8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 16, 2006

PLIANT CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Utah	333-40067	87-0496065
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)
1475 Woodfield Road, Suite 700 Schaumburg, IL 60173
(Address of Principal Executive Offices) (Zip Code)
(847) 969-3300
(Registrant’s telephone number, including area code)
N.A.
(Former Name or Former Address if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

ITEM 8.01.OTHER EVENTS

As previously disclosed, on January 3, 2006, Pliant Corporation (the “Company”) and certain of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking relief under the provisions of chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) (the “Chapter 11 Cases”). The Chapter 11 Cases are being jointly administered under the caption “In re: Pliant Corporation, et al., Case No. 06-10001”.

On June 16, 2006, the Company issued a press release announcing that it had reached an agreement with representatives of its key classes of bondholders and shareholders in the Chapter 11 Cases. The press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

On June 19, 2006, consistent with the terms of the agreement, the Debtors filed with the Bankruptcy Court the Debtors’ Fourth Amended Joint Plan of Reorganization (the “Fourth Amended Plan”) and certain related exhibits. A copy of the Fourth Amended Plan is being filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated by reference herein. A copy of the exhibits that were filed with the Fourth Amended Plan are being filed as Exhibits 2.2 through 2.4 to this Current Report on Form 8-K and are incorporated by reference herein. A confirmation hearing with respect to the Fourth Amended Plan is currently scheduled for June 23, 2006.

ITEM 9.01.FINANCIAL STATEMENT AND EXHIBITS

(d)Exhibits.

Exhibit No.	Description
2.1	Debtors’ Fourth Amended Joint Plan of Reorganization.
2.2	Certificate of Incorporation of New Pliant
2.3	New Pliant Stockholders Agreement
2.4	Restricted Stock Incentive and Deferred Cash Incentive Plans
99.1	Press Release dated June 16, 2006

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PLIANT CORPORATION
Date: June 19, 2006	By:	/s/ Joseph Kwederis
		Joseph Kwederis Senior Vice President and Chief Financial Officer

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EX-2.1

Exhibit 2.1

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re:	Chapter 11
PLIANT CORPORATION, et  al.,(1)	Case No. 06-10001 (MFW)
Debtors.	Jointly Administered

DEBTORS’ FOURTH AMENDED JOINT PLAN OF REORGANIZATION

SIDLEY AUSTIN LLP	YOUNG CONAWAY STARGATT & TAYLOR, LLP
Larry J. Nyhan	Robert S. Brady (No. 2847)
James F. Conlan	Edmon L. Morton (No. 3856)
William A. Evanoff	Kenneth J. Enos (No. 4544)
Jessica C. Knowles	The Brandywine Building
Laura B. Franzon	1000 West Street, 17th Floor
One South Dearborn Street	P.O. Box 391
Chicago, Illinois 60603	Wilmington, Delaware 19899-0391
Telephone: (312) 853-7000	Telephone: (302) 571-6600
Facsimile: (312) 853-7036	Facsimile: (302) 571-1253

Counsel to the Debtors and Debtors-in-Possession

Dated: June 19, 2006

(1)The Debtors are: Uniplast Holdings, Inc. (Tax ID No. XX-XXX9589), Pliant Corporation (Tax ID No. XX-XXX6065), Pliant Corporation International (Tax ID No. XX-XXX3075), Pliant Solutions Corporation (Tax ID No. XX-XXX3872), Pliant Film Products of Mexico, Inc. (Tax ID No. XX-XXX0805), Pliant Packaging of Canada, LLC (Tax ID No. XX-XXX0929), Pliant Investment, Inc. (Tax ID No. XX-XXX0995), Alliant Company LLC (Tax ID No. XX-XXX6811), Uniplast U.S., Inc. (Tax ID No. XX-XXX9066), Uniplast Industries Co. (Tax ID No. N/A), and Pliant Corporation of Canada Ltd (Tax ID No. N/A) each with a mailing address of 1475 Woodfield Road, Suite 700, Schaumburg, Illinois 60173.

TABLE OF CONTENTS

INTRODUCTION		1
ARTICLE I	DEFINED TERMS AND RULES OF INTERPRETATION	2
ARTICLE II	CLASSIFICATION OF CLAIMS AND INTERESTS	14
2.1	Unclassified Claims	14
2.2	Classes of Claims	14
2.3	Classes of Interests	15
ARTICLE III	TREATMENT OF CLAIMS AND INTERESTS	16
3.1	Unclassified Claims	16
3.2	Classes of Claims	17
3.3	Classes of Interests	19
3.4	Special Provision Regarding Unimpaired Claims	20
ARTICLE IV	ACCEPTANCE OR REJECTION OF THE PLAN	20
4.1	Impaired Classes of Claims and Interests Entitled to Vote	20
4.2	Acceptance by an Impaired Class	20
4.3	Presumed Acceptances by Unimpaired Classes	20
4.4	Presumed Rejection by Impaired Classes	21
4.5	Summary of Classes Voting on the Plan	21
ARTICLE V	MEANS FOR IMPLEMENTATION OF THE PLAN	21
5.1	Non-Substantive Consolidation	21
5.2	Reincorporation of Pliant in Delaware	21
5.3	New Pliant Securities	21
5.4	Intentionally Omitted	24
5.5	Issuance of New Senior Subordinated Notes	24
5.6	Continued Corporate Existence and Vesting of Assets in the Reorganized Debtors	24
5.7	Corporate Governance, Directors, Officers and Corporate Action	25
5.8	Cancellation of Notes, Instruments, Debentures, Preferred Stock, Outstanding Common Stock and Other Outstanding Common Stock Interests	26
5.9	Issuance of New Securities and Related Matters	26
5.10	Exit Financing	28
5.11	Restricted Stock Incentive Plan and Deferred Cash Incentive Plan	28
5.12	Sources of Cash for Plan Distributions	28
5.13	Cram-Down	28
5.14	Additional Transactions Authorized Under the Plan	28
5.15	Emergence Bonus Payments	28
5.16	Exercise of Warrants and Stock Options	29
5.17	Supplemental First Lien Notes Indenture	29
ARTICLE VI	PROVISIONS GOVERNING DISTRIBUTIONS	29

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6.1	Distributions for Claims or Interests Allowed as of the Effective Date	29
6.2	Distributions for Claims and Interests that Become Allowed after the Effective Date	29
6.3	Interest on Claims	30
6.4	Distributions by Disbursing Agent	30
6.5	Delivery of Distributions and Undeliverable or Unclaimed Distributions	30
6.6	Record Date for Distributions	31
6.7	Allocation of Plan Distributions Between Principal and Interest	31
6.8	Means of Cash Payment	31
6.9	Withholding and Reporting Requirements	32
6.10	Setoffs	32
6.11	Fractional Shares	32
6.12	Denomination of New Senior Subordinated Notes	32
ARTICLE VII	TREATMENT OF EXECUTORY CONTRACTS, UNEXPIRED LEASES AND PENSION PLANS	32
7.1	Assumption of Executory Contracts and Unexpired Leases	33
7.2	Cure of Defaults of Assumed Executory Contracts and Unexpired Leases	33
7.3	Post-Petition Contracts and Leases	33
7.4	Retiree Benefits and Pension Plans	33
ARTICLE VIII	PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS AND DISPUTED INTERESTS	33
8.1	Objections to and Estimation of Claims	34
8.2	Payments and Distributions on Disputed, Contingent and Unliquidated Claims and Interests and on Claims for Which Proofs of Claim are Filed	34
8.3	Classes 4, 5 and 7	34
ARTICLE IX	CONFIRMATION AND CONSUMMATION OF THE PLAN	34
9.1	Conditions to Effective Date	34
9.2	Waiver of Conditions	35
9.3	Consequences of Non-Occurrence of Effective Date	35
ARTICLE X	EFFECT OF PLAN CONFIRMATION	36
10.1	Binding Effect	36
10.2	Releases	36
10.3	Survival of Indemnification Obligations	37
10.4	Discharge of Claims and Termination of Interests	37
10.5	Preservation of Rights of Action and Settlement of Litigation Claims	38
10.6	Exculpation and Limitation of Liability	38
10.7	Injunction	38
10.8	Term of Bankruptcy Injunction or Stays	39
10.9	Subordination	39
ARTICLE XI	RETENTION OF JURISDICTION	39
ARTICLE XII	MISCELLANEOUS PROVISIONS	41

