EXHIBIT 4.9
SECOND PRIORITY PLEDGE AGREEMENT dated as of May 30,
2003, 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 ("Wilmington
Trust"), as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as defined in
the Second Priority Security Agreement referred to below).
Capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Indenture (as defined
below).
WITNESSETH:
WHEREAS, pursuant to the terms, conditions and provisions of (a)
the Indenture dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the "Indenture"), among the Issuer, the
Subsidiary Pledgors and Wilmington Trust, as trustee (the "Trustee"), (b) the
Purchase Agreement dated as of May 22, 2003, among the Issuer, the Subsidiary
Pledgors and J.P.Morgan Securities Inc., Credit Suisse First Boston LLC and
Deutsche Bank Securities Inc. (the "Initial Purchasers") and (c) the Second
Priority Security Agreement dated as of May 30, 2003, (as amended, supplemented
or otherwise modified from time to time, the "Second Priority Security
Agreement"), among the Issuer, the Grantors party thereto and the Collateral
Agent, the Issuer is issuing $250,000,000 aggregate principal amount of 11 1/8%
Senior Secured 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 Pledgors;
WHEREAS, pursuant to the Pledge Agreement dated as of September
30, 1997, as amended and restated as of May 31, 2000 (as amended, supplemented
or otherwise modified from time to time, the "First Priority Pledge Agreement"),
among the Issuer, each of the subsidiaries of the Issuer party thereto or which
becomes a party thereto pursuant to the Credit Agreement referred to below
(together with the Issuer, each a "Credit Agreement Pledgor" and, collectively,
the "Credit Agreement Pledgors") and Deutsche Bank Trust Company Americas
(formerly known as Bankers Trust Company), as collateral agent, the Credit
Agreement Pledgors have granted to the Credit Agent (as defined below) a
first-priority lien and security interest in the Collateral (as defined below)
in connection with the Credit Agreement dated as of September 30, 1997, as
amended and restated as of May 31, 2000 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Issuer, Aspen
Industrial, S.A. de C.V., a Mexico corporation, the lenders from time to time
party thereto (the
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"Lenders"), Deutsche Bank Trust Company Americas, as administrative agent and
collateral agent (in such capacity, together with any successor Credit Agent as
provided and defined in the Intercreditor Agreement, the "Credit Agent") for the
Lenders, and JPMorgan Chase Bank, as Syndication Agent.
WHEREAS, the Issuer, the Collateral Agent and the Credit Agent
have entered into an Intercreditor Agreement, dated as of the date hereof (the
"Intercreditor Agreement"), pursuant to which the lien upon and security
interest in the Collateral granted by this Agreement are and shall be
subordinated in all respects to the lien upon and security interest in the
Collateral granted pursuant to, and subject to the terms and conditions of, the
Senior Lender Documents (as defined in the Intercreditor Agreement);
WHEREAS, each Pledgor is executing and delivering this Agreement
pursuant to the terms of the Indenture to induce the Trustee to enter into the
Indenture and the Initial Purchasers to purchase the Notes; and
WHEREAS, each Pledgor has duly authorized the execution,
delivery and performance of this Agreement.
