercise of remedies, the applicable Senior Collateral Agent
shall deliver to the applicable Junior Collateral Agent (or, if there is more
than one applicable Junior Collateral Agent, the Junior Collateral Agent acting
as agent or trustee in respect of the largest amount of Junior Obligations) any
proceeds of Common Collateral held by it in the same form as received, with any
necessary endorsements, or as a court of competent jurisdiction may otherwise
direct to be applied by such Junior Collateral Agent to the applicable Junior
Obligations in such order as specified in the relevant Junior Obligations
Documents; provided, however, that if different Junior
Obligations Documents would require such proceeds to be applied differently,
then such proceeds will be applied ratably to the Junior Obligations arising
under each such Junior Obligations Document (based on the respective aggregate
outstanding amounts of such Junior Obligations thereunder) and, as among the
Junior Obligations arising under each such Junior Obligations Document, applied
in such order as is specified therein.

 

4.2                                 Allocation of Proceeds.  As long as the applicable Discharge of
Senior Obligations has not occurred, (a) any sale or other disposition of any
capital stock or other equity interests of a Grantor that owns assets
constituting Senior Lender First Lien Collateral or 2004 Notes First Lien
Collateral shall be deemed to be a sale or disposition of such Senior Lender
First Lien Collateral or 2004 Notes First Lien Collateral, as the case may be,
(b) any sale or

 

18

 

disposition of capital stock or other equity interests of a Grantor
that owns both Senior Lender First Lien Collateral and 2004 Notes First Lien
Collateral shall be deemed to be a separate sale or disposition of such Senior
Lender First Lien Collateral and such 2004 Notes First Lien Collateral and (c)
the proceeds received in respect of any such sale or disposition referred to in
clause (b) above (or any sale or other disposition of assets (other than those
described in clause (b) above) including both Senior Lender First Lien
Collateral and 2004 Notes First Lien Collateral shall be allocated between the
Senior Lender First Lien Collateral and 2004 Notes First Lien Collateral based
upon their respective Fair Market Values.

 

4.3                                 Payments Over.  Any Common Collateral or proceeds thereof received by any Junior
Collateral Agent or Junior Obligations Secured Party with respect to such
Common Collateral in connection with the exercise of any right or remedy (including
set-off) relating to such Common Collateral in contravention of this Agreement
shall be segregated and held in trust and forthwith paid over to the applicable
Senior Collateral Agent with respect to such Common Collateral for the benefit
of the applicable Senior Obligations Secured Parties in the same form as
received, with any necessary endorsements or as a court of competent
jurisdiction may otherwise direct.  The
applicable Senior Collateral Agent is hereby authorized to make any such
endorsements as agent for any such Junior Collateral Agent or Junior
Obligations Secured Party.  This
authorization is coupled with an interest and is irrevocable.

 

Section 5.                                          Other
Agreements.

 

5.1                                 Releases.

 

(a)                                       If:

 

(i)                                              all
other Liens (other than Permitted Liens (as defined in the 2003 Indenture)
under clauses (b) — (aa) of the definition of Permitted Liens in the 2003
Indenture) on any Common Collateral securing Credit Agreement Obligations or
any Other Second-Lien Obligations (each as defined in the 2003 Indenture) then
secured by that Common Collateral (including all commitments thereunder) are
released; provided that after giving effect to the release, Senior
Obligations secured by Senior Liens on the remaining Common Collateral remain
outstanding;

 

(ii)                                           any
Common Collateral is disposed of pursuant to a transaction permitted or not
prohibited under the 2003 Indenture;

 

(iii)                                        the
Company provides substitute collateral for any Common Collateral with at least
an equivalent fair value, as determined in good faith by the Board of Directors
of the Company;

 

(iv)                                       all
of the stock of any of the Subsidiaries that is Common Collateral is released
or any Subsidiary that is a Note Guarantor (as defined in the 2003 Indenture)
is released from its Note Guarantee (as defined in the 2003 Indenture); or

 

(v)                                          the
Company so requests in respect of Common Collateral with a fair value, as
determined in good faith by the Board of Directors of the Company, of up to

 

19

 

$2.0 million in any calendar year; subject to a cumulative carryover
for any amount not used in any prior calendar year,

 

then

 

the
Liens, if any, of the Second Priority Noteholder Agent, for itself or for the benefit of the Second Priority
Noteholders, on such Common Collateral (and, in the case of clause (iv) above,
on the assets of such Subsidiary that constitute Common Collateral) shall be
automatically, unconditionally and simultaneously released and the Second
Priority Noteholder Agent, for itself
and on behalf of any such Second Priority Noteholder, promptly shall execute
and deliver to the applicable Senior Collateral Agent or such Grantor such
termination statements, releases and other documents as such Senior Collateral
Agent or such Grantor may request to effectively confirm such release; provided
that a Grantor shall not be released from its guaranty of the Second Priority
Noteholder Claims pursuant to this Section if such Grantor will remain
liable under a guaranty in respect of the Senior Subordinated Notes or other
Subordinated Obligations (each as defined in the 2003 Indenture).

 

(b)                                 If:

 

(i)                                     all other Liens
(other than Permitted Liens (as defined in the 2004 Indenture) under clauses
(b) — (aa) of the definition of Permitted Liens in the 2004 Indenture) on any Senior
Lender First Lien Collateral securing Credit Agreement Obligations (as defined
in the 2004 Indenture) or any Secondary Collateral Obligations then secured by
that Senior Lender First Lien Collateral (including all commitments thereunder)
are released; provided that after giving effect to the release, Senior
Lender Claims secured by Liens on the remaining Senior Lender First Lien
Collateral remain outstanding;

 

(ii)                                  any Senior Lender
First Lien Collateral is disposed of pursuant to a transaction permitted or not
prohibited under the 2004 Indenture; or

 

(iii)                               all of the stock of any
of the Subsidiaries that is Senior Lender First Lien Collateral is released or
any Subsidiary that is a Note Guarantor (as defined in the 2004 Indenture) is
released from its Note Guarantee (as defined in the 2004 Indenture);

 

then

 

the
Liens, if any, of the 2004 Noteholder Agent, for itself or for the benefit of
the 2004 Noteholders, on such Senior Lender First Lien Collateral (and, in the case of clause (iii)
above, on the assets of such Subsidiary that constitute Senior Lender
First Lien Collateral) shall be
automatically, unconditionally and simultaneously released and the 2004
Noteholder Agent, for itself and on behalf of any such 2004 Noteholder,
promptly shall execute and deliver to the Credit Agent or such Grantor such
termination statements, releases and other documents as the Credit Agent or
such Grantor may request to effectively confirm such release; provided
that a Grantor shall not be released from its guaranty of the 2004 Noteholder
Claims pursuant to this Section unless such release is permitted by the
terms of the 2004 Noteholder Documents.

 

20

 

(c)                                       If:

 

(i)                                     all other Liens
(other than Permitted Encumbrances (as defined in the New Credit Agreement) on
any 2004 Notes First Lien Collateral securing 2004 Noteholder Claims or any
other Second-Priority Obligations (as defined in the 2004 Indenture) then
secured by that 2004 Notes First Lien Collateral (including all commitments
thereunder) are released; provided that after giving effect to the
release, 2004 Noteholder Claims secured by Liens on the remaining 2004 Notes
First Lien Collateral remain outstanding;

 

(ii)                                  any 2004 Notes First
Lien Collateral is disposed of pursuant to a transaction permitted or not
prohibited under the Senior Credit Agreement; or

 

(iii)                               any Subsidiary that is a
Domestic Obligations Loan Party (as defined in the New Credit Agreement) is
released from its Guarantee under the applicable Guarantee Agreement (as
defined in the New Credit Agreement);

 

then

 

the Liens, if any, of the Credit Agent, for itself or for the benefit
of the Senior Lenders, on such 2004 Notes First Lien Collateral (and, in the
case of clause (iii) above, on the assets of such Subsidiary that
constitute 2004 Notes First Lien Collateral) shall be automatically,
unconditionally and simultaneously released and the Credit Agent, for itself
and on behalf of any such Senior Lender, promptly shall execute and deliver to
the 2004 Trustee or such Grantor such termination statements, releases and
other documents as the 2004 Trustee or such Grantor may request to effectively
confirm such release; provided that a Grantor shall not be released from
its guaranty of the Senior Lender Claims pursuant to this Section unless
such release is permitted by the terms of the Senior Lender Documents (without
giving effect to this Agreement).

 

(d)                                      Each
Junior Collateral Agent, for itself and on behalf of the applicable Junior
Obligations Secured Parties, hereby irrevocably constitutes and appoints the
applicable Senior Collateral Agent and any officer or agent of the applicable
Senior Collateral Agent, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of such Junior Collateral Agent or Junior Obligations Secured Party
or in the applicable Senior Collateral Agent’s own name, from time to time in
the applicable Senior Collateral Agent’s discretion, for the purpose of carrying
out the terms of this Section 5.1,
to take any and all appropriate action and to execute any and all documents and
instruments that may be necessary or desirable to accomplish the purposes of
this Section 5.1,
including any termination statements, endorsements or other instruments of
transfer or release.

 

5.2                                 Insurance.

 

(a)                                       Unless
and until the applicable Discharge of Senior Obligations has occurred, the
applicable Senior Collateral Agent and the applicable Senior Obligations Loan
Parties shall have the sole and exclusive right, subject to the rights of the
Grantors under the Senior Obligations Documents, to adjust settlement for any
insurance policy covering the Common Collateral in respect of which such Senior
Obligations Secured Parties hold Senior Liens in the event of any loss
thereunder and to approve any award granted in any condemnation or similar
proceeding affecting such Common Collateral. 
Unless and until the applicable

 

21

 

Discharge of Senior Obligations has occurred, all proceeds of any such
policy and any such award if in respect to such Common Collateral shall be paid
to the applicable Senior Collateral Agent for the benefit of the applicable
Senior Obligations Loan Parties to the extent required under the Senior
Obligations Documents and thereafter to the applicable Junior Collateral Agent
(or, if there are more than one applicable Junior Collateral Agents, the Junior
Collateral Agent acting as agent or trustee in respect of the largest amount of
Junior Obligations) for the benefit of the applicable Junior Obligations
Secured Parties to the extent required under the Junior Obligations Documents
and then to the owner of the subject property or as a court of competent
jurisdiction may otherwise direct.  If
any Junior Collateral Agent or Junior Obligations Secured Party shall, at any
time, receive any proceeds of any such insurance policy or any such award in
contravention of this Agreement, it shall pay such proceeds over to the
applicable Senior Collateral Agent in accordance with the terms of
Section 4.3.  For purposes of this
Section 5.2, unless and until the applicable Discharge of Senior
Obligations has occurred, in the event of any receipt of insurance proceeds in
respect of any loss of Senior Lender First Lien Collateral and 2004 Notes First
Lien Collateral, such proceeds shall be allocated between such Senior Lender
First Lien Collateral and such 2004 Notes First Lien Collateral based upon
their respective Fair Market Values (determined as of the time immediately
prior to the loss giving rise to such insurance proceeds).

