Document:

Exhibit 10.4

 

GUARANTEE AND COLLATERAL
AGREEMENT dated as of May 13, 2004, among PP HOLDING CORPORATION, a Delaware
corporation (“Holdings”), PP ACQUISITION CORPORATION, a Delaware
corporation (the “Borrower”) and the Subsidiaries of the Borrower
identified herein.

 

W I  T  N  E  S  S
E  T  H:

 

WHEREAS, the Borrower will acquire all the capital stock of Polypore,
Inc., a Delaware corporation (the “Company”), pursuant to the Stock
Purchase Agreement, dated as of January 30, 2004 (the “Acquisition
Agreement”), between the Company, the sellers named therein and the
Borrower;

 

WHEREAS, pursuant to the Acquisition Agreement, the Borrower will be
merged with and into the Company, with the Company continuing as the surviving
corporation in such merger (the “Merger”);

 

WHEREAS, upon the effectiveness of the Merger, the Company will succeed
to all rights and obligations of the Borrower by operation of law and all
references herein and in the other Loan Documents to the term “Borrower”
shall thereupon be deemed to be references to the Company;

 

WHEREAS, pursuant to the Credit Agreement, dated as of May 13, 2004
(the “Credit Agreement”), among Holdings, the Borrower, the financial
institutions from time to time party thereto (the “Lenders”), General
Electric Capital Corporation, Lehman Commercial Paper Inc. and UBS Securities
LLC, as co-documentation agents, Bear Stearns Corporate Lending Inc., as
syndication agent and JPMorgan Chase Bank, as administrative agent (the “Administrative
Agent”), the Lenders have severally agreed to make extensions of credit to
the Borrower upon the terms and subject to the conditions set forth therein;

 

WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;

 

WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable
transfers to one or more of the other Grantors in connection with the operation
of their respective businesses;

 

WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect
benefit from the making of the extensions of credit under the Credit Agreement;
and

 

WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent for the ratable benefit of the Lenders;

 

NOW,
THEREFORE, in consideration of the premises and to induce the Administrative
Agent and the Lenders to enter into the Credit Agreement and to induce the
Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees as follows:

 

 

ARTICLE I

 

Definitions 

 

SECTION
1.01.  Credit Agreement.  (a)  Capitalized terms used in
this Agreement and not otherwise defined herein have the meanings set forth in
the Credit Agreement.  All terms defined in the New York UCC (as such term
is defined herein) and not defined in this Agreement have the meanings
specified therein.  All references to the Uniform Commercial Code shall
mean the New York UCC.

 

(b)
The rules of construction specified in Section 1.2 of the Credit Agreement
also apply to this Agreement.

 

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

 

“Account”
has the meaning assigned to such term in Section 9-102 of the New York
UCC.

 

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

 

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

 

“Acquisition
Agreement” has the meaning assigned to such term in the recitals.

 

“Administrative
Agent” has the meaning assigned to such term in the preliminary statement
of this Agreement.

 

“Article 9
Collateral” has the meaning assigned to such term in Section 4.01.

 

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

 

“Chattel
Paper” has the meaning assigned to such term in Section 9-102 of the
New York UCC.

 

“Claiming
Guarantor” has the meaning assigned to such term in Section 6.02.

 

“Collateral”
means the Article 9 Collateral and the Pledged Collateral.

 

“Collateral
Account” means any collateral account established by the Administrative
Agent as provided in Section 5.05 or 5.07.

 

“Commercial
Tort Claim” has the meaning assigned to such term in Section 9-102 of
the New York UCC.

 

2

 

“Commodity
Intermediary” has the meaning assigned to such term in Section 9-102
of the New York UCC.

 

“Company”
has the meaning assigned to such term in the recitals.

 

“Contributing
Guarantor” has the meaning assigned to such term in Section 6.02.

 

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

 

“Copyrights”
means all of the following now owned or hereafter acquired by any
Grantor:  (a) all copyright rights in any work subject to the
copyright laws of the United States or any other country, whether as author,
assignee, transferee or otherwise, and (b) all registrations and applications
for registration of any such copyright in the United States or any other
country, including registrations, recordings, supplemental registrations and
pending applications for registration in the United States Copyright Office (or
any successor office or any similar office in any other country), including
those listed on Schedule III.

 

“Credit
Agreement” has the meaning assigned to such term in the preliminary
statement of this Agreement.

 

“Daramic”
has the meaning assigned to such term in Section 3.02(a).

 

“Daramic
Brazil” has the meaning assigned to such term in Section 3.02(a).

 

“Deposit
Account” has the meaning assigned to such term in Section 9-102 of the
New York UCC.

 

“Electronic
Chattel Paper” has the meaning assigned to such term in Section 9-102
of the New York UCC.

 

“Entitlement
Holder” has the meaning assigned to such term in Section 8-102 of the
New York UCC.

 

“Entitlement
Order” has the meaning assigned to such term in Section 8-102 of the
New York UCC.

 

“Equipment”
has the meaning assigned to such term in Section 9-102 of the New York
UCC.

 

“Equity
Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or
other equity interests in any person, or any obligations convertible into or
exchangeable for, or giving any person a right, option or warrant to acquire
such equity interests or such convertible or exchangeable obligations.

 

“Federal
Securities Laws” has the meaning assigned to such term in
Section 5.04.

 

3

 

“Farm
Products” has the meaning assigned to such term in Section 9-102 of
the New York UCC.

 

“Financial
Asset” has the meaning assigned to such term in Section 8-102 of the
New York UCC.

 

“General
Intangibles” means all choses in action and causes of action and all other
intangible personal property of any Grantor of every kind and nature (other
than Accounts) now owned or hereafter acquired by any Grantor, including all
rights and interests in partnerships, limited partnerships, limited liability
companies and other unincorporated entities, corporate or other business
records, indemnification claims, contract rights (including rights under
leases, whether entered into as lessor or lessee, Hedging Agreements and other
agreements), Intellectual Property, goodwill, registrations, franchises, tax
refund claims and any letter of credit, guarantee, claim, security interest or
other security held by or granted to any Grantor to secure payment by an
Account Debtor of any of the Accounts.

 

“Grantors”
means Holdings, the Borrower and the Subsidiary Guarantors.

 

“Guarantors”
means Holdings and the Subsidiary Guarantors.

 

“Holdings”
has the meaning assigned to such term in the preamble of this Agreement.

 

“Instrument”
has the meaning assigned to such term in Section 9-102 of the New York
UCC.

 

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

 

“Inventory”
has the meaning assigned to such term in Section 9-102 of the New York
UCC.

 

“Investment
Property” has the meaning assigned to such term in Section 9-102 of
the New York UCC.

 

“Issuers”
means the collective reference to each issuer of any Investment Property.

 

“Lenders”
has the meaning assigned to such term in the preliminary statement of this
Agreement.

 

“Letter-of-Credit
Right” has the meaning assigned to such term in Section 9-102 of the
New York UCC.

 

4

 

“License”
means any Patent License, Trademark License, Copyright License or other license
or sublicense agreement to which any Grantor is a party, including those listed
on Schedule III.

 

“Loan
Document Obligations” means (a) the due and punctual payment of (i) the
principal of 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
Borrower 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 of the Borrower to any of the Secured Parties under the
Credit Agreement and each of the other Loan Documents, 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), (b) the due and
punctual performance of all other obligations of the Borrower under or pursuant
to the Credit Agreement and each of the other Loan Documents, and (c) the due
and punctual payment and performance of all the obligations of each other Loan
Party under or pursuant to this Agreement and each of the other Loan Documents.

 

“Merger”
has the meaning assigned to such term in the recitals.

 

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

 

“Obligations”
means (a) the Loan Document Obligations and (b) the due and punctual
payment and performance of all obligations of each Loan Party under each
Hedging Agreement that (i) is in effect on the Closing Date with a counterparty
that is a Lender or an Affiliate of a Lender as of the Closing Date or (ii) is
entered into after the Closing Date with any counterparty that is a Lender or
an Affiliate of a Lender at the time such Hedging Agreement is entered into
unless such Hedging Agreement provides the obligations thereunder are not
“Obligations” as defined herein.

 

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

 

“Patents”
means all of the following now owned or hereafter acquired by any
Grantor:  (a) all letters patent of the United States or the
equivalent thereof in any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or the
equivalent thereof in any other country, including registrations, recordings
and pending applications in the United States Patent and Trademark Office (or
any successor or any similar offices in any other country), including those
listed on Schedule III, and (b) all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof, and the
inventions disclosed or claimed therein, including the right to make, use
and/or sell the inventions disclosed or claimed therein.

 

5

 

“Perfection
Certificate” means a certificate substantially in the form of Exhibit B,
completed and supplemented with the schedules and attachments contemplated
thereby, and duly executed by a Financial Officer.

 

“Pledged
Collateral” has the meaning assigned to such term in Section 3.01.

 

“Pledged
Debt Securities” has the meaning assigned to such term
in Section 3.01.

 

“Pledged
Securities” means any promissory notes, stock certificates or other
securities now or hereafter included in the Pledged Collateral, including all
certificates, instruments or other documents representing or evidencing any
Pledged Collateral.

 

“Pledged
Stock” has the meaning assigned to such term in Section 3.01.

 

“Proceeds”
has the meaning assigned to such term in Section 9-102 of the New York
UCC.

 

“Receivable”
means any right to payment for goods sold or leased or for services rendered,
whether or not such right is evidenced by an Instrument or Chattel Paper and
whether or not it has been earned by performance (including, without limitation,
any Account).

 

“Secured
Parties” means (a) the Lenders, (b) the Administrative Agent,
(c) any Issuing Bank, (d) each counterparty to any Hedging Agreement
with a Loan Party that either (i) is in effect on the Closing Date if such
counterparty is a Lender or an Affiliate of a Lender as of the Closing Date or
(ii) is entered into after the Closing Date if such counterparty is a Lender or
an Affiliate of a Lender at the time such Hedging Agreement is entered into,
(e) the beneficiaries of each indemnification obligation undertaken by any
Loan Party under any Loan Document and (f) the successors and assigns of
each of the foregoing.

 

“Securities
Account” has the meaning assigned to such term in Section 8-501 of the
New York UCC.

 

“Securities
Intermediary” has the meaning assigned to such term in Section 8-102
of the New York UCC.

 

“Security”
has the meaning assigned to such term in Section 8-102 of the New York
UCC.

 

“Security
Interest” has the meaning assigned to such term in Section 4.01.

 

“Subsidiary
Guarantors” means (a) the Subsidiaries identified on Schedule I and
(b) each other Subsidiary that becomes a party to this Agreement as a
Subsidiary Guarantor after the Closing Date.

 

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

 

6

 

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

 

“Vehicles”
means all cars, trucks, trailers, construction and earth moving equipment and
other vehicles covered by a certificate of title law of any state.

 

ARTICLE II

 

Guarantee

 

SECTION
2.01.  Guarantee.  Each Guarantor unconditionally guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not
merely as a surety, the due and punctual payment and performance of the
Obligations.  Each of the Guarantors 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.  Each of the
Guarantors waives presentment to, demand of payment from and protest to the
Borrower or any other Loan Party of any of the Obligations, and also waives
notice of acceptance of its guarantee and notice of protest for nonpayment.

 

SECTION
2.02.  Guarantee of Payment.  Each of the Guarantors further
agrees that its guarantee hereunder constitutes a guarantee of payment 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 security held for
the 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 the Borrower or any other person.

 

SECTION
2.03.  No Limitations, Etc.  (a)  Except for
termination of a Guarantor’s obligations hereunder as expressly provided in
Section 7.15, the obligations of each Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise,
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 (i) the failure of
the Administrative Agent or any other Secured Party to assert any claim or
demand or to enforce any right or remedy under the provisions of any Loan
Document or otherwise; (ii) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of, any
Loan Document or any other agreement, including with respect to any other Guarantor
under this Agreement; (iii) the release of any security held by the
Administrative Agent or any other Secured Party for the Obligations or any of
them; (iv) any default, failure or delay, wilful or otherwise, in the
performance of the Obligations; or (v) any other act or omission that may
or might in any manner or to any extent vary the risk of any Guarantor or
otherwise operate as a discharge of any

 

7

 

Guarantor as a matter of
law or equity (other than the indefeasible payment in full in cash of all the
Obligations).  Each Guarantor expressly authorizes the Administrative
Agent to take and hold security for the payment and performance of the
Obligations, to exchange, waive or release any or all such security (with or
without consideration), to enforce or apply such security and direct the order
and manner of any sale thereof in its sole discretion or to release or
substitute any one or more other guarantors or obligors upon or in respect of
the Obligations, all without affecting the obligations of any Guarantor
hereunder.

 

(b)
To the fullest extent permitted by applicable law, each Guarantor waives any
defense based on or arising out of any defense of the Borrower or any other
Loan Party or the unenforceability of the Obligations or any part thereof from
any cause, or the cessation from any cause of the liability of the Borrower or
any other Loan Party, other than the indefeasible payment in full in cash of
all the Obligations.  The Administrative 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 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 the Borrower or any other Loan
Party or exercise any other right or remedy available to them against the
Borrower or any other Loan Party, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Obligations have
been fully and indefeasibly paid in full in cash.  To the fullest extent
permitted by applicable law, each Guarantor 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 the Borrower or any other Loan
Party, as the case may be, or any security.