NOW, THEREFORE, for and in consideration of the premises, and of
the mutual covenants herein contained, and in order to induce the Trustee to
enter into the Indenture and the Initial Purchasers to purchase the Notes, each
Pledgor and the Collateral Agent, on behalf of itself and each Secured Party,
and each of their respective successors or assigns, hereby agree as follows:
SECTION 1. Pledge. As security for the payment and performance,
as the case may be, in full of all obligations of the Issuer and the Subsidiary
Pledgors under the Indenture, the Notes and the other Indenture Documents (as
defined in the Second Priority Security Agreement), including obligations to the
Trustee and the Collateral Agent, whether for payment of principal of, interest
on or additional interest, if any, on the Notes and all other monetary
obligations of the Issuer and the Subsidiary Pledgors under the Indenture, the
Notes and the other Indenture Documents whether for fees, expenses,
indemnification or otherwise (referred to collectively as the "Obligations"),
each Pledgor hereby transfers, grants, bargains, sells, conveys, hypothecates,
pledges, sets over and (subject to the Intercreditor Agreement) 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 second-priority security interest in all of the Pledgor's
right, title and interest in, to and under (a) all 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 it that have been pledged to the
Credit Agent pursuant to the First Priority Pledge Agreement, all of which have
been delivered to and are held by the Credit Agent (with the exception of Equity
Interests consisting of uncertificated securities) and are listed on Schedule II
hereto, and any Equity Interests obtained in the future by such Pledgor and the
certificates representing all such shares (collectively, the "Pledged Stock");
(b)(i) all the debt securities owned by it that have been pledged to the Credit
Agent pursuant to the First Priority Pledge Agreement, all of which are listed
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opposite the name of the Pledgor on Schedule II hereto, and have been delivered
to and are held by the Credit Agent, (ii) any debt securities in the future
issued to the Pledgor and (iii) the promissory notes and any other instruments
evidencing such debt securities (collectively, 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; 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 Pledgor 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 Pledgor 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 Pledgor 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 Securities and Exchange Commission (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 secures 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 (as defined
in the Second Priority Security Agreement) may be amended or modified, without
the consent of any Holder, to the extent necessary to release the second
priority 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 Credit Agent (or, if the First-Lien
Termination Date (as defined in the Second Priority Security Agreement) has
occurred, the Collateral Agent), (a) any stock certificates, notes or other
securities now or hereafter included in the Collateral (the "Pledged
Securities") have been or shall be accompanied by stock powers duly executed in
blank or other instruments of transfer satisfactory to the Credit Agent (or, if
the First-Lien Termination Date has occurred, the Collateral Agent) and by such
other instruments and documents as the Credit Agent (or, if the First-Lien
Termination Date has occurred, 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
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instruments or documents as the Credit Agent (or, if the First-Lien Termination
Date has occurred, 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 terms of 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 Credit Agent (or, if the
First-Lien Termination Date has occurred, the Collateral Agent) any and all
Pledged Securities, and any and all certificates or other instruments or
documents representing the Collateral, unless such Pledged Securities,
certificates or other instruments or documents have previously been delivered to
the Credit Agent (or, if the First-Lien Termination Date has occurred, the
Collateral Agent).
(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 to the Collateral
Agent and delivered to the Credit Agent (or, if the First-Lien Termination Date
has occurred, the Collateral Agent) for the benefit of the Secured Parties
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 other than Permitted Liens, (iii) will make no assignment, pledge,
hypothecation or transfer of, or create or permit to exist any security interest
in or Lien (other than Permitted Liens) on, the Collateral, other than pursuant
hereto or to the Senior Lender Documents (as defined in the Intercreditor
Agreement) in accordance with the Intercreditor Agreement in respect of
Permitted Liens, and (iv) subject to Section 5 and the Intercreditor Agreement,
will cause any and all Collateral, whether for value paid by the Pledgor or
otherwise, to be forthwith deposited (unless such Collateral was previously
deposited with the Credit Agent (or, if
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the First-Lien Termination Date has occurred, 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 against any and all Liens (other than
Permitted Liens), 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 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 second-priority 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 Credit Agent (or, if the First-Lien Termination Date has
occurred, the Collateral Agent) in accordance with Section 2.
SECTION 4. Registration in Nominee Name; Denominations. The
Credit Agent (or, if the First-Lien Termination Date has occurred, the
Collateral Agent), on behalf of the Secured Parties, shall have the right (in
its sole and absolute discretion)
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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 Credit Agent (or, if the First-Lien
Termination Date has occurred, 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 Credit Agent (or, if the First-Lien Termination Date has occurred,
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.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a)
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 or 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 Credit
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Agent (or, if the First-Lien Termination Date has occurred, the Collateral
Agent) for the benefit of the Secured Parties 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, 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 Credit Agent (or, if the First-Lien Termination Date has occurred,
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 Credit Agent (or, if the
First-Lien Termination Date has occurred, 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 Credit Agent (or, if the
First-Lien Termination Date has occurred, the Collateral Agent) pursuant to the
provisions of this paragraph (b) shall, subject to the provisions of the
Intercreditor Agreement, be retained by the Credit Agent (or, if the First-Lien
Termination Date has occurred, the Collateral Agent) in an account to be
established by the Credit Agent (or, if the First-Lien Termination Date has
occurred, 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 Credit Agent (or, if the
First-Lien Termination Date has occurred, 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 Credit Agent (or,
if the First-Lien Termination Date has occurred, the Collateral Agent) under
paragraph (a)(ii) of this Section 5, shall cease, and all such rights shall
thereupon become vested in the Credit Agent (or, if the First-Lien Termination
Date has occurred, the Collateral Agent), which shall have the sole and
exclusive right and authority to exercise such voting and consensual rights and
powers, provided that, if the First-Lien Termination Date has occurred, unless
the Collateral Agent shall have received written objections from Holders of at
least 25% in principal amount of the 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.
