Document:

Exhibit
4.14

 

PLEDGE AGREEMENT dated as of
February 17, 2004, among PLIANT CORPORATION, a Utah corporation (the
“Issuer”), each Subsidiary of the Issuer listed on Schedule I
hereto (each such Subsidiary individually a “Subsidiary Pledgor” and
collectively, the “Subsidiary Pledgors”; the Issuer and the Subsidiary
Pledgors are referred to collectively herein as the “Pledgors”) and
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as collateral agent
(in such capacity, the “Collateral Agent”) for the Secured Parties (as
defined in the Security Agreement referred to below).

 

Reference is made to (a) the Indenture dated as of the date hereof (as
amended, supplemented or otherwise modified from time to time, the “Indenture”),
among the Issuer, Uniplast Industries Co., a Nova Scotia company (“Uniplast”),
the Subsidiary Pledgors and Wilmington Trust Company, as trustee (the “Trustee”),
(b) the Purchase Agreement dated as of February 6, 2004 (the “Purchase
Agreement”), among the Issuer, Uniplast, the Subsidiary Pledgors and J.P.
Morgan Securities Inc., Credit Suisse First Boston LLC and Deutsche Bank
Securities Inc. (the “Initial Purchasers”).  Pursuant to the terms, conditions and provisions of the Indenture
and the Purchase Agreement, the Issuer is issuing $306,000,000 aggregate
principal amount at maturity of 111/8% Senior Secured
Discount Notes due 2009 and may issue, from time to time, additional notes in
accordance with the provisions of the Indenture (collectively, the “Notes”),
which will be guaranteed on a senior secured basis by each of the Subsidiary
Pledgors and Uniplast, and (c) the Security Agreement dated as of
February 17, 2004 (the “Security Agreement”), among the Issuer, the
guarantors party thereto and the Collateral Agent.  Capitalized terms used herein and not defined herein shall have
the meanings assigned to such terms in the Indenture.

 

The Issuer, Deutsche Bank Trust Company Americas (as collateral agent
under the credit agreement dated as of the date hereof (the “Credit
Agreement”), among the Issuer, Uniplast Industries Co., the domestic
subsidiary borrowers party thereto, the lenders party thereto, Credit Suisse
First Boston, acting through its Cayman Islands Branch, as administrative agent
and documentation agent, Deutsche Bank Trust Company Americas, as collateral
agent, General Electric Capital Corporation, as co-collateral agent, and
JPMorgan Chase Bank, as syndication agent), and the Collateral Agent, in its
capacity as agent with respect to the Notes and in its capacity as agent with
respect to the Issuer’s 111/8% Senior Secured Notes due
2009 (the “Existing Senior Secured Notes”), have entered into the
Amended and Restated Intercreditor Agreement dated as of the date hereof (the “Intercreditor
Agreement”), which addresses the relative priority of the security
interests in the Collateral of (a) the Secured Parties, (b) the secured parties
under the Security Documents (as defined in the Credit Agreement) and (c) the
holders of the Existing Senior Secured Notes.

 

The obligations of the Initial Purchasers to purchase the Notes are
conditioned upon, among other things, the execution and delivery by the Issuer
and the Subsidiary Pledgors of this Agreement to secure the Obligations.  The Subsidiary Pledgors will derive
substantial

 

 

benefits from the issuance of the Notes by
the Issuer pursuant to the Indenture and are willing to execute and deliver
this Agreement in order to induce the Initial Purchasers to purchase the Notes.

 

Accordingly, each of the Pledgors and the Collateral Agent, on behalf
of itself and each Secured Party (and each of their respective successors or
assigns), hereby agrees as follows:

 

SECTION 1.  Pledge.  As security for the payment and performance,
as the case may be, in full of the Obligations, each Pledgor hereby transfers,
grants, bargains, sells, conveys, hypothecates, pledges, sets over and
delivers, unto the Collateral Agent, its successors and assigns, and hereby
grants to the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, a security interest in all of the Pledgor’s
right, title and interest in, to and under (a) the shares of capital
stock, partnership interests, membership interests in a limited liability
company, beneficial interests in a trust or other equity ownership interests in
a person (collectively, the “Equity Interests”) owned by such Pledgor
and listed on Schedule II hereto and any Equity Interests obtained in the
future by the Pledgor and the certificates representing all such shares (the “Pledged
Stock”); (b)(i) the debt securities listed opposite the name of the
Pledgor on Schedule II hereto, (ii) any debt securities in the future
issued to the Pledgor and (iii) the promissory notes and any other instruments
evidencing such debt securities (the “Pledged Debt Securities”);
(c) subject to Section 5, 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 the securities referred to in clauses (a) and (b)
above; (d) subject to Section 5, all rights and privileges of the
Pledgor with respect to the securities and other property referred to in
clauses (a), (b) and (c) above, including any interest of such Pledgor in
the entries on the books of the issuer of the Pledged Stock or any financial
intermediary pertaining to the Pledged Shares; and (e) all proceeds of any
of the foregoing (the items referred to in clauses (a) through
(e) above being collectively referred to as the “Collateral”).  Notwithstanding any of the foregoing, the
Pledged Stock shall not include (i) more than 65% of the issued and
outstanding shares of common stock of any Foreign Subsidiary that is not a Note
Guarantor or (ii) to the extent that applicable law requires that a Subsidiary
of the Pledgor issue directors’ qualifying shares, such qualifying shares.

 

Any security interest in Pledged Stock or Pledged Debt Securities of
any Subsidiary of the Issuer shall be limited at any time to that portion of
capital stock or other security which value (defined as the principal amount,
par value, book value as carried by the Issuer or market value, whichever is
greatest), when considered in the aggregate with all other capital stock or
other securities of such Subsidiary subject to a security interest under the
Indenture, does not exceed 19.99% of the principal amount of the then
outstanding Notes issued by the Issuer; provided, in the event that Rule
3-16 of Regulation S-X under the Securities Act is amended, modified or
interpreted by the SEC to require (or is replaced with another rule or
regulation or any other law, rule or regulation is adopted, which would
require) the filing with the SEC (or any other governmental agency) of separate
financial statements of any Subsidiary of the Issuer due to the fact that such
Subsidiary’s Pledged Stock or Pledged Debt Securities secure the Notes, then
such Pledged Stock or Pledged Debt Securities of such Subsidiary shall
automatically be deemed not to be part of the Collateral but only to the extent
necessary to not be subject to such requirement; provided, further,
in such event, the Security Documents may be

 

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amended or modified, without the consent of
any Holder, to the extent necessary to release the security interests on the
shares of capital stock or other securities that are so deemed to no longer
constitute part of the Collateral.

 

Upon delivery to the Collateral Agent, (a) any stock certificates,
notes or other securities now or hereafter included in the Collateral (the “Pledged
Securities”) shall be accompanied by stock powers duly executed in blank or
other instruments of transfer satisfactory to the Collateral Agent and by such
other instruments and documents as the Collateral Agent may reasonably request
and (b) all other property comprising part of the Collateral shall be
accompanied by proper instruments of assignment duly executed by the applicable
Pledgor and such other instruments or documents as the Collateral Agent may
reasonably request.  Each delivery of
Pledged Securities shall be accompanied by a schedule describing the
securities then being pledged hereunder, which schedule shall be attached
hereto as Schedule II and made a part hereof.  Each schedule so delivered shall supplement any prior
schedules so delivered.

 

TO HAVE AND TO HOLD the Collateral, in accordance with, and to the
extent consistent with, the Intercreditor Agreement, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral 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 2.  Delivery of the Collateral.  (a) 
  Each Pledgor agrees promptly to deliver or cause to be
delivered to the Collateral Agent any and all Pledged Securities, and any and
all certificates or other instruments or documents representing the Collateral.

 

(b)  Each Pledgor will cause any
Indebtedness for borrowed money owed to the Pledgor by the Issuer or any
Subsidiary to be evidenced by a duly executed promissory note that is pledged
and delivered to the Collateral Agent pursuant to the terms thereof.

 

SECTION 3.  Representations, Warranties and
Covenants.  Each Pledgor hereby
represents, warrants and covenants, as to itself and the Collateral pledged by
it hereunder, to and with the Collateral Agent that:

 

(a)  the Pledged Stock
represents that percentage as set forth on Schedule II of the issued and
outstanding shares of each class of the capital stock of the issuer with
respect thereto;

 

(b)  except for the security
interest granted hereunder and except as permitted by the Indenture, the
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II, (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
Collateral, other than pursuant hereto and (iv) subject to Section 5,
will cause any and all Collateral, whether for value paid by the Pledgor or
otherwise, to be forthwith deposited with the Collateral Agent and pledged or
assigned hereunder;

 

(c)  the Pledgor (i) has
the power and authority to pledge the Collateral in the manner hereby done or
contemplated and (ii) will defend its title or interest thereto or therein

 

3

 

against any
and all Liens (other than the Lien created by this Agreement), however arising,
of all Persons whomsoever;

 

(d)  no consent which has not
been obtained of any other Person (including stockholders or creditors of any
Pledgor) and no consent or approval which has not been obtained of any
governmental authority or any securities exchange is necessary to the validity
of the pledge effected hereby;

 

(e)  by virtue of the execution
and delivery by the Pledgors of this Agreement and the Intercreditor Agreement,
upon delivery to the Credit Agent (as defined in the Intercreditor Agreement)
of the certificates or instruments representing or evidencing the Pledged
Securities or other Collateral constituting certificated securities or
instruments, certificates or other documents representing or evidencing the
Collateral in accordance with this Agreement (or, in the case of certificates
or instruments representing or evidencing collateral which are then in the
possession of the Credit Agent, upon the execution and delivery of the
Intercreditor Agreement) and, in the case of Collateral not constituting
certificated securities or instruments, the filing of UCC financing statements
in the appropriate filing office, the Collateral Agent will obtain a valid and
perfected lien upon and security interest in all right, title and interest of
the applicable pledgor in such Pledged Securities as security for the payment
and performance of the Obligations;

 

(f)  the pledge effected hereby
is effective to vest in the Collateral Agent, on behalf of the Secured Parties,
the rights of the Collateral Agent in the Collateral as set forth herein;

 

(g)  all of the Pledged Stock
has been duly authorized and validly issued and is fully paid and nonassessable;

 

(h)  all information set forth
herein relating to the Pledged Stock is accurate and complete in all material
respects as of the date hereof;

 

(i)  the pledge of the Pledged
Stock pursuant to this Agreement does not violate Regulation U or X of the
Federal Reserve Board or any successor thereto as of the date hereof; and

 

(j)  all Collateral consisting
of Pledged Securities, certificates or other documents representing or
evidencing the Collateral has been delivered to the Collateral Agent in accordance
with Section 2.