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12.1	Surrender of Instruments	41
12.2	Committees	42
12.3	Post-Confirmation Date Retention of Professionals	42
12.4	Bar Date for Certain Administrative Expense Claims	42
12.5	Certain Fees and Expenses of Old Indenture Trustee, First Lien Indenture Trustee, Second Lien Indenture Trustee and New Senior Subordinated Notes Indenture Trustee	42
12.6	Effectuating Documents and Further Transactions	43
12.7	Compensation and Benefit Programs	43
12.8	Corporate Action	43
12.9	Exemption from Transfer Taxes	43
12.10	Payment of Statutory Fees	44
12.11	Amendment or Modification of the Plan	44
12.12	Severability of Plan Provisions	44
12.13	Successors and Assigns	44
12.14	Revocation, Withdrawal or Non-Consummation	44
12.15	Notice	44
12.16	Governing Law	45
12.17	Tax Reporting and Compliance	45
12.18	Exhibits	45
12.19	Filing of Additional Documents	46
12.20	Reservation of Rights	46
12.21	Disputes Concerning Canadian Claims against and Interests in Canadian Debtors	46
12.22	Obligations Under Final DIP Order	46

EXHIBITS

Exhibit A	—	Certificate of Incorporation of New Pliant
Exhibit B	—	By-Laws of New Pliant
Exhibit C	—	New Pliant Stockholders Agreement
Exhibit D	—	Series AA Registration Rights Agreement
Exhibit E	—	Restricted Stock Incentive and Deferred Cash Incentive Plans
Exhibit F	—	Intentionally Omitted
Exhibit G	—	Form of New Senior Subordinated Note
Exhibit H	—	Intentionally Omitted
Exhibit I	—	Discontinued Compensation and Benefits Programs
Exhibit J	—	Emergence Bonus Plan Term Sheet

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Exhibit K	—	Form of New Senior Subordinated Notes Indenture
Exhibit L	—	Directors and Officers of New Pliant and Reorganized Debtors
Exhibit M	—	Intercompany Claims That Will Not Be Reinstated

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INTRODUCTION

Pliant Corporation (“Pliant”), Uniplast Holdings, Inc., Pliant Corporation International, Pliant Solutions Corporation, Pliant Film Products of Mexico, Inc., Pliant Packaging of Canada, LLC, Pliant Investment, Inc., Alliant Company LLC, Uniplast U.S., Inc., Uniplast Industries Co. and Pliant Corporation of Canada Ltd. propose the following joint plan of reorganization for the resolution of the outstanding claims against and interests in the Debtors (as defined herein). Reference is made to the Disclosure Statement (as that term is defined herein), distributed contemporaneously herewith, for a discussion of the Debtors’ history, business, properties and operations, projections for those operations, risk factors, a summary and analysis of this Plan (as that term is defined herein), and certain related matters including, among other things, the securities to be issued under this Plan. Subject to certain restrictions and requirements set forth herein and in 11 U.S.C. § 1127 and Fed. R. Bankr. P. 3019, the Debtors reserve the right to alter, amend, modify, revoke or withdraw this plan prior to its substantial consummation.

ARTICLE I

DEFINED TERMS AND RULES OF INTERPRETATION

A.            Defined Terms. As used herein, capitalized terms shall have the meanings set forth below. Any term that is not otherwise defined herein, but that is used in the Bankruptcy Code or the Bankruptcy Rules, shall have the meaning given to that term in the Bankruptcy Code or the Bankruptcy Rules, as applicable.

1.1           Ad Hoc Committee of First Lien Noteholders means the ad hoc committee of Holders of First Lien Notes.

1.2           Ad Hoc Committee of Second Lien Noteholders means the ad hoc committee of Holders of Second Lien Notes.

1.3           Administrative Expense Claim means a Claim for costs and expenses of administration of the Chapter 11 Cases that are Allowed under sections 503(b) and 507(a)(2) of the Bankruptcy Code, including, without limitation, (a) any actual and necessary costs and expenses of preserving the Debtors’ Estates and operating the businesses of the Debtors in Possession (such as wages, salaries and commissions for services and payments for inventory, leased equipment and premises) and Claims of governmental units for taxes (including tax audit Claims) related to tax years commencing after the Petition Date, but excluding Claims related to tax periods, or portions thereof, ending on or before the Petition Date; (b) all compensation for legal, financial, advisory, accounting and other services and reimbursement of expenses Allowed by the Bankruptcy Court under sections 328, 330, 331, 363 or 503(b) of the Bankruptcy Code; (c) any indebtedness or obligations incurred or assumed by the Debtors in Possession during the Chapter 11 Cases; (d) any payment to be made under the Plan or otherwise to cure a default on an assumed executory contract or unexpired lease; (e) the indenture trustees’ reasonable fees and expenses under the terms of the respective indentures and pursuant to section 12.5 of the Plan; and (f) all fees and charges assessed against the Debtors’ Estates under section 1930, chapter 123, of title 28 of the United States Code.

1.4           Affiliate Debtor(s) means, individually or collectively, a Debtor or Debtors other than Pliant, as applicable.

1.5           Allowed means, with respect to a Claim or Interest, or any portion thereof, in any Class or category specified, a Claim or Interest (a) that is not listed as disputed, contingent or unliquidated on the Debtors’ schedules, if any, and as to which no objection or request for estimation has been filed on or before any objection deadline, if any, set by the Bankruptcy Court or the expiration of such other applicable period fixed by the Bankruptcy Court; (b) as to which any objection has been settled, waived, withdrawn or denied by a Final Order; or (c) that is expressly allowed (i) by a Final Order, (ii) by an agreement between the Holder of such Claim or Interest and the Debtors or Reorganized Debtors, or (iii) pursuant to the terms of this Plan.

1.6           Ballot means the document for accepting or rejecting the Plan, in the form approved by the Bankruptcy Court.

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1.7           Bankruptcy Code means title 11 of the United States Code, as now in effect or hereafter amended.

1.8           Bankruptcy Court means the United States Bankruptcy Court for the District of Delaware or any other court with jurisdiction over the Chapter 11 Cases.

1.9           Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code, as now in effect or hereafter amended and any Local Rules of the Bankruptcy Court.

1.10         Bondholder Additional Consideration means an amount in Cash equal to one percent (1%) of the principal amount of Old Notes held by a Holder of an Old Note Claim, provided that Bondholder Additional Consideration shall not be a payment in respect of such principal amount of Old Notes but shall instead be a payment on account of the acceptance of the Plan by Class 7.

1.11         Bondholder Common Stock means New Common Stock in an amount equal to thirty percent (30%) of the New Common Stock.

1.12         Bondholder Series AA Preferred Stock means 79.0% of the aggregate amount of issued and outstanding Series AA Preferred Stock as of the Effective Date.

1.13         Business Day means any day other than a Saturday, a Sunday or “legal holiday” (as defined in Bankruptcy Rule 9006(a)).

1.14         By-Laws means the by-laws of New Pliant, in substantially the form attached to this Plan as Exhibit B.

1.15         Canadian Confirmation Order means the order of the Canadian Court, which shall, among other things, order and declare that the Confirmation Order and this Plan are recognized and shall be implemented and effective in Canada in accordance with their terms.

1.16         Canadian Court means the Ontario Superior Court of Justice.

1.17         Canadian Debtors means Uniplast Industries Co., Pliant Corporation of Canada Ltd., and Pliant Packaging of Canada, LLC.

1.18         Cash means legal tender of the United States of America.

1.19         Certificate of Incorporation means the amended and restated certificate of incorporation of New Pliant, in substantially the form attached to this Plan as Exhibit A.

1.20         Chapter 11 Cases means the voluntary cases commenced by the Debtors in the Bankruptcy Court under chapter 11 of the Bankruptcy Code.

1.21         Claim means a “claim,” as defined in section 101(5) of the Bankruptcy Code.

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1.22         Class means each category of Holders of Claims or Interests established under Article II of the Plan pursuant to section 1122 of the Bankruptcy Code.

1.23         Confirmation means the entry of the Confirmation Order by the Bankruptcy Court.

1.24         Confirmation Date means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order on its docket.

1.25         Confirmation Order means the order of the Bankruptcy Court confirming this Plan pursuant to section 1129 of the Bankruptcy Code.

1.26         Consenting Noteholders means the “Consenting Noteholders” as such term is defined in the Support Agreement.

1.27         Consenting Noteholders’ Professional Fees means the reasonable professional fees and expenses incurred between the Petition Date and the Effective Date by the legal professionals to the Consenting Noteholders in accordance with the fee letter entered into between Pliant and such professionals prior to the Petition Date. Such fee letter will be included in the contracts being assumed in accordance with section 7.1 of this Plan.

1.28         Debtor(s) means, individually or collectively, Pliant, Uniplast Holdings, Inc., Pliant Corporation International, Pliant Solutions Corporation, Pliant Film Products of Mexico, Inc., Pliant Packaging of Canada, LLC, Pliant Investment, Inc., Alliant Company LLC, Uniplast Industries Co., Uniplast U.S., Inc., and Pliant Corporation of Canada Ltd.

1.29         Deferred Cash Incentive Plan means a deferred cash incentive plan developed for New Pliant and the Reorganized Debtors and approved and implemented pursuant to section 5.11 of this Plan. The Deferred Cash Incentive Plan shall be substantially in the form that is set forth in Exhibit E to the Plan.