 

SECTION
2.04.  Reinstatement.  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 the Borrower, any
other Loan Party or otherwise.

 

SECTION
2.05.  Agreement To Pay; Subrogation.  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 the Borrower 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 for distribution to the applicable Secured Parties in cash the amount of
such unpaid Obligation.  Upon payment by any Guarantor of any sums to the
Administrative Agent as provided above, all rights of such Guarantor against
the Borrower or any other Guarantor arising as a result thereof by way of right
of subrogation, contribution, reimbursement, indemnity or otherwise shall in
all respects be subject to Article VI.

 

SECTION
2.06.  Information.  Each Guarantor assumes all responsibility
for being and keeping itself informed of the Borrower’s and each other Loan
Party’s financial condition and assets, 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 such Guarantor of information known to it or any of them
regarding such circumstances or risks.

 

8

 

ARTICLE III

 

Pledge of Securities

 

SECTION
3.01.  Pledge.  As security for the payment or performance, as
the case may be, in full of the Obligations, each Grantor hereby pledges to the
Administrative Agent, its successors and assigns, for the benefit of the
Secured Parties, and hereby grants to the Administrative Agent, its successors
and assigns, for the benefit of the Secured Parties, a security interest in, all
of such Grantor’s right, title and interest in, to and under (a) Equity
Interests owned by it and listed on Schedule II and any other Equity
Interests obtained in the future by such Grantor and the certificates
representing all such Equity Interests (the “Pledged Stock”); provided, however, that the Pledged Stock shall not
include more than 66% of the issued and outstanding voting Equity Interests of
any Foreign Subsidiary; (b)(i) the debt securities listed opposite the
name of such Grantor on Schedule II, (ii) any debt securities in the
future issued to such Grantor and (iii) the promissory notes and any other
instruments evidencing such debt securities (the “Pledged Debt Securities”); (c) all
other property that may be delivered to and held by the Administrative Agent
pursuant to the terms of this Section 3.01; (d) subject to
Section 3.06, all payments of principal or interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, in exchange for or upon the conversion of,
and all other Proceeds received in respect of, the securities referred to in
clauses (a) and (b) above; (e) subject to Section 3.06, all
rights and privileges of such Grantor with respect to the securities and other
property referred to in clauses (a), (b), (c) and (d) above; and
(f) all Proceeds of any of the foregoing (the items referred to in clauses
(a) through (f) above being collectively referred to as the “Pledged Collateral”).

 

TO
HAVE AND TO HOLD the Pledged Collateral, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Administrative Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, forever; subject, however, to the
terms, covenants and conditions hereinafter set forth.

 

SECTION
3.02.  Delivery of the Pledged Collateral. 
(a)  Each Grantor agrees promptly to deliver or cause to be delivered
to the Administrative Agent any and all Pledged Securities; provided, that,
notwithstanding anything herein to the contrary, Daramic, Inc. (“Daramic”) shall be
under no obligation to pledge 66% of its shares of Daramic Separadores de
Baterias Ltd. (“Daramic Brazil”)
during the period commencing on the Closing Date and ending on the two-month
anniversary of the Closing Date; provided,
further, that
if the Proposed Reorganization does not occur on or prior to such two-month
anniversary, Daramic shall be required to promptly (and, in any event within
five (5) Business Days after such two-month anniversary) deliver 66% of its
shares in Daramic Brazil to the Administrative Agent.

 

(b)
Each Grantor will cause any Indebtedness for borrowed money owed to such
Grantor by any person in an amount that exceeds $200,000 that is evidenced by a
duly executed promissory note to be pledged and delivered to the Administrative
Agent, duly endorsed in a manner satisfactory to the Administrative
Agent.  Without limiting the foregoing, all promissory notes in favor of
any Grantor shall be delivered to the Administrative Agent promptly after
request of the Administrative Agent.

 

(c)
Upon delivery to the Administrative Agent, (i) any Pledged Securities shall be
accompanied by stock powers duly executed in blank or other instruments of
transfer satisfactory to the Administrative Agent and by such other instruments
and documents as the Administrative Agent may reasonably request and
(ii) all other property comprising part of the

 

9

 

Pledged Collateral shall
be accompanied by proper instruments of assignment duly executed by the
applicable Grantor and such other instruments or documents as the
Administrative Agent may reasonably request.  Each delivery of Pledged
Securities shall be accompanied by a schedule describing the securities,
which schedule shall be attached hereto as Schedule II and made a
part hereof; provided that failure to attach any such
schedule hereto shall not affect the validity of such pledge of such
Pledged Securities.  Each schedule so delivered shall supplement any
prior schedules so delivered.

 

SECTION
3.03.  Representations, Warranties and Covenants.  The
Grantors jointly and severally represent, warrant and covenant to and with the
Administrative Agent, for the benefit of the Secured Parties, that:

 

(a)
Schedule II correctly sets forth the percentage of the issued and
outstanding shares of each class of the Equity Interests of the issuer thereof
represented by such Pledged Stock and includes all Equity Interests, debt
securities and promissory notes required to be pledged hereunder;

 

(b)
except for the security interests granted hereunder, each of the Grantors
(i) is and, subject to any transfers made in compliance with the Credit
Agreement, will continue to be the direct owner, beneficially and of record, of
the Pledged Securities indicated on Schedule II as owned by such Grantor,
(ii) holds the same free and clear of all Liens, (iii) will make no
assignment, pledge, hypothecation or transfer of, or create or permit to exist
any security interest in or other Lien on, the Pledged Collateral, other than
Liens created by this Agreement or as permitted by the Credit Agreement and
transfers made in compliance with the Credit Agreement, and (iv) subject
to Section 3.06, will cause any and all Pledged Collateral, whether for
value paid by the Grantor or otherwise, to be forthwith deposited with the
Administrative Agent and pledged or assigned hereunder;

 

(c)
except for restrictions and limitations imposed by the Loan Documents or
securities laws generally, the Pledged Collateral (other than Pledged
Collateral representing less than all of the Equity Interests of a person) is
and will continue to be freely transferable and assignable, and none of the
Pledged Collateral is or will be subject to any option, right of first refusal,
shareholders agreement, charter or by-law provisions or contractual restriction
of any nature that might prohibit, impair, delay or otherwise affect the pledge
of such Pledged Collateral hereunder, the sale or disposition thereof pursuant
hereto or the exercise by the Administrative Agent of rights and remedies
hereunder;

 

(d)
each of the Grantors (i) has the power and authority to pledge the Pledged
Collateral pledged by it hereunder in the manner hereby done or contemplated
and (ii) will defend its title or interest thereto or therein against any and
all Liens (other than Liens created by this Agreement or as permitted by the
Credit Agreement), however arising, of all persons whomsoever;

 

(e) no
consent or approval of any Governmental Authority, any securities exchange or
any other person was or is necessary to the validity of the pledge of the
Pledged Collateral effected hereby (other than such as have been obtained and
are in full force and effect and except with respect to Pledged Collateral in
the form of Equity Interests in joint ventures);

 

10

 

(f) by
virtue of the execution and delivery by the Grantors of this Agreement, when
any Pledged Securities are delivered to the Administrative Agent in accordance
with this Agreement, the Administrative Agent will obtain a legal, valid and
perfected first priority lien upon and security interest in such Pledged
Securities as security for the payment and performance of the Obligations; and

 

(g)
the pledge effected hereby is effective to vest in the Administrative Agent,
for the benefit of the Secured Parties, the rights of the Administrative Agent
in the Pledged Collateral as set forth herein.

 

SECTION
3.04.  Certification of Limited Liability Company Interests and Limited
Partnership Interests.  Each interest in any limited liability company
or limited partnership controlled by any Grantor and pledged hereunder shall be
represented by a certificate, shall be a “security” within the meaning of
Article 8 of the New York UCC and shall be governed by Article 8 of
the New York UCC;

 

SECTION
3.05.  Registration in Nominee Name; Denominations.  The
Administrative Agent, on behalf of the Secured Parties, shall have the right
(in its sole and absolute discretion) to hold the Pledged Securities in its own
name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the
name of the applicable Grantor, endorsed or assigned in blank or in favor of
the Administrative Agent.  Each Grantor will promptly give to the
Administrative Agent copies of any notices or other communications received by
it with respect to Pledged Securities registered in the name of such
Grantor.  The Administrative Agent shall at all times have the right to
exchange the certificates representing Pledged Securities for certificates of
smaller or larger denominations for any purpose consistent with this Agreement.

 

SECTION
3.06.  Voting Rights; Dividends and Interest, etc. 
(a)  Unless and until an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have given the Grantors at least
two Business Days’ notice of its intent to exercise its rights under this
Agreement (which notice shall be deemed to have been given immediately upon the
occurrence of an Event of Default with respect to Holdings or the Borrower
under paragraph (g) or (h) of Article VII of the Credit Agreement):

 

(i)                                    
Each Grantor shall be entitled
to exercise any and all voting and/or other consensual rights and powers
inuring to an owner of Pledged Securities or any part thereof for any purpose
consistent with the terms of this Agreement, the Credit Agreement and the other
Loan Documents; provided, however, that such rights and powers
shall not be exercised in any manner that could materially and adversely affect
the rights inuring to a holder of any Pledged Securities or the rights and
remedies of any of the Administrative Agent or the other Secured Parties under
this Agreement or the Credit Agreement or any other Loan Document or the
ability of the Secured Parties to exercise the same.

 

(ii)                                 
The Administrative Agent shall
execute and deliver to each Grantor, or cause to be executed and delivered to
each Grantor, all such proxies, powers of attorney and other instruments as a Grantor
may reasonably request for the purpose of enabling such Grantor to exercise the
voting and/or consensual rights and powers it is entitled to exercise pursuant
to subparagraph (i) above.

 

(iii)                              
Each Grantor shall be entitled
to receive and retain any and all dividends, interest, principal and other
distributions paid on or distributed in respect of the Pledged Securities to
the extent and only to the extent that such

 

11

 

dividends, interest, principal and
other distributions are permitted by, and otherwise paid or distributed in
accordance with, the terms and conditions of the Credit Agreement, the other
Loan Documents and applicable laws; provided, however, that any
noncash dividends, interest, principal or other distributions that would
constitute Pledged Stock or Pledged Debt Securities, whether resulting from a
subdivision, combination or reclassification of the outstanding Equity
Interests of the issuer of any Pledged Securities or received in exchange for
Pledged Securities or any part thereof, or in redemption thereof, or as a
result of any merger, consolidation, acquisition or other exchange of assets to
which such issuer may be a party or otherwise, shall be and become part of the
Pledged Collateral, and, if received by any Grantor, shall not be commingled by
such Grantor with any of its other funds or property but shall be held separate
and apart therefrom, shall be held in trust for the benefit of the
Administrative Agent and shall be forthwith delivered to the Administrative
Agent in the same form as so received (with any necessary endorsement). 
This paragraph (iii) shall not apply to dividends between or among the Borrower
and the Subsidiary Guarantors only of property subject to a perfected security
interest under this Agreement; provided that the Borrower notifies the
Administrative Agent in writing, specifically referring to this
Section 3.06 at the time of such dividend and takes any actions the
Administrative Agent reasonably specifies to ensure the continuance of its
perfected security interest in such property under this Agreement.

 

(b)
Upon the occurrence and during the continuance of an Event of Default, after
the Administrative Agent shall have notified (or shall be deemed to have
notified) the Grantors of the suspension of their rights under paragraph
(a)(iii) of this Section 3.06, then all rights of any Grantor to
dividends, interest, principal or other distributions that such Grantor is
authorized to receive pursuant to paragraph (a)(iii) of this
Section 3.06 shall cease, and all such rights shall thereupon become
vested in the Administrative Agent, which shall have the sole and exclusive
right and authority to receive and retain such dividends, interest, principal
or other distributions.  All dividends, interest, principal or other
distributions received by any Grantor contrary to the provisions of this
Section 3.06 shall be held in trust for the benefit of the Administrative
Agent, shall be segregated from other property or funds of such Grantor and
shall be forthwith delivered to the Administrative Agent upon demand in the
same form as so received (with any necessary endorsement).  Any and all
money and other property paid over to or received by the Administrative Agent
pursuant to the provisions of this paragraph (b) shall be retained by the
Administrative Agent in an account to be established by the Administrative
Agent upon receipt of such money or other property and shall be applied in
accordance with the provisions of Section 5.02.  After all Events of
Default have been cured or waived and the applicable Grantor or Grantors have
delivered to the Administrative Agent certificates to that effect, the
Administrative Agent shall, promptly after all such Events of Default have been
cured or waived, repay to each Grantor (without interest) all dividends,
interest, principal or other distributions that such Grantor would otherwise be
permitted to retain pursuant to the terms of paragraph (a)(iii) of this
Section 3.06 and that remain in such account.