 

SECTION 4.  Registration in Nominee Name;
Denominations.  The Collateral
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
Pledgors, endorsed or assigned in blank or in favor of the Collateral
Agent.  Each Pledgor will promptly give
to the Collateral Agent copies of any notices or other communications received
by it with respect to Pledged Securities registered in the name of such
Pledgor.  The Collateral 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 and the Intercreditor Agreement.

 

4

 

The applicable Pledgor shall, within 30 days after the date hereof, for
each interest in any limited liability company or limited partnership
controlled by such Pledgor and pledged hereunder that is represented by a
certificate, in the organizational documents of such limited liability company
or limited partnership, cause the issuer of such interests to elect to treat
such interests as a “security” within the meaning of Article 8 of the
Uniform Commercial Code of its jurisdiction of organization or formation, as
applicable, by including in its organizational documents language substantially
similar to the following and, accordingly, such interests shall be governed by
Article 8 of the Uniform Commercial Code:

 

“The Partnership/Company hereby irrevocably elects that all membership
interests in the Partnership/Company shall be securities governed by
Article 8 of the Uniform Commercial Code of [jurisdiction of organization
or formation, as applicable].  Each
certificate evidencing partnership/membership interests in the
Partnership/Company shall bear the following legend:  “This certificate evidences an interest in [name of Partnership/LLC]
and shall be a security for purposes of Article 8 of the Uniform
Commercial Code.”  No change to this
provision shall be effective until all outstanding certificates have been
surrendered for cancelation and any new certificates thereafter issued shall
not bear the foregoing legend.”

 

For each interest in any limited liability company or limited
partnership controlled by any Pledgor and pledged hereunder that is not
represented by a certificate, the applicable Pledgor agrees that it shall not,
at any time, (a) elect to treat any such interest as a “security” within the
meaning of Article 8 of the Uniform Commercial Code of its jurisdiction of
organization or formation, as applicable, or (b) issue any certificate
representing such interest, unless (i) in the case of clause (a), such Pledgor
provides prior written notification to the Collateral Agent of such election
and (ii) in the case of cause (b), such Pledgor immediately complies with the
requirements of the second paragraph of this Section 4 with respect to
such interest and immediately pledges any such certificate to the Collateral
Agent pursuant to the terms hereof.

 

If any securities, whether certificated or uncertificated, or other
investment property now or hereafter acquired by any Pledgor (other than
Securities or other investment property held in the Notes Collateral Account)
are held by such Pledgor or its nominee through a securities intermediary or
commodity intermediary, such Pledgor shall promptly notify the Collateral Agent
thereof and, at the Collateral Agent’s request and option, pursuant to an
agreement in form and substance reasonably satisfactory to the Collateral
Agent, either (i) cause such securities intermediary or (as the case may be)
commodity intermediary to agree to comply with entitlement orders or other
instructions from the Collateral Agent to such securities intermediary as to
such security entitlements, or (as the case may be) to apply any value
distributed on account of any commodity contract as directed by the Collateral
Agent to such commodity intermediary, in each case without further consent of
any Pledgor or such nominee, or (ii) in the case of Financial Assets or other
Investment Property (each as defined in the NY UCC) held through a
securities intermediary, arrange for the Collateral Agent to become the
entitlement holder with respect to such investment property, with the Pledgor
being permitted, only with the consent of the Collateral Agent, to exercise
rights to withdraw or otherwise deal with such investment property.  The Collateral Agent agrees with each of the
Pledgors that the Collateral 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

 

5

 

consent to the exercise of any withdrawal or
dealing rights by any Pledgor, 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 Collateral Agent is the securities intermediary.

 

SECTION 5.  Voting Rights; Dividends and
Interest, etc.  (a)  In
accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, unless and until an Event of Default shall have
occurred and be continuing:

 

(i)  Each Pledgor 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 Indenture and the
other Indenture Documents; provided, however, that such Pledgor
will not be entitled to exercise any such right if the result thereof could
materially and adversely affect the rights inuring to a holder of the Pledged
Securities or the rights and remedies of any of the Secured Parties under this
Agreement, the Indenture or any other Indenture Document or the ability of the
Secured Parties to exercise the same.

 

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

 

(iii)  Each Pledgor shall be
entitled to receive and retain any and all cash dividends, interest and
principal paid on the Pledged Securities to the extent and only to the extent
that such cash dividends, interest and principal are permitted by, and
otherwise paid in accordance with, the terms and conditions of the Indenture,
the other Indenture Documents and applicable laws.  All noncash dividends, interest and principal, and all dividends,
interest and principal paid or payable in cash or otherwise in connection with
a partial or total liquidation or dissolution, return of capital, capital
surplus or paid-in surplus, and all other distributions (other than
distributions referred to in the preceding sentence) made on or in respect of
the Pledged Securities, whether paid or payable in cash or otherwise, whether
resulting from a subdivision, combination or reclassification of the
outstanding capital stock 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 Collateral, and, if received by any Pledgor, shall not
be commingled by such Pledgor 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 Collateral Agent and shall be forthwith delivered to the Collateral Agent
in the same form as so received (with any necessary endorsement).

 

(b)  In accordance with, and to
the extent consistent with, the terms of the Intercreditor Agreement, upon the
occurrence and during the continuance of an Event of Default,

 

6

 

all rights of
any Pledgor to dividends, interest or principal that such Pledgor is authorized
to receive pursuant to paragraph (a)(iii) above shall cease, and all such
rights shall thereupon become vested in the Collateral Agent, which shall have
the sole and exclusive right and authority to receive and retain such
dividends, interest or principal.  All
dividends, interest or principal received by the  Pledgor contrary to the provisions of this Section 5 shall
be held in trust for the benefit of the Collateral Agent, shall be segregated
from other property or funds of such Pledgor and shall be forthwith delivered
to the Collateral 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 Collateral Agent pursuant to the provisions of this
paragraph (b) shall, subject to the provisions of the Intercreditor
Agreement, be retained by the Collateral Agent, in an account to be established
by the Collateral Agent upon receipt of such money or other property and shall
be applied in accordance with the provisions of Section 7.  After all Events of Default have been cured
or waived, the Collateral Agent shall, within five Business Days after all such
Events of Default have been cured or waived, repay to each Pledgor all cash
dividends, interest or principal (without interest), that such Pledgor would
otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii)
above and which remain in such account.

 

(c)  In accordance with, and to
the extent consistent with, the terms of, the Intercreditor Agreement, upon the
occurrence and during the continuance of an Event of Default, all rights of any
Pledgor to exercise the voting and consensual rights and powers it is entitled
to exercise pursuant to paragraph (a)(i) of this Section 5, and the
obligations of the Collateral Agent under paragraph (a)(ii) of this
Section 5, shall cease, and all such rights shall thereupon become vested
in the Collateral Agent, which shall have the sole and exclusive right and
authority to exercise such voting and consensual rights and powers; provided
that, and to the extent consistent with the Intercreditor Agreement, unless
otherwise directed by holders of at least 25% in aggregate principal amount at
maturity of the outstanding Notes, the Collateral Agent shall have the right
from time to time following and during the continuance of an Event of Default
to permit the Pledgors to exercise such rights.  After all Events of Default have been cured or waived, such
Pledgor will have the right to exercise the voting and consensual rights and
powers that it would otherwise be entitled to exercise pursuant to the terms of
paragraph (a)(i) above.

 

SECTION 6.  Remedies upon Default.  In accordance with, and to the extent
consistent with, the terms of the Intercreditor Agreement, upon the occurrence
and during the continuance of an Event of Default, subject to applicable
regulatory and legal requirements, the Collateral Agent may sell the
Collateral, or any part thereof, at public or private sale or at any broker’s
board or on any securities exchange, for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate.  The Collateral Agent shall be authorized at
any such sale (if it deems it advisable to do so) to restrict the prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing the Collateral for their own account for investment and not with a
view to the distribution or sale thereof, and upon consummation of any such
sale the Collateral Agent shall have the right to assign, transfer and deliver
to the purchaser or purchasers thereof the Collateral so sold.  Each such purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
any Pledgor, and, to the extent permitted by applicable law, the Pledgors
hereby waive all rights of redemption, stay, valuation and appraisal any
Pledgor now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.

 

7

 

The Collateral Agent shall give a Pledgor 10 days’ prior written notice
(which each Pledgor agrees is reasonable notice within the meaning of
Section 9-611 of the Uniform Commercial Code as in effect in the State of
New York or its equivalent in other jurisdictions) of the Collateral Agent’s
intention to make any sale of such Pledgor’s Collateral.  Such notice, in the case of a public sale,
shall state the time and place for such sale and, in the case of a sale at a
broker’s board or on a securities exchange, shall state the board or exchange
at which such sale is to be made and the day on which the Collateral, or
portion thereof, will first be offered for sale at such board or exchange.  Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix and state in the notice of such sale.  At any such sale, the Collateral, or portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion) determine.  The Collateral Agent shall not be obligated
to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid in full by the purchaser or
purchasers thereof, but the Collateral 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 applicable law, private) sale made
pursuant to this Section 6, any Secured Party may bid for or purchase,
free from any right of redemption, stay or appraisal on the part of any Pledgor
(all said rights being also hereby waived and released), the Collateral or any
part thereof offered for sale and may make payment on account thereof by using
any claim then due and payable to it from such Pledgor as a credit against the
purchase price, and it may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to such
Pledgor therefor.  For purposes hereof,
(a) a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof, (b) the Collateral Agent shall be free
to carry out such sale pursuant to such agreement and (c) such Pledgor shall
not be entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Collateral Agent shall have
entered into such an agreement all Events of Default shall have been remedied
and the Obligations paid in full.  As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may, in accordance with, and to the extent consistent with, the
terms of the Intercreditor Agreement, proceed by a suit or suits at law or in
equity to foreclose upon the Collateral and to sell the Collateral or any
portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.  Any sale pursuant to the
provisions of this Section 6 shall be deemed to conform to the
commercially reasonable standards as provided in Section 9-611 of the
Uniform Commercial Code as in effect in the State of New York or its equivalent
in other jurisdictions.