1.30         DIP Facility Agent means General Electric Capital Corporation as Administrative Agent and Collateral Agent under the DIP Facility Agreement.

1.31         DIP Facility Agreement means that certain Senior Secured, Super-Priority, Priming Debtor-in-Possession Credit Agreement by and among Pliant, Uniplast Holdings Inc., and Uniplast U.S., Inc., as borrowers, and Pliant Corporation International, Pliant Solutions Corporation, Pliant Film Products of Mexico, Inc., Pliant Packaging of Canada, LLC, Pliant Investment, Inc., Alliant Company LLC, Uniplast Industries Co., and Pliant Corporation of Canada Ltd., as guarantors, and the DIP Facility Agents and the DIP Facility Lenders, (as amended, modified, or supplemented), as approved by the Bankruptcy Court.

1.32         DIP Facility Claims means all Claims held by the DIP Facility Agent and the DIP Facility Lenders pursuant to the DIP Facility Agreement.

1.33         DIP Facility Lenders means the lenders party to the DIP Facility Agreement.

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1.34         Disbursing Agent means any entity in its capacity as a disbursing agent under section 6.4 hereof.

1.35         Disclosure Statement means that certain disclosure statement relating to the Plan, including, without limitation, all exhibits and schedules thereto, as the same may be amended, supplemented or otherwise modified from time to time, as approved by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code.

1.36         Distribution Date means the date upon which the initial distributions will be made to Holders of Allowed Claims and Interests pursuant to Article VI of this Plan.

1.37         Distribution Record Date means the Confirmation Date.

1.38         DTC means The Depository Trust Company.

1.39         Durham Parties means Richard P. Durham and Durham Capital, L.L.C.

1.40         Durham Put Shares means the capital stock and warrants of Pliant that are subject to the alleged “put” right of the Durham Parties. As of the Petition Date, the Durham Put Shares consisted of 18,200 shares of outstanding common stock, 1,232 shares of Series A Preferred Stock and 1,250.48 Warrants.

1.41         Durham Subordinated Claims means the Claims, if any, of the Durham Parties related to the Durham Put Shares to the extent subordinated by the Bankruptcy Court pursuant to section 510(b) of the Bankruptcy Code.

1.42         Effective Date means the Business Day this Plan becomes effective as provided in Article IX hereof.

1.43         Eligible Employee means “Eligible Employee” as defined by the Motion of the Debtors for an Order Authorizing the Debtors to Make Certain Payments Pursuant to a Management Incentive Plan, which was granted by the Bankruptcy Court in an order docketed on March 14, 2006.

1.44         Estate(s) means, individually, the estate of Pliant or any of the Affiliate Debtors and collectively, the estates of the Debtors created under section 541 of the Bankruptcy Code.

1.45         Exhibit means an exhibit annexed either to this Plan or the Disclosure Statement.

1.46         Exit Facility Credit Agreement means such bank financing agreement as the Debtors shall have arranged on the Effective Date, in such amount and on such terms as are satisfactory to the Debtors.

1.47         File, Filed or Filing means file, filed or filing with the Bankruptcy Court or its authorized designee in the Chapter 11 Cases.

1.48         Final DIP Order means the Final Order (I) Authorizing Debtors to Obtain Postpetition Financing Pursuant to Section 364 of the Bankruptcy Code; (II) Authorizing Limited

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Use of Cash Collateral; (III) Granting Liens, Including Priming Liens, and Super-Priority Claims; and (IV) Granting Adequate Protection to Prepetition Secured Lenders, entered on February 2, 2006 and as amended, modified or supplemented by the Bankruptcy Court from time to time.

1.49         Final Order means an order or judgment of the Bankruptcy Court entered by the Clerk of the Bankruptcy Court on the docket in the Chapter 11 Cases, which has not been reversed, vacated or stayed and as to which (a) the time to appeal, petition for certiorari or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings for a new trial, reargument or rehearing shall then be pending, or (b) if an appeal, writ of certiorari, new trial, reargument or rehearing thereof has been sought, such order or judgment of the Bankruptcy Court shall have been affirmed by the highest court to which such order was appealed, or certiorari shall have been denied or a new trial, reargument or rehearing shall have been denied or resulted in no modification of such order, and the time to take any further appeal, petition for certiorari or move for a new trial, reargument or rehearing shall have expired; provided, however, that the possibility that a motion under Rule 59 or Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules, may be filed relating to such order, shall not cause such order not to be a Final Order.

1.50         First Lien Additional Interest means additional payment in kind interest on the First Lien Notes at a rate of 0.225% per annum commencing on the Effective Date.

1.51         First Lien Indenture Trustee means the trustee under the First Lien Notes Indenture.

1.52         First Lien Note Claim means a Claim arising under or evidenced by the First Lien Notes or the First Lien Notes Indenture and related documents, including any Claim of the First Lien Indenture Trustee.

1.53         First Lien Noteholder means a Holder of First Lien Notes under the First Lien Notes Indenture.

1.54         First Lien Notes means (1) the 11 5/8% senior secured notes due 2009 in the aggregate principal amount of approximately $270,074,094.96 as of the Petition Date and (2) the remaining 11 1/8% senior secured notes due 2009 in the aggregate principal amount of approximately $7,038,588.96 as of the Petition Date, each issued under the First Lien Notes Indenture.

1.55         First Lien Notes Indenture means that certain Amended and Restated Indenture (as amended and restated as of May 6, 2005, and modified from time to time) dated as of February 17, 2004, among Pliant, as issuer, and Wilmington Trust Company, as indenture trustee, including all agreements, documents, notes, instruments, and any other agreements delivered thereto or in connection therewith. The guarantors of indebtedness under the original first lien notes indenture, prior to its amendment, pursuant to which the 11 1/8% senior secured notes were issued, were  (i) Pliant Corporation International; (ii) Pliant Film Products of Mexico, Inc.; (iii) Pliant Packaging of Canada, LLC; (iv) Uniplast Holdings, Inc.; (v) Uniplast U.S., Inc.; (vi) Uniplast Industries Co.; and (vii) Pliant Solutions Corporation. The guarantors of

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indebtedness under the First Lien Notes Indenture, as amended, pursuant to which the 11 5/8% senior secured notes were issued, are (i) Pliant Corporation International; (ii) Pliant Film Products of Mexico, Inc.; (iii) Pliant Packaging of Canada, LLC; (iv) Uniplast Holdings, Inc.; (v) Uniplast U.S., Inc.; and (vi) Uniplast Industries Co.

1.56         General Unsecured Claim means any Claim against the Debtors that is not an Administrative Expense Claim, a DIP Facility Claim, a Priority Tax Claim, a Priority Non-Tax Claim, an Other Secured Claim, a Revolving Credit Facility Claim, a First Lien Note Claim, a Second Lien Note Claim, an Intercompany Claim, an Old Note Claim or a Durham Subordinated Claim, and shall not include Claims that are disallowed or released, whether by operation of law or pursuant to order of the Bankruptcy Court, written release or settlement, the provisions of this Plan or otherwise.

1.57         Holder means an entity holding a Claim or Interest.

1.58         Impaired means “impaired” within the meaning of section 1124 of the Bankruptcy Code.

1.59         Intercompany Claims means all prepetition Claims against any of the Debtors held by a Debtor or a Non-Debtor Affiliate.

1.60         Intercreditor Agreement means the Amended and Restated Intercreditor Agreement, dated February 17, 2004, as amended, modified or supplemented from time to time, between Pliant, the collateral agent under the Revolving Credit Facility Agreement, the First Lien Indenture Trustee and the Second Lien Indenture Trustee.

1.61         Interest means the legal, equitable, contractual and other rights of the Holders of Series A Preferred Stock, Series B Preferred Stock, Outstanding Common Stock and Other Outstanding Common Stock Interests in Pliant.

1.62         Interim Compensation Order means the Order Establishing Procedures for Interim Compensation and Reimbursement of Expenses of Professional Pursuant to §§ 105 and 331, entered by the Bankruptcy Court on February 1, 2006.

1.63         JP Morgan Entities means JP Morgan Partners (BHCA), L.P. and other related entities, including Flexible Films, LLC, a Delaware limited liability company, Flexible Films II, LLC, a Delaware limited liability company, Southwest Industrial Films, LLC, a Delaware limited liability company, and Southwest Industrial Films II, LLC, a Delaware limited liability company.

1.64         Litigation Claims means the claims, rights of action, suits or proceedings, whether in law or in equity, whether known or unknown, including any Potential Durham Recovery Claims, that any Debtor or Estate may hold against any entity as of the Petition Date except any claim, right or cause of action pursuant to section 547 of the Bankruptcy Code.

1.65         Merger means the merger of Pliant with and into New Pliant, with New Pliant surviving the merger, as provided in section 5.2 of the Plan.

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1.66         New Common Stock means the shares of New Pliant common stock to be issued as of the Effective Date and to be distributed pursuant to this Plan.