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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.
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
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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 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
Collateral Agent shall apply the proceeds of any sale of Collateral pursuant to
Section 6, as well as any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the
Trustee or the Collateral Agent (in its capacity as such hereunder or
under any other Indenture Document) in connection with such collection
or sale or otherwise in connection with this Agreement, any other
Indenture Document or any of the Obligations (or any such costs and
expenses incurred by a trustee or a collateral agent in connection with
Other Second-Lien 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 Trustee or 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
and any other amounts due to the Trustee or the Collateral Agent under
Section 7.07 of the Indenture;
SECOND, to the payment in full of the Obligations owed to the
Holders and any Other Second-Lien Obligations owed to holders of such
Indebtedness (the amounts so applied to be distributed among the Holders
and any holders of Other Second-Lien Obligations pro rata in accordance
with the amounts of the Obligations owed to the Holders and Other
Second-Lien Obligations owed to holders of such Indebtedness on the date
of any such distribution); and
THIRD, to the Pledgors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
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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. In accordance
with, and to the extent consistent with, the terms of the Intercreditor
Agreement, (a) 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 Trustee, the Holders and each Affiliate of the foregoing Persons
(each such Person being called 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
respective obligations thereunder or the consummation of the Transactions and
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
11
under this Section 8 shall be payable on written demand therefor and shall bear
interest at the rate specified in 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 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 Collateral Agent and 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
12
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 otherwise 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.
SECTION 12. Registration, etc. Each Pledgor agrees that, upon
the occurrence and during the continuance of an Event of Default hereunder, 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
13
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. (a) This Agreement and the
security interests granted hereby shall terminate at the time provided for in
Section 10.08 of the Indenture.
14
(b) Upon any sale or other transfer by any Pledgor of any
Collateral that is permitted under the Indenture or the Intercreditor Agreement
to any Person that is not a Pledgor, or, if any of the Collateral shall
otherwise become subject to the release provisions set forth in Section 10.03 of
the Indenture or Section 5.1 of the Intercreditor Agreement, such Collateral
shall be automatically released from the security interest created by this
Agreement to the extent provided for in Section 10.03 of the Indenture or
Section 5.1 of the Intercreditor Agreement, as applicable. To the extent
applicable, the Issuer will comply with Section 314(d) of the TIA (as defined in
the Second Priority Security Agreement), relating to the release of property or
securities from the Lien and Security Interest and to any substitution therefor
of any property or securities to be subjected to the Lien created by this
Agreement. Any certificate or opinion required by TIA Section 314(d) may be made
by an Officer (as defined in the Second Priority Security Agreement) of the
Issuer except in cases where TIA Section 314(d) requires that such certificate
or opinion be made by an independent Person, which Person will be an independent
engineer, appraiser or other expert selected or approved by the Trustee in the
exercise of reasonable care.
(c) In connection with any termination or release pursuant to
paragraph (a) or (b), the Collateral Agent shall execute and deliver to any
Pledgor, at such Pledgor's expense, all UCC termination statements and similar
documents that such Pledgor shall reasonably request to evidence such
termination or release. Any execution and delivery of documents pursuant to this
Section 14 shall be without recourse to or warranty by the Collateral Agent.
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 at the address for notices set forth on Schedule I.
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
15
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 pursuant to a transaction permitted or not
prohibited under the Indenture Documents, 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 purchase of the Notes by the Initial
Purchasers, 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 fee or 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 impaired thereby (it being understood
that the invalidity of a particular provision in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
16
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 as 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 Second Priority Security 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.
17
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 OTHER INDENTURE
DOCUMENT. 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.
SECTION 24. Additional Pledgors. If, pursuant to Sections 4.11
and 11.07 of the Indenture, the Company is required to cause any Subsidiary of
the Company that is not a Subsidiary Pledgor to become a Subsidiary Pledgor,
upon execution and delivery by the Collateral Agent and such Subsidiary of an
instrument in the form of Schedule III, 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. Credit Agreement. The Collateral Agent acknowledges
and agrees, on behalf of itself and the Holders (as defined in the Second
Priority Security Agreement), that, any provision of this Agreement to the
contrary notwithstanding, until the First-Lien Termination Date, the Pledgors
shall not be required to act or refrain from acting with respect to any
Collateral on which the Credit Agent has a Lien superior in priority to the
Collateral Agent's Lien thereon in any manner that would result in a default
under the terms and provisions of the Credit Agreement.