 

(b)                                      The
Company shall cause all insurance policies or certificates with respect to its
insurance policies to be endorsed for the benefit of the Second Priority
Noteholders, the 2004 Noteholders and the Senior Lenders (including by naming
the Second Priority Noteholder Agent, the 2004 Noteholder Agent and the Credit
Agent as loss payee or additional insured, as appropriate), in each case to the
extent required by the terms of the Second Priority Documents, 2004 Noteholder
Documents or Senior Lender Documents, as applicable.  In the event any insurance policy does not permit such
endorsement to be made for the benefit of more than one group of creditors, or
does not permit more than one agent to be named as loss payee or additional
insured, such insurance policy shall be endorsed for the benefit of the Senior
Obligations Secured Parties, and shall name the Senior Collateral Agent as loss
payee or additional insured (if permitted by the terms of such insurance
policy, for the benefit of the Senior Collateral Agent and the applicable
Junior Collateral Agents), in each case to the extent such policy relates to
Common Collateral upon which such Senior Collateral Agent holds a Senior Lien
for the benefit of such Senior Obligations Secured Parties.

 

5.3                                 Amendments to Junior Obligations Collateral
Documents.

 

(a)                                       Without
the prior written consent of the applicable Senior Collateral Agent and the
Required Lenders, no Junior Obligations Collateral Document may be amended,
supplemented or otherwise modified or entered into to the extent such
amendment, supplement or modification, or the terms of any new Junior
Obligations Collateral Document, would be prohibited by or inconsistent with any
of the terms relating to the applicable Senior Obligations Collateral of the
corresponding Senior Obligations Documents. 
Each Junior Collateral Agent agrees that each corresponding Junior
Obligations Collateral Document shall include the following language (or
language to similar effect approved by the applicable Senior Collateral Agent):

 

22

 

“Notwithstanding anything herein to the contrary, the lien and security
interest granted to the [Junior Collateral Agent] pursuant to this Agreement
and the exercise of any right or remedy by the [Junior Collateral Agent]
hereunder are subject to the provisions of the Amended and Restated
Intercreditor Agreement, dated as of February 17, 2004 (as amended,
supplemented or otherwise modified from time to time, the “Intercreditor Agreement”), among
Pliant Corporation, Deutsche Bank Trust Company Americas, as Credit Agent, and
Wilmington Trust Company, as Trustee for the Senior Secured Notes due 2009 and
the Senior Secured Discount Notes due 2009. 
In the event of any conflict between the terms of the Intercreditor
Agreement and this Agreement, the terms of the Intercreditor Agreement shall
govern.”

 

In
addition, each Junior Collateral Agent agrees that each applicable Junior
Obligations Collateral Document that is a mortgage or similar document, in each
case covering any Common Collateral, shall contain such other language as the
applicable Senior Collateral Agent may reasonably request to reflect the
subordination of such Junior Obligations Collateral Document to the
corresponding Senior Obligations Collateral Document covering such Common
Collateral.

 

(b)                                      In
the event that the applicable Senior Collateral Agent or Senior Obligations
Secured Parties enter into any amendment, waiver or consent in respect of any
of the Senior Obligations Collateral Documents for the Senior Agreement or, if
no Senior Agreement then exists, for the other Senior Obligations Documents,
for the purpose of adding to, or deleting from, or waiving or consenting to any
departures from any provisions of, any Senior Collateral Document or changing
in any manner the rights of such Senior Collateral Agent, the applicable Senior
Obligations Secured Parties, the Company or any other Grantor thereunder, then
such amendment, waiver or consent shall apply automatically to any comparable
provision of each Comparable Obligations Collateral Document without the
consent of any Junior Collateral Agent or Junior Obligations Secured Party and
without any action by any Junior Collateral Agent or Junior Obligations Secured
Party, the Company or any other Grantor, provided, that (A) no such amendment, waiver or
consent shall have the effect of removing assets subject to the Lien of the
Junior Obligations Collateral Documents, except to the extent that a release of
such Lien is permitted by Section 5.1,
and (B) notice of such amendment, waiver or consent shall have been
given to each Junior Collateral Agent.

 

5.4                                 Rights As Unsecured Creditors.  Notwithstanding anything to the contrary in
this Agreement, each Junior Collateral Agent and each Junior Obligations
Secured Party may exercise rights and remedies as an unsecured creditor against
the Company or any Subsidiary that has guaranteed the applicable Junior
Obligations in accordance with the terms of the applicable Junior Obligations
Documents and applicable law as if the Common Collateral was not subject to
their Junior Liens.  Nothing in this
Agreement shall prohibit the receipt by any Junior Collateral Agent or any
Junior Obligations Secured Party of the required payments of interest and
principal so long as such receipt is not the direct or indirect result of the
exercise by such Junior Collateral Agent or such Junior Obligations Secured
Party of rights or remedies as a secured creditor or enforcement in
contravention of this Agreement of any Lien held by any of them.  In the event any Junior Collateral Agent or
Junior Obligations Secured Party becomes a judgment lien creditor in respect of
any Common Collateral on which they do not have Senior Liens as a result of its
enforcement of its rights as an unsecured creditor, such judgment lien shall be
subordinated to the Senior Liens securing Senior Obligations on the same basis
as the other

 

23

 

Liens securing such Junior Obligations are so subordinated to such
Senior Liens under this Agreement. 
Nothing in this Agreement impairs or otherwise adversely affects any
rights or remedies the Credit Agent or the Senior Lenders may have with respect
to the Senior Lender First Lien Collateral or any rights or remedies the 2004
Noteholder Agent or the 2004 Noteholders may have with respect to the 2004
Notes First Lien Collateral.

 

5.5                                 Bailee for Perfection.

 

(a)                                       Each
Senior Collateral Agent agrees to hold the Pledged Collateral that is part of
the Common Collateral in its possession or control (or in the possession or
control of its agents or bailees) as bailee or agent for each Junior Collateral
Agent and any assignee solely for the purpose of perfecting the security
interest granted in such Pledged Collateral pursuant to the applicable Junior
Obligations Collateral Documents, subject to the terms and conditions of this Section 5.5.

 

(b)                                      Except
as otherwise specifically provided herein, until the applicable Discharge of
Senior Obligations has occurred, the applicable Senior Collateral Agent shall
be entitled to deal with the Pledged Collateral in accordance with the terms of
the applicable Senior Obligations Collateral Documents as if the Liens under
the Comparable Obligations Collateral Documents did not exist.  The rights of the Junior Collateral Agents
and the Junior Obligations Secured Parties shall at all times be subject to the
terms of this Agreement and to the Senior Collateral Agent’s rights under the
Senior Obligations Collateral Documents.

 

(c)                                       No
Senior Collateral Agent shall have any obligation whatsoever to any Junior
Collateral Agent or any Junior Obligations Secured Party to assure that the
Pledged Collateral is genuine or owned by any of the Grantors or to preserve
rights or benefits of any Person except as expressly set forth in this Section 5.5.  The duties or responsibilities of each
Senior Collateral Agent under this Section 5.5 shall be limited solely to
holding the Pledged Collateral as bailee for the Junior Collateral Agents for
purposes of perfecting the Lien held by such Junior Collateral Agents.

 

(d)                                      No
Senior Collateral Agent shall have, by reason of the Junior Obligations
Collateral Documents or this Agreement or any other document, a fiduciary
relationship in respect of any Junior Collateral Agent or any Junior
Obligations Secured Party.

 

(e)                                       Upon
the applicable Discharge of Senior Obligations, (i) the applicable Senior
Collateral Agent shall deliver (A) in the case of a Discharge of 2004
Noteholder Claims that constitutes a 2004 Notes First Lien Transition Date, to
the Credit Agent and, (B) in all other cases, to the applicable Junior
Collateral Agent (or, if there is more than one applicable Junior Collateral
Agent, the Junior Collateral Agent acting as agent or trustee in respect of the
largest amount of Junior Obligations) the remaining Pledged Collateral (if any)
together with any necessary endorsements (or otherwise cooperate to allow such
Junior Collateral Agent to obtain control of such Pledged Collateral) or as a
court of competent jurisdiction may otherwise direct and (ii) with respect to
any Pledged Collateral that constitutes a deposit or other account, such Senior
Collateral Agent shall, at the request of such Junior Collateral Agent, either
(A) transfer all cash and other assets in such account to an account controlled
by such Junior Collateral Agent or (B) cooperate with the Company and such
Junior Collateral Agent (at the expense of the

 

24

 

Company) in permitting control of such account to be transferred to
such Junior Collateral Agent.  Any
Junior Collateral Agent vested with control of any Pledged Collateral pursuant
to this clause (e) shall hold such Pledged Collateral as bailee for the other
Junior Collateral Agent pursuant to the terms of this Section 5.5.

 

(f)                                         Notwithstanding
anything to the contrary in any Junior Obligations Collateral Document, in the
event the terms of a Senior Obligations Collateral Document and a Junior
Obligations Collateral Document each require the Company or any Subsidiary to
(i) make payment in respect of any item of Common Collateral to, deliver
any item of Common Collateral to or deposit any item of Common Collateral with,
(ii) afford control over any item of Common Collateral to,
(iii) register ownership of any item of Common Collateral in the name of
or make an assignment of ownership of any Common Collateral or the rights
thereunder to, (iv) cause any securities intermediary, commodity
intermediary or other Person acting in a similar capacity to agree to comply,
in respect of any item of Common Collateral, with instructions or orders from,
or to treat, in respect of any item of Common Collateral, as the entitlement
holder, (v) hold any item of Common Collateral in trust for (to the extent
such item of Common Collateral cannot be held in trust for multiple parties
under applicable law), (vi) obtain the agreement of a bailee or other
third party to hold any item of Common Collateral for the benefit of or subject
to the control of or, in respect of any item of Common Collateral, to follow
the instructions of, or (vii) grant a power of attorney with respect to
any Common Collateral to, in any case, both the applicable Senior Collateral
Agent and the applicable Junior Collateral Agent, the Company or such
Subsidiary may, until the applicable Discharge of Senior Obligations has
occurred (or, in the case of compliance with the Senior Lender Collateral
Documents, until the 2004 Notes First Lien Transition Date), comply with such
requirement under the Junior Obligations Collateral Document as it relates to
such Common Collateral by taking such action under the applicable Senior
Obligations Collateral Documents only.