1.67         New Equity Common Stock means an amount equal to 42% of New Common Stock to be issued to Holders of Outstanding Common Stock Interests pursuant to section 3.3(c) of this Plan; provided, however, that in the event that any of the Stock Options are exercised pursuant to section 5.16 and the exercise thereof would cause a “Change of Control,” as defined by either the First Lien Notes Indenture or the Second Lien Notes Indenture, to occur upon consummation of the Plan, then such percentage may be increased by up to 2.5% of New Common Stock to avoid such Change of Control. Such increase will be limited to no more than the percentage necessary to avoid a Change of Control under both the First Lien Notes Indenture and the Second Lien Notes Indenture.

1.68         New Pliant means a newly formed corporation organized under the laws of the State of Delaware that will be, as of the Effective Date, merged with Pliant and will be the ultimate parent of the other Reorganized Debtors as described in section 5.2 of this Plan.

1.69         New Pliant Stockholders Agreement means a stockholders agreement to be entered into by New Pliant and the holders of New Common Stock pursuant to section 5.3 of this Plan. The New Pliant Stockholders Agreement will be substantially in the form of Exhibit C to the Plan.

1.70         New Senior Subordinated Notes means new 13% unsecured senior subordinated notes, substantially in the form annexed hereto as Exhibit G, in the initial aggregate principal amount of $35 million subject to section 6.12 of the Plan, due 2010, to be issued by New Pliant pursuant to the New Senior Subordinated Notes Indenture.

1.71         New Senior Subordinated Notes Indenture means an indenture, substantially in the form annexed hereto as Exhibit K, to be entered into pursuant to section 5.5 of this Plan. The New Senior Subordinated Notes Indenture contains provisions for the payment in kind of interest and a call option, as contemplated by section 5.5.

1.72         New Senior Subordinated Notes Indenture Trustee means the trustee under the New Senior Subordinated Notes Indenture.

1.73         Non-Debtor Affiliate means, individually or collectively, Aspen Industrial, S.A. de C.V., Jacinto Mexico, S.A. de C.V., Pliant de Mexico S.A. de C.V., Pliant Corporation Pty Ltd., and Pliant Film Products GmbH.

1.74         Old Indenture Trustee means the trustee under the Old Notes Indentures.

1.75         Old Note Claim means a Claim arising under or evidenced by the Old Notes or the Old Notes Indentures and related documents, including any Claim of the Old Indenture Trustee.

1.76         Old Notes mean the 13.0% unsecured senior subordinated notes due 2010 issued under the Old Notes Indentures.

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1.77         Old Notes Indentures means both of (i) the indenture, dated as of May 31, 2000, as amended, restated and modified from time to time, among Pliant, as issuer, the guarantors named therein and Bank of New York, as indenture trustee and (ii) the indenture, dated as of April 10, 2002, as amended, restated and modified from time to time, among Pliant, as issuer, the guarantors named therein and Bank of New York as indenture trustee.

1.78         Other Outstanding Common Stock Interests means any calls, rights, puts, awards, commitments, repurchase rights, unvested or unexercised stock options, unvested common stock, unvested preferred stock or any other agreements of any character related to the common stock of Pliant, but does not include Outstanding Common Stock or Durham Subordinated Claims if Allowed.

1.79         Other Secured Claim means a Claim (other than an Administrative Expense Claim, a DIP Facility Claim or Revolving Credit Facility Claim) that is secured by a lien on property in which a Debtor’s Estate has an interest or that is subject to setoff under section 553 of the Bankruptcy Code, to the extent of the value of the Claim holder’s interest in the applicable Estate’s interest in such property or to the extent of the amount subject to setoff, as applicable, as determined pursuant to section 506(a) of the Bankruptcy Code or, in the case of the setoff, pursuant to section 553 of the Bankruptcy Code.

1.80         Outstanding Common Stock means the issued and outstanding common stock of Pliant as of the Petition Date, in addition to any Warrants, which shall be deemed to be exercised pursuant to section 5.16 of the Plan, and Stock Options, which are exercised by the Holders thereof pursuant to section 5.16 of the Plan. Outstanding Common Stock does not include the Other Outstanding Common Stock Interests.

1.81         Pension Plans means the Pliant Corporation Defined Benefit Pension Plan, the Hourly Employees Pension Plan for Calhoun, Georgia Plant, and the Pliant Corporation Hourly Employees’ Pension Plan for Chippewa Falls Plant.

1.82         Petition Date means January 3, 2006, the date on which the Debtors commenced their Chapter 11 Cases.

1.83         Plan means this chapter 11 plan of reorganization, including Exhibits and all supplements, appendices and schedules thereto, either in its present form or as the same may be altered, amended or modified from time to time in accordance with the provisions of the Bankruptcy Code and the terms hereof.

1.84         Plan Supplement means the supplement to this Plan in form and substance satisfactory to the Debtors and not inconsistent with the provisions of the Term Sheet in a manner that is materially adverse to the Consenting Noteholders filed with the Bankruptcy Court not later than 10 days prior to the Confirmation Date for the purposes specified in the Plan.

1.85         Pliant means Pliant Corporation, a Utah corporation, debtor-in-possession in these Chapter 11 Cases pending in the Bankruptcy Court.

1.86         Potential Durham Recovery Claims means any claims or rights of action of the Estates pursuant to section 544 of the Bankruptcy Code (or pursuant to other applicable law) to

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recover conveyances, payments or transfers, including the forgiveness of indebtedness, made to the Durham Parties for the repurchase of Pliant capital stock.

1.87         Priority Non-Tax Claims means any Claim other than an Administrative Expense Claim or a Priority Tax Claim, entitled to priority in payment as specified in section 507(a) of the Bankruptcy Code.

1.88         Priority Tax Claim means any Claim of a governmental unit of the kind entitled to priority in payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.

1.89         Pro Rata means that proportion that a Claim or Interest in a particular Class bears to the aggregate amount of all Claims or Interests in such Class except in cases where Pro Rata is used in reference to multiple Classes in which case, Pro Rata means the proportion that a Claim or Interest in a particular Class bears to the aggregate amount of all Claims in such multiple Classes.

1.90         Reinstated or Reinstatement means (a) leaving unaltered the legal, equitable and contractual rights to which a Claim entitles the Holder of such Claim, or (b) notwithstanding any contractual provision or applicable law that entitles the Holder of such Claim to demand or receive accelerated payment of such Claim after the occurrence of a default, (i) curing any such default that occurred before or after the Petition Date, other than a default of a kind specified in section 365(b)(2) of the Bankruptcy Code; (ii) reinstating the maturity of such Claim as such maturity existed before such default; (iii) compensating the Holder of such Claim for any damages incurred as a result of any reasonable reliance by such Holder on such contractual provision or such applicable law; (iv) if such Claim arises from any failure to perform a nonmonetary obligation other than a default arising from failure to operate a nonresidential real property lease subject to section 365(b)(1)(A) of the Bankruptcy Code, compensating the Holder of such Claim (other than the debtor or an insider) for any pecuniary loss incurred by such Holder as a result of such failure; and (v) not otherwise altering the legal, equitable or contractual rights to which such Claim entitles the Holder of such Claim.

1.91         Reorganized Debtors means the Debtors or any successors thereto by merger, consolidation or otherwise, on or after the Effective Date, after giving effect to the transactions occurring on the Effective Date in accordance with this Plan.

1.92         Representative Committee means the official committee of unsecured creditors appointed by the U.S. Trustee pursuant to section 1102(a) of the Bankruptcy Code in the Chapter 11 Cases.

1.93         Restricted Stock Incentive Plan means the restricted stock incentive plan developed for New Pliant and the Reorganized Debtors and approved and implemented pursuant to section 5.11 of this Plan. The Restricted Stock Incentive Plan will be substantially in the form set forth in Exhibit E to the Plan.

1.94         Revolving Credit Facility Agents means Morgan Stanley Senior Funding, Inc., as Domestic B Agent and General Electric Capital Corporation, as Domestic A Agent, Administrative Agent and Collateral Agent, as each term is defined in the Revolving Credit Facility Agreement.

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1.95         Revolving Credit Facility Agreement means the Amended and Restated Credit Agreement, dated as of November 21, 2005, as amended, modified or supplemented from time to time, by and among Pliant and certain of its subsidiaries as borrowers, the Revolving Credit Facility Agents and the Revolving Credit Facility Lenders, including all agreements, documents, notes, instruments and any other agreements delivered pursuant thereto or in connection therewith.

1.96         Revolving Credit Facility Claims means all Claims of the Revolving Credit Facility Lenders and Revolving Credit Facility Agents under the Revolving Credit Facility Agreement, which Claims shall be deemed, pursuant to section 506 of the Bankruptcy Code, Allowed pursuant to this Plan in the aggregate principal amount of $130,953,697, plus (a) (i) interest thereon through the Effective Date at the non-default contract rate and (ii) all fees and expenses payable in respect of such Claims under the Revolving Credit Facility Agreement and minus (b) amounts repaid prior to the Effective Date, if any.