18
IN WITNESS WHEREOF, the parties hereto have duly executed this
Second Priority Pledge Agreement as of the day and year first above written.
PLIANT CORPORATION,
by
/s/ Brian E. Johnson
-----------------------------
Name:
Title:
THE SUBSIDIARY PLEDGORS LISTED
ON SCHEDULE I HERETO,
by
/s/ Brian E. Johnson
-----------------------------
Name:
Title: Authorized Officer
WILMINGTON TRUST COMPANY, as
Collateral Agent,
by
/s/ James D. Nesci
-----------------------------
Name: James D. Nesci
Title: Authorized Officer
Schedule I to the
Second Priority Pledge Agreement
SUBSIDIARY PLEDGORS
Name Address
---- -------
Pliant Solutions Corporation 1475 Woodfield Road,
Suite 700
Schaumburg, IL 60173
Pliant Packaging of Canada, LLC 1475 Woodfield Road,
Suite 700
Schaumburg, IL 60173
Pliant Corporation International 1475 Woodfield Road,
Suite 700
Schaumburg, IL 60173
Pliant Film Products of Mexico, Inc. 1475 Woodfield Road,
Suite 700
Schaumburg, IL 60173
Uniplast Holdings Inc. 1475 Woodfield Road,
Suite 700
Schaumburg, IL 60173
Uniplast U.S., Inc. 1475 Woodfield Road,
Suite 700
Schaumburg, IL 60173
Uniplast Midwest, Inc. 1475 Woodfield Road,
Suite 700
Schaumburg, IL 60173
Turex, Inc. 1475 Woodfield Road,
Suite 700
Schaumburg, IL 60173
Pierson Industries, Inc. 1475 Woodfield Road,
Suite 700
Schaumburg, IL 60173
Schedule II to the
Second Priority Pledge Agreement
EQUITY INTERESTS
Issuer Certificate Registered Owner Number Percentage
Number of Shares of Shares
- ----------------------------------------------------------------------------------------------------------
Huntsman Container 8 Huntsman Packaging 1,000 100%
Corporation International Corporation
(now known as Pliant (now known as Pliant
Corporation International) Corporation)
Huntsman Film Products of 2 Huntsman Packaging 1,000 100%
Mexico, Inc. Corporation
(now known as Pliant Film (now known as Pliant
Products of Mexico, Inc.) Corporation)
Huntsman KCL Corporation, 1 Huntsman Packaging 1,000 100%
Inc. Corporation
(now known as Pliant (now known as Pliant
Solutions Corporation) Corporation)
ASPEN Industrial, S.A. de 8 Huntsman Packaging 361,731,315 65%
C.V. (Mexico) Corporation
(now known as Pliant
Corporation)
Pliant Corporation of Canada C-6 Pliant Corporation 65 65%
Ltd. (Canada)
Huntsman Film Products UK, 7 Huntsman Container 65 65%
Limited (UK) Corporation International
(now known as Pliant Film (now known as Pliant
Products, UK, Limited) Corporation International)
Huntsman Film Products Pty. ACT 5 Huntsman Packaging 975,000 65%
Ltd. (Australia) Corporation
(now known as Pliant (now known as Pliant
Corporation Pty, Ltd.) Corporation)
Uniplast Holdings Inc. 26 Pliant Corporation 1,497,696 100%
Uniplast U.S., Inc. -- Uniplast Holdings Inc. 1,000 100%
Uniplast Industries Co. 31 Uniplast Holdings Inc. 997,480 100%
Pierson Industries, Inc. -- Uniplast U.S., Inc. 12,500 100%
Turex, Inc. 23 Uniplast U.S., Inc. 61 100%
Uniplast Midwest, Inc. -- Uniplast U.S., Inc. 1,000 100%
Pliant Asia & Pacific Rim 3 Pliant Corporation 2
Pte Ltd. 100%
. Pliant Corporation is the owner of the uncertificated equity
interests of Pliant Packaging of Canada, LLC.