 

5.6                                 Entry Upon Premises by Credit Agent.

 

(a)                                       If,
prior to the 2004 Notes First Lien Transition Date, the Credit Agent takes any
enforcement action with respect to the Senior Lender First Lien Collateral, the
2004 Noteholder Agent (i) shall cooperate with the Credit Agent in its efforts
to enforce its security interest in the Senior Lender First Lien Collateral and
to finish any work-in-process and assemble the Senior Lender First Lien
Collateral, (ii) shall not hinder or restrict in any respect the Credit Agent
from enforcing its security interest in the Senior Lender First Lien Collateral
or from finishing any work-in-process or assembling the Senior Lender First
Lien Collateral, and (iii) shall permit the Credit Agent, its employees,
agents, advisers and representatives, at the sole cost and expense of the
lenders under the Senior Credit Agreement, to enter upon and use the 2004 Notes
First Lien Collateral (including, without limitation, (x) equipment,
processors, computers and other machinery related to the storage or processing
of records, documents or files and (y) intellectual property), for a period not
to exceed 270 days after the taking of such enforcement action, for purposes of
(A) assembling and storing the Senior Lender First Lien Collateral and
completing the manufacturing and processing of, and turning into finished
goods, any Senior Lender First Lien Collateral (including raw materials and
work-in-process), (B) selling any or all of the Senior Lender First Lien
Collateral located on such 2004 Notes First Lien Collateral, whether in bulk,
in lots or to customers in the ordinary course of business or otherwise, (C)
removing any or all of the Senior Lender First Lien Collateral located on such

 

25

 

2004 Notes First Lien Collateral and (D) taking reasonable actions to
protect, secure and otherwise enforce the rights of the Senior Lenders in the
Senior Lender First Lien Collateral; provided, however, that
nothing contained in this Agreement shall restrict the rights of the 2004
Noteholder Agent from selling, assigning or otherwise transferring any 2004
Notes First Lien Collateral prior to the expiration of such 270 day period if
such purchaser, assignee or transferee agrees to be bound by the provisions of
this Section.  It is understood and
agreed that if any stay or other order prohibiting the exercise of remedies
with respect to the Senior Lender First Lien Collateral has been entered by a
court of competent jurisdiction, such 270 day period shall be tolled during the
pendency of any such stay or other order; provided, that after the 270th
day following the taking of the enforcement action referred to above, such
period shall terminate as to any 2004 Notes First Lien Collateral if the 2004
Noteholder Agent shall determine in good faith and advise the Credit Agent that
the continuance of such period would prevent a contemplated sale of such 2004
Notes First Lien Collateral or materially reduce the price obtainable in such
sale.  Notwithstanding anything in this
paragraph to the contrary, the 2004 Noteholders (i) shall have no obligation to
exercise remedies that may be available to them under the 2004 Noteholder
Collateral Documents and (ii) shall be required to permit the Credit Agent to
enter upon and use the 2004 Notes First Lien Collateral only to the extent the
2004 Noteholders have possession and control of such 2004 Notes First Lien
Collateral.

 

(b)                                      If
the Credit Agent elects to enter upon and use the 2004 Notes First Lien
Collateral as provided in paragraph (a) above, it shall take all reasonable
efforts to avoid, to the extent reasonably practicable, interference with the
operation of the 2004 Notes First Lien Collateral.  Subject to the 2004 Noteholders’ having obtained possession and
control of any of the 2004 Notes First Lien Collateral in connection with their
enforcement of their rights against the 2004 Notes First Lien Collateral, the
2004 Noteholder Agent may instruct the Credit Agent in writing to remove all
Senior Lender First Lien Collateral from such 2004 Notes First Lien Collateral
by the end of the 270 day period referred to in paragraph (a) above, whereupon,
at the end of such 270 day period, the Credit Agent shall at its sole cost and
expense, remove the Senior Lender First Lien Collateral from the 2004 Notes
First Lien Collateral, provided that no stay or other order prohibiting
such removal has been entered by a court of competent jurisdiction (it being
understood and agreed that the running of such 270 day period shall be tolled
during the pendency of any such stay or other order).  If the Credit Agent does not remove the Senior Lender First Lien
Collateral from the 2004 Notes First Lien Collateral by the end of such 270 day
period (or such longer period as such a stay or other order is in effect), the
2004 Noteholder Agent may cause the Senior Lender First Lien Collateral to be
removed themselves, and, thereafter store the Senior Lender First Lien
Collateral in such location or locations as such 2004 Noteholders shall deem
advisable pending repossession by the Credit Agent.  Any costs reasonably incurred by the 2004 Noteholder Agent or the
2004 Noteholders by virtue of such removal and storage shall be paid by the
Senior Lenders.  The 2004 Noteholder
Agent agrees to notify the Credit Agent of the location or locations to which
any of the Senior Lender First Lien Collateral shall have been removed by it
pursuant to the foregoing provisions.

 

(c)                                       During
the period of actual occupation, use and/or control by the Senior Lenders or
their agents or representatives of any 2004 Notes First Lien Collateral (or any
assets or property subject to a leasehold interest constituting 2004 Notes
First Lien Collateral), the Senior Lenders shall be obligated to (i) reimburse
the 2004 Noteholders for all utilities, insurance and all other operating costs
of such 2004 Notes First Lien Collateral or other assets or property

 

26

 

during any such period of actual occupation, use and/or control
(calculated on a per diem basis based upon a fraction, the numerator of which
shall be the actual number of days of such occupation, use and/or control and
the denominator of which shall be 365 days) to the extent the same are actually
paid by such 2004 Noteholders, (ii) to repair at their expense any physical
damage to such 2004 Notes First Lien Collateral or other assets or property
directly resulting from such occupancy, use or control, and to leave such 2004
Notes First Lien Collateral or other assets or property in substantially the
same condition as it was at the commencement of such occupancy, use or control
and (iii) to indemnify and hold harmless the 2004 Noteholders from and against
any losses, claims, liabilities, costs or expenses directly resulting from such
occupancy, use or control or from any acts or omissions of the Senior Lenders
or their agents or representatives in connection therewith.  Notwithstanding the foregoing, in no event
shall the Senior Lenders have any liability to the 2004 Noteholders pursuant to
this Section 5.6 as a result of any condition (including any environmental
condition, claim or liability) on or with respect to the 2004 Notes First Lien
Collateral existing prior to the date of the exercise by the Senior Lenders of
their rights under this Section (except to the extent of any injury to any
Person on the real property constituting 2004 Notes First Lien Collateral or
damage to any 2004 Notes First Lien Collateral as a result of such condition
that would not have occurred but for the exercise by the Senior Lenders of
their right of use as set forth in this Section 5.6) and the Senior
Lenders shall have no duty or liability to maintain the 2004 Notes First Lien
Collateral in a condition or manner better than that in which it was maintained
prior to the use thereof by the Senior Lenders, or for any diminution in the
value of the 2004 Notes First Lien Collateral that results solely from ordinary
wear and tear resulting from the use of the 2004 Notes First Lien Collateral by
the Senior Lenders in the manner and for the time periods specified under this
Section.  Without limiting the rights
granted in this Section 5.6, the Senior Lenders shall cooperate with the
2004 Noteholder Agent in connection with any efforts made by such 2004
Noteholder Agent to sell the 2004 Notes First Lien Collateral.

 

5.7                                 Rights under Permits, Licenses and Intellectual
Property.  The 2004
Noteholder Agent agrees that if the Credit Agent shall require rights available
under any permit, license or Intellectual Property controlled by the 2004
Noteholder Agent in order to realize on any Senior Lender First Lien
Collateral, the 2004 Noteholder Agent shall take all such actions as shall be
available to it, consistent with applicable law and reasonably requested by the
Credit Agent, to make such rights available to the Credit Agent.  The Credit Agent agrees that if the 2004
Noteholder Agent shall require rights available under any permit, license or
Intellectual Property controlled by the Credit Agent in order to realize on any
2004 Notes First Lien Collateral, the Credit Agent shall take all such actions
as shall be available to it, consistent with applicable law and reasonably
requested by the 2004 Noteholder Agent, to make such rights available to the
2004 Noteholder Agent.  Each Senior
Collateral Agent agrees that any sale or other transfer of Common Collateral
consisting of Intellectual Property upon any exercise of remedies under this
Agreement shall be made expressly subject to the rights to be made available
pursuant to this Section.

 

5.8                                 When Discharge of Senior Lender Claims Deemed to Not
Have Occurred; Successor Agents.

 

(a)                                       If
at any time after the Discharge of Senior Lender Claims has occurred with
respect to the New Credit Agreement the Company designates any Future
First-Lien Credit

 

27

 

Facility to be the “Senior Credit Agreement” hereunder, then such
Discharge of Senior Lender Claims shall automatically be deemed not to have
occurred for all purposes of this Agreement (other than with respect to any
actions taken prior to the date of such designation as a result of the
occurrence of such first Discharge of Senior Lender Claims), and such Future
First-Lien Credit Facility shall automatically be treated as the Senior Credit
Agreement for all purposes of this Agreement, including for purposes of the
Lien priorities and rights in respect of Common Collateral set forth herein and
the granting by the Credit Agent of amendments, waivers and consents
hereunder.  Upon receipt of notice of
such designation (including the identity of the new Credit Agent), the Second
Priority Noteholder Agent and 2004 Noteholder Agent shall promptly (i) enter
into such documents and agreements (including amendments or supplements to this
Agreement) as the Company or such new Credit Agent shall request in order to
provide to the new Credit Agent the rights of the Credit Agent contemplated
hereby and (ii) deliver to the Credit Agent the Pledged Collateral together
with any necessary endorsements (or otherwise allow such Credit Agent to obtain
control of such Pledged Collateral).