 

(c)
Upon the occurrence and during the continuance of an Event of Default, after
the Administrative Agent shall have notified (or shall be deemed to have
notified) the Grantors of the suspension of their rights under paragraph (a)(i)
of this Section 3.06, then all rights of any Grantor to exercise the
voting and consensual rights and powers it is entitled to exercise pursuant to
paragraph (a)(i) of this Section 3.06, and the obligations of the
Administrative Agent under paragraph (a)(ii) of this Section 3.06,
shall cease, and all such rights shall thereupon become

 

12

 

vested in the
Administrative Agent, which shall have the sole and exclusive right and
authority to exercise such voting and consensual rights and powers; provided
that, unless otherwise directed by the Required Lenders, the Administrative
Agent shall have the right from time to time following and during the
continuance of an Event of Default to permit the Grantors to exercise such
rights.

 

(d)
Any notice given by the Administrative Agent to the Grantors exercising its
rights under paragraph (a) of this Section 3.06 (i) may be given by
telephone if promptly confirmed in writing, (ii) may be given to one or more of
the Grantors at the same or different times and (iii) may suspend the rights of
the Grantors under paragraph (a)(i) or paragraph (a)(iii) in part without
suspending all such rights (as specified by the Administrative Agent in its
sole and absolute discretion) and without waiving or otherwise affecting the
Administrative Agent’s rights to give additional notices from time to time
suspending other rights so long as an Event of Default has occurred and is
continuing.

 

ARTICLE IV

 

Security Interests in Personal Property

 

SECTION
4.01.  Security Interest.  (a)  As security for the
payment or performance, as the case may be, in full of the Obligations, each
Grantor hereby assigns and pledges to the Administrative Agent, its successors
and assigns, for the ratable benefit of the Secured Parties, and hereby grants
to the Administrative Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, a security interest (the “Security Interest”),
in all right, title or interest in or to any and all of the following assets
and properties now owned or at any time hereafter acquired by such Grantor or
in which such Grantor now has or at any time in the future may acquire any
right, title or interest (collectively, the “Article 9 Collateral”):

 

(i)                                    
all Accounts;

 

(ii)                                 
all Chattel Paper;

 

(iii)                              
all cash and Deposit Accounts;

 

(iv)                             
all Documents;

 

(v)                                
all Equipment;

 

(vi)                             
all General Intangibles;

 

(vii)                          
all Instruments;

 

(viii)                       
all Inventory;

 

(ix)                               
all Investment Property;

 

(x)                                  
all Letter-of-Credit Rights;

 

(xi)                               
all books and records pertaining
to the Article 9 Collateral; and

 

13

 

(xii)                            
to the extent not otherwise
included, all Proceeds and products of any and all of the foregoing and all
collateral security and guarantees given by any person with respect to any of
the foregoing.

 

Notwithstanding
the foregoing, the Article 9 Collateral shall not include any of the
following assets now owned or hereafter acquired which would otherwise be
included in the Article 9 Collateral: (a) assets sold to a person which is
not a Grantor in compliance with the Credit Agreement, (b) assets owned by a
Guarantor after the release of the guarantee of such Guarantor pursuant to
Section 7.15, (c) assets subject to a Lien permitted by Sections 6.02(a),
(c), (i) and (u) of the Credit Agreement, (d) assets which contain a valid and
enforceable prohibition on the creation of a security interest therein so long
as such prohibition remains in effect and is valid notwithstanding Sections
9-406 and 9-408 of the applicable Uniform Commercial Code, (e)  Vehicles,
(f) real estate leasehold interests, (g) Investment Property solely to the
extent excluded by the proviso in Section 3.01 and (h) any other asset, if
any, specifically identified from time to time by the Administrative Agent
and the Borrower in writing in connection with the determination by the
Administrative Agent pursuant to the last sentence of Section 5.9 of the
Credit Agreement.

 

(b)
Each Grantor hereby irrevocably authorizes the Administrative Agent at any time
and from time to time to file in any relevant jurisdiction any initial
financing statements (including fixture filings) and amendments thereto that
contain the information required by Article 9 of the Uniform Commercial
Code of each applicable jurisdiction for the filing of any financing statement
or amendment, including (i) whether such Grantor is an organization, the type
of organization and any organizational identification number issued to such
Grantor and (ii) in the case of a financing statement filed as a fixture
filing, a sufficient description of the real property to which such
Article 9 Collateral relates.  Each Grantor agrees to provide such
information to the Administrative Agent promptly upon request.  Each Grantor
authorizes the Administrative Agent to use the collateral description “all
personal property” in any such financing statements.  Each Grantor also
ratifies its authorization for the Administrative Agent to file in any relevant
jurisdiction any initial financing statements or amendments thereto if filed
prior to the date hereof.

 

The
Administrative Agent is further authorized to file with the United States
Patent and Trademark Office or United States Copyright Office (or any successor
office or any similar office in any other country) or to file such documents as
may be necessary or advisable for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Administrative Agent as secured party.

 

(c)
The Security Interest is granted as security only and shall not subject the
Administrative Agent or any other Secured Party to, or in any way alter or
modify, any obligation or liability of any Grantor with respect to or arising
out of the Article 9 Collateral.

 

SECTION
4.02.  Representations and Warranties.  The Grantors jointly
and severally represent and warrant to the Administrative Agent and the Secured
Parties that:

 

(a)
Each Grantor has good and valid rights in and title to the Article 9
Collateral with respect to which it has purported to grant a Security Interest
hereunder and has full power and authority to grant to the Administrative Agent
the Security Interest in such Article 9 Collateral pursuant hereto and to
execute, deliver and perform

 

14

 

its obligations in accordance with
the terms of this Agreement, without the consent or approval of any other
person other than any consent or approval that has been obtained.

 

(b)
The Perfection Certificate has been duly prepared, completed and executed and
the information set forth therein (including (x) the exact legal name of each
Grantor and (y) the jurisdiction of organization of each Grantor) is correct
and complete as of the Closing Date.  Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations containing a description of the
Article 9 Collateral have been prepared by the Administrative Agent based
upon the information provided to the Administrative Agent in the Perfection
Certificate for filing in each governmental, municipal or other office
specified in Schedule 2 to the Perfection Certificate (or specified by
notice from the Borrower to the Administrative Agent after the Closing Date in
the case of filings, recordings or registrations required by Sections 5.6
or 5.9 of the Credit Agreement, which are all the filings, recordings and
registrations (other than filings required to be made in the United States
Patent and Trademark Office and the United States Copyright Office in order to
perfect the Security Interest in Article 9 Collateral consisting of United
States Patents, Trademarks and Copyrights) that are necessary as of the Closing
Date to publish notice of and protect the validity of and to establish a legal,
valid and perfected security interest in favor of the Administrative Agent (for
the ratable benefit of the Secured Parties) in respect of all Article 9
Collateral in which the Security Interest may be perfected by filing, recording
or registration in the United States (or any political subdivision thereof) and
its territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the
filing of continuation statements.  Each Grantor represents and warrants
that a fully executed agreement in the form hereof and containing a description
of all Article 9 Collateral consisting of Intellectual Property with
respect to United States Patents and United States registered Trademarks (and
Trademarks for which United States registration applications are pending) and
United States registered Copyrights have been delivered to the Administrative
Agent for recording by the United States Patent and Trademark Office and the
United States Copyright Office pursuant to 35 U.S.C. §261,
15 U.S.C. §1060 or 17 U.S.C. §205 and the regulations
thereunder, as applicable, and otherwise as may be required pursuant to the
laws of any other necessary jurisdiction, to protect the validity of and to
establish a legal, valid and perfected security interest in favor of the Administrative
Agent (for the ratable benefit of the Secured Parties) in respect of all
Article 9 Collateral consisting of Patents, Trademarks and Copyrights in
which a security interest may be perfected by filing, recording or registration
in the United States (or any political subdivision thereof) and its territories
and possessions, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary (other than such
actions as are necessary to perfect the Security Interest with respect to any
Article 9 Collateral consisting of Patents, Trademarks and Copyrights (or
registration or application for registration thereof) acquired or developed
after the date hereof).

 

(c)
The Security Interest constitutes (i) a legal and valid security interest
in all the Article 9 Collateral securing the payment and performance of
the Obligations, (ii) subject to the filings described in
Section 4.02(b), a perfected security interest in all Article 9
Collateral in which a security interest may be perfected by filing, recording
or registering a financing statement or analogous document in the United States
(or any political subdivision thereof) and its territories and possessions
pursuant to the Uniform

 

15

 

Commercial Code or other applicable
law in such jurisdictions and (iii) a security interest that shall be
perfected in all Article 9 Collateral in which a security interest may be
perfected upon the receipt and recording of this Agreement with the United
States Patent and Trademark Office and the United States Copyright Office, as
applicable.  The Security Interest is and shall be prior to any other Lien
on any of the Article 9 Collateral, other than Liens expressly permitted
pursuant to Section 6.2 of the Credit Agreement.

 

(d)
The Article 9 Collateral is owned by the Grantors free and clear of any
Lien, except for Liens expressly permitted pursuant to Section 6.2 of the
Credit Agreement.  None of the Grantors has filed or consented to the
filing of (i) any financing statement or analogous document under the
Uniform Commercial Code or any other applicable laws covering any
Article 9 Collateral, (ii) any assignment in which any Grantor
assigns any Collateral or any security agreement or similar instrument covering
any Article 9 Collateral with the United States Patent and Trademark
Office or the United States Copyright Office or (iii) any assignment in
which any Grantor assigns any Article 9 Collateral or any security
agreement or similar instrument covering any Article 9 Collateral with any
foreign governmental, municipal or other office, which financing statement or
analogous document, assignment, security agreement or similar instrument is
still in effect, except, in each case, for Liens expressly permitted pursuant
to Section 6.2 of the Credit Agreement.  None of the Grantors hold
any Commercial Tort Claim except as indicated on the Perfection Certificate.

 

(e)

 

(f)

 

SECTION
4.03.  Covenants.  (a)  Each Grantor agrees to maintain,
at its own cost and expense, such complete and accurate records with respect to
the Article 9 Collateral as is prudent in the conduct of its business, but
in any event to include complete accounting records indicating all payments and
proceeds received with respect to any part of the Article 9 Collateral,
and, at such time or times as the Administrative Agent may request, to prepare
and deliver as soon as reasonably practicable to the Administrative Agent a
duly certified schedule or schedules in form and detail satisfactory to
the Administrative Agent showing the identity, amount and location of any and
all Article 9 Collateral.

 

(b)
Each Grantor shall, at its own expense, take any and all actions necessary to
defend title to the Article 9 Collateral against all persons and to defend
the Security Interest of the Administrative Agent in the Article 9
Collateral and the priority thereof against any Lien not expressly permitted
pursuant to Section 6.2 of the Credit Agreement.

 

(c)
Each Grantor agrees, at its own expense, to execute, acknowledge, deliver and
cause to be duly filed all such further instruments and documents and take all
such actions as the Administrative Agent may from time to time request to
better assure, preserve, protect and perfect the Security Interest and the
rights and remedies created hereby, including the payment of any fees and Taxes
required in connection with the execution and delivery of this Agreement, the
granting of the Security Interest and the filing of any financing statements
(including fixture filings) or other documents in connection herewith or
therewith.  If any amount payable to any Grantor under or in connection
with any of the Article 9 Collateral shall be or become evidenced by any
promissory note or other instrument in excess of $200,000, such note or
instrument shall be promptly pledged and delivered to the Administrative Agent,
duly endorsed in a manner satisfactory to the Administrative Agent.

 

16

 

Without
limiting the generality of the foregoing, each Grantor hereby authorizes the
Administrative Agent, with prompt notice thereof to the Grantors, to supplement
this Agreement by supplementing Schedule III or adding additional
schedules hereto to specifically identify any asset or item that may, in the
Administrative Agent’s judgment, constitute Copyrights, Licenses, Patents or
Trademarks; provided that any Grantor shall have the right, exercisable
within 10 days after it has been notified by the Administrative Agent of
the specific identification of such Collateral, to advise the Administrative
Agent in writing of any material inaccuracy of the representations and
warranties made by such Grantor hereunder with respect to such
Collateral.  Each Grantor agrees that it will use its best efforts to take
such action as shall be necessary in order that all representations and
warranties hereunder shall be true and correct in all material respects with
respect to such Collateral within 30 days after the date it has been
notified by the Administrative Agent of the specific identification of such
Collateral.

 

(d)
The Administrative Agent and such persons as the Administrative Agent may
designate shall have the right, at the Grantors’ own cost and expense, to
inspect the Article 9 Collateral, all records related thereto (and to make
extracts and copies from such records) and the premises upon which any of the
Article 9 Collateral is located, to discuss the Grantors’ affairs with the
officers of the Grantors and their independent accountants and to verify under
reasonable procedures, in accordance with Section 5.7 of the Credit
Agreement, the validity, amount, quality, quantity, value, condition and status
of, or any other matter relating to, the Article 9 Collateral, including,
in the case of Accounts or Article 9 Collateral in the possession of any
third person, by contacting Account Debtors (only during the existence of a
Default) or the third person possessing such Article 9 Collateral for the
purpose of making such a verification.  The Administrative Agent shall
have the absolute right to share any information it gains from such inspection
or verification with any Secured Party.