 

SECTION 7.  Application of Proceeds of Sale.  In accordance with, and to the extent
consistent with, the terms of the Intercreditor Agreement, the proceeds of any
sale of Collateral pursuant to Section 6, as well as any Collateral
consisting of cash, shall be applied by the Collateral Agent as follows:

 

8

 

FIRST, to the payment of all costs and
expenses incurred by the Collateral Agent in connection with such sale or
otherwise in connection with this Agreement, any other Indenture Document or
any of the Obligations, including all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all advances made by
the Collateral Agent hereunder or under any other Indenture Document on behalf
of any Pledgor and any other costs or expenses incurred in connection with the
exercise of any right or remedy hereunder or under any other Indenture
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) in the manner provided in the Indenture; and

 

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

 

In accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, the Collateral Agent shall have absolute discretion as
to the time of application of any such proceeds, moneys or balances in
accordance with this Agreement.  The
Collateral Agent may fix a record date and payment date for any payment to
Holders pursuant to this Section 7. 
At least 15 days before such record date, the Collateral Agent shall
mail to each Holder and the Issuer a notice that states the record date, the
payment date and the amount to be paid. 
Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral 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 Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.

 

SECTION 8.  Reimbursement of Collateral Agent.  (a)    In accordance with, and to the
extent consistent with, the terms of the Intercreditor Agreement, the Pledgors
agree to pay upon demand to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees, other charges and
disbursements of its counsel and of any experts or agents, that the Collateral
Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of the Collateral Agent hereunder or
(iv) the failure by such Pledgor to perform or observe any of the
provisions hereof.

 

(b)  Without limitation of its
indemnification obligations under the other Indenture Documents, each Pledgor
agrees to indemnify the Collateral Agent, the Secured Parties and each
affiliate of the foregoing persons (each, an “Indemnitee”) against, and hold
each Indemnitee harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel fees, other charges and
disbursements, incurred by or asserted against any Indemnitee arising out of,
in any way connected with, or as a result of (i) the execution or delivery
of this Agreement or any other Indenture Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties
hereto of their

 

9

 

respective
obligations thereunder or the consummation of the other transactions
contemplated thereby or (ii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the gross negligence or wilful
misconduct of such Indemnitee.

 

(c)  Any amounts payable as
provided hereunder shall be additional Obligations secured hereby and by the
other Security Documents.  The
provisions of this Section 8 shall remain operative and in full force and
effect regardless of the termination of this Agreement, 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 Indenture Document or any investigation made by or on behalf of the
Collateral Agent or any other Secured Party. 
All amounts due under this Section 8 shall be payable on written
demand therefor and shall bear interest at the rate borne by the Notes.

 

SECTION 9.  Collateral Agent Appointed
Attorney-in-Fact.  Each Pledgor
hereby appoints the Collateral Agent the attorney-in-fact of such Pledgor, upon
the occurrence and during the continuance of a Default, for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instrument that the Collateral Agent may deem necessary or
advisable to accomplish the purposes hereof, which appointment is irrevocable
and coupled with an interest.  Without
limiting the generality of the foregoing, the Collateral Agent shall have the
right, upon the occurrence and during the continuance of an Event of Default, with
full power of substitution either in the Collateral Agent’s name or in the name
of such Pledgor, to ask for, demand, sue for, collect, receive and give
acquittance for any and all moneys due or to become due under and by virtue of
any Collateral, to endorse checks, drafts, orders and other instruments for the
payment of money payable to the Pledgor representing any interest or dividend
or other distribution payable in respect of the Collateral or any part thereof
or on account thereof and to give full discharge for the same, to settle, compromise,
prosecute or defend any action, claim or proceeding with respect thereto, and
to sell, assign, endorse, pledge, transfer and to make any agreement
respecting, or otherwise deal with, the same; provided, however,
that nothing herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as to the nature
or sufficiency of any payment received by the Collateral Agent, or to present
or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby. 
The Collateral Agent and the other Secured Parties shall be accountable
only for amounts actually received as a result of the exercise of the powers
granted to them herein, and neither they nor their officers, directors,
employees or agents shall be responsible to any Pledgor for any act or failure
to act hereunder, except for their own gross negligence or wilful misconduct.

 

Notwithstanding anything in this Section 9 to the contrary, the
Collateral Agent agrees that it will not exercise any rights under the power of
attorney provided for in this Section 9 unless it does so in accordance
with, and to the extent consistent with, the terms of the Intercreditor
Agreement.

 

SECTION 10.  Waivers; Amendment.  (a)  No failure or delay of the Collateral Agent
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any

 

10

 

single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Collateral
Agent hereunder and of the other Secured Parties under the other Indenture
Documents are cumulative and are not exclusive of any rights or remedies that
they would otherwise have.  No waiver of
any provisions of this Agreement or consent to any departure by any Pledgor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given.  No notice or demand on any Pledgor in any
case shall entitle such Pledgor 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 (i) in
accordance with the Indenture and pursuant to a written agreement entered into
between the Collateral Agent and the Pledgor or Pledgors with respect to which
such waiver, amendment or modification is to apply, subject to the limitations
in the Intercreditor Agreement or (ii) as provided in the Intercreditor
Agreement.

 

SECTION 11.  Securities Act, etc.  In view of the position of the Pledgors in
relation to the Pledged Securities, or because of other current or future
circumstances, a question may arise under the Securities Act, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose 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 Securities permitted hereunder.  Each Pledgor understands that compliance
with the Federal Securities Laws might very strictly limit the course of
conduct of the Collateral Agent if the Collateral Agent were to attempt to
dispose of all or any part of the Pledged Securities, and might also limit the
extent to which or the manner in which any subsequent transferee of any Pledged
Securities could dispose of the same. 
Similarly, there may be other legal restrictions or limitations
affecting the Collateral Agent in any attempt to dispose of all or part of the
Pledged Securities under applicable Blue Sky or other state securities laws or
similar laws analogous in purpose or effect. 
Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to those who will agree, among other things,
to acquire such Pledged Securities for their own account, for investment, and not
with a view to the distribution or resale thereof.  Each Pledgor acknowledges and agrees that in light of such
restrictions and limitations, the Collateral Agent, in its discretion,
(a) may proceed to make such a sale whether or not a registration statement
for the purpose of registering such Pledged Securities or part thereof shall
have been filed under the Federal Securities Laws and (b) may approach and
negotiate with a single potential purchaser to effect such sale.  Each Pledgor 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
Collateral Agent shall incur no responsibility or liability for selling all or
any part of the Pledged Securities at a price that the Collateral Agent, in its
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 11 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 Collateral Agent sells.

 

11

 

SECTION 12.  Registration, etc.  Each Pledgor agrees that, upon the
occurrence and during the continuance of an Event of Default, if, in accordance
with, and to the extent consistent with, the terms of the Intercreditor
Agreement, for any reason the Collateral Agent desires to sell any of the
Pledged Securities at a public sale, it will, at any time and from time to
time, upon the written request of the Collateral Agent, use its best efforts to
take or to cause the issuer of such Pledged Securities to take such action and
prepare, distribute and/or file such documents, as are required or advisable in
the reasonable opinion of counsel for the Collateral Agent to permit the public
sale of such Pledged Securities.  Each
Pledgor further agrees to indemnify, defend and hold harmless the Collateral
Agent, each other Secured Party, any underwriter and their respective officers,
directors, affiliates and controlling persons from and against all loss,
liability, expenses, costs of counsel (including, without limitation,
reasonable fees and expenses to the Collateral Agent of legal counsel), and
claims (including the costs of investigation) that they may incur insofar as
such loss, liability, expense or claim arises out of or is based upon any
untrue statement of a material fact contained in any prospectus (or any
amendment or supplement thereto) or in any notification or offering circular,
or arises out of or is based upon any omission to state a material fact
required to be stated therein or necessary to make the statements in any
thereof not misleading, except insofar as the same may have been caused by any
untrue statement or omission based upon information furnished to such Pledgor
or the issuer of such Pledged Securities by the Collateral Agent or any other
Secured Party expressly for use therein. 
Each Pledgor further agrees, upon such written request referred to
above, to use its best efforts to qualify, file or register, or cause the
issuer of such Pledged Securities to qualify, file or register, any of the
Pledged Securities under the Blue Sky or other securities laws of such states
as may be requested by the Collateral Agent and keep effective, or cause to be
kept effective, all such qualifications, filings or registrations.  The Pledgors will bear all costs and
expenses of carrying out their obligations under this Section 12.  Each Pledgor acknowledges that there is no
adequate remedy at law for failure by it to comply with the provisions of this
Section 12 and that such failure would not be adequately compensable in
damages, and therefore agrees that its agreements contained in this
Section 12 may be specifically enforced.

 

SECTION 13.  Security Interest Absolute.  All rights of the Collateral Agent
hereunder, the grant of a security interest in the Collateral and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the
Indenture, any other Indenture 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 Indenture, any other
Indenture Document or any other agreement or instrument relating to any of the
foregoing, (c) any exchange, release or nonperfection of any other
collateral, or any release or amendment or waiver of or consent to or departure
from any guaranty, for all or any of the Obligations or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Pledgor in respect of the Obligations or in respect of this
Agreement (other than the indefeasible payment in full of all the Obligations).

 

SECTION 14.  Termination or Release.  This Agreement and the pledges created
hereby shall terminate when all the Obligations have been indefeasibly paid in
full pursuant to

 

12

 

the terms of
the Indenture.  Collateral shall be
released as and to the extent provided in Article X of the Indenture.

 

SECTION 15.  Notices.  All communications and notices hereunder
shall be in writing and given as provided in Section 12.02 of the
Indenture.  All communications and
notices hereunder to any Subsidiary Pledgor shall be given to it in care of the
Issuer.

 

SECTION 16.  Further Assurances.  Each Pledgor agrees to do such further acts
and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Collateral Agent, in accordance
with, and to the extent consistent with, the terms of the Intercreditor
Agreement, may at any time reasonably request in connection with the
administration and enforcement of this Agreement or with respect to the
Collateral or any part thereof or in order better to assure and confirm unto the
Collateral Agent its rights and remedies hereunder.