 

(b)                                      If
the Discharge of 2004 Noteholder Claims has occurred with respect to the 2004
Indenture and the Company concurrently designates any other 2004 Noteholder
Document to be the “Senior Indenture” hereunder, then such Discharge of 2004
Noteholder Claims shall automatically be deemed not to have occurred for all
purposes of this Agreement (other than with respect to any actions taken prior
to the date of such designation as a result of the occurrence of such first
Discharge of 2004 Noteholder Claims), and such other 2004 Noteholder Document
shall automatically be treated as the Senior Indenture for all purposes of this
Agreement, including for purposes of the Lien priorities and rights in respect
of Common Collateral set forth herein and the granting by the 2004 Noteholder
Agent of amendments, waivers and consents hereunder.  Upon receipt of notice of such designation (including the
identity of the new 2004 Noteholder Agent), (i) the Second Priority Noteholder
Agent and Credit Agent shall promptly enter into such documents and agreements
(including amendments or supplements to this Agreement) as the Company or such
new 2004 Noteholder Agent shall request in order to provide to the new 2004
Noteholder Agent the rights of the 2004 Noteholder Agent contemplated hereby
and (ii) the old 2004 Noteholder Agent shall promptly deliver to (or cooperate
with respect to the transfer of control thereof to) the new 2004 Noteholder
Agent any Pledged Collateral then within the possession or control of the old
2004 Noteholder Agent, together with any necessary endorsements.

 

Section 6.                                          Insolvency
or Liquidation Proceedings.

 

6.1                                 Financing Issues.  If the Company or any other Grantor shall be
subject to any Insolvency or Liquidation Proceeding and the Credit Agent shall
desire to permit the use of cash collateral or to permit the Company or any
other Grantor to obtain financing under Section 363 or Section 364 of
Title 11 of the United States Code or any similar Bankruptcy Law (“DIP
Financing”), then each of (a) the Second Priority Noteholder Agent, on
behalf of itself and the Second Priority Noteholders, and (b) the 2004
Noteholder Agent, on behalf of itself and the 2004 Noteholders, agrees that it
will raise no objection to such use of cash collateral or DIP Financing and
will not request adequate protection or any other relief in connection
therewith (except to the extent permitted by Section 6.3) and, to the
extent the Liens securing the Senior Lender Claims under the Senior Credit
Agreement or, if no Senior Credit Agreement exists, under the other Senior
Lender Documents are subordinated or pari
passu with such DIP Financing, (x) the

 

28

 

Second Priority Noteholder Agent will subordinate its Liens in the
Common Collateral to such DIP Financing (and all Obligations relating thereto)
on the same basis as the other Liens securing the Second Priority Noteholder
Claims are so subordinated to Senior Lender Claims and 2004 Noteholder Claims
under this Agreement and (y) the 2004 Noteholder Agent will subordinate
its Liens in the Senior Lender First Lien Collateral to such DIP Financing (and
all Obligations relating thereto) on the same basis as the Liens of the 2004
Noteholder Agent in such Senior Lender First Lien Collateral are subordinated
to the Senior Lender Claims under this Agreement and will subordinate its Liens
in the 2004 Notes First Lien Collateral to such DIP Financing (and all
Obligations relating thereto) to the same extent that the Credit Agent
subordinates its Liens in the Senior Lender First Lien Collateral to such DIP
Financing (and all Obligations relating thereto).

 

6.2                                 Relief from the Automatic Stay.  Until the applicable Discharge of Senior
Obligations has occurred, each Junior Collateral Agent, on behalf of itself and
the applicable Junior Obligations Secured Parties, agrees that none of them
shall seek relief from the automatic stay or any other stay in any Insolvency
or Liquidation Proceeding in respect of the Common Collateral in which it holds
Junior Liens, without the prior written consent of the applicable Senior
Collateral Agent and the Required Lenders under the applicable Senior
Obligations Documents.

 

6.3                                 Adequate Protection.  Each Junior Collateral Agent, on behalf of
itself and the applicable Junior Obligations Secured Parties, agrees that none
of them shall contest (or support any other Person contesting) (a) any request
by the applicable Senior Collateral Agent or the applicable Senior Obligations
Secured Parties for adequate protection or (b) any objection by such
Senior Collateral Agent or such Senior Obligations Secured Parties to any
motion, relief, action or proceeding based on the such Senior Collateral
Agent’s or such Senior Obligations Secured Parties’ claiming a lack of adequate
protection, in each case as it relates to the applicable Senior Obligations
Collateral.  Notwithstanding the
foregoing contained in this Section 6.3, in any Insolvency or Liquidation
Proceeding, (i) in connection with any DIP Financing or the use of cash
collateral under Section 363 or Section 364 of Title 11 of the United
Sates Code or any similar Bankruptcy Law, the 2004 Noteholder Agent and the
2004 Noteholders may request adequate protection in connection with any
subordination of their Liens in the 2004 Notes First Lien Collateral,
(ii) if any Senior Obligations Secured Parties (or any subset thereof) are
granted adequate protection in the form of additional collateral in connection
with any DIP Financing or use of cash collateral under Section 363 or
Section 364 of Title 11 of the United States Code or any similar
Bankruptcy Law, then each Junior Collateral Agent, on behalf of itself and the
applicable Junior Obligations Secured Parties, may seek or request adequate
protection in the form of a replacement Lien on such additional collateral; provided
that (A) any replacement Liens on any additional collateral granted to the
2004 Noteholder Agent as adequate protection in respect of any 2004 Notes First
Lien Collateral to secure the 2004 Noteholder Claims may be subordinated to any
and all Liens on such additional collateral securing such DIP Financing (and
all Obligations relating thereto) but shall be senior to any and all Liens on
such additional collateral securing any corresponding Junior Obligations and
(B) any replacement Liens on any additional collateral granted to each
applicable Junior Collateral Agent as adequate protection in respect of any
Common Collateral in which such Junior Collateral Agent did not hold the Senior
Liens to secure the applicable Junior Obligations shall be subordinated to the
Liens securing the applicable Senior Obligations and any such DIP Financing

 

29

 

(and all Obligations relating thereto) on the same basis as the other
Junior Liens securing such Junior Obligations are so subordinated to such
Senior Obligations under this Agreement and (iii) in the event that any
Junior Collateral Agent, on behalf of its itself or the applicable Junior Obligations
Secured Parties, seeks or requests adequate protection in respect of its Junior
Liens and such adequate protection is granted in the form of additional
collateral, then such Junior Collateral Agent, on behalf of itself or any of
the applicable Junior Obligations Secured Parties, agrees that the applicable
Senior Collateral Agent shall also be granted a Lien on such additional
collateral as security for the applicable Senior Obligations and that any Lien
on such additional collateral securing such Junior Obligations shall be
subordinated to the Liens on such collateral securing such Senior Obligations
and any other Liens granted to the applicable Senior Obligations Secured
Parties as adequate protection in respect of their Senior Liens on the same
basis as the other Liens securing such Junior Obligations are so subordinated
to such Senior Obligations under this Agreement.

 

6.4                                 No Waiver.  Nothing contained herein shall prohibit or in any way limit any
Senior Collateral Agent or any Senior Obligations Secured Party from objecting
in any Insolvency or Liquidation Proceeding or otherwise to any action taken by
any applicable Junior Collateral Agent or Junior Obligations Secured Party,
including the seeking by any such Junior Collateral Agent or Junior Obligations
Secured Party of adequate protection or the asserting by any Junior Collateral
Agent or any such Junior Obligations Secured Party of any of its rights and
remedies under the applicable Junior Obligations Documents or otherwise, in
each case to the extent affecting such Senior Collateral Agent’s rights in the
applicable Senior Obligations Collateral.

 

6.5                                 Preference Issues.  If any Senior Obligations Secured Party is
required in any Insolvency or Liquidation Proceeding or otherwise to turn over
or otherwise pay to the estate of the Company or any other Grantor (or any
trustee, receiver or similar person therefor), because the payment of such
amount was declared to be fraudulent or preferential in any respect or for any
other reason, any amount (a “Recovery”), whether received as proceeds of
security, enforcement of any right of set-off or otherwise, then the applicable
Senior Obligations shall be reinstated to the extent of such Recovery and
deemed to be outstanding as if such payment had not occurred and such Senior
Obligations Secured Party shall be entitled to a Discharge of Senior
Obligations with respect to all such recovered amounts.  If this Agreement shall have been terminated
prior to such Recovery, this Agreement shall be reinstated in full force and
effect, and such prior termination shall not diminish, release, discharge,
impair or otherwise affect the obligations of the parties hereto.

 

Section 7.                                          Reliance;
Waivers; etc.

 

7.1                                 Reliance. 
The consent by the Senior Obligations Secured Parties to (a) the
execution and delivery of the Junior Obligations Documents to which such Senior
Obligations Secured Parties have consented (or the assent by the Senior
Obligations Secured Parties to the existence of the Junior Obligations
Documents in existence on the date of this Agreement) and (b) the grant to
the Junior Collateral Agents on behalf of the Junior Obligations Secured
Parties of a Lien on the Senior Obligations Collateral, and all loans and other
extensions of credit made or deemed made on and after the date hereof by the
Senior Obligations Secured Parties to the Company or any Subsidiary, in each
case shall be deemed to have been given and made in

 

30

 

reliance upon this Agreement. 
Each Junior Collateral Agent, on behalf of itself and the applicable
Junior Obligations Secured Parties, acknowledges that it and such Junior
Obligations Secured Parties have, independently and without reliance on the
applicable Senior Collateral Agent or any applicable Senior Obligations Secured
Party, and based on documents and information deemed by them appropriate, made
their own credit analysis and decision to enter into the applicable Junior
Obligations Documents, this Agreement and the transactions contemplated hereby
and thereby and they will continue to make their own credit decision in taking
or not taking any action under such Junior Obligations Documents or this
Agreement.

 

7.2                                 No Warranties or Liability.  Each Junior Collateral Agent, on behalf of
itself and the applicable Junior Obligations Secured Parties, acknowledges and
agrees that no Senior Collateral Agent or Senior Obligations Secured Party has
made any express or implied representation or warranty, including with respect
to the execution, validity, legality, completeness, collectibility or
enforceability of any of the Senior Obligations Documents, the ownership of any
Common Collateral or the perfection or priority of any Liens thereon.  The Senior Obligations Secured Parties will
be entitled to manage and supervise their respective loans and extensions of
credit under the applicable Senior Obligations Documents in accordance with law
and as they may otherwise, in their sole discretion, deem appropriate, and such
Senior Obligations Secured Parties may manage their loans and extensions of
credit without regard to any rights or interests that any Junior Collateral
Agent or any of the Junior Obligations Secured Parties have in the Common
Collateral or otherwise, except as otherwise provided in this Agreement.  No Senior Collateral Agent or Senior
Obligations Secured Party shall have any duty to any Junior Collateral Agent or
any Junior Obligations Secured Party to act or refrain from acting in a manner
that allows, or results in, the occurrence or continuance of an event of
default or default under any agreements with the Company or any Subsidiary
thereof (including any Junior Obligations Documents), regardless of any
knowledge thereof that they may have or be charged with.