 

(e)
At its option, the Administrative Agent may discharge past due Taxes,
assessments, charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Article 9 Collateral and not expressly
permitted pursuant to Section 6.2 of the Credit Agreement, and may pay for
the maintenance and preservation of the Article 9 Collateral to the extent
any Grantor fails to do so as required by the Credit Agreement or this Agreement,
and each Grantor jointly and severally agrees to reimburse the Administrative
Agent on demand for any payment made or any expense incurred by the
Administrative Agent pursuant to the foregoing authorization; provided, however,
that nothing in this paragraph shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Administrative Agent
or any Secured Party to cure or perform, any covenants or other promises of any
Grantor with respect to Taxes, assessments, charges, fees, Liens, security
interests or other encumbrances and maintenance as set forth herein or in the
other Loan Documents.

 

(f)
If at any time any Grantor shall take a security interest in any property of an
Account Debtor or any other person to secure payment and performance of an
Account in excess of $200,000, such Grantor shall promptly assign such security
interest to the Administrative Agent.  Such assignment need not be filed
of public record unless necessary to continue the perfected status of the
security interest against creditors of and transferees from the Account Debtor
or other person granting the security interest.

 

(g)
As between each Grantor, the Administrative Agent and the Secured Parties, each
Grantor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement
or instrument relating to the Article 9 Collateral, all in accordance with
the terms and conditions thereof, and each Grantor

 

17

 

jointly and severally
agrees to indemnify and hold harmless the Administrative Agent and the Secured
Parties from and against any and all liability for such performance.

 

(h)
None of the Grantors shall make or permit to be made an assignment, pledge or
hypothecation of the Article 9 Collateral or shall grant any other Lien in
respect of the Article 9 Collateral, except as expressly permitted by
Section 6.2 of the Credit Agreement.  None of the Grantors shall make
or permit to be made any transfer of the Article 9 Collateral, except as
expressly permitted by Sections 6.3 and 6.5 of the Credit Agreement.

 

(i)
None of the Grantors will, without the Administrative Agent’s prior written
consent, grant any extension of the time of payment of any Accounts included in
the Article 9 Collateral, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partly, any person liable for
the payment thereof or allow any credit or discount whatsoever thereon, other
than extensions, credits, discounts, compromises, compoundings or settlements
granted or made in good faith in the prudent conduct of the business of such
Grantor.

 

(j)
The Grantors, at their own expense, shall maintain or cause to be maintained
insurance covering physical loss or damage to the Inventory and Equipment in
accordance with the requirements set forth in Section 5.2 of the Credit
Agreement.  Each Grantor irrevocably makes, constitutes and appoints the
Administrative Agent (and all officers, employees or agents designated by the
Administrative Agent) as such Grantor’s true and lawful agent (and
attorney-in-fact) for the purpose, upon the occurrence and during the
continuance of an Event of Default, of making, settling and adjusting claims in
respect of Article 9 Collateral under policies of insurance, endorsing the
name of such Grantor on any check, draft, instrument or other item of payment
for the proceeds of such policies of insurance and for making all
determinations and decisions with respect thereto.  In the event that any
Grantor at any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or under the Credit Agreement or to pay
any premium in whole or part relating thereto, the Administrative Agent may,
without waiving or releasing any obligation or liability of the Grantors
hereunder or any Event of Default, in its sole discretion, obtain and maintain
such policies of insurance and pay such premium and take any other actions with
respect thereto as the Administrative Agent deems advisable.  All sums
disbursed by the Administrative Agent in connection with this paragraph,
including attorneys’ fees, court costs, expenses and other charges relating
thereto, shall be payable, upon demand, by the Grantors to the Administrative
Agent and shall be additional Obligations secured hereby.

 

(k)
Each Grantor shall maintain, in form and manner reasonably satisfactory to the
Administrative Agent, records of its Chattel Paper and its books, records and
documents evidencing or pertaining thereto.

 

(l)
Each Grantor agrees to notify the Administrative Agent promptly in writing upon
learning that any of the Article 9 Collateral constitutes, or is the
Proceeds of, Farm Products.

 

(m)
Each Grantor agrees to notify the Administrative Agent promptly in writing upon
learning that any of obligor on any Receivable is a Governmental Authority.

 

SECTION
4.04.  Other Actions.  In order to further insure the
attachment, perfection and priority of, and the ability of the Administrative
Agent to enforce, the Administrative Agent’s security interest in the
Article 9 Collateral, each Grantor agrees, in each case at such Grantor’s
own expense, to take the following actions with respect to the following
Article 9 Collateral:

 

18

 

(a) Instruments. 
If any Grantor shall at any time hold or acquire any Instruments in excess of
$200,000, such Grantor shall forthwith endorse, assign and deliver the same to
the Administrative Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Administrative Agent may from time to
time specify.

 

(b) Deposit
Accounts.  For each Deposit Account that any Grantor at any time opens
or maintains, such Grantor shall, on or prior to July 31, 2004 (or such
later date not beyond September 30, 2004 as the Administrative Agent may
agree in its sole discretion) either (i) cause the depositary bank to
agree to comply at any time with instructions from the Administrative Agent to
such depositary bank directing the disposition of funds from time to time
credited to such Deposit Account, without further consent of such Grantor or
any other person, pursuant to an agreement in form and substance satisfactory
to the Administrative Agent, or (ii) arrange for the Administrative Agent
to become the customer of the depositary bank with respect to the Deposit
Account, with the Grantor being permitted, only with the consent of the
Administrative Agent, to exercise rights to withdraw funds from such Deposit
Account.  The Administrative Agent agrees with each Grantor that the
Administrative Agent shall not give any such instructions or withhold any
withdrawal rights from any Grantor, unless an Event of Default has occurred and
is continuing, or, after giving effect to any withdrawal, would occur. 
The provisions of this paragraph shall not apply to (A) any Deposit
Account for which any Grantor, the depositary bank and the Administrative Agent
have entered into a cash collateral agreement specially negotiated among such
Grantor, the depositary bank and the Administrative Agent for the specific
purpose set forth therein, (B) Deposit Accounts for which the
Administrative Agent is the depositary, (C) Deposit Accounts of which all or a
substantial portion of the funds on deposit are used for funding (i) payroll,
(ii) 401(k) and other retirement plans and employee benefits, including rabbi
trusts for deferred compensation, (iii) health care benefits (e.g., imprest accounts) and (iv) escrow
arrangements (e.g., environmental
indemnity accounts) and (D) other Deposit Accounts with an aggregate balance of
all funds in all such other Deposit Accounts for all Grantors not in excess of
$3,000,000 at any time.

 

(c) Investment
Property.  Except to the extent otherwise provided in
Article III, if any Grantor shall at any time hold or acquire any
certificated securities, such Grantor shall forthwith endorse, assign and
deliver the same to the Administrative Agent, accompanied by such instruments
of transfer or assignment duly executed in blank as the Administrative Agent
may from time to time specify.  If any securities now or hereafter
acquired by any Grantor are uncertificated and are issued to such Grantor or
its nominee directly by the issuer thereof, such Grantor shall immediately
notify the Administrative Agent thereof and, at the Administrative Agent’s
request and option, pursuant to an agreement in form and substance satisfactory
to the Administrative Agent, either (a) cause the issuer to agree to
comply with instructions from the Administrative Agent as to such securities,
without further consent of any Grantor or such nominee, or (b) arrange for
the Administrative Agent to become the registered owner of the
securities.  If any securities, whether certificated or uncertificated, or
other Investment Property now or hereafter acquired by any Grantor are held by
such Grantor or its nominee through a Securities Intermediary or Commodity
Intermediary, such Grantor shall immediately notify the Administrative Agent
thereof and, at the Administrative Agent’s request and option, pursuant to an
agreement in form and substance satisfactory to the Administrative Agent,
either (a) cause such Securities Intermediary or Commodity Intermediary,
as the case may be, to agree to comply with Entitlement Orders or other
instructions from the

 

19

 

Administrative Agent to such
Securities Intermediary as to such securities or other Investment Property, or
(as the case may be) to apply any value distributed on account of any commodity
contract as directed by the Administrative Agent to such Commodity
Intermediary, in each case without further consent of any Grantor or such
nominee, or (b) in the case of Financial Assets (as governed by
Article 8 of the New York UCC) or other Investment Property held through a
Securities Intermediary, arrange for the Administrative Agent to become the
Entitlement Holder with respect to such Investment Property, with the Grantor
being permitted, only with the consent of the Administrative Agent, to exercise
rights to withdraw or otherwise deal with such Investment Property.  The
Administrative Agent agrees with each of the Grantors that the Administrative
Agent shall not give any such Entitlement Orders or instructions or directions
to any such issuer, Securities Intermediary or Commodity Intermediary, and
shall not withhold its consent to the exercise of any withdrawal or dealing
rights by any Grantor, unless an Event of Default has occurred and is
continuing, or, after giving effect to any such investment and withdrawal
rights would occur.  The provisions of this paragraph shall not apply to
any Financial Assets credited to a Securities Account for which the
Administrative Agent is the Securities Intermediary.

 

(d) Electronic
Chattel Paper and Transferable Records.  If any Grantor at any time
holds or acquires an interest in any Electronic Chattel Paper or any “transferable record,” as that term is
defined in Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act, or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction, such Grantor shall
promptly notify the Administrative Agent thereof and, at the request of the
Administrative Agent, shall take such action as the Administrative Agent may
request to vest in the Administrative Agent control under New York UCC
Section 9-105 of such Electronic Chattel Paper or control under
Section 201 of the Federal Electronic Signatures in Global and National
Commerce Act or, as the case may be, Section 16 of the Uniform Electronic
Transactions Act, as so in effect in such jurisdiction, of such transferable
record.  The Administrative Agent agrees with such Grantor that the
Administrative Agent will arrange, pursuant to procedures satisfactory to the
Administrative Agent and so long as such procedures will not result in the
Administrative Agent’s loss of control, for the Grantor to make alterations to
the Electronic Chattel Paper or transferable record permitted under UCC
Section 9-105 or, as the case may be, Section 201 of the Federal
Electronic Signatures in Global and National Commerce Act or Section 16 of
the Uniform Electronic Transactions Act for a party in control to allow without
loss of control, unless an Event of Default has occurred and is continuing or
would occur after taking into account any action by such Grantor with respect
to such Electronic Chattel Paper or transferable record.

 

(e) Letter-of-Credit
Rights.  If any Grantor is at any time a beneficiary under a letter of
credit now or hereafter issued in favor of such Grantor, such Grantor shall
promptly notify the Administrative Agent thereof and, at the request and option
of the Administrative Agent, such Grantor shall, pursuant to an agreement in
form and substance satisfactory to the Administrative Agent, either
(i) arrange for the issuer and any confirmer of such letter of credit to
consent to an assignment to the Administrative Agent of the proceeds of any
drawing under the letter of credit or (ii) arrange for the Administrative
Agent to become the transferee beneficiary of the letter of credit, with the
Administrative Agent agreeing, in each case, that the proceeds of any drawing
under the letter of credit are to be paid to the applicable Grantor unless an
Event of Default has occurred or is continuing.

 

20

 

(f) Commercial
Tort Claims.  If any Grantor shall at any time hold or acquire a
Commercial Tort Claim, the Grantor shall promptly notify the Administrative
Agent thereof in a writing signed by such Grantor including a summary
description of such claim and grant to the Administrative Agent in such writing
a security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
the Administrative Agent.

 

SECTION
4.05.  Covenants regarding Patent, Trademark and Copyright Collateral. 
(a)  Each Grantor agrees that it will not, and will not permit any of
its licensees to, do any act, or omit do to any act, whereby any Patent that is
material to the conduct of the business of the Borrower and its Subsidiaries,
taken as a whole, may become invalidated or dedicated to the public, and agrees
that it shall continue to mark any products covered by a Patent with the
relevant patent number as necessary and sufficient to establish and preserve
its maximum rights under applicable patent laws.

 

(b)
Each Grantor (either itself or through its licensees or its sublicensees) will,
for each Trademark material to the conduct of the business of the Borrower and
its Subsidiaries, taken as a whole, (i) maintain such Trademark in full force
free from any claim of abandonment or invalidity for non-use,
(ii) maintain the quality of products and services offered under such
Trademark, (iii) display such Trademark with notice of Federal or foreign
registration to the extent necessary and sufficient to establish and preserve
its maximum rights under applicable law and (iv) not knowingly use or
knowingly permit the use of such Trademark in violation of any third party
rights.

 

(c)
Each Grantor (either itself or through its licensees or sublicensees) will, for
each work covered by a Copyright that is material to the conduct of the
business of the Borrower and its Subsidiaries, taken as a whole, continue to
publish, reproduce, display, adopt and distribute the work with appropriate
copyright notice as necessary and sufficient to establish and preserve its
maximum rights under applicable copyright laws.

 

(d)
Each Grantor shall notify the Administrative Agent immediately if it knows or
has reason to know that any Patent, Trademark or Copyright that is material to
the conduct of the business of the Borrower and its Subsidiaries, taken as a
whole, may become abandoned, lost or dedicated to the public, or of any adverse
determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, United States Copyright Office or any court or similar office
of any country) regarding such Grantor’s ownership of any such Patent,
Trademark or Copyright, its right to register the same, or its right to keep
and maintain the same.