1.97         Revolving Credit Facility Lenders means all lenders under the Revolving Credit Facility Agreement.

1.98         Second Lien Additional Consideration means an amount in Cash equal to $4,000,000 payable to Holders of Second Lien Note Claims and distributed under and in accordance with the Second Lien Notes Indenture on the Effective Date in consideration for their non-objection to the Plan and resolution of disputes pertaining thereto.  For the avoidance of doubt, the payment of Second Lien Additional Consideration shall not be in respect of Allowed Second Lien Note Claims or any amounts now or hereafter due owing under the Second Lien Notes Indenture and shall not be allocated either to principal or interest in respect of the Second Lien Note Claims.

1.99         Second Lien Indenture Trustee means the trustee under the Second Lien Notes Indenture.

1.100       Second Lien Note Claim means a Claim arising under or evidenced by the Second Lien Notes or the Second Lien Notes Indenture and related documents, including any Claim of the Second Lien Indenture Trustee.

1.101       Second Lien Noteholder means a Holder of a Second Lien Note under the Second Lien Notes Indenture.

1.102       Second Lien Notes means the 11 1/8% senior secured notes due 2009 issued under the Second Lien Notes Indenture in the aggregate principal amount of $250,000,000.

1.103       Second Lien Notes Indenture means that certain Indenture dated as of May 30, 2003, as amended and restated or modified from time to time, among Pliant, as issuer, and Wilmington Trust Company, as initial indenture trustee, and succeeded by Wells Fargo Bank, National Association, as successor indenture trustee, including all agreements, documents, notes, instruments, and any other agreements delivered thereto or in connection therewith. The guarantors of indebtedness under the Second Lien Notes Indenture are (i) Pliant Corporation International; (ii) Pliant Film Products of Mexico, Inc.; (iii) Pliant Packaging of Canada, LLC; (iv) Pliant Solutions Corporation; (v) Uniplast Holdings, Inc.; and (vi) Uniplast U.S., Inc.

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1.104       Secured Claim means a Claim secured by a lien on collateral to the extent of the value of such collateral (i) as set forth in this Plan, (ii) as agreed to by the Holder of such Claim and the Debtors or (iii) as determined by a Final Order in accordance with section 506(a) of the Bankruptcy Code or, in the event that such Claim is subject to setoff under section 553 of the Bankruptcy Code, to the extent of such setoff.

1.105       Senior Credit Agreement means “Senior Credit Agreement” as defined by the Intercreditor Agreement.

1.106       Series AA Directors means two directors initially selected by the Holders of a majority of the outstanding principal amount of the Old Notes and thereafter elected by the holders of a majority of the Series AA Preferred Stock.

1.107       Series AA Preferred Stock means the shares of Series AA Exchangeable Redeemable Preferred Stock authorized pursuant to the Certificate of Incorporation with an initial liquidation preference of $335.56 million and accruing quarterly cumulative dividends at a rate of 13% per annum.

1.108       Series AA Registration Rights Agreement means a registration rights agreement between New Pliant and the Holders of Old Note Claims to be entered into pursuant to section 5.3(d) of this Plan. The Series AA Registration Rights Agreement will be substantially in the form of Exhibit D to the Plan.

1.109       Series A Common Stock means an amount equal to 28% of New Common Stock to be issued to Holders of Series A Preferred Stock pursuant to section 3.3(a) of this Plan; provided, however, that in the event that any of the Stock Options are exercised pursuant to section 5.16 and the exercise thereof would cause a “Change of Control,” as defined by either the First Lien Notes Indenture or the Second Lien Notes Indenture, to occur upon consummation of the Plan, then such percentage may be decreased by up to 2.5% of New Common Stock to avoid such Change of Control. Such decrease will be limited to no more than the percentage necessary to avoid a Change of Control under both the First Lien Notes Indenture and the Second Lien Notes Indenture.

1.110       Series A Preferred Stock means (i) the Series A Cumulative Exchangeable Redeemable Preferred Stock of Pliant and (ii) all options, warrants, calls, rights, puts, awards, commitments or any other agreements of any character to acquire such preferred stock.

1.111       Series A/Series AA Preferred Stock means 21.0% of the aggregate amount of issued and outstanding Series AA Preferred Stock as of the Effective Date.

1.112       Series B Preferred Stock means (i) the Series B Redeemable Preferred Stock of Pliant and (ii) all options, warrants, calls, rights, puts, awards, commitments or any other agreements of any character to acquire such preferred stock.

1.113       Series M Preferred Stock means the shares of Series M Preferred Stock authorized pursuant to the Certificate of Incorporation.

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1.114       Stock Options means the vested options to purchase common stock of Pliant that were granted by Pliant to certain present and former employees, which have not expired by their terms or by agreement between Pliant and the Holder thereof and which the Holder thereof exercises in accordance with section 5.16 of the Plan. Stock Options do not include the Warrants or unvested stock options.

1.115       Supplemental First Lien Notes Indenture means a supplemental indenture to be entered into pursuant to section 5.17 of the Plan, which shall provide for the First Lien Additional Interest.

1.116       Support Agreement means that certain support agreement among Pliant, Flexible Films, LLC, a Delaware limited liability company, Flexible Films II, LLC, a Delaware limited liability company, Southwest Industrial Films, LLC, a Delaware limited liability company, and Southwest Industrial Films II, LLC, a Delaware limited liability company, and the Consenting Noteholders, substantially in the form of Exhibit E to the Disclosure Statement.

1.117       Term Sheet means the term sheet that is annexed as exhibit A to the Support Agreement.

1.118       Unimpaired means with respect to a Claim or Interest that such Claim or Interest is Reinstated under the Plan.

1.119       Warrants mean the warrants for the purchase of common stock of Pliant that have an exercise price of .01 per share and that have not expired by their terms or by agreement of Pliant and the Holder thereof, which shall be deemed to be exercised pursuant to section 5.16 of the Plan.

B.            Rules of Interpretation. For purposes of this Plan, unless otherwise provided herein: (a) whenever from the context it is appropriate, each term, whether stated in the singular or the plural, will include both the singular and the plural; (b) unless otherwise provided in this Plan, any reference in this Plan to a contract, instrument, release, or other agreement or document being in a particular form or on particular terms and conditions means that such document will be substantially in such form or substantially on such terms and conditions; (c) any reference in this Plan to an existing document or schedule Filed or to be Filed means such document or schedule, as it may have been or may be amended, modified, or supplemented pursuant to this Plan; (d) any reference to an entity as a Holder of a Claim or Interest includes that entity’s successors and assigns; (e) all references in this Plan to Sections, Articles and Schedules are references to Sections, Articles and Schedules of or to this Plan or the Plan Supplement, as the same may be amended, waived or modified from time to time; (f) the words “herein,” “hereof,” “hereto,” “hereunder” and other words of similar import refer to this Plan as a whole and not to any particular section, subsection or clause contained in this Plan; (g) captions and headings to Articles and Sections are inserted for convenience of reference only and are not intended to be a part of or to affect the interpretation of this Plan; (h) subject to the provisions of any contract, certificates or articles of incorporation, by-laws, instruments, releases, or other agreements or documents entered into in connection with this Plan, the rights and obligations arising under this Plan shall be governed by, and construed and enforced in accordance with, federal law, including the Bankruptcy Code and Bankruptcy Rules; (i) the rules of construction

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set forth in section 102 of the Bankruptcy Code will apply; and (j) in computing any period of time prescribed or allowed by this Plan, the provision of Bankruptcy Rule 9006(a) will apply.

C.            Exhibits and Plan Supplement. All Exhibits as well as the Plan Supplement, are incorporated into and are a part of this Plan as if set forth in full herein, and, to the extent not annexed hereto, such Exhibits and Plan Supplement shall be timely Filed in accordance with this Plan. Holders of Claims and Interests may obtain a copy of the Filed Exhibits and Plan Supplement upon written request to the Debtors. Upon their Filing, the Exhibits and Plan Supplement may be inspected in the office of the clerk of the Bankruptcy Court or its designee during normal business hours. The documents contained in the Exhibits and Plan Supplement shall be approved by the Bankruptcy Court pursuant to the Confirmation Order.

ARTICLE II

CLASSIFICATION OF CLAIMS AND INTERESTS

All Claims and Interests, except Administrative Expense Claims, DIP Facility Claims and Priority Tax Claims, are placed in the Classes set forth below. In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims, DIP Facility Claims and Priority Tax Claims, as described below, have not been classified.

This Plan constitutes a single plan of reorganization for all Debtors. A Claim or Interest is placed in a particular Class only to the extent that the Claim or Interest qualifies within the description of such Class and is in a different Class to the extent that it qualifies within the description of such different Class, but the same portion of a Claim may not be in more than one Class. A Claim or Interest is also placed in a particular Class for all purposes, including voting, confirmation and distribution under this Plan and under sections 1122 and 1123(a)(1) of the Bankruptcy Code. However, a Claim or Interest is placed in a particular Class for the purpose of receiving distributions pursuant to this Plan only to the extent that such Claim or Interest is an Allowed Claim or Interest in that Class and such Claim or Interest has not been paid, released or otherwise settled prior to the Effective Date.