 

7.3                                 No Waiver of Lien Priorities.

 

(a)                                       No
right of any Senior Obligations Secured Party, any Senior Collateral Agent or
any of them to enforce any provision of this Agreement or any Senior
Obligations Document shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Company or any other Grantor or by
any act or failure to act by any Senior Obligations Secured Party or the Senior
Collateral Agent, or by any noncompliance by any Person with the terms,
provisions and covenants of this Agreement, any of the Senior Obligations
Documents or any of the Junior Obligations Documents, regardless of any
knowledge thereof that the Senior Collateral Agent or the Senior Obligations
Secured Parties, or any of them, may have or be otherwise charged with;

 

(b)                                      Without
in any way limiting the generality of the foregoing paragraph (but subject to
the rights of the Company and the other Grantors under the Senior Obligations
Documents), the Senior Obligations Secured Parties, the Senior Collateral Agent
and any of them, may, at any time and from time to time, without the consent
of, or notice to, any Junior Collateral Agent or any Junior Obligations Secured
Party, without incurring any liabilities to any Junior Collateral Agent or any
Junior Obligations Secured Party and without impairing or releasing the Lien
priorities and other benefits provided in this Agreement (even if any right of

 

31

 

subrogation or other right or remedy of any Junior Collateral Agent or
any Junior Obligations Secured Party is affected, impaired or extinguished
thereby) do any one or more of the following:

 

(i)                                              change
the manner, place or terms of payment or change or extend the time of payment
of, or amend, renew, exchange, increase or alter, the terms of any of the
Senior Obligations or any Lien on any Senior Obligations Collateral or guaranty
of the Senior Obligations or any liability of the Company or any other Grantor,
or any liability incurred directly or indirectly in respect thereof (including
any increase in or extension of the Senior Obligations, without any restriction
as to the amount, tenor or terms of any such increase or extension)  or
otherwise amend, renew, exchange, extend, modify or supplement in any manner
any Liens held by the Senior Collateral Agent or any of the Senior Obligations
Secured Parties, the Senior Obligations or any of the Senior Obligations
Documents;

 

(ii)                                           sell,
exchange, release, surrender, realize upon, enforce or otherwise deal with in
any manner and in any order any part of the Senior Obligations Collateral or
any liability of the Company or any other Grantor to the Senior Obligations
Secured Parties or the Senior Collateral Agent, or any liability incurred
directly or indirectly in respect thereof;

 

(iii)                                        settle
or compromise any Senior Obligation or any other liability of the Company or
any other Grantor or any security therefor or any liability incurred directly
or indirectly in respect thereof and apply any sums by whomsoever paid and
however realized to any liability (including the Senior Obligations) in any
manner or order; and

 

(iv)                                       exercise
or delay in or refrain from exercising any right or remedy against the Company
or any security or any other Grantor or any other Person, elect any remedy and
otherwise deal freely with the Company, any other Grantor or any Senior
Obligations Collateral and any security and any guarantor or any liability of
the Company or any other Grantor to the Senior Lenders or any liability
incurred directly or indirectly in respect thereof.

 

(c)                                       Each
Junior Collateral Agent, on behalf of itself and the applicable Junior
Obligations Secured Parties, also agrees that the Senior Obligations Secured
Parties and the Senior Collateral Agent shall have no liability to any Junior
Collateral Agent or any Junior Obligations Secured Party, and each Junior
Collateral Agent, on behalf of itself and the applicable Junior Obligations
Secured Parties, hereby waives any claim against any Senior Obligations Secured
Party or the Senior Collateral Agent, arising out of any and all actions that
the Senior Obligations Secured Parties or the Senior Collateral Agent may take
or permit or omit to take with respect to: 
(i) the Senior Obligations Documents; (ii) the collection of the Senior
Obligations; or (iii) the foreclosure upon, or sale, liquidation or other
disposition of, any Senior Obligations Collateral.  Each Junior Collateral Agent, on behalf of itself and the
applicable Junior Obligations Secured Parties, agrees that the Senior
Obligations Secured Parties and the Senior Collateral Agent have no duty to
them in respect of the maintenance or preservation of the Senior Obligations
Collateral, the Senior Obligations or otherwise; and

 

32

 

(d)                                      Each
Junior Collateral Agent, on behalf of itself and the applicable Junior
Obligations Secured Parties, agrees not to assert and hereby waives, to the
fullest extent permitted by law, any right to demand, request, plead or
otherwise assert or otherwise claim the benefit of, any marshalling, appraisal,
valuation or other similar right that may otherwise be available under
applicable law or any other similar rights that a junior secured creditor may
have under applicable law.

 

7.4                                 Obligations Unconditional.  All rights, interests, agreements and
obligations of the Senior Collateral Agents and the Senior Obligations Secured
Parties and the Junior Collateral Agents and the Junior Obligations Secured
Parties, respectively, hereunder shall remain in full force and effect
irrespective of:

 

(a)                                       any
lack of validity or enforceability of any Senior Obligations Documents or any
Junior Obligations Documents;

 

(b)                                      any
change in the time, manner or place of payment of, or in any other terms of,
all or any of the Senior Obligations or Junior Obligations, or any amendment or
waiver or other modification, including any increase in the amount thereof,
whether by course of conduct or otherwise, of the terms of any Senior
Obligations Document or of the terms of any Junior Obligations Document;

 

(c)                                       any
exchange of any security interest in any Common Collateral or any other
collateral, or any amendment, waiver or other modification, whether in writing
or by course of conduct or otherwise, of all or any of the Senior Obligations
or Junior Obligations or any guarantee thereof;

 

(d)                                      the
commencement of any Insolvency or Liquidation Proceeding in respect of the
Company or any other Grantor; or

 

(e)                                       any
other circumstances that otherwise might constitute a defense available to, or
a discharge of, the Company or any other Grantor in respect of the Senior
Obligations, or of any Junior Collateral Agent or any Junior Obligations
Secured Party in respect of this Agreement.

 

Section 8.                                          Miscellaneous.

 

8.1                                 Conflicts.  (a)  Subject to
Section 8.20, in the event of any conflict between the provisions of this
Agreement and the provisions of the Senior Obligations Documents or Junior
Obligations Documents, the provisions of this Agreement shall govern.

 

(b)                                      The
parties hereto agree that if any amendments to this Agreement (i) are required
to comply with any amendment to the Trust Indenture Act made after the date
hereof and (ii) are reasonably determined by the Senior Collateral Agent not to
be adverse to the Senior Collateral Agent or the applicable Senior Obligations
Secured Parties with respect to their Senior Liens and the Senior Obligations,
then such parties shall cooperate and act in good faith to effect such
amendments as promptly as practicable.

 

33

 

8.2                                 Continuing Nature of this Agreement; Severability.  This Agreement shall continue to be
effective until the Discharge of Senior Lender Claims and Discharge of 2004
Noteholder Claims shall have occurred. 
This is a continuing agreement of lien subordination and the Senior
Obligations Secured Parties may continue, at any time and without notice to any
Junior Collateral Agent or the applicable Junior Obligations Secured Parties,
to extend credit and other financial accommodations and lend monies to or for
the benefit of the Company or any other Grantor constituting Senior Obligations
on reliance hereof.  Each Junior
Collateral Agent, on behalf of itself and the applicable Junior Obligations
Secured Parties, hereby waives any right it may have under applicable law to
revoke this Agreement or any of the provisions of this Agreement.  The terms of this Agreement shall survive,
and shall continue in full force and effect, in any Insolvency or Liquidation
Proceeding.  Any provision of this
Agreement that is prohibited or unenforceable in any jurisdiction shall not
invalidate the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

8.3                                 Amendments; Waivers.  No amendment, modification or waiver of any
of the provisions of this Agreement by the Credit Agent, the Second Priority
Noteholder Agent or the 2004 Noteholder Agent shall be deemed to be made unless
the same shall be in writing signed on behalf of the party making the same or
its authorized agent and each waiver, if any, shall be a waiver only with
respect to the specific instance involved and shall in no way impair the rights
of the parties making such waiver or the obligations of the other parties to
such party in any other respect or at any other time.  The Company and other Grantors shall not have any right to
consent to or approve any amendment, modification or waiver of any provision of
this Agreement except to the extent their rights are affected.

 

8.4                                 Information Concerning Financial Condition of the
Company and the Subsidiaries. 
Each of (a) the Credit Agent and the Senior Lenders, (b) the
Second Priority Noteholder Agent and the Second Priority Noteholders and (c)
the 2004 Noteholder Agent and the 2004 Noteholders shall be responsible for
keeping themselves informed of (a) the financial condition of the Company and
the Subsidiaries and all endorsers and/or guarantors of the Senior Lender
Claims, the Second Priority Noteholder Claims and the 2004 Noteholder Claims
and (b) all other circumstances bearing upon the risk of nonpayment of the
Senior Lender Claims, the Second Priority Noteholder Claims and the 2004
Noteholder Claims.  No Senior Collateral
Agent or Senior Obligations Secured Party shall have any duty to advise any
Junior Collateral Agent or any Junior Obligations Secured Party of information
known to it or them regarding such condition or any such circumstances or
otherwise.  In the event that a Senior
Collateral Agent or any of the Senior Obligations Secured Parties, in its or
their sole discretion, undertakes at any time or from time to time to provide
any such information to any Junior Collateral Agent or any Junior Obligations
Secured Party, it or they shall be under no obligation (w) to make, and no
Senior Collateral Agent or Senior Obligations Secured Party shall make, any
express or implied representation or warranty, including with respect to the
accuracy, completeness, truthfulness or validity of any such information so
provided, (x) to provide any additional information or to provide any such
information on any subsequent occasion, (y) to undertake any investigation or
(z) to disclose any information that, pursuant to accepted or reasonable
commercial finance practices, such party wishes to maintain confidential or is
otherwise required to maintain confidential.

 

34

 

8.5                                 Subrogation.  Each Junior Collateral Agent, on behalf of itself and the
applicable Junior Obligations Secured Parties, hereby waives any rights of
subrogation it may acquire as a result of any payment hereunder until the
applicable Discharge of Senior Obligations has occurred.

 

8.6                                 Application of Payments.  All payments received by the holders of
Senior Obligations may be applied, reversed and reapplied, in whole or in part,
to such part of the Senior Obligations as the applicable Senior Obligations
Secured Parties, in their sole discretion, deem appropriate, consistent with
the terms of the applicable Senior Obligations Documents.  Each Junior Collateral Agent, on behalf of
itself and the applicable Junior Obligations Secured Parties, assents to any
extension or postponement of the time of payment of the applicable Senior
Obligations or any part thereof and to any other indulgence with respect
thereto, to any substitution, exchange or release of any security that may at
any time secure any part of such Senior Obligations and to the addition or
release of any other Person primarily or secondarily liable therefor.