 

SECTION 17.  Binding Effect; Several Agreement;
Assignments. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party; and all covenants, promises and agreements by or on
behalf of any Pledgor that are contained in this Agreement shall bind and inure
to the benefit of its successors and assigns. 
This Agreement shall become effective as to any Pledgor when a
counterpart hereof executed on behalf of such Pledgor shall have been delivered
to the Collateral Agent and a counterpart hereof shall have been executed on
behalf of the Collateral Agent, and thereafter shall be binding upon such
Pledgor and the Collateral Agent and their respective successors and assigns,
and shall inure to the benefit of such Pledgor, the Collateral Agent and the
other Secured Parties, and their respective successors and assigns, except that
no Pledgor shall have the right to assign its rights hereunder or any interest
herein or in the Collateral (and any such attempted assignment shall be void),
except as expressly contemplated by this Agreement or the other Indenture
Documents.  If all of the capital stock
of a Pledgor is sold, transferred or otherwise disposed of to a Person that is
not an Affiliate of the Borrower pursuant to a transaction permitted by the
Indenture, such Pledgor shall be released from its obligations under this
Agreement without further action.  This
Agreement shall be construed as a separate agreement with respect to each
Pledgor and may be amended, modified, supplemented, waived or released with
respect to any Pledgor without the approval of any other Pledgor and without
affecting the obligations of any other Pledgor hereunder.

 

SECTION 18.  Survival of Agreement;
Severability.  (a)  All
covenants, agreements, representations and warranties made by each Pledgor
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Indenture Document
shall be considered to have been relied upon by the Collateral Agent and the
other Secured Parties and shall survive the issuance of the Notes, regardless
of any investigation made by the Secured Parties or on their behalf, and shall
continue in full force and effect as long as the principal of or any accrued
interest on any Note or any other amount payable under this Agreement or any
other Indenture Document is outstanding and unpaid.

 

(b)  In the event any one or
more of the provisions contained in this Agreement should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or 

 

13

 

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.

 

SECTION 19.  Governing Law. 
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.

 

SECTION 20.  Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute a single contract, and shall
become effective as provided in Section 17.  Delivery of an executed counterpart of a signature page to this
Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart of this Agreement.

 

SECTION 21.  Rules of Interpretation.  The rules of interpretation specified in
Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.  Section headings 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 22.  Jurisdiction; Consent to Service
of Process.  (a)  Each
Pledgor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Indenture Documents, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that, to the extent permitted by
applicable law, all claims in respect of any such action or proceeding may be
heard and determined in such New York State or, to the extent permitted by law,
in such Federal court.  Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that the Collateral
Agent or any other Secured Party may otherwise have to bring any action or
proceeding relating to this Agreement or the other Indenture Documents against
any Pledgor or its properties in the courts of any jurisdiction.

 

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

 

(c)  Each party to this
Agreement irrevocably consents to service of process in the manner provided for
notices in Section 15.  Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.

 

14

 

SECTION 23.  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 INDENTURE 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
INDENTURE DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 23.

 

SECTION 24.  Additional Pledgors.  Pursuant to Section 4.11 of the
Indenture, each domestic Restricted Subsidiary that is formed or acquired after
the date of the Indenture and each Foreign Subsidiary that guarantees
Indebtedness of the Issuer or any domestic Subsidiary is required to enter in
this agreement as a Subsidiary Pledgor. 
Upon execution and delivery by the Collateral Agent and a Subsidiary of
an instrument in the form of Annex 1, such Subsidiary shall become a
Subsidiary Pledgor hereunder with the same force and effect as if originally
named as a Subsidiary Pledgor herein. 
The execution and delivery of such instrument shall not require the
consent of any Pledgor hereunder.  The
rights and obligations of each Pledgor hereunder shall remain in full force and
effect notwithstanding the addition of any new Subsidiary Pledgor as a party to
this Agreement.

 

SECTION 25.  Subject to Intercreditor
Agreement.  Notwithstanding anything
herein to the contrary, the lien and security interest granted to the
Collateral Agent pursuant to this Agreement and the exercise of any right or
remedy by the Collateral Agent hereunder are subject to the provisions of the
Intercreditor Agreement.  In the event
of any conflict between the terms of the Intercreditor Agreement and this
Agreement, the terms of the Intercreditor Agreement shall govern.

 

SECTION 26.  Nova Scotia Unlimited Liability
Companies.  Notwithstanding anything
else contained in this Agreement or any other document or agreement among all
or some of the parties hereto, Uniplast Holdings Inc. is the sole registered
and beneficial owner of all Collateral which is comprised of shares of the
Uniplast Industries Co. or any other Person whose securities are the subject
hereof and which is an unlimited liability company (a “ULC”) and will
remain so until such time as such shares are effectively transferred into the
name of the Collateral Agent, any other Secured Party or any other Person on
the books and records of such ULC.  Accordingly,
Uniplast Holdings Inc. shall be entitled to receive and retain for its own
account any dividend on or other distribution, if any, in respect of such
Collateral (except insofar as Uniplast Holdings Inc. has granted a security
interest therein) and shall have the right to vote such Collateral and to
control the direction, management and policies of the Uniplast Industries Co.
to the same extent as Uniplast Holdings Inc. would if such Collateral were not
pledged to the Collateral Agent (for its own benefit and for the benefit of the
Secured Parties) pursuant hereto. 
Nothing in this Agreement or any other document or agreement among all
or some of the parties hereto is intended to, and nothing in this Agreement or
any other document or agreement among

 

15

 

all or some of
the parties hereto shall, constitute the Collateral Agent, any Secured Party or
any Person other than Uniplast Holdings Inc. a member of a ULC for the purposes
of the Companies
Act (Nova Scotia) until such time as notice is given to Uniplast
Holdings Inc. and further steps are taken thereunder so as to register the
Collateral Agent, any Secured Party or any other Person as holder of shares of
the ULC.  To the extent any provision
hereof would have the effect of constituting the Collateral Agent or any
Secured Party as a member of any ULC prior to such time, such provision shall
be severed herefrom and ineffective with respect to Collateral which are shares
of a ULC without otherwise invalidating or rendering unenforceable this
Agreement or invalidating or rendering unenforceable such provision insofar as
it relates to Collateral which are not shares of a ULC.

 

16

 

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

 

	
   

  	
  PLIANT
  CORPORATION,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  SUBSIDIARY PLEDGORS LISTED

  ON SCHEDULE I HERETO

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:       Authorized
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON
  TRUST COMPANY, as Collateral

  Agent,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: James McGinley 

  
	
   

  	
   

  	
  Title:   Authorized Signer

  
	
   

  	
   

  	
   

  

 

17

 

Schedule I to the 

Pledge Agreement

 

SUBSIDIARY PLEDGORS

 

	
  Name

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
  Pliant Corporation International

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Pliant Film Products of Mexico, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Pliant Solutions Corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Pliant Packaging of Canada, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Uniplast Holdings Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Uniplast U.S., Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Pierson Industries, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Turex, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Uniplast Midwest, Inc.

  	
   

  	
   

  

 

 

Schedule II to the 

Pledge Agreement

 

CAPITAL STOCK

 

	
  Issuer

  	
   

  	
  Number of

  Certificate

  	
   

  	
  Registered

  Owner

  	
   

  	
  Number and

  Class of Shares

  	
   

  	
  Percentage

  of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

DEBT SECURITIES

 

	
  Issuer

  	
   

  	
  Principal
  Amount

  	
   

  	
  Date of
  Note

  	
   

  	
  Maturity
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Annex 1 to the 

Pledge Agreement

 

SUPPLEMENT NO.       dated as
of                              ,
to the Pledge Agreement dated as of February 17, 2004 (the “Pledge
Agreement”), among PLIANT CORPORATION, a Utah corporation (the “Issuer”),
and each subsidiary of the Borrower listed on Schedule I thereto (each
such subsidiary individually a “Subsidiary Pledgor” and collectively,
the “Subsidiary Pledgors”; the Borrower and the Subsidiary Pledgors are
referred to collectively herein as the “Pledgors”) and WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as collateral agent (in such capacity,
the “Collateral Agent”) for the Secured Parties (as defined in the
Pledge Agreement).

 

A.                                   Reference is made to
(a) the Indenture dated as of February 17, 2004 (as amended, supplemented
or otherwise modified from time to time, the “Indenture”), among the
Issuer, the Subsidiary Pledgors and Wilmington Trust Company, as trustee (the “Trustee”),
(b) the Security Agreement dated as of February 17, 2004 (the “Security
Agreement”), among the Issuer, the guarantors party thereto and the
Collateral Agent, and (c) the Amended and Restated Intercreditor Agreement
dated as of February 17, 2004 (the “Intercreditor Agreement”),
among the Issuer, the Collateral Agent, the collateral agent for the Existing
Senior Secured Notes and Deutsche Bank Trust Company Americas, as Credit Agent
(as defined therein).

 

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

 

C.                                     The Pledgors have
entered into the Pledge Agreement in satisfaction of a condition of the Initial
Purchasers to purchase the Notes. 
Section 24 of the Pledge Agreement provides that such Subsidiaries
may become Subsidiary Pledgors under the Pledge Agreement by execution and
delivery of an instrument in the form of this Supplement.  The undersigned Subsidiary (the “New
Pledgor”) is executing this Supplement in accordance with the requirements
of the Indenture to become a Subsidiary Pledgor under the Pledge Agreement.

 

Accordingly, the Collateral Agent and the New Pledgor agree as follows:

 

SECTION 1.  In accordance
with Section 24 of the Pledge Agreement, the New Pledgor by its signature
below becomes a Pledgor under the Pledge Agreement with the same force and
effect as if originally named therein as a Pledgor and the New Pledgor hereby
agrees (a) to all the terms and provisions of the Pledge Agreement
applicable to it as a Pledgor thereunder and (b) represents and warrants
that the representations and warranties made by it as a Pledgor thereunder are
true and correct on and as of the date hereof. 
In furtherance of the foregoing, the New Pledgor, as security for the
payment and performance in full of the Obligations, does hereby create and
grant to the Collateral 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 Pledgor’s right, title and interest in and to the
Collateral of the New Pledgor.  Each
reference to a “Subsidiary Pledgor” or a “Pledgor” in the Pledge Agreement
shall be deemed to include the New Pledgor. 
The Pledge Agreement is hereby incorporated herein by reference.

 

 

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

 

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

 

SECTION 4.  The New Pledgor
hereby represents and warrants that set forth on Schedule I attached
hereto is a true and correct schedule of all its Pledged Securities.