2.1           Unclassified Claims. The following Claims are not Impaired by the Plan.

(a)Administrative Expense Claims.

(b)DIP Facility Claims.

(c)Priority Tax Claims.

2.2           Classes of Claims.

(a)Class 1: Priority Non-Tax Claims. Class 1 consists of all Priority Non-Tax Claims against each applicable Debtor. Claims in Class 1 are not Impaired.

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(b)Class 2: Other Secured Claims. Class 2 consists of all Other Secured Claims against each applicable Debtor. Claims in Class 2 are not Impaired.

(c)Class 3: Revolving Credit Facility Claims. Class 3 consists of all Revolving Credit Facility Claims against each applicable Debtor. Claims in Class 3 are Impaired. The Debtors reserve the right to seek a determination at the hearing on Confirmation that the Revolving Credit Facility Claims are unimpaired and deemed to have accepted the Plan.

(d)Class 4: First Lien Note Claims. Class 4 consists of all First Lien Note Claims against each applicable Debtor. Claims in Class 4 are not Impaired.

(e)Class 5: Second Lien Note Claims. Class 5 consists of all Second Lien Note Claims against each applicable Debtor. Claims in Class 5 are not Impaired.

(f)Class 6: General Unsecured Claims. Class 6 consists of all General Unsecured Claims against each applicable Debtor. Claims in Class 6 are not Impaired.

(g)Class 7: Old Note Claims. Class 7 consists of all Old Note Claims against each applicable Debtor. Claims in Class 7 are Impaired.

(h)Class 8: Intercompany Claims. Class 8 consists of the Intercompany Claims against each applicable Debtor. Claims in Class 8 are Impaired.

2.3           Classes of Interests.

(a)Class 9: Series A Preferred Stock Interests. Class 9 consists of all Interests directly arising from, under, or relating in any way to, the Series A Preferred Stock and all Claims arising out of or relating thereto. For the avoidance of doubt, Class 9 includes the Durham Put Shares that are Series A Preferred Stock Interests but does not include Durham Subordinated Claims. Interests in Class 9 are Impaired.

(b)Class 10: Series B Preferred Stock Interests. Class 10 consists of all Interests directly arising from, under, or relating in any way to, the Series B Preferred Stock, and all Claims arising out of or relating thereto. Interests in Class 10 are Impaired.

(c)Class 11: Outstanding Common Stock Interests. Class 11 consists of all Interests directly arising from, under, or relating in any way to, the Outstanding Common Stock, and all Claims arising out of or relating thereto. For the avoidance of doubt, Class 11 includes the Durham Put Shares that are Outstanding Common Stock Interests but does not include Durham Subordinated Claims. Interests in Class 11 are Impaired.

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(d)Class 11A: Durham Subordinated Claims. Class 11A consists of the Durham Subordinated Claims. Claims in Class 11A are Impaired.

(e)Class 12: Other Outstanding Common Stock Interests. Class 12 consists of all Interests directly arising from, under, or relating in any way to the Other Outstanding Common Stock Interests, and all Claims arising out of or relating thereto. Interests in Class 12 are Impaired.

ARTICLE III

TREATMENT OF CLAIMS AND INTERESTS

3.1           Unclassified Claims.

(a)Administrative Expense Claims. Subject to the provisions of sections 328, 330, 331 and 503(b) of the Bankruptcy Code and the Interim Compensation Order, each Allowed Administrative Expense Claim shall be paid by the Debtors, at their election, in full, in Cash, at the Debtors’ option: (i) on the Effective Date, (ii) on the date upon which such Administrative Expense Claim becomes an Allowed Claim, (iii) in the ordinary course of business as such claims become due; provided, however, that Administrative Expense Claims not yet due or that represent obligations incurred by the Debtors in the ordinary course of their business during these Chapter 11 Cases, or assumed by the Debtors during these Chapter 11 Cases, shall be paid or performed when due in the ordinary course of business and in accordance with the terms and conditions of the particular agreements governing such obligations, or (iv) on such other date as may be agreed upon between the Holder of such Allowed Administrative Expense Claim and the Debtors.

(b)DIP Facility Claims. On the Effective Date, all amounts owed by any Debtor under the DIP Facility Agreement (including, without limitation, all loans and all fees and expenses payable thereunder) shall be paid in full in Cash and the Commitments (as defined in the DIP Facility Agreement) under the DIP Facility Agreement shall be cancelled. In addition, on the Effective Date, any unexpired letters of credit outstanding under the DIP Facility Agreement shall be either (i) returned to the applicable DIP Facility Lender and cancelled without having been drawn or (ii) replaced with back-to-back letters of credit and/or cash collateralized in an amount equal to 105% of the aggregate letter of credit exposure (i.e., the sum of (x) the aggregate undrawn amount of all outstanding letters of credit and (y) all amounts drawn under such letters of credit and not then reimbursed), in each case as provided for in accordance with the DIP Facility Agreement.

(c)Priority Tax Claims. The legal and equitable rights of the Holders of Priority Tax Claims are not Impaired by this Plan. On or as soon as

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reasonably practicable after (i) the Effective Date if such Priority Tax Claim is an Allowed Priority Tax Claim or (ii) the date on which such Priority Tax Claim becomes an Allowed Priority Tax Claim, each Holder of an Allowed Priority Tax claim shall receive in full satisfaction, settlement and release of and in exchange for such Allowed Priority Tax Claim, at the election of the Debtors: (a) Cash equal to the amount of such Allowed Priority Tax Claim; (b) such other treatment as to which the Debtors or the Reorganized Debtors and the Holder of such Allowed Priority Tax Claims shall have agreed upon in writing; or (c) such Claim will be otherwise treated in any other manner such that it will not be Impaired; provided, however, that any Allowed Priority Tax Claim not due and owing on the Effective Date will be paid when such Claim becomes due and owing.

3.2           Classes of Claims. Unless the Holder of an Allowed Claim and the applicable Debtors agree to a different treatment, on the Effective Date, or as soon as practicable after the Effective Date, each Holder of an Allowed Claim shall receive as follows:

(a)Class 1: Priority Non-Tax Claims. Each Holder of an Allowed Priority Non-Tax Claim shall have its Claim Reinstated.

(b)Class 2: Other Secured Claims. Each Holder of an Allowed Other Secured Claim shall have its Claim Reinstated.

(c)Class 3: Revolving Credit Facility Claims. Each Holder of an Allowed Revolving Credit Facility Claim shall be paid in full in Cash, including, without limitation, all unpaid interest accrued at the non-default contract rate and any unpaid professional fees and expenses, as provided for in the Revolving Credit Facility Agreement.

(d)Class 4: First Lien Note Claims. Each Holder of an Allowed First Lien Note Claim shall

(i) have its Claim Reinstated by way of a reaffirmation by the Reorganized Debtors of the First Lien Notes Indenture and the First Lien Notes in accordance with their terms, and compliance on the Effective Date with section 1124 of the Bankruptcy Code, including, without limitation, the payment of all reasonable fees, costs and charges owing to each Holder of a First Lien Note Claim, and

(ii) receive its Pro Rata share of First Lien Additional Interest as provided in the Supplemental Final Lien Notes Indenture.

In addition, the Debtors shall pay the reasonable fees, costs and charges owing to the First Lien Indenture Trustee and each Holder of a First Lien Note Claim to the extent provided for, and allowable, under the First Lien Notes Indenture or provided for under the Final DIP Order.

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(e)Class 5: Second Lien Note Claims. Each Holder of an Allowed Second Lien Note Claim shall

(i)  have its Claim Reinstated by way of a reaffirmation by the Reorganized Debtors of the Second Lien Notes Indenture and the Second Lien Notes in accordance with their terms, and compliance on the Effective Date with section 1124 of the Bankruptcy Code, including, without limitation, the payment of Cash on the Effective Date in an amount equal to interest accrued at the contract rate (together with interest on overdue installments of interest at the same rate, to the extent allowable) as specified in the Second Lien Notes Indenture and the Second Lien Notes through the last payment date immediately preceding the Effective Date; and

(ii) receive its Pro Rata share of Second Lien Additional Consideration.

In addition, the Debtors shall pay the reasonable fees, costs and charges owing to the Second Lien Indenture Trustee and each Holder of a Second Lien Note Claim to the extent provided for, and allowable, under the Second Lien Notes Indenture or provided for under the Final DIP Order.

(f)Class 6: General Unsecured Claims. Each Holder of an Allowed General Unsecured Claim shall have its Claim Reinstated and shall receive payment in full. Claims of the Debtors or Reorganized Debtors arising under section 547 of the Bankruptcy Code against Holders of General Unsecured Claims shall be waived as provided in section 10.5 of this Plan.