 

8.7                                 Consent to Jurisdiction; Waivers.  The parties hereto consent to the
jurisdiction of any state or federal court located in New York, New York, and
consent that all service of process may be made by registered mail directed to
such party as provided in Section 8.8 for such party.  Service so made shall be deemed to be
completed three days after the same shall be posted as aforesaid.  The parties hereto waive any objection to any
action instituted hereunder in any such court based on forum non conveniens, and any objection to
the venue of any action instituted hereunder in any such court.  Each of the parties hereto waives any right
it may have to trial by jury in respect of any litigation based on, or arising
out of, under or in connection with this Agreement or any other Senior Lender
Document, Second Priority Noteholder Document or 2004 Noteholder Document, or
any course of conduct, course of dealing, verbal or written statement or action
of any party hereto.

 

8.8                                 Notices. 
All notices to the Senior Lenders, the Second Priority Noteholders and
the 2004 Noteholders permitted or required under this Agreement may be sent to
the Credit Agent, Second Priority Noteholder Agent and 2004 Noteholder Agent,
respectively.  Unless otherwise
specifically provided herein, any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telecopied, electronically mailed or sent by courier service or U.S. mail and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of a telecopy or electronic mail or four Business Days
after deposit in the U.S. mail (registered or certified, with postage prepaid
and properly addressed).  For the
purposes hereof, the addresses of the parties hereto shall be as set forth
below each party’s name on the signature pages hereto, or, as to each party, at
such other address as may be designated by such party in a written notice to
all of the other parties.

 

8.9                                 Further Assurances.  Each Junior Collateral Agent, on behalf of
itself and the applicable Junior Obligations Secured Parties, agrees that each
of them shall take such further action and shall execute and deliver to the
applicable Senior Collateral Agent and the applicable Senior Obligations Secured
Parties such additional documents and instruments (in recordable form, if
requested) as such Senior Collateral Agent or Senior Obligations Secured

 

35

 

Parties may reasonably request to effectuate the terms of and the lien
priorities contemplated by this Agreement.

 

8.10                           Governing Law.  This Agreement has been delivered and accepted at and shall be
deemed to have been made at New York, New York and shall be interpreted, and
the rights and liabilities of the parties bound hereby determined, in
accordance with the laws of the State of New York.

 

8.11                           Binding on Successors and Assigns.  This Agreement shall be binding upon the
Credit Agent, the Senior Lenders, the Second Priority Noteholder Agent, the
Second Priority Noteholders, the 2004 Noteholder Agent, the 2004 Noteholders,
the Company and their respective permitted successors and assigns.

 

8.12                           Specific Performance.  Each Senior Collateral Agent may demand
specific performance of this Agreement with respect to the obligations of each
Junior Collateral Agent and the Junior Obligations Secured Parties.  Each Junior Collateral Agent, on behalf of
itself and the applicable Junior Obligations Secured Parties, hereby irrevocably
waives any defense based on the adequacy of a remedy at law and any other
defense that might be asserted to bar the remedy of specific performance in any
action that may be brought by the applicable Senior Collateral Agent with
respect to the applicable Senior Obligations Collateral.

 

8.13                           Section Titles.  The section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Agreement.

 

8.14                           Counterparts.  This Agreement may be executed in one or more counterparts, each
of which shall be an original and all of which shall together constitute one
and the same document.

 

8.15                           Authorization.  By its signature, each Person executing this Agreement on behalf
of a party hereto represents and warrants to the other parties hereto that it
is duly authorized to execute this Agreement.

 

8.16                           No Third Party Beneficiaries.  This Agreement and the rights and benefits
hereof shall inure to the benefit of each of the parties hereto and their
respective successors and assigns and shall inure to the benefit of each of the
holders of Senior Lender Claims, Second Priority Noteholder Claims and 2004
Noteholder Claims.  No other Person
shall have or be entitled to assert rights or benefits hereunder.

 

8.17                           Effectiveness.  This Agreement shall become effective when executed and delivered
by the parties hereto.  This Agreement
shall be effective both before and after the commencement of any Insolvency or
Liquidation Proceeding.  All references
to the Company or any other Grantor shall include the Company or any other
Grantor as debtor and debtor-in-possession and any receiver or trustee for the
Company or any other Grantor (as the case may be) in any Insolvency or
Liquidation Proceeding.  Upon the
effectiveness of this Agreement, the Existing Intercreditor Agreement shall be
amended and restated in its entirety and the provisions of the Existing
Intercreditor Agreement shall be superseded by the provisions hereof.

 

36

 

8.18                           Credit Agent and Trustee.  It is understood and agreed that (a)
Deutsche Bank Trust Company Americas is entering into this Agreement in its
capacity as Credit Agent and the provisions of Article VIII of the New
Credit Agreement applicable to Deutsche Bank Trust Company Americas as
collateral agent thereunder shall also apply to Deutsche Bank Trust Company
Americas as Credit Agent hereunder, and (b) Wilmington Trust Company is
entering in this Agreement in its capacity as Second Priority Noteholder Agent
and 2004 Noteholder Agent and the provisions of Article 7 of the
Indentures applicable to Wilmington Trust Company as the 2003 Trustee and 2004
Trustee, as the case may be, thereunder shall also apply to Wilmington Trust
Company as Second Priority Noteholder Agent and 2004 Noteholder Agent
hereunder.

 

8.19                           Designations.  For purposes of the provisions hereof
and the Indentures requiring the Company to designate Indebtedness as “Credit
Agreement Obligations”, “First-Lien Credit Facilities” or “Other First-Lien
Obligations”, or any other designation for any other purposes hereunder or
under the Indentures, any such designation shall be sufficient if the relevant
designation is set forth in writing, signed on behalf of the Company by an
officer thereof and delivered to the Credit Agent, the Second Priority
Noteholder Agent and the 2004 Noteholder Agent.  For all purposes hereof and of each of the 2003 Indenture and the
2004 Indenture, the Company hereby designates the Credit Facility provided
pursuant to the New Credit Agreement as a First-Lien Credit Facility and any
Obligations (as defined in the Security Documents (as defined in the New Credit
Agreement)), including any Obligations in respect of the New Credit Agreement,
as “Credit Agreement Obligations” under each Indenture, in each case with
respect to the Senior Lender Liens on the Senior Lender First Priority
Collateral.  For all purposes hereof and
of the 2003 Indenture, the Company hereby designates the 2004 Indenture as a
First-Lien Credit Facility and any Obligations (as defined in the Security
Documents (as defined in the 2004 Indenture)), including any Obligations in
respect of the 2004 Indenture and the 2004 Notes, as “Credit Agreement
Obligations” under the 2003 Indenture, in each case with respect to the 2004
Noteholder Liens on the 2004 Notes First Lien Collateral.

 

8.20                           Relative Rights.  Notwithstanding anything in this
Agreement to the contrary, nothing in this Agreement is intended to or will (a)
amend, waive or otherwise modify the provisions of any Senior Obligations
Document or permit the Company or any Subsidiary to take any action, or fail to
take any action, to the extent such action or failure would otherwise
constitute a breach of, or default under, any Senior Obligations Document,
except to the extent such amendment, waiver, modification, action or failure
related to any Junior Lien thereunder and except to the extent expressly
provided for in Sections 4.2, 5.6, 5.7 and 6.1 of this Agreement, (b) change
the relative priorities of the Senior Obligations or the Senior Liens granted
under the Senior Obligations Documents on the Common Collateral (or any other
assets) held by any Senior Obligations Secured Party as among such Senior
Obligations Secured Party and the other Senior Obligations Secured Parties, (c)
otherwise change the relative rights of any Senior Obligations Secured Party
holding the Senior Liens in any Common Collateral in respect of such Common
Collateral as among such Senior Obligations Secured Party and the other Senior
Obligations Secured Parties or (d) obligate the Company or any Subsidiary to
take any action, or fail to take any action, that would otherwise constitute a
breach of, or default under, any Senior Obligations Document, except to the
extent such breach or default related to any Junior Lien thereunder and except
to the extent expressly provided for in Sections 4.2, 5.6, 5.7 and 6.1 of this
Agreement.

 

37

 

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

 

	
   

  	
  Credit Agent:

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK TRUST COMPANY AMERICAS,

  as Credit Agent,

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  222 S. Riverside Plaza

  MS CH105-2900

  Chicago, IL 60606

  Attention:  Marla Heller

  Telecopy No.:  (312) 537-1324

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Second Priority Noteholder Agent:

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY,

  as Second Priority Noteholder Agent,

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  Rodney Square North

  1100 North Market Street

  Wilmington, DE 19890-0001

  Attention:  Mary St. Amand

  Telecopy No.:  (302) 636-4140

  

 

 

	
   

  	
  2004 Noteholder Agent:

  
	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY,

  as 2004 Noteholder Agent,

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  Rodney Square North

  1100 North Market Street

  Wilmington, DE 19890-0001

  Attention:  Mary St. Amand

  Telecopy No.:  (302) 636-4140

  

 

 

	
   

  	
  PLIANT CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Brian E. Johnson

  
	
   

  	
   

  	
  Title: 
  Executive Vice-President

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
  1475 Woodsfield Road, Suite 700

  Schamburg, IL 60173

  Attention:  Chief Financial Officer

  Telecopy No.:  (847) 969-3361EXHIBIT 10.22

 

GUARANTEE
AGREEMENT dated as of February 17, 2004, among PLIANT CORPORATION, a
Utah corporation (the “Parent Borrower”), Uniplast Industries Co., a
Nova Scotia company, (the “Canadian Subsidiary Borrower”), each of the
subsidiaries of the Parent Borrower listed on Schedule I hereto (the
Canadian Borrower and each such subsidiary individually, a “Subsidiary
Guarantor” and collectively, the “Subsidiary Guarantors”; the Parent
Borrower and the Subsidiary Guarantors, individually a “Guarantor” and,
collectively, the “Guarantors”) and CREDIT SUISSE FIRST BOSTON, acting
through its Cayman Islands Branch, as administrative agent (the “Administrative
Agent”) for the Lenders under the Credit Agreement referred to below.

 

Reference is made to the Credit Agreement dated as of
February 17, 2004 (as amended, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among the Parent Borrower,
the subsidiaries of the Parent Borrower party thereto as domestic subsidiary
borrowers (the “Domestic Subsidiary Borrowers”), the Canadian Subsidiary
Borrower (together with the Parent Borrower and the Domestic Subsidiary
Borrowers, the “Borrowers”), the lenders from time to time party thereto
(the “Lenders”), the Administrative Agent, Deutsche Bank Trust Company
Americas, as collateral agent (the “Collateral Agent”), General Electric
Capital Corporation, as co-collateral agent, and JPMorgan Chase Bank, as
syndication agent.  Capitalized terms
used herein and not defined herein shall have the meanings assigned to such
terms in the Credit Agreement.