 

(e)
In no event shall any Grantor, either itself or through any agent, employee,
licensee or designee, file an application for any Patent, Trademark or
Copyright (or for the registration of any Trademark or Copyright) with the
United States Patent and Trademark Office, United States Copyright Office or
any office or agency in any political subdivision of the United States or in
any other country or any political subdivision thereof, with respect to any of
the same which is material to the conduct of the business of the Borrower and
its Subsidiaries, taken as a whole, unless it promptly informs the
Administrative Agent, and, upon request of the Administrative Agent, executes
and delivers any and all agreements, instruments, documents and papers as the
Administrative Agent may request to evidence the Administrative Agent’s
security interest in such Patent, Trademark or Copyright, and each Grantor
hereby appoints the Administrative Agent as its attorney-in-fact to execute and
file such writings for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed; such power, being coupled with an interest, is
irrevocable.

 

21

 

(f)
Each Grantor will take all necessary steps that it deems appropriate under the
circumstances and are consistent with the practice in any proceeding before the
United States Patent and Trademark Office, United States Copyright Office or
any office or agency in any political subdivision of the United States or in
any other country or any political subdivision thereof, to maintain and pursue
each application relating to any Patent, Trademark and/or Copyright (and to
obtain the relevant grant or registration) that is material to the conduct of
the business of the Borrower and its Subsidiaries, taken as a whole, and to
maintain each issued Patent and each registration of the Trademarks and
Copyrights that is material to the conduct of the business of the Borrower and
its Subsidiaries, taken as a whole, including timely filings of applications
for renewal, affidavits of use, affidavits of incontestability and payment of
maintenance fees, and, if consistent with good business judgment, to initiate
opposition, interference and cancelation proceedings against third parties.

 

(g)
In the event that any Grantor knows or has reason to believe that any
Article 9 Collateral consisting of a Patent, Trademark or Copyright that
is material to the conduct of the business of the Borrower and its
Subsidiaries, taken as a whole, has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Administrative Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Article 9 Collateral.  Such Grantor may discontinue or settle any
such suit or other action if the Grantor deems such discontinuance or
settlement to be appropriate in its reasonable business judgment.

 

(h)
Upon the occurrence and during the continuance of an Event of Default, each
Grantor shall, at the request of the Administrative Agent, use its best efforts
to obtain all requisite consents or approvals by the licensor of each Copyright
License, Patent License or Trademark License to effect the assignment of all
such Grantor’s right, title and interest thereunder to the Administrative Agent
or its designee.

 

ARTICLE V

 

Remedies

 

SECTION
5.01.  Remedies upon Default.  Upon the occurrence and during
the continuance of an Event of Default, each Grantor agrees to deliver each
item of Collateral to the Administrative Agent on demand, and it is agreed that
the Administrative Agent shall have the right to take any of or all the
following actions at the same or different times:  (a) with respect
to any Article 9 Collateral consisting of Intellectual Property, on demand,
to cause the Security Interest to become an assignment, transfer and conveyance
of any of or all such Article 9 Collateral by the applicable Grantors to
the Administrative Agent, or to license or sublicense, whether general, special
or otherwise, and whether on an exclusive or nonexclusive basis, any such
Article 9 Collateral throughout the world on such terms and conditions and
in such manner as the Administrative Agent shall determine (other than in
violation of any then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with or without legal process and
with or without prior notice or demand for performance, to take possession of
the Article 9 Collateral and without liability for trespass to enter any
premises where the Article 9 Collateral may be located for the purpose of
taking possession of or removing the Article 9 Collateral and, generally,
to exercise any and all rights afforded to a secured party under the Uniform
Commercial Code or other applicable law.  Without limiting the generality
of the foregoing, each Grantor agrees that the Administrative Agent shall have
the right, subject to the mandatory requirements of applicable

 

22

 

law, to sell or otherwise
dispose of all or any part of the Collateral at a public or private sale or at
any broker’s board or on any securities exchange, for cash, upon credit or for
future delivery as the Administrative Agent shall deem appropriate.  The
Administrative Agent shall be authorized at any such sale (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the Collateral
for their own account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale the Administrative Agent
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold.  Each such purchaser at any
such sale shall hold the property sold absolutely, free from any claim or right
on the part of any Grantor, and the Grantors hereby waive (to the extent
permitted by law) all rights of redemption, stay and appraisal which such
Grantor now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.

 

The
Administrative Agent shall give the applicable Grantors 10 days’ written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Administrative Agent’s intention to make any sale of
Collateral.  Such notice, in the case of a public sale, shall state the
time and place for such sale and, in the case of a sale at a broker’s board or
on a securities exchange, shall state the board or exchange at which such sale
is to be made and the day on which the Collateral, or portion thereof, will
first be offered for sale at such board or exchange.  Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Administrative Agent may fix and state in the notice (if
any) of such sale.  At any such sale, the Collateral, or portion thereof,
to be sold may be sold in one lot as an entirety or in separate parcels, as the
Administrative Agent may (in its sole and absolute discretion) determine. 
The Administrative Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given.  The
Administrative Agent may, without notice or publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned.  In case any sale of all or any part of the Collateral is made
on credit or for future delivery, the Collateral so sold may be retained by the
Administrative Agent until the sale price is paid by the purchaser or
purchasers thereof, but the Administrative Agent shall not incur any liability
in case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold
again upon like notice.  At any public (or, to the extent permitted by
law, private) sale made pursuant to this Section, any Secured Party may bid for
or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to such Secured Party
from any Grantor as a credit against the purchase price, and such Secured Party
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to any Grantor therefor.  For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Administrative Agent shall be free to
carry out such sale pursuant to such agreement and no Grantor shall be entitled
to the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Administrative Agent shall have entered
into such an agreement all Events of Default shall have been remedied and the
Obligations paid in full.  As an alternative to exercising the power of
sale herein conferred upon it, the Administrative Agent may proceed by a suit
or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver.  Any sale

 

23

 

pursuant to the
provisions of this Section 5.01 shall be deemed to conform to the
commercially reasonable standards as provided in Section 9-610(b) of the
New York UCC or its equivalent in other jurisdictions.

 

SECTION
5.02.  Application of Proceeds.  The Administrative Agent
shall apply the proceeds of any collection, sale, foreclosure or other
realization upon any Collateral, including any Collateral consisting of cash,
as follows:

 

FIRST, to the payment of
all costs and expenses incurred by the Administrative Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with such
collection, sale, foreclosure or realization or otherwise in connection with
this Agreement, any other Loan Document or any of the Obligations, including
all court costs and the fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Administrative Agent hereunder or under
any other Loan Document on behalf of any Grantor and any other costs or
expenses incurred in connection with the exercise of any right or remedy
hereunder or under any other Loan Document;

 

SECOND, to the payment in
full of the Obligations (the amounts so applied to be distributed among the
Secured Parties pro rata in accordance with the amounts of the Obligations owed
to them on the date of any such distribution); and

 

THIRD, to the Grantors,
their successors or assigns, or as a court of competent jurisdiction may
otherwise direct.

 

The Administrative Agent
shall have absolute discretion as to the time of application of any such
proceeds, moneys or balances in accordance with this Agreement.  Upon any
sale of Collateral by the Administrative Agent (including pursuant to a power
of sale granted by statute or under a judicial proceeding), the receipt of the
Administrative Agent or of the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Administrative Agent or such
officer or be answerable in any way for the misapplication thereof.

 

SECTION
5.03.  Grant of License to Use Intellectual Property.  For the
purpose of enabling the Administrative Agent to exercise rights and remedies
under this Article at such time as the Administrative Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to the Administrative Agent an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to the Grantors)
to use, license or sublicense any of the Article 9 Collateral consisting
of Intellectual Property now owned or hereafter acquired by such Grantor, and
wherever the same may be located, and including in such license access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout
thereof.  The use of such license by the Administrative Agent shall be
exercised, at the option of the Administrative Agent, only upon the occurrence
and during the continuation of an Event of Default; provided, however,
that any license, sublicense or other transaction entered into by the
Administrative Agent in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.

 

SECTION
5.04.  Securities Act, etc.  In view of the position of the
Grantors in relation to the Pledged Collateral, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose

 

24

 

or effect (such Act and
any such similar statute as from time to time in effect being called the “Federal
Securities Laws”) with respect to any disposition of the Pledged Collateral
permitted hereunder.  Each Grantor understands that compliance with the
Federal Securities Laws might very strictly limit the course of conduct of the
Administrative Agent if the Administrative Agent were to attempt to dispose of
all or any part of the Pledged Collateral, and might also limit the extent to
which or the manner in which any subsequent transferee of any Pledged
Collateral could dispose of the same.  Similarly, there may be other legal
restrictions or limitations affecting the Administrative Agent in any attempt
to dispose of all or part of the Pledged Collateral under applicable “blue sky”
or other state securities laws or similar laws analogous in purpose or
effect.  Each Grantor recognizes that in light of such restrictions and
limitations the Administrative Agent may, with respect to any sale of the
Pledged Collateral, limit the purchasers to those who will agree, among other
things, to acquire such Pledged Collateral for their own account, for
investment, and not with a view to the distribution or resale thereof. 
Each Grantor acknowledges and agrees that in light of such restrictions and
limitations, the Administrative Agent, in its sole and absolute discretion
(a) may proceed to make such a sale whether or not a registration
statement for the purpose of registering such Pledged Collateral or part
thereof shall have been filed under the Federal Securities Laws and
(b) may approach and negotiate with such number of purchasers as the
Administrative Agent determines to be reasonable to effect such sale. 
Each Grantor acknowledges and agrees that any such sale might result in prices
and other terms less favorable to the seller than if such sale were a public
sale without such restrictions.  In the event of any such sale, the
Administrative Agent shall incur no responsibility or liability for selling all
or any part of the Pledged Collateral at a price that the Administrative Agent,
in its sole and absolute discretion, may in good faith deem reasonable under
the circumstances, notwithstanding the possibility that a substantially higher
price might have been realized if the sale were deferred until after
registration as aforesaid or if more than a single purchaser were
approached.  The provisions of this Section 5.04 will apply
notwithstanding the existence of a public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Administrative Agent sells.

 

SECTION
5.05. Certain Matters Relating to Receivables.  (a)  At any
time during the continuance of an Event of Default, the Administrative Agent
shall have the right to make test verifications of the Receivables in any
manner and through any medium that it reasonably considers advisable, and each
Grantor shall furnish all such assistance and information as the Administrative
Agent may require in connection with such test verifications.  At any time
during the continuance of an Event of Default, upon the Administrative Agent’s
request and at the expense of the relevant Grantor, such Grantor shall cause
independent public accountants or others satisfactory to the Administrative
Agent to furnish to the Administrative Agent reports showing reconciliations,
aging and test verifications of, and trial balances for, the Receivables.

 

(b)                                
The Administrative
Agent hereby authorizes each Grantor to collect such Grantor’s Receivables, and
the Administrative Agent may curtail or terminate said authority at any time
after the occurrence and during the continuance of an Event of Default. 
If required by the Administrative Agent at any time after the occurrence and
during the continuance of an Event of Default, any payments of Receivables,
when collected by any Grantor, (i) shall be forthwith (and, in any event,
within two Business Days) deposited by such Grantor in the exact form received,
duly indorsed by such Grantor to the Administrative Agent if required, in a
Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Secured Parties only as provided in Section 5.02, and (ii)
until so turned over, shall be held by such Grantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Grantor.  Each such

 

25

 

deposit of Proceeds of Receivables
shall be accompanied by a report identifying in reasonable detail the nature
and source of the payments included in the deposit.

 

SECTION
5.06.  Communications with Obligors; Grantors Remain Liable.
(a)  The Administrative Agent in its own name or in the name of others may
at any time after the occurrence and during the continuance of an Event of
Default communicate with obligors under the Receivables to verify with them to
the Administrative Agent’s satisfaction the existence, amount and terms of any
Receivables.

 

(b)                                
Upon the request of
the Administrative Agent at any time after the occurrence and during the
continuance of an Event of Default, each Grantor shall notify obligors on the
Receivables that the Receivables have been assigned to the Administrative Agent
for the ratable benefit of the Secured Parties and that payments in respect
thereof shall be made directly to the Administrative Agent.

 

(c)                                 
Anything herein to
the contrary notwithstanding, each Grantor shall remain liable under each of
the Receivables to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise thereto.  Neither the Administrative Agent nor
any Lender shall have any obligation or liability under any Receivable (or any
agreement giving rise thereto) by reason of or arising out of this Agreement or
the receipt by the Administrative Agent or any Lender of any payment relating
thereto, nor shall the Administrative Agent or any Lender be obligated in any
manner to perform any of the obligations of any Grantor under or pursuant to
any Receivable (or any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it
or as to the sufficiency of any performance by any party thereunder, to present
or file any claim, to take any action to enforce any performance or to collect
the payment of any amounts which may have been assigned to it or to which it
may be entitled at any time or times.