 

SECTION 5.  Except as
expressly supplemented hereby, the Pledge 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, neither party hereto shall be required
to comply with such provision for so long as such provision is held to be
invalid, illegal or unenforceable, but the validity, legality and
enforceability of the remaining provisions contained herein and in the Pledge
Agreement shall not in any way be affected or impaired.  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 15 of the Pledge Agreement. 
All communications and notices hereunder to the New Pledgor shall be
given to it at the address set forth under its signature hereto.

 

SECTION 9.  The New Pledgor
agrees to reimburse the Collateral 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 Collateral Agent.

 

2

 

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

 

 

	
   

  	
  [Name
  of New Pledgor],

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON
  TRUST COMPANY, as Collateral

  Agent,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

3

 

Schedule I to

Supplement No.

to the Pledge Agreement 

 

Pledged Securities of the New Pledgor

 

 

CAPITAL STOCK

 

	
  Issuer

  	
   

  	
  Number of

  Certificate

  	
   

  	
  Registered

  Owner

  	
   

  	
  Number and

  Class of Shares

  	
   

  	
  Percentage

  of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

DEBT
SECURITIES

 

	
  Issuer

  	
   

  	
  Principal
  Amount

  	
   

  	
  Date of
  Note

  	
   

  	
  Maturity
  DateExhibit
4.15

 

CANADIAN PLEDGE AGREEMENT
dated as of February 17, 2004, among UNIPLAST INDUSTRIES CO. a Nova
Scotia company (“Uniplast”), each other subsidiary of Pliant
Corporation, a Utah corporation (the “Issuer”), organized under the laws
of Canada or any province thereof listed on Schedule I hereto (each such
subsidiary and Uniplast individually a “Pledgor” and collectively, the “Pledgors”)
and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as collateral
agent (in such capacity, the “Collateral Agent”) for the Secured Parties
(as defined in the Security Agreement referred to below).

 

Reference
is made to (a) the Indenture dated as of February 17, 2004, (as amended,
supplemented or otherwise modified from time to time, the “Indenture”),
among the Issuer, the subsidiaries of the Issuer party thereto as note
guarantors (the “Note Guarantors”) and Wilmington Trust Company, as
trustee (the “Trustee”), (b) the Purchase Agreement dated as of
February 6, 2004 (the “Purchase Agreement”), among the Issuer, the
Note Guarantors and J.P. Morgan Securities Inc., Credit Suisse First Boston LLC
and Deutsche Bank Securities Inc. (the “Initial Purchasers”) and
(c) the Canadian Security Agreement dated as of February 17, 2004
(the “Canadian Security Agreement”), among Uniplast, the other grantors
party thereto and the Collateral Agent. 
Capitalized terms used herein and not defined herein shall have the
meanings assigned to such terms in the Indenture.

 

Pursuant
to the terms, conditions and provisions of the Indenture and the Purchase
Agreement, the Issuer is issuing U.S.$306,000,000 aggregate principal amount at
maturity of 111/8% Senior Secured Discount Notes due 2009
and may issue, from time to time, additional notes in accordance with the
provisions of the Indenture (collectively, the “Notes”), which will be
guaranteed on a senior secured basis by, inter alia, each of the Pledgors.

 

The
Issuer, Deutsche Bank Trust Company Americas (as collateral agent under the
credit agreement dated as of the date hereof (the “Credit Agreement”),
among the Issuer, Uniplast Industries Co., the domestic subsidiary borrowers
party thereto, the lenders party thereto, Credit Suisse First Boston, acting
through its Cayman Islands Branch, as administrative agent and documentation
agent, Deutsche Bank Trust Company Americas, as collateral agent, General
Electric Capital Corporation, as co-collateral agent, and JPMorgan Chase Bank,
as syndication agent), and the Collateral Agent, in its capacity as agent with
respect to the Notes and in its capacity as agent with respect to the Issuer’s
111/8% Senior Secured Notes due 2009 (the “Existing
Senior Secured Notes”), have entered into the Amended and Restated
Intercreditor Agreement dated as of the date hereof (the “Intercreditor
Agreement”), which addresses the relative priority of the security
interests in the Collateral of (a) the Secured Parties, (b) the secured parties
under the Security Documents (as defined in the Credit Agreement) and (c) the
holders of the Existing Senior Secured Notes.

 

The
obligations of the Initial Purchasers to purchase the Notes are conditioned
upon, among other things, the execution and delivery by the Pledgors of this
Agreement to secure the Obligations. 
The Pledgors will derive substantial benefits from the issuance of the

 

 

Notes by the Issuer pursuant to the Indenture and are willing to
execute and deliver this Agreement in order to induce the Initial Purchasers to
purchase the Notes.

 

Accordingly,
each of the Pledgors and the Collateral Agent, on behalf of itself and each
Secured Party (and each of their respective successors or assigns), hereby
agrees as follows:

 

SECTION 1.  Pledge.  As general and continuing collateral
security for the payment and performance, as the case may be, in full of the
Obligations, each Pledgor hereby transfers, grants, bargains, sells, conveys,
hypothecates, pledges, sets over and delivers unto the Collateral Agent, its
successors and assigns, and hereby grants to the Collateral Agent, its
successors and assigns, for the ratable benefit of the Secured Parties, a
continuing security interest in all of the Pledgor’s right, title and interest
in, to and under (a) the shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a person (collectively, the
“Equity Interests”) owned by such Pledgor and listed on Schedule II hereto
and any Equity Interests obtained in the future by the Pledgor and the
certificates representing all such shares (the “Pledged Stock”);
(b)(i) the debt securities listed opposite the name of the Pledgor on
Schedule II hereto, (ii) any debt securities in the future issued to the
Pledgor and (iii) the promissory notes and any other instruments evidencing such
debt securities (the “Pledged Debt Securities”); (c) subject to
Section 5, 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
the securities referred to in clauses (a) and (b) above;
(d) subject to Section 5, all rights and privileges of the Pledgor
with respect to the securities and other property referred to in clauses (a),
(b), (c) and (d) above, including any interest of such Pledgor in the entries
on the books of the issuer of the Pledged Stock or any financial intermediary
pertaining to the Pledged Stock; and (e) all proceeds of any of the
foregoing (the items referred to in clauses (a) through (e) above
being collectively referred to as the “Collateral”).  Notwithstanding any of the foregoing, the
Pledged Stock shall not include (i) more than 65% of the issued and
outstanding shares of common stock of any Foreign Subsidiary that is not a Note
Guarantor, (ii) to the extent that applicable law requires that a
Subsidiary of the Pledgor issue directors’ qualifying shares, such qualifying
shares or (iii) any shares or other Equity Interests or debt securities issued
by any Excluded Subsidiary (as defined in the Credit Agreement).

 

Any
security interest in Pledged Stock or Pledged Debt Securities of any Subsidiary
of the Issuer shall be limited at any time to that portion of capital stock or
other security which value (defined as the principal amount, par value, book
value as carried by the Issuer or market value, whichever is greatest), when
considered in the aggregate with all other capital stock or other securities of
such Subsidiary subject to a security interest under the Indenture, does not
exceed 19.99% of the principal amount of the then outstanding Notes issued by
the Issuer; provided, in the event that Rule 3-16 of Regulation S-X under
the Securities Act is amended, modified or interpreted by the SEC to require
(or is replaced with another rule or regulation or any other law, rule or
regulation is adopted, which would require) the filing with the SEC (or any
other governmental agency) of separate financial statements of any Subsidiary
of the Issuer due to the fact that such Subsidiary’s Pledged Stock or Pledged
Debt Securities secure the Notes, then such Pledged Stock or Pledged Debt
Securities of such Subsidiary shall automatically be deemed not to be part of
the Collateral but only to the extent necessary to not be

 

2

 

subject to such requirement; provided, further, in such event, the
Security Documents may be amended or modified, without the consent of any
Holder, to the extent necessary to release the security interests on the shares
of capital stock or other securities that are so deemed to no longer constitute
part of the Collateral.

 

Any
stock certificates, notes or other securities now or hereafter included in the
Collateral (the “Pledged Securities”) shall be accompanied by (a) stock
powers of attorney duly executed in blank or other instruments of transfer
satisfactory to the Collateral Agent and by such other instruments and
documents as the Collateral Agent may reasonably request and (b) all other
property comprising part of the Collateral shall be accompanied by proper
instruments of assignment duly executed by the applicable Pledgor and such
other instruments or documents as the Collateral Agent may reasonably
request.  Each delivery of Pledged Securities
shall be accompanied by a schedule describing the securities then being
pledged hereunder, which schedule shall be attached hereto as
Schedule II and made a part hereof. Each schedule so delivered shall
supplement any prior schedules so delivered. 
If the constating documents of any Person listed under the heading
“Issuer” in Schedule II hereto restrict the transfer of the securities of
such Issuer, then the Pledgor will also deliver to the Collateral Agent a
certified copy of a resolution of the directors or shareholders of such Issuer
consenting to the transfer(s) contemplated by this Agreement, including any
prospective transfer of the Collateral by the Collateral Agent upon a
realization on the security constituted hereby in accordance with this
Agreement.

 

Each
Pledgor confirms that value has been given by the Collateral Agent and the
Secured Parties to the Pledgor, that the Pledgor has rights in the Collateral
(other than after-acquired property) and that the Pledgor and the Collateral
Agent have not agreed to postpone the time for attachment of the security
interests created by this Agreement to any of the Collateral.  The security interests created by this
Agreement will have effect and be deemed to be effective whether or not the
Obligations or any part thereof are owing or in existence before or after or
upon the date of this Agreement.

 

TO
HAVE AND TO HOLD the Collateral, in accordance with, and to the extent
consistent with, the Intercreditor Agreement, together with all right, title,
interest, powers, privileges and preferences pertaining or incidental thereto,
unto the Collateral 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 2.  Delivery
of the Collateral. 
(a)  Each Pledgor agrees promptly to deliver or cause to be
delivered to the Collateral Agent any and all Pledged Securities, and any and
all certificates or other instruments or documents representing the Collateral.

 

(b)                                 Each Pledgor
will cause any Indebtedness for borrowed money owed to the Pledgor by the
Issuer or any Subsidiary to be evidenced by a duly executed promissory note
that is pledged and delivered to the Collateral Agent pursuant to the terms
thereof.