(g)Class 7: Old Note Claims. Each Holder of an Allowed Old Note Claim shall receive:

(i)            its Pro Rata share of New Senior Subordinated Notes which, together with the consideration identified in (ii) and (iii) below, shall be issued in exchange for the Old Notes;

(ii)           its Pro Rata share of Bondholder Series AA Preferred Stock;

(iii)          its Pro Rata share of Bondholder Common Stock; and

(iv)          if Class 7 accepts the Plan, Bondholder Additional Consideration.

In addition, Class 7 shall receive Cash in an amount equal to the Consenting Noteholders’ Professional Fees, which Cash shall be paid directly by Pliant to the professionals incurring such fees.

(h)Class 8: Intercompany Claims. On the Effective Date, at the option of the Debtors, all Intercompany Claims in Class 8 shall either be (i) Reinstated, in full or in part, or (ii) discharged and extinguished, in full or in part, in which case such discharged and extinguished portion shall be eliminated

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and the holders thereof shall not be entitled to, and shall not receive or retain, any property or interest on account of such portion under the Plan, provided, however, that prior to such discharge and extinguishment such Intercompany Claims may be contributed to capital, transferred, setoff or subject to any other arrangement at the option of the Debtors. Any and all Class 8 Claims, or portions thereof, being extinguished and, to the extent, if any, such Claims are being contributed to capital or treated in another manner as permitted herein, are set forth in Exhibit M to the Plan.

3.3           Classes of Interests. Unless the Holder of an Allowed Interest and Pliant agree to a different treatment, on the Effective Date, or as soon as practicable after the Effective Date, each Holder of an Allowed Interest shall receive as follows:

(a)Class 9: Series A Preferred Stock Interests. Each Holder of an Allowed Series A Preferred Stock Interest shall receive its Pro Rata share of: (i) the Series A/Series AA Preferred Stock, and (ii) the Series A Common Stock.

(b)Class 10: Series B Preferred Stock Interests. Each former director or officer of the Debtors who is a Holder of an Allowed Series B Preferred Stock Interest shall receive an amount equal to $5,258 per share in Cash on account of each vested share, or portion thereof, of Series B Preferred Stock held by such Holder. Holders of Series B Preferred Stock who are current directors or officers of the Debtors as of the Effective Date shall agree to forego any distribution as provided for in this section 3.3(b) in consideration for their eligibility to participate in one or more of the Reorganized Debtors’ incentive programs. All unvested Series B Preferred Stock Interests shall be cancelled, annulled and extinguished, and the Holders thereof shall not be entitled to any distribution on account of such unvested shares.

(c)Class 11: Outstanding Common Stock Interests. Each Holder of an Allowed Outstanding Common Stock Interest shall receive its Pro Rata share of New Equity Common Stock.

(d)Class 11A: Durham Subordinated Claims. If and to the extent the Bankruptcy Court determines that Holders of Allowed Durham Subordinated Claims are entitled to receive (a) a portion of the New Equity Common Stock (such portion, the “Subordinated Claim Common Stock Allocation”) that is otherwise distributable to Holders of Outstanding Common Stock Interests, and/or (b) a portion of the Series A Common Stock and the Series A/Series AA Preferred Stock (such portion, the “Subordinated Claim Preferred Allocation”) that is otherwise distributable to Holders of Series A Preferred Stock Interests, then Holders of Allowed Durham Subordinated Claims shall receive a payment in Cash equal to the value as of the Effective Date, as agreed with the Debtors or determined by the Bankruptcy Court, of such Subordinated Claim Common Stock Allocation and such Subordinated Claim Preferred

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Allocation; provided, however, that the amount of such distribution shall be reduced by the value, as agreed with the Debtors or determined by the Bankruptcy Court, of the New Equity Common Stock, the Series A Common Stock and the Series A/Series AA Preferred Stock that is distributed to Holders of Allowed Durham Subordinated Claims on account of Durham Put Shares pursuant to Sections 3.3(a) and 3.3(c) above. In the event any distribution of Cash is made pursuant to this section 3.3(d), such distribution shall not be greater than $11,747,513.40.

(e)Class 12: Other Outstanding Common Stock Interests. On the Effective Date or as soon as practicable after the Effective Date, all Other Outstanding Common Stock Interests shall be cancelled, annulled and extinguished. Nothing contained in this section 3.3(d) shall impact a party’s right to assert valid defenses related to Other Outstanding Common Stock Interests, if any, pursuant to applicable law; provided, however, that no affirmative recovery may be obtained on account of such defenses.

3.4           Special Provision Regarding Unimpaired Claims. Except as otherwise explicitly provided in this Plan, nothing shall affect the Debtors’ or the Reorganized Debtors’ rights and defenses, both legal and equitable, with respect to any Unimpaired Claims, including, but not limited to, all rights with respect to legal and equitable defenses to setoffs or recoupments against Unimpaired Claims.

ARTICLE IV

ACCEPTANCE OR REJECTION OF THE PLAN

4.1           Impaired Classes of Claims and Interests Entitled to Vote. Holders of Claims and Interests in each Impaired Class of Claims and Interests (Classes 3, 7, 8, 9, 10 and 11) are entitled to vote as a Class to accept or reject this Plan.

4.2           Acceptance by an Impaired Class. In accordance with section 1126(c) of the Bankruptcy Code and except as provided in section 1126(e) of the Bankruptcy Code, an Impaired Class of Claims shall have accepted this Plan if this Plan is accepted by the Holders of at least two-thirds (2¤3) in dollar amount and more than one-half (1¤2) in number of the Allowed Claims of such Class that have timely and properly voted to accept or reject this Plan. In accordance with section 1126(d) of the Bankruptcy Code and except as provided in section 1126(e) of the Bankruptcy Code, an Impaired Class of Interests shall have accepted this Plan if this Plan is accepted by Holders of at least two-thirds (2¤3) in amount of Allowed Interests of such Class that have timely and properly voted to accept or reject this Plan.

4.3           Presumed Acceptances by Unimpaired Classes. Classes 1, 2, 4, 5 and 6 are not Impaired by this Plan. Under section 1126(f) of the Bankruptcy Code, Holders of such Claims or Interests are conclusively presumed to accept this Plan, and thus the votes of the Holders of such Claims or Interests will not be solicited.

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4.4           Presumed Rejection by Impaired Classes. Class 12 is Impaired by this Plan, and Holders of Interests in Class 12 will not receive or retain any property under the Plan on account of such Interests. Under section 1126(g) of the Bankruptcy Code, Holders of such Interests are conclusively presumed to reject this Plan, and thus the votes of the Holders of such Interests will not be solicited. In addition, the votes of Holders of Claims in Class 11A shall not be solicited. Class 11A is presumed to reject the Plan, and the Debtors shall seek to confirm the Plan with respect to such Class pursuant to section 1129(b) of the Bankruptcy Code.

4.5           Summary of Classes Voting on the Plan. As a result of the provisions of sections 4.1, 4.3 and 4.4 of this Plan, only the votes of Holders of Claims and Interests in Classes 3, 7, 8, 9, 10 and 11 will be solicited with respect to this Plan.

ARTICLE V

MEANS FOR IMPLEMENTATION OF THE PLAN

5.1           Non-Substantive Consolidation. The Plan is a joint plan that does not provide for substantive consolidation of the Debtors’ estates, and on the Effective Date, the Debtors’ estates shall not be deemed to be substantively consolidated for purposes hereof. Allowed Claims held against one Debtor will be satisfied solely from the Cash and assets of such Debtor and its Estate, provided that, to the extent of any insufficiency, funds shall be advanced to the relevant Debtors by the Estate of Pliant. Except as specifically set forth herein, nothing in the Plan or the Disclosure Statement shall constitute or be deemed to constitute an admission that any one of the Debtors is subject to or liable for any claim against any other Debtor. Additionally, claimants holding Claims against multiple Debtors, to the extent Allowed in each Debtor’s case, will be treated as a separate claim against each Debtor’s estate, provided, however, that no Holder shall be entitled to receive more than payment in full of its Allowed Claim (plus postpetition interest, if and to the extent provided in this Plan), and such Claims will be administered and treated in the manner provided in the Plan.

5.2           Reincorporation of Pliant in Delaware. Prior to the Effective Date, New Pliant shall be incorporated as a Delaware corporation and wholly-owned subsidiary of Pliant. On the Effective Date, Pliant shall merge with and into New Pliant, with New Pliant surviving the Merger and all issued and outstanding capital stock in Pliant shall be exchanged in the Merger for the New Common Stock and Series AA Preferred Stock to be distributed to the Holders of Series A Preferred Stock Interests and Outstanding Common Stock Interests as provided for in sections 5.3(a)(ii) and (iii) and 5.3(c)(2) of the Plan. As provided in section 5.8 of the Plan, all capital stock in Pliant, including the capital stock so exchanged, and all rights relating thereto, including, but not limited to, any rights that would cause Pliant to repurchase capital stock, shall be extinguished. In addition, immediately after the consummation of the Merger, New Pliant shall issue the New Common Stock, Series AA Preferred Stock and the New Senior Subordinated Notes to the Holders of Allowed Old Note Claims in exchange therefor, as provided in sections 5.3(a)(i), 5.3(c)(1), 5.4 and 5.5, as well as the Bondholder Additional Consideration.