 

SECTION
5.07.  Proceeds to be Turned Over To Administrative Agent.  In
addition to the rights of the Administrative Agent and the Secured Parties
specified in Section 5.05 with respect to payments of Receivables, if an
Event of Default shall occur and be continuing, all Proceeds received by any
Grantor consisting of cash, checks and other near-cash items shall be held by
such Grantor in trust for the Administrative Agent and the Secured Parties,
segregated from other funds of such Grantor, and shall, forthwith upon receipt
by such Grantor, be turned over to the Administrative Agent in the exact form
received by such Grantor (duly indorsed by such Grantor to the Administrative
Agent, if required).  All Proceeds received by the Administrative Agent
hereunder shall be held by the Administrative Agent in a Collateral Account
maintained under its sole dominion and control.  All Proceeds while held
by the Administrative Agent in a Collateral Account (or by such Grantor in
trust for the Administrative Agent and the Secured Parties) shall continue to
be held as collateral security for all the Obligations and shall not constitute
payment thereof until applied as provided in Section 5.02.

 

SECTION
5.08.  Deficiency.  Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Lender to collect such
deficiency.

 

26

 

ARTICLE VI

 

Indemnity, Subrogation and Subordination

 

SECTION
6.01.  Indemnity and Subrogation.  In addition to all such
rights of indemnity and subrogation as the Guarantors may have under applicable
law (but subject to Section 6.03), the Borrower agrees that (a) in
the event a payment shall be made by any Guarantor under this Agreement, the
Borrower shall indemnify such Guarantor for the full amount of such payment and
such Guarantor shall be subrogated to the rights of the person to whom such
payment shall have been made to the extent of such payment and (b) in the
event any assets of any Guarantor shall be sold pursuant to this Agreement or
any other Security Document to satisfy in whole or in part a claim of any
Secured Party, the Borrower shall indemnify such Guarantor in an amount equal
to the greater of the book value or the fair market value of the assets so
sold.

 

SECTION
6.02.  Contribution and Subrogation.  Each Guarantor (a “Contributing
Guarantor”) agrees (subject to Section 6.03) that, in the event a
payment shall be made by any other Guarantor hereunder in respect of any
Obligation or assets of any other Guarantor shall be sold pursuant to any
Security Document to satisfy any Obligation owed to any Secured Party and such
other Guarantor (the “Claiming Guarantor”) shall not have been fully
indemnified by the Borrower as provided in Section 6.01, the Contributing
Guarantor shall indemnify the Claiming Guarantor in an amount equal to the
amount of such payment or the greater of the book value or the fair market
value of such assets, as the case may be, in each case multiplied by a fraction
of which the numerator shall be the net worth of the Contributing Guarantor on
the date hereof and the denominator shall be the aggregate net worth of all the
Guarantors on the date hereof (or, in the case of any Guarantor becoming a
party hereto pursuant to Section 7.16, the date of the Supplement hereto
executed and delivered by such Guarantor).  Any Contributing Guarantor
making any payment to a Claiming Guarantor pursuant to this Section 6.02
shall be subrogated to the rights of such Claiming Guarantor under
Section 6.01 to the extent of such payment.

 

SECTION
6.03.  Subordination.  (a)  Notwithstanding any provision
of this Agreement to the contrary, all rights of the Guarantors under
Sections 6.01 and 6.02 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to
the indefeasible payment in full in cash of the Obligations.  No failure
on the part of the Borrower or any Guarantor to make the payments required by
Sections 6.01 and 6.02 (or any other payments required under applicable
law or otherwise) shall in any respect limit the obligations and liabilities of
any Guarantor with respect to its obligations hereunder, and each Guarantor
shall remain liable for the full amount of the obligations of such Guarantor
hereunder.

 

(b)
Each of the Borrower and the Subsidiary Guarantors hereby agrees that all
Indebtedness and other monetary obligations owed by it to the Borrower or any
Subsidiary shall be fully subordinated to the indefeasible payment in full in
cash of the Obligations.

 

ARTICLE VII

 

Miscellaneous

 

SECTION
7.01.  Notices.  All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 9.1 of the Credit Agreement.  All
communications and notices hereunder to any Subsidiary Guarantor shall be given
to it in care of the Borrower as provided in Section 9.1 of the Credit
Agreement.

 

27

 

SECTION
7.02.  Security Interest Absolute.  All rights of the
Administrative Agent hereunder, the Security Interest, the grant of a security
interest in the Pledged Collateral and all obligations of each Grantor
hereunder shall be absolute and unconditional irrespective of (a) any lack
of validity or enforceability of the Credit Agreement, any other Loan Document,
any agreement with respect to any of the Obligations or any other agreement or
instrument relating to any of the foregoing, (b) any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument, (c) any exchange, release or non-perfection of
any Lien on other collateral, or any release or amendment or waiver of or
consent under or departure from any guarantee, securing or guaranteeing all or
any of the Obligations, or (d) any other circumstance that might otherwise
constitute a defense available to, or a discharge of, any Grantor in respect of
the Obligations or this Agreement.

 

SECTION
7.03.  Survival of Agreement.  All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
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 other parties hereto and shall
survive the execution and delivery of the Loan Documents and the making of any
Loans and issuance of any Letters of Credit, regardless of any investigation
made by any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time
any credit is extended under the Credit Agreement, and shall continue in full
force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under any Loan Document is
outstanding and unpaid or the Aggregate L/C Exposure does not equal zero and so
long as the Commitments have not expired or terminated.

 

SECTION
7.04.  Binding Effect; Several Agreement.  This Agreement
shall become effective as to any Loan Party when a counterpart hereof executed
on behalf of such Loan Party 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 Loan Party and
the Administrative Agent and their respective permitted successors and assigns,
and shall inure to the benefit of such Loan Party, the Administrative Agent and
the other Secured Parties and their respective successors and assigns, except
that no Loan Party shall have the right to assign or transfer its rights or
obligations hereunder or any interest herein or in the Collateral (and any such
assignment or transfer shall be void) except as expressly contemplated by this
Agreement or the Credit Agreement.  This Agreement shall be construed as a
separate agreement with respect to each Loan Party and may be amended,
modified, supplemented, waived or released with respect to any Loan Party
without the approval of any other Loan Party and without affecting the
obligations of any other Loan Party hereunder.

 

SECTION
7.05.  Successors and Assigns.  Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the permitted successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of any Grantor or the Administrative Agent that
are contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.

 

SECTION
7.06.  Administrative Agent’s Fees and Expenses; Indemnification. 
(a)  The parties hereto agree that the Administrative Agent shall be
entitled to reimbursement of its expenses incurred hereunder as provided in
Section 9.5 of the Credit Agreement.

 

28

 

(b)
Without limitation of its indemnification obligations under the other Loan
Documents, each Grantor jointly and severally agrees to indemnify the
Administrative Agent and the other Indemnitees against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related out of pocket expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a result of, the
execution, delivery or performance of this Agreement or any agreement or
instrument contemplated hereby or any claim, litigation, investigation or
proceeding relating to any of the foregoing agreement or instrument
contemplated hereby or thereby, or to the Collateral, whether or not any
Indemnitee is a party thereto; provided, however, that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.

 

(c)
Any such amounts payable as provided hereunder shall be additional Obligations
secured hereby and by the other Security Documents.  The provisions of
this Section 7.06 shall remain operative and in full force and effect
regardless of the termination of this Agreement or any other Loan Document, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Loan Document, or any investigation made by or on
behalf of the Administrative Agent or any other Secured Party.  All
amounts due under this Section 7.06 shall be payable on written demand
therefor and shall bear interest at the rate specified in Section 2.6 of
the Credit Agreement.

 

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

 

29

 

actually received as a
result of the exercise of the powers granted to them herein, and neither they
nor their officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.

 

SECTION
7.08.  Applicable Law.  THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

 

SECTION
7.09.  Waivers; Amendment.  (a)  No failure or delay
by the Administrative Agent, the Issuing Bank or any Lender in exercising any
right or power hereunder or under any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power.  The rights and remedies of the Administrative
Agent, the Issuing Bank and the Lenders hereunder and 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 any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of
this Section, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.  Without limiting
the generality of the foregoing, the making of a Loan or issuance of a Letter
of Credit shall not be construed as a waiver of any Default, regardless of
whether the Administrative Agent, any Lender or the Issuing Bank may have had
notice or knowledge of such Default at the time.  No notice or demand on
any Loan Party in any case shall entitle any Loan Party to any other or further
notice or demand in similar or other circumstances.

 

(b)
Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to an agreement or agreements in writing entered into
by the Administrative Agent and the Loan Party or Loan Parties with respect to
which such waiver, amendment or modification is to apply, subject to any
consent required in accordance with Section 9.8 of the Credit Agreement.

 

SECTION
7.10.  WAIVER OF JURY TRIAL. 
EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.  EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 7.10.

 

SECTION
7.11.  Severability.  In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (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.

 

30

 

SECTION
7.12.  Counterparts.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 7.04.  Delivery of an executed signature page to this
Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.

 

SECTION
7.13.  Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.

 

SECTION
7.14.  Jurisdiction; Consent to Service of Process.  (a) 
Each of the Loan Parties 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 any other Loan Document, or for
recognition or enforcement of any judgment, and each of the Loan Parties 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
Loan Parties 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 or any other Loan Document shall affect any right that the
Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or any other Loan Document
against any Loan Party or its properties in the courts of any jurisdiction.

 

(b)
Each of the Loan Parties hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (a) of this Section.  Each of the Loan
Parties 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 of the Loan Parties hereby irrevocably consents to service of process in
the manner provided for notices in Section 7.01.  Nothing in this
Agreement or any other Loan Document will affect the right of the
Administrative Agent to serve process in any other manner permitted by law.

 

SECTION
7.15.  Termination or Release.  (a)  This Agreement, the
Guarantees, the Security Interest and all other security interests granted
hereby shall terminate when all the Loan Document Obligations then due and
owing have been indefeasibly paid in full and the Lenders have no further
commitment to lend under the Credit Agreement, the aggregate L/C Exposure has
been reduced to zero and the Issuing Bank has no further obligations to issue
Letters of Credit under the Credit Agreement.

 

(b)
A Subsidiary Guarantor shall automatically be released from its obligations
hereunder and the Security Interest in the Collateral of such Subsidiary
Guarantor shall be automatically released upon the consummation of any
transaction permitted by the Credit Agreement as a result of which such
Subsidiary Guarantor ceases to be a Subsidiary of the Borrower.

 

31

 

(c)
Upon any sale or other transfer by any Grantor of any Collateral that is
permitted under the Credit Agreement to any person that is not the Borrower or
a Guarantor, or, upon the effectiveness of any written consent to the release
of the security interest granted hereby in any Collateral pursuant to
Section 9.8 of the Credit Agreement, the security interest in such
Collateral shall be automatically released and the Administrative Agent will
confirm such release in writing promptly after written request therefor.

 

(d)
In connection with any termination or release pursuant to paragraph (a),
(b) or (c) above, the Administrative Agent shall execute and deliver to any
Grantor, at such Grantor’s expense, all documents that such Grantor shall
reasonably request to evidence such termination or release.  Any execution
and delivery of documents pursuant to this Section 7.15 shall be without
recourse to or warranty by the Administrative Agent.  Without limiting the
provisions of Section 7.06, the Borrower shall reimburse the
Administrative Agent upon demand for all costs and out of pocket expenses,
including the fees, charges and disbursements of counsel, incurred by it in
connection with any action contemplated by this Section 7.15.

 

                               
SECTION 7.16  Additional Grantors.  Pursuant to
Section 5.9 of the Credit Agreement, each Domestic Subsidiary of a Loan
Party that was not in existence or not a Subsidiary on the date of the Credit
Agreement is required to enter in this Agreement as a Subsidiary Guarantor upon
becoming such a Subsidiary.  Upon execution and delivery by the
Administrative Agent and a Domestic Subsidiary of a supplement in the form of
Exhibit A hereto, such Domestic 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 such
instrument shall not require the consent of any other Loan Party
hereunder.  The rights and obligations of each Subsidiary Guarantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Loan Party as a party to this Agreement.

 

                               
SECTION 7.17  Right of Setoff.  If an Event of Default shall
have occurred and is 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
obligations at any time owing by such Lender or Affiliate to or for the credit
or the account of any Grantor against any and all of the obligations of such
Grantor now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured.  The rights
of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.

 

                               
SECTION 7.18  Duty of Administrative Agent.  The
Administrative Agent’s sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under
Section 9-207 of the New York UCC or otherwise, shall be to deal with it
in the same manner as the Administrative Agent deals with similar property for
its own account.  Neither the Administrative Agent, any Lender nor any of
their respective officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof.  The powers conferred on the Administrative Agent and the Lenders
hereunder are solely to protect the Administrative Agent’s and the Lenders’
interests in the Collateral and shall not impose any duty upon the
Administrative Agent or any Lender to exercise any such powers.  The
Administrative Agent and the Lenders shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither
they

 

32

 

nor any of their
officers, directors, employees or agents shall be responsible to any Grantor
for any act or failure to act hereunder, except for their own gross negligence
or willful misconduct.

 

SECTION
7.19.  Authority of Administrative Agent.  Each Grantor
acknowledges that the rights and responsibilities of the Administrative Agent
under this Agreement with respect to any action taken by the Administrative
Agent or the exercise or non-exercise by the Administrative Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Credit Agreement and
by such other agreements with respect thereto as may exist from time to time
among them, but, as between the Administrative Agent and the Grantors, the
Administrative Agent shall be conclusively presumed to be acting as agent for
the Lenders with full and valid authority so to act or refrain from acting, and
no Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.