 

The Lenders have agreed to make Loans to the Borrowers, and the Issuing
Bank has agreed to issue Letters of Credit for the account of the Parent
Borrower, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement.  The
Borrowers have requested that the Subsidiary Guarantors guarantee the
Obligations (as defined below) by entering into this Agreement.  Each of the Subsidiary Guarantors is a
Subsidiary of the Parent Borrower and an affiliate of the Domestic Subsidiary
Borrowers and the Canadian Subsidiary Borrower and acknowledges that it will
derive substantial benefit from the making of the Loans by the Lenders and the
issuance of the Letters of Credit by the Issuing Bank.  The obligations of the Lenders to make Loans
and of the Issuing Bank to issue Letters of Credit are conditioned on, among
other things, the execution and delivery by the Guarantors of a Guarantee
Agreement in the form hereof.  As
consideration therefor and in order to induce the Lenders to make Loans and the
Issuing Bank to issue Letters of Credit, the Guarantors are willing to execute
this Agreement.

 

 

Accordingly, the parties hereto agree as follows:

 

1.                                       Guarantee.  Each Guarantor unconditionally guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not
merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii) each
payment required to be made by the Borrowers under the Credit Agreement in
respect of any Letter of Credit, when and as due, including payments in respect
of reimbursement of disbursements, interest thereon and obligations to provide
cash collateral and (iii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
each Loan Party to the Secured Parties under the Credit Agreement and the other
Loan Documents, (b) the due and punctual performance of all covenants, agreements,
obligations and liabilities of each Loan Party under or pursuant to the Credit
Agreement and the other Loan Documents, (c) the due and punctual payment
and performance of all obligations of each Loan Party, monetary or otherwise,
under each Swap Agreement that (i) is effective on the Effective Date with
a counterparty that is a Lender (or an affiliate of a Lender) as of the
Effective Date or (ii) is entered into after the Effective Date with any
counterparty that is a Lender (or an Affiliate thereof) at the time such Swap
Agreement is entered into and (d) the due and punctual payment and
performance of all monetary obligations of each Loan Party in respect of
overdrafts and related liabilities owed to any of the Lenders (or any
Affiliates thereof) or Wachovia Bank N.A. (or any Affiliates thereof) arising
from treasury, depositary and cash management services or in connection with
any automated clearinghouse transfers of funds (all the monetary and other
obligations referred to in the preceding clauses (a) through
(d) being collectively called the “Obligations”).  Each Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation.

 

The Parent Borrower is entering into this Agreement as a Guarantor in
order to Guarantee the Obligations of the Domestic Subsidiary Borrowers and the
Canadian Subsidiary Borrower and each Borrower other than the Parent Borrower
is entering into this Agreement as a Guarantor in order to guarantee the
obligations of the other Borrowers, and the obligations of each Borrower under
the foregoing paragraph shall be construed accordingly.

 

2.                                       Obligations
Not Waived.  To the fullest extent
permitted by applicable law, each Guarantor waives presentment to, demand of
payment from and protest to each of the Borrowers of any of the Obligations,
and also waives notice of acceptance of its guarantee and notice of protest for
nonpayment.  To the fullest extent
permitted by applicable law, the obligations of each Guarantor hereunder shall
not be affected by (a) the failure of the Administrative Agent, the
Collateral Agent or any other

 

2

 

Secured Party to assert any claim or demand or to enforce or exercise
any right or remedy against any of the Borrowers or any other Subsidiary
Guarantor under the provisions of the Credit Agreement, any other Loan Document
or otherwise, (b) any rescission, waiver, amendment or modification of, or
any release from any of the terms or provisions of this Agreement, any other
Loan Document, any Guarantee or any other agreement, including with respect to
any other Subsidiary Guarantor under this Agreement, or (c) the failure to
perfect any security interest in, or the release of, any of the security held
by or on behalf of the Collateral Agent or any other Secured Party.

 

3.                                       Security.  Each of the Guarantors authorizes the
Collateral Agent and each of the other Secured Parties to (a) take and
hold security pursuant to the Security Documents for the payment of this
Guarantee and the Obligations and exchange, enforce, waive and release any such
security, (b) apply such security and direct the order or manner of sale
thereof as they in their sole discretion may determine and (c) release or
substitute any one or more endorsees, other Subsidiary Guarantors or other
obligors.

 

4.                                       Guarantee
of Payment.  Each Guarantor further
agrees that its guarantee constitutes a guarantee of payment in dollars when
due and not of collection, and waives any right to require that any resort be
had by the Administrative Agent or any other Secured Party to any of the
security held for payment of the Obligations or to any balance of any deposit
account or credit on the books of the Administrative Agent or any other Secured
Party in favor of any of the Borrowers or any other Person.

 

5.                                       No
Discharge or Diminishment of Guarantee. 
The obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim
of waiver, release, surrender, alteration or compromise of any of the
Obligations, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise.  Without limiting the generality of the foregoing, the obligations
of each Guarantor hereunder shall not be discharged or impaired or otherwise
affected by the failure of the Administrative Agent, the Collateral Agent or
any other Secured Party to assert any claim or demand or to enforce any remedy
under the Credit Agreement, any other Loan Document or any other agreement, by
any waiver or modification of any provision of any thereof, by any default,
failure or delay, wilful or otherwise, in the performance of the Obligations,
or by any other act or omission that may or might in any manner or to any
extent vary the risk of any Guarantor or that would otherwise operate as a
discharge of any Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations).

 

6.                                       Defenses
of the Borrowers Waived.  To the
fullest extent permitted by applicable law, each of the Guarantors waives any
defense based on or arising out of any defense of any of the Borrowers or the
unenforceability of the Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of any of the Borrowers, other than
the final and indefeasible payment in full in cash of the Obligations.  The Collateral Agent and the other Secured
Parties may, at their election, foreclose on any security held by one or more
of them by one or more judicial or

 

3

 

nonjudicial sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations, make any other
accommodation with any of the Borrowers or any other guarantor or exercise any
other right or remedy available to them against any of the Borrowers or any
other guarantor, without affecting or impairing in any way the liability of any
Subsidiary Guarantor hereunder except to the extent the Obligations have been
fully, finally and indefeasibly paid in cash. 
Pursuant to applicable law, each of the Guarantors waives any defense
arising out of any such election even though such election operates, pursuant
to applicable law, to impair or to extinguish any right of reimbursement or
subrogation or other right or remedy of such Guarantor against any of the
Borrowers or any other Guarantor or guarantor, as the case may be, or any security.

 

Each of the Guarantors agrees that its guarantee hereunder shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by the Administrative Agent or any other Secured Party upon the
bankruptcy or reorganization of any of the Borrowers, any other Loan Party or
otherwise.

 

7.                                       Agreement
to Pay; Subordination.  In
furtherance of the foregoing and not in limitation of any other right that the
Administrative Agent or any other Secured Party has at law or in equity against
any Guarantor by virtue hereof, upon the failure of any of the Borrowers or any
other Loan Party to pay any Obligation when and as the same shall become due,
whether at maturity, by acceleration, after notice of prepayment or otherwise,
each Guarantor hereby promises to and will forthwith pay, or cause to be paid,
to the Administrative Agent or such other Secured Party as designated thereby
in same day funds the amount of such unpaid Obligations.  Upon payment by any Guarantor of any sums to
the Administrative Agent or any Secured Party as provided above, all rights of
such Guarantor against the Borrowers arising as a result thereof by way of
right of subrogation, contribution, reimbursement, indemnity or otherwise shall
in all respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in same day funds of all the Obligations.  In addition, any indebtedness of any of the
Borrowers now or hereafter held by any Subsidiary Guarantor is hereby
subordinated in right of payment to the prior payment in full of the
Obligations.  If any amount shall
erroneously be paid to any Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of any of the Borrowers, such amount shall be held in trust for
the benefit of the Secured Parties and shall forthwith be paid to the
Administrative Agent to be credited against the payment of the Obligations,
whether matured or unmatured, in accordance with the terms of the Loan
Documents.

 

8.                                       Information.  Each of the Guarantors assumes all
responsibility for being and keeping itself informed of the financial condition
and assets of each of the Borrowers, and of all other circumstances bearing
upon the risk of nonpayment of the Obligations and the nature, scope and extent
of the risks that such Guarantor assumes and incurs hereunder, and agrees that
none of the Administrative Agent or the other Secured Parties will have any
duty to advise any of the Guarantors of information known to it or any of them
regarding such circumstances or risks.

 

4

 

9.                                       Representations
and Warranties.  Each of the
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement are true and
correct in all material respects.

 

10.                                 Termination.  The Guarantees made hereunder (a) shall
terminate when all the Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement, the LC
Exposure has been reduced to zero and the Issuing Bank has no further
obligation to issue Letters of Credit under the Credit Agreement and
(b) shall continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of any Obligation is rescinded or
must otherwise be restored by any Secured Party or any Guarantor upon the
bankruptcy or reorganization of any of the Borrowers, any Guarantor or
otherwise.

 

11.                                 Binding
Effect; Several Agreement; Assignments. 
Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party; and all covenants, promises and agreements by or on behalf of the
Guarantors that are contained in this Agreement shall bind and inure to the
benefit of each party hereto and their respective successors and assigns.  This Agreement shall become effective as to
any Guarantor when a counterpart hereof executed on behalf of such Guarantor
shall have been delivered to the Administrative Agent, and a counterpart hereof
shall have been executed on behalf of the Administrative Agent, and thereafter
shall be binding upon such Guarantor and the Administrative Agent and their
respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Administrative Agent and the other Secured Parties, and their
respective successors and assigns, except that no Guarantor shall have the
right to assign its rights or obligations hereunder or any interest herein (and
any such attempted assignment shall be void). 
If all of the capital stock of a Subsidiary Guarantor is sold,
transferred or otherwise disposed of pursuant to a transaction permitted by
Section 6.06 of the Credit Agreement, such Subsidiary Guarantor shall be
released from its obligations under this Agreement without further action.  This Agreement shall be construed as a
separate agreement with respect to each Subsidiary Guarantor and may be
amended, modified, supplemented, waived or released with respect to any
Guarantor without the approval of any other Guarantor and without affecting the
obligations of any other Guarantor hereunder.