DEBT SECURITIES
1. Intercompany Promissory Notes among the Grantors.
2. Amended and Restated Promissory Note issued by Scott K. Sorensen
to the Borrower in the original principal amount of $786,700.
3. Amended and Restated Promissory Note by Ronald G. Moffitt to the
Borrower in the original principal amount of $262,200.
4. Secured Promissory Note by Richard P. Durham to the Borrower in
the original principal amount of $2,430,798.
5. Secured Promissory Note issued by Jack E. Knott to the Borrower
in the original principal amount of $3,744,260.
6. Secured Promissory Note issued by Ronald G. Moffitt to the
Borrower in the original principal amount of $301,956.
7. Secured Promissory Note dated as of August 30, 2002, issued by
Poly West Converting, Inc. to the Borrower in the original
principal amount of $25,000.
8. Amended and Restated Promissory Note dated as of June 30, 2002,
issued by Richard J. Hoffend, Jr., Nyal L. Cannon and David W.
Salerno to the Borrower in the original principal amount of
$1,243,627.
9. Promissory Note dated May 21, 2003, issued by CTI Industries
Corporation to Pliant Corporation in the original principal
amount of $672,974.11.
Schedule III to
to the Second Priority Pledge Agreement
SUPPLEMENT NO. dated as of , to the SECOND PRIORITY
PLEDGE AGREEMENT dated as of May 30, 2003, among PLIANT
CORPORATION, a Utah corporation (the "Issuer"), and 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
("Wilmington Trust"), as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as defined in the
Second Priority Security Agreement referred to below)
A. Reference is made to (a) the Indenture dated as of May 30,
2003, (as amended, supplemented or otherwise modified from time to time, the
"Indenture"), among the Issuer, the guarantors party thereto and Wilmington
Trust, as trustee (in such capacity, the "Trustee"), (b) the Second Priority
Security Agreement dated as of May 30, 2003, (as amended, supplemented or
otherwise modified from time to time, the "Second Priority Security Agreement"),
among the Issuer, the grantors party thereto and the Collateral Agent and (c)
the Intercreditor Agreement dated as of May 30, 2003 (as amended, supplemented
or otherwise modified from time to time, the "Intercreditor Agreement"), among
the Issuer, the Collateral Agent and the Credit Agent (as defined in the Second
Priority Security Agreement).
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Second Priority
Pledge Agreement and the Indenture.
C. The Pledgors have entered into the Second Priority Pledge
Agreement pursuant to the terms of the Indenture in order to induce the Trustee
to enter into the Indenture and the Initial Purchasers to purchase the Notes.
Pursuant to Section 4.11 of the Indenture, the Company is required to cause
certain of its Subsidiaries to enter into the Second Priority Pledge Agreement
as a Subsidiary Pledgor. Section 24 of the Second Priority Pledge Agreement
provides that such Subsidiaries may become Subsidiary Pledgors under the Second
Priority 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 Second Priority Pledge Agreement as consideration
for the purchase of the Notes by the Initial Purchasers and the Holders.
Accordingly, the Collateral Agent and the New Pledgor agree as
follows:
SECTION 1. In accordance with Section 24 of the Second Priority
Pledge Agreement, the New Pledgor by its signature below becomes a Pledgor under
the Second Priority 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 Second Priority 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
(as defined in the Second Priority Pledge Agreement), 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 (as defined in the Second Priority Pledge Agreement) of the New
Pledgor, subject to the provisions of the Intercreditor Agreement (as provided
in Section 7.25 of the Second Priority Pledge Agreement). Each reference to a
"Subsidiary Pledgor" or a "Pledgor" in the Second Priority Pledge Agreement
shall be deemed to include the New Pledgor. The Second Priority 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 as 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 Second
Priority 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 the event 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 Second Priority Pledge Agreement shall not in any way be affected or
impaired (it being understood that the invalidity of a provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in Section 15 of the Second Priority 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.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent
have duly executed this Supplement to the Second Priority 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
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Name:
Title:
Address:
SCHEDULE I
to Supplement No.___ to the
Second Priority Pledge Agreement
Pledged Securities of the New Pledgor
EQUITY INTERESTS
Number of Registered Number and Percentage
Issuer Certificate Owner Class of Shares of Shares
- ------ ----------- ---------- --------------- -----------
DEBT SECURITIES
Principal Date of Maturity
Issuer Amount Note Date
- ------ --------- ------- --------