 

SECTION 7.20.  Acknowledgments.  Each Grantor hereby
acknowledges that:

 

(a) it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;

 

(b)
neither the Administrative Agent nor any Lender has any fiduciary relationship
with or duty to any Grantor arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between the Grantors,
on the one hand, and the Administrative Agent and Lenders, on the other hand,
in connection herewith or therewith is solely that of debtor and creditor; and

 

(c) no
joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or
among the Grantors and the Lenders.

 

33

 

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

 

	
   

  	
  PP HOLDING CORPORATION,

  
	
   

  	
   

  
	
   

  	
  by

  	
  /s/ Lynn Amos

  	
   

  
	
   

  	
   

  	
  Name: Lynn Amos

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer, Treasurer

  and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  PP ACQUISITION
  CORPORATION,

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ Lynn Amos

  	
   

  
	
   

  	
   

  	
  Name: Lynn Amos

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer, Treasurer

  and Secretary

  
	
   

  	
   

  
	
   

  	
  DARAMIC, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  by 

  	
  /s/ Lynn Amos

  	
   

  
	
   

  	
   

  	
  Name: Lynn Amos

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer, Executive

  Vice President, Treasurer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  DARAMIC INTERNATIONAL,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ Lynn Amos

  	
   

  
	
   

  	
   

  	
  Name: Lynn Amos

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer, Executive

  Vice President, Treasurer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  CELGARD, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ Lynn Amos

  	
   

  
	
   

  	
   

  	
  Name: Lynn Amos

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer, Executive

  Vice President, Treasurer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  DARAMIC ASIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ Lynn Amos

  	
   

  
	
   

  	
   

  	
  Name: Lynn Amos

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer, Executive

  Vice President, Treasurer and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  POLYPORE HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  by

  	
  /s/ Lynn Amos

  	
   

  
	
   

  	
   

  	
  Name: Lynn Amos

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer, Executive

  Vice President, Treasurer and Secretary

  

 

 

 

	
  The undersigned hereby
  acknowledges and agrees that, upon the effectiveness of the Merger, it will
  succeed by operation of law to all of the rights and obligations of the
  Borrower set forth herein and that all references herein to the “Borrower”
  shall thereupon be deemed to be references to the undersigned.

  	
   

  
	
   

  	
   

  
	
  POLYPORE, INC.,

  
	
   

  
	
  by

  	
   /s/ Lynn Amos

  	
   

  
	
   

  	
  Name: Lynn Amos

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  

 

2

 

Exhibit A to the

Guarantee and

Collateral Agreement

 

SUPPLEMENT NO. [•] dated as of [•], to the Guarantee and Collateral
Agreement dated as of May 13, 2004 (the “Guarantee and Collateral Agreement”),
among PP HOLDING CORPORATION., a Delaware corporation (“Holdings”), PP
ACQUISITION CORPORATION, a Delaware corporation (the “Borrower”), each
subsidiary of the Borrower listed on Schedule I thereto (each such
subsidiary individually a “Subsidiary Guarantor” and collectively, the “Subsidiary
Guarantors”; the Subsidiary Guarantors, Holdings and the Borrower are
referred to collectively herein as the “Grantors”).

 

A. 
Reference is made to the Credit Agreement dated as of May 13, 2004 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”),
among the Borrower, Holdings, the lenders named therein (the “Lenders”),
and JPMorgan Chase Bank, as administrative agent (in such capacity, the “Administrative
Agent”).

 

B. 
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement or the Guarantee and
Collateral Agreement referred to therein, as applicable.

 

C. 
The Grantors have entered into the Guarantee and Collateral Agreement in order
to induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit.  Section 7.16 of the Guarantee and Collateral Agreement
provides that additional Domestic Subsidiaries of the Loan Parties may become
Subsidiary Guarantors and Grantors under the Guarantee and Collateral Agreement
by execution and delivery of an instrument in the form of this Supplement. 
The undersigned Subsidiary (the “New Subsidiary”) is executing this
Supplement in accordance with the requirements of the Credit Agreement to
become a Subsidiary Guarantor and a Grantor under the Guarantee and Collateral
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 New Subsidiary agrees as follows:

 

SECTION 1. 
In accordance with Section 7.16 of the Guarantee and Collateral Agreement,
the New Subsidiary by its signature below becomes a Grantor and Subsidiary
Guarantor under the Guarantee and Collateral Agreement with the same force and
effect as if originally named therein as a Grantor and Subsidiary Guarantor and
the New Subsidiary hereby (a) agrees to all the terms and provisions of the
Guarantee and Collateral Agreement applicable to it as a Grantor and Subsidiary
Guarantor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Grantor and Subsidiary Guarantor
thereunder are true and correct in all material respects on and as of the date
hereof.  In furtherance of the foregoing, the New Subsidiary, as security
for the payment and performance in full of the Obligations (as defined in the
Guarantee and Collateral Agreement), does hereby create and grant to the
Administrative Agent, its successors and assigns, for the benefit of the
Secured Parties, their successors and assigns, a security interest in and lien
on all of the New Subsidiary’s right, title and interest in and to the
Collateral (as defined in the Guarantee and Collateral Agreement) of the New
Subsidiary.  Each reference to a “Grantor” or a “Subsidiary
Guarantor” in the Guarantee and Collateral Agreement shall be deemed to
include the New Subsidiary.  The Guarantee and Collateral Agreement is
hereby incorporated herein by reference.

 

1

 

SECTION 2. 
The New Subsidiary 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 (and by different parties
hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract. This
Supplement shall become effective when the Administrative Agent shall have
received counterparts of this Supplement that bear the signature of the New
Subsidiary.  Delivery of an executed signature page to this Supplement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.

 

SECTION 4. 
The New Subsidiary hereby represents and warrants that (a) set forth on
Schedule I attached hereto is a true and correct schedule of the
location of any and all Collateral of the New Subsidiary and (b) set forth
under its signature hereto, is the true and correct legal name of the New
Subsidiary, its jurisdiction of formation and the location of its chief
executive office.

 

SECTION 5. 
Except as expressly supplemented hereby, the Guarantee and Collateral Agreement
shall remain in full force and effect.

 

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

 

SECTION 7. 
In case any one or more of the provisions contained in this Supplement should
be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and in
the Guarantee and Collateral Agreement 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 hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

 

SECTION 8. 
All communications and notices hereunder shall be in writing and given as
provided in Section 7.01 of the Guarantee and Collateral Agreement. All
communications and notices hereunder to the New Subsidiary shall be given to it
at the address set forth under its signature below.

 

SECTION 9. 
The New Subsidiary agrees to reimburse the Administrative Agent for its
reasonable out-of-pocket expenses in connection with this Supplement, including
the reasonable fees, other charges and disbursements of counsel for the
Administrative Agent.

 

IN
WITNESS WHEREOF, the New Subsidiary has duly executed this Supplement to the
Guarantee and Collateral Agreement as of the day and year first above written.

 

2

 

	
   

  	
  [NAME OF NEW
  SUBSIDIARY],

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Legal Name:

  
	
   

  	
   

  	
  Jurisdiction

  of Formation:

  
	
   

  	
   

  	
  Location of Chief

  Executive Office:

  

 

3

 

Schedule I to

Supplement No.       to the

Guarantee and

Collateral Agreement

 

LOCATION OF COLLATERAL

 

	
  Description

  	
   

  	
  Location

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

JURISDICTION OF FORMATION

 

 

Schedule II to

Supplement No.       

to the Guarantee and

Collateral Agreement

 

Pledged Securities of the New Subsidiary

 

CAPITAL STOCK

 

	
  Issuer

  	
   

  	
  Number of

  Certificate

  	
   

  	
  Registered

  Owner

  	
   

  	
  Number and

  Class of

  Equity Interests

  	
   

  	
  Percentage

  of Equity Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

DEBT SECURITIES

 

	
  Issuer

  	
   

  	
  Principal

  Amount

  	
   

  	
  Date of Note

  	
   

  	
  Maturity Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

INTELLECTUAL PROPERTY

 

 

Exhibit B to

Guarantee and

Collateral Agreement

 

FORM OF PERFECTION CERTIFICATE

 

Reference
is made to (a) the Credit Agreement dated as of May 13, 2004 (as amended,
supplemented, or otherwise modified from time to time, the “Credit Agreement”),
among PP Holding Corporation (“Holdings”), PP Acquisition Corporation,
(the “Borrower”), the lenders named therein (the “Lenders”) and
Credit Suisse First Boston, a bank organized under the laws of Switzerland,
acting through its Cayman Islands branch, as Administrative Agent for the
Lenders (in such capacity, the “Administrative Agent”) and (b) the
Guarantee and Collateral Agreement dated as of May 13, 2004 among the Borrower,
Holdings and the Subsidiaries identified therein (the “Guarantors”). 
Capitalized terms used but not defined herein have the meanings assigned in the
Credit Agreement or the Security Documents referred to therein, as applicable.

 

The
undersigned, a Financial Officer and general counsel, respectively, of the
Borrower, hereby certify to the Administrative Agent and each other Secured
Party as follows:

 

1.  Names. 
(a)  The exact legal name of each Grantor, as such name appears in its
respective certificate of formation, is as follows:

 

(b)
Set forth below is each other legal name each Grantor has had in the past five
years, together with the date of the relevant change:

 

(c)
Except as set forth in Schedule 1 hereto, no Grantor has changed its
identity or corporate structure in any way within the past five years. 
Changes in identity or corporate structure would include mergers,
consolidations and acquisitions, as well as any change in the form, nature or
jurisdiction of organization.  If any such change has occurred, include in
Schedule 1 the information required by Sections 1 and 2 of this
certificate as to each acquiree or constituent party to a merger or
consolidation.

 

(d)
The following is a list of all other names (including trade names or similar
appellations) used by each Grantor or any of its divisions or other business
units in connection with the conduct of its business or the ownership of its
properties at any time during the past five years:

 

(e)
Set forth below is the Organizational Identification Number, if any, issued by
the jurisdiction of formation of each Grantor that is a registered
organization:

 

2.  Current
Locations.  (a)  The chief executive office of each Grantor is
located at the address set forth opposite its name below:

 

	
  Grantor

  	
   

  	
  Mailing Address

  	
   

  	
  County

  	
   

  	
  State

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(b)
Set forth below opposite the name of each Grantor are all locations where such
Grantor maintains any books or records relating to any Accounts Receivable
(with each location at which chattel paper, if any, is kept being indicated by
an “*”):

 

	
  Grantor

  	
   

  	
  Mailing Address

  	
   

  	
  County

  	
   

  	
  State

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

(c)
The jurisdiction of formation of each Grantor that is a registered organization
is set forth opposite its name below:

 

	
  Grantor:

  	
   

  	
  Jurisdiction:

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

(d)
Set forth below opposite the name of each Grantor are all the locations where
such Grantor maintains any Equipment or other Collateral not identified above:

 

	
  Grantor

  	
   

  	
  Mailing Address

  	
   

  	
  County

  	
   

  	
  State

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(e)
Set forth below opposite the name of each Grantor are all the places of
business of such Grantor not identified in paragraph (a), (b), (c) or (d)
above:

 

	
  Grantor

  	
   

  	
  Mailing Address

  	
   

  	
  County

  	
   

  	
  State

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(f)
Set forth below opposite the name of each Grantor are the names and addresses
of all Persons other than such Grantor that have possession of any of the
Collateral of such Grantor:

 

	
  Grantor

  	
   

  	
  Mailing Address

  	
   

  	
  County

  	
   

  	
  State

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

3.  Unusual
Transactions.  All Accounts have been originated by the Grantors and
all Inventory has been acquired by the Grantors in the ordinary course of
business.

 

4.  File Search
Reports.  File search reports have been obtained from each Uniform
Commercial Code filing office identified with respect to such Grantor in
Section 2 hereof, and such search reports reflect no liens against any of
the Collateral other than those permitted under the Credit Agreement.

 

5.  UCC Filings. 
Financing statements in substantially the form of Schedule 5 hereto have
been prepared for filing in the proper Uniform Commercial Code filing office in
the jurisdiction in which each Grantor is located and, to the extent any of the
collateral is comprised of fixtures, timber to be cut or as extracted
collateral from the wellhead or minehead, in the proper local jurisdiction, in
each case as set forth with respect to such Grantor in Section 2 hereof.

 

6.  Schedule of
Filings.  Attached hereto as Schedule 6 is a
schedule setting forth, with respect to the filings described in
Section 5 above, each filing and the filing office in which such filing is
to be made.

 

7.  Stock
Ownership and other Equity Interests.  Attached hereto as
Schedule 7 is a true and correct list of all the issued and outstanding
stock, partnership interests, limited liability company membership interests or
other equity interest of the Borrower and each Subsidiary and the record and
beneficial owners of such stock, partnership interests, membership interests or
other equity interests. Also set forth on Schedule 7 is each equity
investment of Holdings, the Borrower or any Subsidiary that represents 50% or
less of the equity of the entity in which such investment was made.