 

SECTION 3.  Representations,
Warranties and Covenants.  Each
Pledgor hereby represents, warrants and covenants, as to itself and the
Collateral pledged by it hereunder, to and with the Collateral Agent that:

 

3

 

(a)                                  the Pledged
Stock represents that percentage as set forth on Schedule II of the issued
and outstanding shares of each class of the capital stock of the issuer with
respect thereto;

 

(b)                                 except for the
security interest granted hereunder and except as permitted by the Indenture,
the Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
Schedule II, (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
Collateral, other than pursuant hereto and (iv) subject to Section 5,
will cause any and all Collateral, whether for value paid by the Pledgor or otherwise,
to be forthwith deposited with the Collateral Agent and pledged or assigned
hereunder;

 

(c)                                  the Pledgor
(i) has the power and authority to pledge the Collateral in the manner
hereby done or contemplated and to execute, deliver and perform its obligations
under this Agreement, and such execution, delivery and performance does not
contravene any of the Pledgor’s constating documents or any agreement,
instrument or restriction to which the Pledgor is a party or by which the
Pledgor or any of the Collateral is bound and (ii) will defend its title
or interest thereto or therein against any and all Liens (other than the Lien
created by this Agreement), however arising, of all Persons whomsoever;

 

(d)                                 no consent
which has not been obtained of any other Person (including stockholders or
creditors of any Pledgor) and no consent or approval which has not been
obtained of any governmental authority or any securities exchange is necessary
to the validity of the pledge effected hereby;

 

(e)                                  by virtue of
the execution and delivery by the Pledgors of this Agreement and the
Intercreditor Agreement, upon delivery to the Credit Agent (as defined in the
Intercreditor Agreement) of the certificates or instrument representing or
evidencing the Pledged Securities or other Collateral constituting certificated
securities or instruments, certificates or other documents representing or
evidencing the Collateral in accordance with this Agreement (or, in the case of
certificates or instruments representing or evidencing Collateral which are
then in the possession of the Credit Agent, upon the execution and delivery of
the Intercreditor Agreement), the Collateral Agent will obtain a valid and
perfected lien upon and security interest of all right, title and interest of
the applicable Pledgor in such Pledged Securities as security for the payment
and performance of the Obligations;

 

(f)                                    the pledge
effected hereby is effective to vest in the Collateral Agent, on behalf of the
Secured Parties, the rights of the Collateral Agent in the Collateral as set
forth herein;

 

(g)                                 all of the
Pledged Stock has been duly authorized and validly issued and is fully paid and
nonassessable;

 

(h)                                 all information
set forth herein relating to the Pledged Stock is accurate and complete in all
material respects as of the date hereof;

 

4

 

(i)                                     the pledge of
the Pledged Stock pursuant to this Agreement does not violate Regulation U
or X of the Federal Reserve Board or any successor thereto as of the date
hereof;

 

(j)                                     this Agreement
had been duly authorized, executed and delivered by the Pledgor and is a valid
and binding obligation of the Pledgor enforceable against the Pledgor in
accordance with its terms, subject only to bankruptcy, insolvency, liquidation
reorganization, moratorium and other similar laws generally affecting the
enforcement of creditor rights, and to the fact that equitable remedies (such
as specific performance and injunction) are discretionary remedies;

 

(k)                                  there is no
existing agreement, option, right or privilege capable of becoming an agreement
or option pursuant to which the Pledgor would be required to sell or otherwise
dispose of any of the Pledged Securities; and

 

(l)                                     all Collateral
consisting of Pledged Securities, certificates or other documents representing
or evidencing the Collateral has been delivered to the Collateral Agent in
accordance with Section 2.

 

SECTION 4.  Registration
in Nominee Name; Denominations.  The
Collateral 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 Pledgors, endorsed or assigned in blank or in favor of the Collateral
Agent.  Each Pledgor will promptly give
to the Collateral Agent copies of any notices or other communications received
by it with respect to Pledged Securities registered in the name of such
Pledgor.  The Collateral 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 and the Intercreditor Agreement.

 

If
any securities, whether certificated or uncertificated, or other investment
property now or hereafter acquired by any Pledgor (other than Securities or
other investment property held in the Notes Collateral Account) are held by
such Pledgor or its nominee through a securities intermediary or commodity
intermediary, such Pledgor shall promptly notify the Collateral Agent thereof
and, at the Collateral Agent’s request and option, pursuant to an agreement in
form and substance reasonably satisfactory to the Collateral Agent, either (i)
cause such securities intermediary or (as the case may be) commodity
intermediary to agree to comply with entitlement orders or other instructions
from the Collateral Agent to such securities intermediary as to such security
entitlements, or (as the case may be) to apply any value distributed on account
of any commodity contract as directed by the Collateral Agent to such commodity
intermediary, in each case without further consent of any Pledgor or such
nominee, or (ii) in the case of Financial Assets or other Investment Property
(each as defined in the Canadian Security Agreement dated as of the date hereof
between the Pledgors and the Collateral Agent) held through a securities
intermediary, arrange for the Collateral Agent to become the entitlement holder
with respect to such investment property, with the Pledgor being permitted,
only with the consent of the Collateral Agent, to exercise rights to withdraw
or otherwise deal with such investment property.  The Collateral Agent agrees with each of the Pledgors that the Collateral
Agent shall not give any such entitlement orders or instructions or directions
to any

 

5

 

such issuer, securities intermediary or commodity intermediary, and
shall not withhold its consent to the exercise of any withdrawal or dealing rights
by any Pledgor, 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 Collateral Agent is the securities intermediary.

 

SECTION 5.  Voting
Rights; Dividends and Interest, etc.  (a)  In accordance with, and to the extent
consistent with, the terms of the Intercreditor Agreement, unless and until an
Event of Default shall have occurred and be continuing:

 

(i)                                     Each Pledgor
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 Indenture and the
other Indenture Documents; provided, however, that such Pledgor
will not be entitled to exercise any such right if the result thereof could
materially and adversely affect the rights inuring to a holder of the Pledged
Securities or the rights and remedies of any of the Secured Parties under this
Agreement, the Indenture or any other Indenture Document or the ability of the
Secured Parties to exercise the same.

 

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

 

(iii)                               Each Pledgor
shall be entitled to receive and retain any and all cash dividends, interest
and principal paid on the Pledged Securities to the extent and only to the
extent that such cash dividends, interest and principal are permitted by, and
otherwise paid in accordance with, the terms and conditions of the Indenture, the
other Indenture Documents and applicable laws. 
All noncash dividends, interest and principal, and all dividends,
interest and principal paid or payable in cash or otherwise in connection with
a partial or total liquidation or dissolution, return of capital, capital
surplus or paid-in surplus, and all other distributions (other than
distributions referred to in the preceding sentence) made on or in respect of
the Pledged Securities, whether paid or payable in cash or otherwise, whether
resulting from a subdivision, combination or reclassification of the
outstanding capital stock 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 Collateral, and, if received by any Pledgor, shall not
be commingled by such Pledgor 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 Collateral Agent and shall be forthwith delivered to the Collateral Agent
in the same form as so received (with any necessary endorsement).

 

6

 

(b)                                 In accordance
with, and to the extent consistent with, the terms of the Intercreditor
Agreement, upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to dividends, interest or principal that
such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above
shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority
to receive and retain such dividends, interest or principal.  All dividends, interest or principal
received by the  Pledgor contrary to the
provisions of this Section 5 shall be held in trust for the benefit of the
Collateral Agent, shall be segregated from other property or funds of such
Pledgor and shall be forthwith delivered to the Collateral 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 Collateral Agent
pursuant to the provisions of this paragraph (b) shall, subject to the
provisions of the Intercreditor Agreement, be retained by the Collateral Agent,
in an account to be established by the Collateral Agent upon receipt of such
money or other property and shall be applied in accordance with the provisions
of Section 7.  After all Events of
Default have been cured or waived, the Collateral Agent shall, within five
Business Days after all such Events of Default have been cured or waived, repay
to each Pledgor all cash dividends, interest or principal (without interest),
that such Pledgor would otherwise be permitted to retain pursuant to the terms
of paragraph (a)(iii) above and which remain in such account.

 

(c)                                  In accordance
with, and to the extent consistent with, the terms of, the Intercreditor
Agreement, upon the occurrence and during the continuance of an Event of
Default, all rights of any Pledgor to exercise the voting and consensual rights
and powers it is entitled to exercise pursuant to paragraph (a)(i) of this
Section 5, and the obligations of the Collateral Agent under
paragraph (a)(ii) of this Section 5, shall cease, and all such rights
shall thereupon become vested in the Collateral Agent, which shall have the
sole and exclusive right and authority to exercise such voting and consensual
rights and powers; provided that, and to the extent consistent with the
Intercreditor Agreement, unless otherwise directed by holders of at least 25%
in aggregate principal amount at maturity of the outstanding Notes, the
Collateral Agent shall have the right from time to time following and during
the continuance of an Event of Default to permit the Pledgors to exercise such
rights.  After all Events of Default
have been cured or waived, such Pledgor will have the right to exercise the voting
and consensual rights and powers that it would otherwise be entitled to
exercise pursuant to the terms of paragraph (a)(i) above.

 

SECTION 6.  Remedies
upon Default.  In accordance with,
and to the extent consistent with, the terms of the Intercreditor Agreement,
upon the occurrence and during the continuance of an Event of Default, subject
to applicable regulatory and legal requirements, the Collateral Agent may
exercise all of the rights and remedies granted to secured parties under the Personal
Property Security Act (Ontario) (the “PPSA”) and any other
applicable statute, or otherwise available to the Collateral Agent at law or in
equity.  Without limited the generality
of the forgoing, the Collateral Agent may sell the Collateral, or any part thereof,
at public or private sale or at any broker’s board or on any securities
exchange, for cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate.  The Collateral
Agent shall be authorized at any such sale (if it deems it advisable to do so)
to restrict the prospective bidders or purchasers to persons who will represent
and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold.  Each such purchaser
at any

 

7

 

such sale shall hold the
property sold absolutely free from any claim or right on the part of any
Pledgor, and, to the extent permitted by applicable law, the Pledgors hereby
waive all rights of redemption, stay, valuation and appraisal any Pledgor now
has or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted.