 

12.                                 Waivers;
Amendment.  (a)  No failure or delay of the Administrative
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance  of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power.  The rights and remedies of the Administrative Agent hereunder and
of the other Secured Parties under the other Loan Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise
have.  No waiver of any provision of
this Agreement or consent to any departure by any Guarantor therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which

 

5

 

given.  No notice or demand on
any Guarantor in any case shall entitle such Guarantor to any other or further
notice or demand in similar or other circumstances.

 

(b)                                 Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to a written agreement entered into between the Guarantors with
respect to which such waiver, amendment or modification relates and the
Administrative Agent, with the prior written consent of the Required Lenders
(except as otherwise provided in the Credit Agreement).

 

13.                               Governing
Law.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

 

14.                                 Notices.  All communications and notices hereunder
shall be in writing and given as provided in Section 10.01 of the Credit
Agreement.  All communications and
notices hereunder to each Subsidiary Guarantor shall be given to it at its
address set forth in Schedule I.

 

15.                                 Survival
of Agreement; Severability. 
(a)  All covenants, agreements, representations and warranties
made by the Guarantors herein and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the
Administrative Agent and the other Secured Parties and shall survive the making
by the Lenders of the Loans and the issuance of the Letters of Credit by the
Issuing Bank regardless of any investigation made by the Secured Parties or on
their behalf, and shall continue in full force and effect as long as the principal
of or any accrued interest on any Loan or any other fee or amount payable under
this Agreement or any other Loan Document is outstanding and unpaid or the LC
Exposure does not equal zero and as long as the Commitments have not been
terminated.

 

(b)                                 In
the event any one or more of the provisions contained in this Agreement or in
any other Loan Document should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby (it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction).  The
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

 

16.                                 Counterparts.  This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective
as provided in Section 11. 
Delivery of an executed signature page to this Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement.

 

6

 

17.                                 Rules
of Interpretation.  The rules of
interpretation specified in Section 1.03 of the Credit Agreement shall be
applicable to this Agreement.

 

18.                                 Jurisdiction;
Consent to Service of Process. 
(a)  Each Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting
in New York City, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement or the other Loan Documents,
or for recognition or enforcement of any judgment, and each of the parties
hereto hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this
Agreement shall affect any right that the Administrative Agent or any other
Secured Party may otherwise have to bring any action or proceeding relating to
this Agreement or the other Loan Documents against any Guarantor or its properties
in the courts of any jurisdiction.

 

(b)                                 Each
Guarantor hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or the other Loan Documents in any New
York State or Federal court.  Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.

 

(c)                                  Each
party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 14.  Nothing in this Agreement will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.

 

19.                               Waiver
of Jury Trial.  EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 19.

 

7

 

20.                                 Additional
Subsidiary Guarantors.  Pursuant to
Section 5.12 of the Credit Agreement, each Subsidiary Loan Party (other
than a Foreign Subsidiary not organized under the laws of Canada or any
province thereof) that was not in existence or not a Subsidiary Loan Party on
the date of the Credit Agreement is required to enter into this Agreement as a
Subsidiary Guarantor upon becoming a Subsidiary Loan Party.  Upon execution and delivery after the date
hereof by the Administrative Agent and such a Subsidiary of an instrument in
the form of Annex 1, such Subsidiary shall become a Subsidiary Guarantor
hereunder with the same force and effect as if originally named as a Subsidiary
Guarantor herein.  The execution and
delivery of any instrument adding an additional Subsidiary Guarantor as a party
to this Agreement shall not require the consent of any other Subsidiary
Guarantor hereunder.  The rights and
obligations of each Subsidiary Guarantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Subsidiary Guarantor as a
party to this Agreement.

 

21.                                 Right
of Setoff.  If an Event of Default
shall have occurred and be continuing, each Lender and each of its Affiliates
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
Indebtedness at any time owing by such Lender or Affiliate to or for the credit
or the account of any Guarantor against any or all the obligations of such
Guarantor now or hereafter existing under this Agreement and the other Loan
Documents held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or any other Loan Document and
although such obligations may be unmatured. 
The rights of each Lender under this Section 21 are in addition to
other rights and remedies (including other rights of setoff) which such Lender
may have.

 

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

 

23.                                 Conversion
of Currencies.  (a)  If, for the purpose of obtaining judgment in
any court, it is necessary to convert a sum owing hereunder in one currency
into another currency, each party hereto agrees, to the fullest extent that it
may effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures in the relevant jurisdiction the
first currency could be purchased with such other currency on the Business Day
immediately preceding the day on which final judgment is given.

 

(b)                                 The
obligations of the Guarantors in respect of any sum due to any party hereto or
any holder of the obligations owing hereunder (the “Applicable Creditor”)

 

8

 

shall, notwithstanding any judgment in a currency (the “Judgment
Currency”) other than the currency in which such sum is stated to be due
hereunder (the “Agreement Currency”), be discharged only to the extent
that, on the Business Day following receipt by the Applicable Creditor of any
sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may
in accordance with normal banking procedures in the relevant jurisdiction
purchase the Agreement Currency with the Judgment Currency; if the amount of
the Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, each of the Guarantors agrees,
as a separate obligation and notwithstanding any such judgment, to indemnify
the Applicable Creditor against such loss. 
The obligations of the Guarantors contained in this Section 23
shall survive the termination of this Agreement and the payment of all other
amounts owing hereunder.

 

9

 

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

 

	
   

  	
  PLIANT CORPORATION,

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Brian E. Johnson

  
	
   

  	
   

  	
  Title: Executive Vice-President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UNIPLAST INDUSTRIES CO.,

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Brian E. Johnson

  
	
   

  	
   

  	
  Title:Executive Vice-President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EACH OF THE SUBSIDIARIES LISTED

  ON SCHEDULE I HERETO,

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Brian E. Johnson

  
	
   

  	
   

  	
  Title:Executive Vice-President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT SUISSE FIRST BOSTON, acting

  through its Cayman Islands Branch, as

  Administrative Agent,

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

10

 

SCHEDULE I TO THE

GUARANTEE AGREEMENT

 

	
  Subsidiary Guarantor

  	
   

  	
  [Address]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

ANNEX 1 TO THE

GUARANTEE AGREEMENT

 

SUPPLEMENT
NO.  dated as of
                  ,
to the Guarantee Agreement dated as of February 17, 2004, among PLIANT
CORPORATION, a Utah corporation (the “Parent Borrower”), UNIPLAST
INDUSTRIES CO., a Nova Scotia company (the “Canadian Subsidiary Borrower”),
each of the subsidiaries of the Parent Borrower listed on Schedule I
thereto (the Canadian Borrower and each such subsidiary individually, a “Subsidiary
Guarantor” and collectively, the “Subsidiary Guarantors”), and
CREDIT SUISSE FIRST BOSTON, acting through its Cayman Islands Branch, as
administrative agent (the “Administrative Agent”) for the Lenders under
the Credit Agreement referred to below.

 

A.  Reference is made to the
Credit Agreement dated as of February 17, 2004, (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among the Parent Borrower, the subsidiaries of the Parent Borrower party
thereto as domestic subsidiary borrowers, the Canadian Subsidiary Borrower, the
lenders from time to time party thereto (the “Lenders”), the
Administrative Agent, Deutsche Bank Trust Company Americas, as collateral
agent, General Electric Capital Corporation, as co-collateral agent, and
JPMorgan Chase Bank, as syndication agent. 
Capitalized terms used herein and not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.

 

B. The Parent Borrower and the Subsidiary Guarantors have entered into
the Guarantee Agreement in order to induce the Lenders to make Loans and the
Issuing Bank to issue Letters of Credit. 
Pursuant to Section 5.12 of the Credit Agreement, each Subsidiary Loan
Party (other than a Foreign Subsidiary not organized under the laws of Canada
or any province thereof) that was not in existence or not a Subsidiary Loan
Party on the date of the Credit Agreement is required to enter into the
Guarantee Agreement as a Subsidiary Guarantor upon becoming a Subsidiary Loan
Party.  Section 20 of the Guarantee
Agreement provides that additional Subsidiaries of the Parent Borrower may
become Subsidiary Guarantors under the Guarantee Agreement by execution and
delivery of an instrument in the form of this Supplement.  The undersigned Subsidiary of the Parent
Borrower (the “New Subsidiary Guarantor”) is executing this Supplement
in accordance with the requirements of the Credit Agreement to become a
Subsidiary Guarantor under the Guarantee Agreement in order to induce the Lenders
to make additional Loans and the Issuing Bank to issue additional Letters of
Credit and as consideration for Loans previously made and Letters of Credit
previously issued.

 

Accordingly, the Administrative Agent and the New Subsidiary Guarantor
agree as follows:

 

 

SECTION 1.  In accordance
with Section 20 of the Guarantee Agreement, the New Subsidiary Guarantor
by its signature below becomes a Subsidiary Guarantor under the Guarantee
Agreement with the same force and effect as if originally named therein as a
Subsidiary Guarantor and the New Subsidiary Guarantor hereby (a) agrees to
all the terms and provisions of the Guarantee Agreement applicable to it as a
Subsidiary Guarantor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Subsidiary Guarantor thereunder
are true and correct on and as of the date hereof.  Each reference to a “Subsidiary Guarantor” or “Guarantor”
in the Guarantee Agreement shall be deemed to include the New Subsidiary
Guarantor.  The Guarantee Agreement is
hereby incorporated herein by reference.

 

SECTION 2.  The New
Subsidiary Guarantor represents and warrants to the Administrative Agent and
the other Secured Parties that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.

 

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

 

SECTION 4.  Except as
expressly supplemented hereby, the Guarantee Agreement shall remain in full
force and effect.

 

SECTION 5.  THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 6.  In case any one
or more of the provisions contained in this Supplement should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and in the
Guarantee Agreement shall not in any way be affected or impaired thereby (it
being understood that the invalidity of a particular provision hereof in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). 
The parties hereto shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

 

SECTION 7.  All
communications and notices hereunder shall be in writing and given as provided
in Section 14 of the Guarantee Agreement. 
All communications and notices hereunder to the New Subsidiary Guarantor
shall be given to it at the address set forth under its signature below, with a
copy to the Parent Borrower.

 

2

 

SECTION 8.  The New
Subsidiary Guarantor agrees to reimburse the Administrative Agent for its
out-of-pocket expenses in connection with this Supplement, including the fees,
disbursements and other charges of counsel for the Administrative Agent.

 

3

 

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

 

 

	
   

  	
  [NAME OF NEW SUBSIDIARY GUARANTOR],

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT SUISSE FIRST BOSTON, acting

  through its Cayman Islands Branch, as

  Administrative Agent,

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00063-of-00352.parquet"}]]