 

2

 

8.  Debt Instruments. 
Attached hereto as Schedule 8 is a true and correct list of all promissory
notes and other evidence of indebtedness held by Holdings, the Borrower and
each Subsidiary that are required to be pledged under the Guarantee and
Collateral Agreement, including all applicable intercompany notes between
Holdings and each Subsidiary of Holdings and each Subsidiary of Holdings and
each other such Subsidiary.

 

9.  Advances. 
Attached hereto as Schedule 9 is (a) a true and correct list of all
advances made by the Borrower to any Subsidiary of the Borrower or made by any
Subsidiary of the Borrower to the Borrower or to any other Subsidiary of the
Borrower (other than those identified on Schedule 8), which advances are
on the date hereof evidenced by one or more intercompany notes pledged to the
Administrative Agent pursuant to the requirements of the Guarantee and
Collateral Agreement and (b) a true and correct list of all unpaid intercompany
transfers of goods sold and delivered by or to the Borrower or any Subsidiary
of the Borrower.

 

10.  Intellectual
Property.  Attached hereto as Schedule 10(A) in proper form for
filing with the United States Patent and Trademark Office is a
schedule setting forth all of each Grantor’s Patents, Patent Licenses,
Trademarks and Trademark Licenses, including the name of the registered owner,
the registration number and the expiration date of each Patent, Patent License,
Trademark and Trademark License owned by any Grantor. Attached hereto as
Schedule 10(B) in proper form for filing with the United States Copyright
Office is a schedule setting forth all of each Grantor’s Copyrights and
Copyright Licenses, including the name of the registered owner, the
registration number and the expiration date of each Copyright or Copyright License
owned by any Grantor.

 

3

 

IN
WITNESS WHEREOF, the undersigned have duly executed this certificate on this
     day of May 2004.

 

	
   

  	
  PP ACQUISITION
  CORPORATION,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

4Exhibit
10.5

 

TAX
SHARING AGREEMENT

THIS AGREEMENT (this “Agreement”)
made and entered into as of May 13, 2004, by and among PP Holding
Corporation II, a Delaware corporation (“PHC II”),
PP Holding Corporation, a Delaware corporation
and direct wholly owned subsidiary of PHC II (“PHC”), Polypore, Inc., a Delaware corporation and direct wholly owned subsidiary of PHC (“Polypore”), and such direct and indirect
subsidiaries of PHC II that are listed on Exhibit A hereto
from time to time (collectively with PHC and Polypore, the “Subsidiaries” and each individually, a “Subsidiary”).

WITNESSETH:

WHEREAS, PHC II and each of the Subsidiaries
qualifies as an “includible corporation” within the meaning of Section 1504(b)
of the Internal Revenue Code of 1986, as amended (the “Code”);

WHEREAS, the affiliated group of corporations,
consisting of PHC II, as the common parent, and each of the Subsidiaries
(the “Polypore Group”), qualifies
as an “affiliated group” within the meaning of Section 1504(a) of the Code; and

WHEREAS, the Polypore Group desires to take advantage
of the tax savings that may result from the filing of U.S. federal income tax
returns on a consolidated basis, in accordance with Sections 1501 et seq. of the Code and the Treasury
Regulations promulgated thereunder.

NOW, THEREFORE, in consideration of the covenants,
agreements, terms and conditions contained herein, and for other good, valid
and binding consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:

SECTION 1.  Defined Terms.  As used in
this Agreement, the following terms shall have the following meanings.

“Code”
shall have the meaning set forth in the recitals of this Agreement.

“Fiscal Year”
shall mean the annual accounting period of PHC II and any other Member.

“Interim Payments”
shall have the meaning set forth in Section 3(b) of this Agreement.

“Member”
shall mean a member (as defined in Treasury Regulations Section 1.1502-1(b)) of
the Polypore Group.

“PHC”
shall have the meaning set forth in the heading of this Agreement.

“PHC II”
shall have the meaning set forth in the heading of this Agreement.

“Polypore”
shall have the meaning set forth in the heading of this Agreement.

 

 

“Polypore Group”
shall have the meaning set forth in the recitals of this Agreement.

“Separate Return
Liability” shall mean, with respect to any Subsidiary for any Fiscal
Year, the U.S. federal income taxes (including any minimum tax or alternative
minimum tax) that would be payable by such Subsidiary to the U.S. Treasury had
the Subsidiary filed a separate income tax return for that Fiscal Year based on
the Subsidiary’s Separate Taxable Income for that Fiscal Year.

“Separate Taxable
Income” shall mean, with respect to any Subsidiary for any Fiscal
Year, the income, gains, losses, deductions and credits of such Subsidiary for
that Fiscal Year calculated as follows:  (i) any dividends received
by one Member from another Member will be assumed to qualify for the 100% dividends
received deduction of Section 243 of the Code or shall otherwise be eliminated
from such calculation; (ii) gain or loss on intercompany transactions,
whether or not deferred, shall be treated by each Member in the manner required
by Treasury Regulations Section 1.1502-13; (iii) limitations on the
calculation of a deduction or the utilization of tax credits or the calculation
of a tax liability shall be made on a consolidated basis; (iv) net
operating losses and credits of a Subsidiary shall be treated as available to
such Subsidiary in determining such Subsidiary’s Separate Taxable Income, and
shall not be reduced even if such net operating losses or credits are used in
determining the consolidated taxable income of the Polypore Group, instead,
such net operating losses and credits shall be reduced only if, when and to the
extent used in determining the Separate Taxable Income of the Subsidiary; and
(v) elections relating to tax credits and tax computations that differ
from the consolidated treatment if separate returns were filed shall be made on
an annual basis by PHC II.

“Subsidiary”
and “Subsidiaries” shall have the
meanings set forth in the heading of this Agreement.

SECTION 2.  Consent to Filing of
Consolidated Return.

(a)          
PHC II shall file a consolidated U.S. federal income tax return, and pay
to the U.S. Treasury any taxes due thereon, on behalf of the Polypore Group for
the taxable year ending December 31, 2004, and for each subsequent taxable
period for which this Agreement is in effect and for which the Polypore Group
is required or permitted to file a consolidated tax return; provided,
that PHC II shall not be liable for any taxes attributable to a Subsidiary
if such Subsidiary has not complied with its tax payment requirements as set
forth in Section 3 hereof.  Each Subsidiary shall execute and file such
consents, elections and other documents that may be required or appropriate for
the proper filing of such returns.

(b)          
Each corporation that, subsequent to the date of this Agreement, becomes a
Member shall be added to the list of Subsidiaries contained in Exhibit A
hereto.  Polypore (or the applicable Member that is the direct parent
corporation of such Subsidiary) shall cause each of the Subsidiaries listed on Exhibit
A hereto, as amended from time to time, to become a party hereto by
executing this Agreement in counterpart.

2

SECTION 3.  Tax Payments.

(a)          
Each Subsidiary shall make payments to PHC II with respect to each Fiscal
Year equal to its respective Separate Return Liability for such Fiscal
Year.  Such payments shall be made in the manner set forth in paragraphs
(b) and (c) below.

(b)          
From time to time during the Fiscal Year each Subsidiary shall make interim
payments (“Interim Payments”) to
PHC II with respect to its Separate Return Liability (i) pursuant to
the schedule set forth in Section 6655(c) of the Code and (ii) calculated
under the principles Section 6655(d) of the Code.  Interim Payments shall
be made no later than 5 calendar days prior to the due date of the relevant
estimated tax payment.

(c)          
If a Subsidiary’s Separate Return Liability for a particular Fiscal Year is
greater than its aggregate Interim Payments with respect to such Fiscal Year,
then such Subsidiary shall pay to PHC II the excess of its Separate Return
Liability over its aggregate Interim Payments at least five calendar days
before PHC II files the Polypore Group’s consolidated U.S. federal income
tax return in respect of such Fiscal Year.  If a Subsidiary’s aggregate
Interim Payments for a particular Fiscal Year exceed its Separate Return
Liability with respect to such Fiscal Year, such excess shall be allowed as a
credit to the Subsidiary in respect of the Interim Payment next due from that
Subsidiary to PHC II.

SECTION 4.  Adjustments to the
Separate Return Liability.

(a)          
If for any Fiscal Year the Internal Revenue Service makes an upward adjust to,
or PHC II files an amended return resulting in an upward adjustment of,
the Polypore Group’s consolidated U.S. federal income tax liability with
respect to such Fiscal Year, then each Subsidiary shall pay to PHC II an
amount equal to the excess of the Separate Return Liability for such Fiscal
Year, as adjusted, over the Separate Return Liability for such Fiscal Year paid
to date.  In the event of a downward adjustment, the excess of a
Subsidiary’s Separate Return Liability for such Fiscal Year paid to date over
its Separate Return Liability, as adjusted, shall be allowed as a credit to the
Subsidiary in respect of the Interim Payment next due from that Subsidiary to
PHC II under Section 3 of this Agreement.

(b)          
The payments required under this Section 4 shall be made promptly after a
“determination” (as defined in Section 1313(a) of the Code) in respect of the
amount at issue; provided, however, that payments in the case of
the filing of an amended return shall be made promptly upon such filing.

SECTION 5.  Interest Payments.  Interest will
be paid pursuant to this Agreement only with respect to payments required to be
made by a Subsidiary as a result of any adjustment or redetermination of income
by the Internal Revenue Service or in the case of a filing of an amended
return.  Such interest will be calculated at the applicable overpayment or
underpayment rate and shall otherwise be determined in the same manner as would
be determined by the Internal Revenue Service.

SECTION 6.  Appointment of
PHC II as Agent.  Each Subsidiary hereby appoints PHC II its
agent with full power to act on its behalf in all matters concerning the
consolidated U.S. federal income tax returns filed on behalf of the Polypore
Group, including the preparation 

 

3

 

and filing of such returns (including any amendments
thereto), making or revoking all elections with respect thereto, negotiating
and settling any audit, examination or administrative proceeding with respect
to such tax returns, and commencing and prosecuting any judicial proceeding
related to such tax returns.

SECTION 7.  State Tax Returns.  The provisions
of this Agreement shall apply, as appropriately adjusted, to any Members filing
combined, consolidated, unitary or similar income or franchise returns for
state tax purposes.

SECTION 8.  Miscellaneous.

(a)          
This Agreement and any provision hereof may be amended, waived, discharged or
terminated only by an instrument in writing signed by the party against whom
enforcement of the amendment, waiver, discharge or termination is sought.

(b)          
This Agreement shall constitute the entire agreement between the parties
concerning the subject matter hereof and shall supersede any prior agreements
and understandings between or among the parties with respect to the subject
matter hereof.

(c)          
The validity, interpretation and enforceability of this Agreement shall be
governed in all respects by the laws of the State of New York, without regard
to conflict of law principles.

(d)          
Failure of any party at any time to require the other party’s performance of
any obligation under this Agreement shall not affect the right to require
performance of that obligation.  Any waiver by any party of any breach of
any provision of this Agreement shall not be construed as a waiver of any
continuing or succeeding breach of such provision, a waiver or modification of
the provision itself, or a waiver of any right under this Agreement.

(e)          
Section and other headings contained in this Agreement are for reference
purposes only and are in no way intended to describe, interpret, define or
limit the scope, extent or intent of this Agreement or of any provision hereof.

(f)           
Every provision of this Agreement is intended to be severable.  If any
term or provision hereof is determined to be illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder of this Agreement.

(g)          
This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which together shall constitute one
agreement.  The signatures of any party to any such counterpart shall be
deemed to be a signature to, and may be appended to, any other counterpart.

(h)          
This Agreement and all of the provisions hereof shall be binding upon and inure
to the benefit of, and be enforceable by, the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations herein shall be assigned by any party
hereto without the prior written consent of the other parties hereto.

 

 

4

 

 

(i)           
Matters of interpretation and calculations under this Agreement shall be made
in good faith by PHC II.

(j)           
Upon request by PHC II, each Subsidiary shall pay to PHC II, no later
than the due date of the next Interim Payment due following such request, such
Subsidiary’s pro rata share of
(i) amounts expended by PHC II in connection with the determination
of the tax liability of the Polypore Group and the preparation of necessary tax
return filings and (ii) amounts expended by PHC II in determining
amounts due pursuant to this Agreement.

[REMAINDER OF PAGE LEFT
BLANK]

 

 

5

 

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

 

	
  PP HOLDING CORPORATION
  II

  	
   

  	
  PP HOLDING CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
  By:

  	
  /s/ Lynn Amos

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  POLYPORE, INC.

  	
   

  	
  CELGARD, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
  By:

  	
  /s/ Lynn Amos

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DARAMIC, INC.

  	
   

  	
  DARAMIC ASIA, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
  By:

  	
  /s/ Lynn Amos

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DARAMIC INTERNATIONAL,
  INC.

  	
   

  	
  POLYPORE HOLDINGS, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Lynn Amos

  	
   

  	
  By:

  	
  /s/ Lynn Amos

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
  Title:

  

 

 

 

6

 

 

EXHIBIT
A

 

Celgard,
Inc., a Delaware corporation

Daramic,
Inc., a Delaware corporation

Daramic
Asia, Inc., a Delaware corporation

Daramic
International, Inc., a Delaware corporation

Polypore
Holdings, Inc., a Delaware corporation

 

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]