 

The
Collateral Agent shall give a Pledgor such prior written notice of the
Collateral Agent’s intention to make any sale of such Pledgor’s Collateral as
may be required by the PPSA or other applicable law.  Such notice, in the case of a public sale, shall state the time
and place for such sale and, in the case of a sale at a broker’s board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. 
Any such public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent may fix and
state in the notice of such sale.  At
any such sale, the Collateral, or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may (in
its sole and absolute discretion) determine. 
The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice, be made at the
time and place to which the same was so adjourned. In case any sale of all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Collateral Agent until the sale price
is paid in full by the purchaser or purchasers thereof, but the Collateral
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 applicable law, private) sale made pursuant to this Section 6, any
Secured Party may bid for or purchase, free from any right of redemption, stay
or appraisal on the part of any Pledgor (all said rights being also hereby
waived and released), the Collateral or any part thereof offered for sale and
may make payment on account thereof by using any claim then due and payable to
it from such Pledgor as a credit against the purchase price, and it may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to such Pledgor therefor.  For purposes hereof, (a) a written
agreement to purchase the Collateral or any portion thereof shall be treated as
a sale thereof, (b) the Collateral Agent shall be free to carry out such
sale pursuant to such agreement and (c) such Pledgor shall not be entitled to
the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered into
such an agreement all Events of Default shall have been remedied and the
Obligations paid in full.  As an
alternative to exercising the power of sale herein conferred upon it, the
Collateral Agent may, in accordance with, and to the extent consistent with,
the terms of the Intercreditor Agreement, proceed by a suit or suits at law or
in equity to foreclose upon the Collateral 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.

 

SECTION 7.  Application
of Proceeds of Sale.  In accordance
with, and to the extent consistent with, the terms of the Intercreditor
Agreement, the proceeds of any sale of Collateral pursuant to Section 6,
as well as any Collateral consisting of cash, shall be applied by the
Collateral Agent as follows:

 

8

 

FIRST,
to the payment of all costs and expenses incurred by the Collateral Agent in
connection with such sale or otherwise in connection with this Agreement, any
other Indenture Document or any of the Obligations, including all court costs
and the reasonable fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder or under any
other Indenture Document on behalf of any Pledgor and any other costs or
expenses incurred in connection with the exercise of any right or remedy
hereunder or under any other Indenture 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) in the
manner provided in the Indenture; and

 

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

 

In
accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, the Collateral Agent shall have absolute discretion as
to the time of application of any such proceeds, moneys or balances in
accordance with this Agreement.  The
Collateral Agent may fix a record date and payment date for any payment to
Holders pursuant to this Section 7. 
At least 15 days before such record date, the Collateral Agent shall
mail to each Holder and the Issuer a notice that states the record date, the
payment date and the amount to be paid. 
Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the purchase money by the Collateral 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 Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.

 

SECTION 8.  Reimbursement
of Collateral Agent.  (a)  In accordance with, and to
the extent consistent with, the terms of the Intercreditor Agreement, the
Pledgors agree to pay upon demand to the Collateral Agent the amount of any and
all reasonable expenses, including the reasonable fees, other charges and
disbursements of its counsel and of any experts or agents, that the Collateral
Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of the Collateral Agent hereunder or
(iv) the failure by such Pledgor to perform or observe any of the
provisions hereof.

 

(b)                                 Without
limitation of its indemnification obligations under the other Indenture
Documents, each Pledgor agrees to indemnify the Collateral Agent, the Secured
Parties and each affiliate of the foregoing persons (each, an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including reasonable counsel fees,
other charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Indenture Document or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto of their

 

9

 

respective obligations
thereunder or the consummation of the other transactions contemplated thereby
or (ii) any claim, litigation, investigation or proceeding relating to any
of the foregoing, whether or not any Indemnitee is a party thereto, provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses resulted
from the gross negligence or wilful misconduct of such Indemnitee.

 

(c)                                  Any amounts
payable as provided hereunder shall be additional Obligations secured hereby
and by the other Security Documents. 
The provisions of this Section 8 shall remain operative and in full
force and effect regardless of the termination of this Agreement, 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 Indenture Document or any investigation made by or
on behalf of the Collateral Agent or any other Secured Party.  All amounts due under this Section 8
shall be payable on written demand therefor and shall bear interest at the rate
borne by the Notes.

 

SECTION 9.  Collateral
Agent Appointed Attorney-in-Fact. 
Each Pledgor hereby appoints the Collateral Agent the attorney-in-fact
of such Pledgor, upon the occurrence and during the continuance of a Default,
for the purpose of carrying out the provisions of this Agreement and taking any
action and executing any instrument that the Collateral Agent may deem
necessary or advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest. 
Without limiting the generality of the foregoing, the Collateral Agent
shall have the right, upon the occurrence and during the continuance of an
Event of Default, with full power of substitution either in the Collateral
Agent’s name or in the name of such Pledgor, to ask for, demand, sue for,
collect, receive and give acquittance for any and all moneys due or to become
due under and by virtue of any Collateral, to endorse checks, drafts, orders
and other instruments for the payment of money payable to the Pledgor
representing any interest or dividend or other distribution payable in respect
of the Collateral or any part thereof or on account thereof and to give full
discharge for the same, to settle, compromise, prosecute or defend any action,
claim or proceeding with respect thereto, and to sell, assign, endorse, pledge,
transfer and to make any agreement respecting, or otherwise deal with, the
same; provided, however, that nothing herein contained shall be
construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Collateral Agent, or to present or file any claim or notice,
or to take any action with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered
thereby.  The Collateral Agent and the
other Secured Parties shall be accountable only for amounts actually received
as a result of the exercise of the powers granted to them herein, and neither
they nor their officers, directors, employees or agents shall be responsible to
any Pledgor for any act or failure to act hereunder, except for their own gross
negligence or wilful misconduct.

 

Notwithstanding
anything in this Section 9 to the contrary, the Collateral Agent agrees
that it will not exercise any rights under the power of attorney provided for
in this Section 9 unless it does so in accordance with, and to the extent
consistent with, the terms of the Intercreditor Agreement.

 

SECTION 10.  Waivers;
Amendment.  (a)  No failure or delay of the Collateral
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any

 

10

 

single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. 
The rights and remedies of the Collateral Agent hereunder and of the
other Secured Parties under the other Indenture Documents are cumulative and
are not exclusive of any rights or remedies that they would otherwise
have.  No waiver of any provisions of
this Agreement or consent to any departure by any Pledgor therefrom shall in
any event be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. 
No notice or demand on any Pledgor in any case shall entitle such
Pledgor 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
(i) in accordance with the Indenture and pursuant to a written agreement
entered into between the Collateral Agent and the Pledgor or Pledgors with
respect to which such waiver, amendment or modification is to apply, subject to
the limitations in the Intercreditor Agreement or (ii) as provided in the
Intercreditor Agreement.

 

SECTION 11.  Securities
Act, etc.  In view of the position
of the Pledgors in relation to the Pledged Securities, or because of other
current or future circumstances, a question may arise under the Securities Act,
as now or hereafter in effect, or any similar statute hereafter enacted
analogous in purpose 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 Securities permitted hereunder.  Each Pledgor understands that compliance
with the Federal Securities Laws might very strictly limit the course of
conduct of the Collateral Agent if the Collateral Agent were to attempt to
dispose of all or any part of the Pledged Securities, and might also limit the
extent to which or the manner in which any subsequent transferee of any Pledged
Securities could dispose of the same. 
Similarly, there may be other legal restrictions or limitations
affecting the Collateral Agent in any attempt to dispose of all or part of the
Pledged Securities under applicable Blue Sky or other state securities laws or
similar laws analogous in purpose or effect. 
Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to those who will agree, among other things,
to acquire such Pledged Securities for their own account, for investment, and
not with a view to the distribution or resale thereof.  Each Pledgor acknowledges and agrees that in
light of such restrictions and limitations, the Collateral Agent, in its
discretion, (a) may proceed to make such a sale whether or not a
registration statement for the purpose of registering such Pledged Securities
or part thereof shall have been filed under the Federal Securities Laws and
(b) may approach and negotiate with a single potential purchaser to effect
such sale.  Each Pledgor 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 Collateral Agent shall incur no responsibility or liability for
selling all or any part of the Pledged Securities at a price that the
Collateral Agent, in its 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 11 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 Collateral Agent sells.

 

11

 

SECTION 12.  Registration,
etc.  Each Pledgor agrees that, upon
the occurrence and during the continuance of an Event of Default, if, in
accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, for any reason the Collateral Agent desires to sell
any of the Pledged Securities at a public sale, it will, at any time and from
time to time, upon the written request of the Collateral Agent, use its best
efforts to take or to cause the issuer of such Pledged Securities to take such
action and prepare, distribute and/or file such documents, as are required or
advisable in the reasonable opinion of counsel for the Collateral Agent to
permit the public sale of such Pledged Securities.  Each Pledgor further agrees to indemnify, defend and hold
harmless the Collateral Agent, each other Secured Party, any underwriter and their
respective officers, directors, affiliates and controlling persons from and
against all loss, liability, expenses, costs of counsel (including, without
limitation, reasonable fees and expenses to the Collateral Agent of legal
counsel), and claims (including the costs of investigation) that they may incur
insofar as such loss, liability, expense or claim arises out of or is based
upon any untrue statement of a material fact contained in any prospectus (or
any amendment or supplement thereto) or in any notification or offering
circular, or arises out of or is based upon any omission to state a material
fact required to be stated therein or necessary to make the statements in any
thereof not misleading, except insofar as the same may have been caused by any
untrue statement or omission based upon information furnished to such Pledgor
or the issuer of such Pledged Securities by the Collateral Agent or any other
Secured Party expressly for use therein. Each Pledgor further agrees, upon such
written request referred to above, to use its best efforts to qualify, file or
register, or cause the issuer of such Pledged Securities to qualify, file or
register, any of the Pledged Securities under the Blue Sky or other securities
laws of such states as may be requested by the Collateral Agent and keep
effective, or cause to be kept effective, all such qualifications, filings or
registrations.  The Pledgors will bear
all costs and expenses of carrying out their obligations under this
Section 12.  Each Pledgor
acknowledges that there is no adequate remedy at law for failure by it to
comply with the provisions of this Section 12 and that such failure would
not be adequately compensable in damages, and therefore agrees that its
agreements contained in this Section 12 may be specifically enforced.

 

SECTION 13.  Security
Interest Absolute.  All rights of
the Collateral Agent hereunder, the grant of a security interest in the
Collateral and all obligations of each Pledgor hereunder, shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability
of the Indenture, any other Indenture 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 Indenture, any other
Indenture Document or any other agreement or instrument relating to any of the
foregoing, (c) any exchange, release or nonperfection of any other
collateral, or any release or amendment or waiver of or consent to or departure
from any guaranty, for all or any of the Obligations or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Pledgor in respect of the Obligations or in respect of this
Agreement (other than the indefeasible payment in full of all the Obligations).

 

SECTION 14.  Termination
or Release. This Agreement and the pledges and security interests created
hereby shall terminate when all the Obligations have been indefeasibly

 

12

 

paid in full pursuant to the
terms of the Indenture.  The Collateral
shall be released as and to the extent provided in Article X of the
Indenture.

 

SECTION 15.  Notices.  All communications and notices hereunder
shall be in writing and given as provided in Section 12.02 of the
Indenture.  All communications and
notices hereunder to any Pledgor shall be given to it in care of the Issuer.

 

SECTION 16.  Further
Assurances.  Each Pledgor agrees to
do such further acts and things, and to execute and deliver such additional
conveyances, assignments, agreements and instruments, as the Collateral Agent, in
accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, may at any time reasonably request in connection with
the administration and enforcement of this Agreement or with respect to the
Collateral or any part thereof or in order better to assure and confirm unto
the Collateral Agent its rights and remedies hereunder.

 

SECTION 17.  Binding
Effect; Several Agreement; Assignments. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of any Pledgor that are contained in this Agreement
shall bind and inure to the benefit of its successors and assigns.  This Agreement shall become effective as to
any Pledgor when a counterpart hereof executed on behalf of such Pledgor shall
have been delivered to the Collateral Agent and a counterpart hereof shall have
been executed on behalf of the Collateral Agent, and thereafter shall be
binding upon such Pledgor and the Collateral Agent and their respective
successors and assigns, and shall inure to the benefit of such Pledgor, the
Collateral Agent and the other Secured Parties, and their respective successors
and assigns, except that no Pledgor shall have the right to assign its rights
hereunder or any interest herein or in the Collateral (and any such attempted
assignment shall be void), except as expressly contemplated by this Agreement
or the other Indenture Documents.  If
all of the capital stock of a Pledgor is sold, transferred or otherwise
disposed of to a Person that is not an Affiliate of the Borrower pursuant to a
transaction permitted by the Indenture, such Pledgor shall be released from its
obligations under this Agreement without further action.  This Agreement shall be construed as a
separate agreement with respect to each Pledgor and may be amended, modified,
supplemented, waived or released with respect to any Pledgor without the
approval of any other Pledgor and without affecting the obligations of any
other Pledgor hereunder.

 

SECTION 18.  Survival
of Agreement; Severability.  (a)  All covenants,
agreements, representations and warranties made by each Pledgor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Indenture Document shall be
considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the issuance of the Notes, regardless of any
investigation made by the Secured Parties or on their behalf, and shall
continue in full force and effect as long as the principal of or any accrued
interest on any Note or any other amount payable under this Agreement or any
other Indenture Document is outstanding and unpaid.

 

(b)                                 In the event
any one or more of the provisions contained in this Agreement should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected

 

13

 

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.

 

SECTION 19.  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA
APPLICABLE THEREIN.

 

SECTION 20.  Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute a single contract, and shall
become effective as provided in Section 17.  Delivery of an executed counterpart of a signature page to this
Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart of this Agreement.

 

SECTION 21.  Rules
of Interpretation.  The rules of
interpretation specified in Section 1.03 of the Credit Agreement shall be
applicable to this Agreement. 
Section headings 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 22.  Jurisdiction;
Consent to Service of Process.  (a)  Each Pledgor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any Ontario court or federal court of Canada
sitting in such jurisdiction, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or the other
Indenture Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that,
to the extent permitted by applicable law, all claims in respect of any such
action or proceeding may be heard and determined in Ontario or, to the extent
permitted by law, in such federal court. 
Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by
law.  Nothing in this Agreement shall
affect any right that the Collateral Agent or any other Secured Party may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Indenture Documents against any Pledgor or its properties in the
courts of any jurisdiction.

 

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

 

(c)                                  Each party to
this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 15. 
Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

 

14

 

SECTION 23.  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 INDENTURE
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 INDENTURE DOCUMENTS, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 23.

 

SECTION 24.  Additional
Pledgors. Pursuant to Section 4.11 of the Indenture, each Foreign
Subsidiary organized under the laws of Canada or any province thereof (a “Canadian
Subsidiary”) that is formed or acquired after the date of the Indenture and
each Canadian Subsidiary that guarantees Indebtedness of the Issuer or any
domestic Subsidiary is required to enter in this agreement as a Pledgor.  Upon execution and delivery by the
Collateral Agent and a Canadian Subsidiary of an instrument in the form of
Annex 1, such Canadian Subsidiary shall become a Pledgor hereunder with
the same force and effect as if originally named as a Pledgor herein.  The execution and delivery of such
instrument shall not require the consent of any Pledgor hereunder.  The rights and obligations of each Pledgor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Pledgor as a party to this Agreement.

 

SECTION 25.  Subject
to Intercreditor Agreement. 
Notwithstanding anything herein to the contrary, the lien and security
interest granted to the Collateral Agent pursuant to this Agreement and the
exercise of any right or remedy by the Collateral Agent hereunder are subject
to the provisions of the Intercreditor Agreement.  In the event of any conflict between the terms of the
Intercreditor Agreement and this Agreement, the terms of the Intercreditor
Agreement shall govern.

 

15

 

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

 

 

	
   

  	
  UNIPLAST INDUSTRIES CO.,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST COMPANY, as Collateral

  Agent,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

16

 

Schedule I to the 

Canadian Pledge Agreement

 

 

PLEDGORS

 

 

	
  Name

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
  Nil

  	
   

  	
   

  

 

 

Schedule II to the 

Canadian Pledge Agreement

 

CAPITAL STOCK

 

	
  Issuer

  	
   

  	
  Number of

  Certificate

  	
   

  	
  Registered

  Owner

  	
   

  	
  Number and

  Class of

  Shares

  	
   

  	
  Percentage

  of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

DEBT SECURITIES

 

	
  Issuer

  	
   

  	
  Principal

  Amount

  	
   

  	
  Date of
  Note

  	
   

  	
  Maturity
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Annex 1 to the 

Canadian Pledge Agreement

 

SUPPLEMENT
NO.      dated as
of        , to the CANADIAN PLEDGE
AGREEMENT dated as of February 17, 2004, among UNIPLAST INDUSTRIES CO., a
Nova Scotia company (“Uniplast”), each other subsidiary of PLIANT
CORPORATION, a Utah corporation (the “Issuer”), organized under the laws
of Canada or any province thereof listed on Schedule I hereto (each such
subsidiary and Uniplast individually a “Pledgor” and collectively, the “Pledgors”)
and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as collateral
agent (in such capacity, the “Collateral Agent”) for the Secured Parties
(as defined in the Canadian Security Agreement referred to below)

 

A.                                   Reference is
made to (a) the Indenture dated as of February 17, 2004 (as amended,
supplemented or otherwise modified from time to time, the “Indenture”),
among the Issuer, the note guarantors thereto and Wilmington Trust Company, as
trustee (the “Trustee”), (b) the Canadian Security Agreement dated as of
February 17, 2004 (the “Canadian Security Agreement”), among
Uniplast, the other grantors party thereto and the Collateral Agent and (c) the
Amended and Restated Intercreditor Agreement dated as of February 17, 2004
(the “Intercreditor Agreement”), among the Issuer, the Collateral Agent,
the collateral agent for the Existing Senior Secured Notes and Deutsche Bank
Trust Company Americas, as Credit Agent (as defined therein).

 

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

 

C.                                     The Pledgors
have entered into the Canadian Pledge Agreement in satisfaction of a condition
of the Initial Purchasers to purchase the Notes.  Section 24 of the Canadian Pledge Agreement provides that
Canadian Subsidiaries may become Pledgors under the Canadian Pledge Agreement
by execution and delivery of an instrument in the form of this Supplement.  The undersigned Canadian Subsidiary (the “New
Pledgor”) is executing this Supplement in accordance with the requirements
of the Indenture to become a Pledgor under the Canadian Pledge Agreement.

 

Accordingly,
the Collateral Agent and the New Pledgor agree as follows:

 

SECTION 1.  In accordance with Section 24 of the
Canadian Pledge Agreement, the New Pledgor by its signature below becomes a
Pledgor under the Canadian Pledge Agreement with the same force and effect as
if originally named therein as a Pledgor and the New Pledgor hereby agrees
(a) to all the terms and provisions of the Canadian Pledge Agreement
applicable to it as a Pledgor thereunder and (b) represents and warrants
that the representations and warranties made by it as a Pledgor thereunder are
true and correct on and as of the date hereof. 
In furtherance of the foregoing, the New Pledgor, as security for the
payment and performance in full of the Obligations, does hereby create and
grant to the Collateral 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 Pledgor’s right, title and interest in
and to the Collateral of the New Pledgor. 
Each reference to a “Pledgor” in the Canadian Pledge Agreement shall be
deemed to include the New Pledgor.  The
Canadian Pledge Agreement is hereby incorporated herein by reference.

 

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

 

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

 

SECTION 4.  The New Pledgor hereby represents and
warrants that set forth on Schedule I attached hereto is a true and
correct schedule of all its Pledged Securities.

 

SECTION 5.  Except as expressly supplemented hereby, the
Canadian Pledge 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 PROVINCE OF ONTARIO AND THE FEDERAL LAWS OF CANADA APPLICABLE THEREIN.

 

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, neither party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability of the remaining
provisions contained herein and in the Canadian Pledge Agreement shall not in
any way be affected or impaired.  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 15 of the Canadian
Pledge Agreement.  All communications
and notices hereunder to the New Pledgor shall be given to it at the address
set forth under its signature hereto.

 

SECTION 9.  The New Pledgor agrees to reimburse the
Collateral 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 Collateral Agent.

 

2

 

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

 

 

	
   

  	
  [Name of New
  Pledgor],

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WILMINGTON TRUST
  COMPANY, as Collateral

  Agent,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

3

 

Schedule I to

Supplement No.

to the Canadian Pledge Agreement 

 

Pledged
Securities of the New Pledgor

 

CAPITAL STOCK

 

	
  Issuer

  	
   

  	
  Number of

  Certificate

  	
   

  	
  Registered

  Owner

  	
   

  	
  Number and

  Class of

  Shares

  	
   

  	
  Percentage

  of Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

DEBT SECURITIES

 

	
  Issuer

  	
   

  	
  Principal

  Amount

  	
   

  	
  Date of

  Note

  	
   

  	
  Maturity

  Date

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