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5.3           New Pliant Securities.

(a)Issuance of New Common Stock. On the Effective Date, New Pliant shall issue shares of New Common Stock. Concurrently with such issuance, New Pliant shall distribute (i) the Bondholder Common Stock to the Old Notes Indenture Trustee for further distribution to the Holders of Allowed Old Note Claims on a Pro Rata basis, (ii) the Series A Common Stock to the Holders of Series A Preferred Stock Interests on a Pro Rata basis, and (iii) the New Equity Common Stock to the Holders of Outstanding Common Stock Interests on a Pro Rata basis. Distribution of such New Common Stock shall be deemed complete upon delivery of one or more share certificates representing such shares as described herein. The Certificate of Incorporation, substantially in the form of Exhibit A hereto, sets forth the rights and preferences of the New Common Stock.

(b)New Pliant Stockholders Agreement. On the Effective Date, New Pliant and the holders of New Common Stock shall enter into the New Pliant Stockholders Agreement substantially in the form set forth in Exhibit C. The New Pliant Stockholders Agreement shall be binding on all parties receiving New Common Stock regardless of whether such parties execute the New Pliant Stockholders Agreement. As provided for in the New Pliant Stockholders Agreement and as qualified in its entirety by the terms contained therein, the New Pliant Stockholders Agreement shall generally provide, among other things:

(i)            that the holders of New Common Stock shall be entitled to, among other things, certain preemptive rights and shall be subject to certain “drag-along” provisions, all as set forth in the New Pliant Stockholders Agreement; and

(ii)           that New Pliant shall be obligated to effect a public offering of the New Common Stock, after the date that is three (3) years following the Effective Date, at the direction of the holders of a majority of the shares of New Common Stock issued to the JP Morgan Entities, certain other Holders of Series A Preferred Stock and Holders of Old Note Claims hereunder.

(c)Issuance of Series AA Preferred Stock. On the Effective Date, New Pliant shall issue 335,600 shares of Series AA Preferred Stock. Concurrently with such issuance, New Pliant shall distribute (1) the Bondholder Series AA Preferred Stock to the Old Notes Indenture Trustee for further distribution to the Holders of Allowed Old Note Claims on a Pro Rata basis and (2) the Series A/Series AA Preferred Stock to the Holders of Series A Preferred Stock Interests on a Pro Rata basis. Distribution of such Series AA Preferred Stock shall be deemed complete upon delivery of one or more share certificates representing such shares as described herein. The Certificate of Incorporation, substantially in the form of Exhibit A hereto, sets forth the rights and preferences of the Series AA Preferred Stock. As provided for in the Certificate of Incorporation and as

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qualified in its entirety by the terms contained therein, the Certificate of Incorporation shall generally provide, among other things, with respect to the Series AA Preferred Stock, that:

(i)            The holders of the Series AA Preferred Stock shall have the right to elect the Series AA Directors. As more fully set forth in the Certificate of Incorporation and subject to the exceptions contained therein, following the fourth anniversary of the Effective Date, the Series AA Directors shall have certain supermajority voting rights that will permit them to initiate a sale of New Pliant and to control any vote of the board of directors relating thereto.

(ii)           If the Series AA Preferred Stock is not redeemed within five (5) years after the Effective Date, the holders of at least 40% of the Series AA Preferred Stock shall have certain rights, subject to certain exceptions, to cause all of the outstanding Series AA Preferred Stock to be converted into 99.9% of the fully diluted New Common Stock, and the holders of Series AA Preferred Stock, voting separately as a class, shall have the right to appoint a majority of the board of directors of New Pliant without converting the Series AA Preferred Stock to New Common Stock.

(iii)          In the event that New Pliant seeks to sell all or substantially all of its assets, the approval of the holders of at least two-thirds of all of the Series AA Preferred Stock shall be required.

(iv)          In the event that New Pliant seeks to effect a merger, then, subject to certain exceptions, the approval of the holders of at least two-thirds of the Series AA Preferred Stock shall be required.

(d)Registration of Series AA Preferred Stock. On the Effective Date, New Pliant, the Holders of Old Note Claims, the JP Morgan Entities and certain other holders of Series AA Preferred Stock shall enter into the Series AA Registration Rights Agreement substantially in the form set forth in Exhibit D hereto. Pursuant to the terms of the Series AA Registration Rights Agreement and as qualified in its entirety by the terms contained therein, New Pliant shall be obligated to register an underwritten public offering of the Series AA Preferred Stock at the direction of holders of a majority of the shares of Series AA Preferred Stock issued to the Holders of Old Note Claims given at any time following the nine-month anniversary and prior to the second anniversary of the Effective Date. The Holders of Old Note Claims and certain other holders of Series AA Preferred Stock shall become parties to the Series AA Registration Rights Agreement, which shall be binding on such holders regardless of whether such parties execute the Series AA Registration Rights Agreement.

(e)To the extent the summary description in this Plan conflicts with the terms of the New Pliant Stockholders Agreement, the Series AA Registration

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Rights Agreement, the Certificate of Incorporation or the By-Laws, the terms of such documents shall govern.

5.4           Intentionally Omitted.

5.5           Issuance of New Senior Subordinated Notes. New Pliant shall issue and distribute the New Senior Subordinated Notes, substantially in the form attached hereto as Exhibit G, to the Old Indenture Trustee, on behalf of all Holders of Old Notes, for ultimate distribution Pro Rata to each Holder of an Old Note Claim. The New Senior Subordinated Notes shall have an aggregate original principal amount of $35,000,000, subject to section 6.12 of the Plan, shall mature in 2010 and shall accrue payment in kind interest at a rate of 13% per annum for the first year following issuance and semi-annual cash pay interest at a rate of 13%  per annum thereafter. The New Senior Subordinated Notes shall be subject to New Pliant’s right, which shall be assignable, to refinance the New Senior Subordinated Notes during the first year after the issuance of the New Senior Subordinated Notes by tendering to the holders of the New Senior Subordinated Notes, Cash in an amount equal to (i) $20,000,000 plus (ii) interest accrued at a rate of 13% per annum from the date of issuance through the date of payment on a principal amount of $20,000,000 minus (iii) any interest previously paid in Cash on the New Senior Subordinated Notes. The New Senior Subordinated Notes shall be issued pursuant to the New Senior Subordinated Notes Indenture, a form of which is attached hereto as Exhibit K.

5.6           Continued Corporate Existence and Vesting of Assets in the Reorganized Debtors. After the Effective Date the Reorganized Debtors shall continue to exist as separate corporate entities in accordance with the applicable law in the respective jurisdiction in which they are incorporated and pursuant to their respective certificates or articles of incorporation and by-laws in effect prior to the Effective Date, except as provided in section 5.2 and except to the extent such certificates or articles of incorporation and by-laws are to be amended pursuant to the terms of this Plan. Notwithstanding anything to the contrary in this Plan, the Unimpaired Claims and Interests and Impaired Claims and Interests of a particular Debtor or Reorganized Debtor shall remain the obligations solely of such Debtor or Reorganized Debtor and shall not become obligations of any other Debtor or Reorganized Debtor by virtue of this Plan, the Chapter 11 Cases, or otherwise. For the avoidance of doubt, after the Effective Date, the obligations of each Debtor indebted under the First Lien Notes Indenture and the Second Lien Notes Indenture shall remain the obligations of the respective Reorganized Debtor, and the obligations of Pliant under the First Lien Notes Indenture and the Second Lien Notes Indenture shall be the obligations of New Pliant. The liens, security interests and pledges created by the First Lien Notes Indenture and the Second Lien Notes Indenture are and continue to be valid, effective, properly perfected and enforecable and are hereby ratified and confirmed in all respects. Except as otherwise provided in this Plan, on and after the Effective Date, all property of the Estates of the Debtors, including all claims, rights and causes of action and any property acquired by the Debtors or the Reorganized Debtors under or in connection with this Plan, shall vest in the Reorganized Debtors free and clear of all Claims, liens, charges, other encumbrances and Interests. On and after the Effective Date, the Reorganized Debtors may operate their businesses and may use, acquire and dispose of property and compromise or settle any Claims without supervision of or approval by the Bankruptcy Court and free and clear of any restrictions of the Bankruptcy Code or the Bankruptcy Rules, other than restrictions expressly imposed by this Plan or the Confirmation Order. Without limiting the foregoing, the Reorganized Debtors may pay the charges that they incur on or after the Effective Date for professionals’ fees, disbursements, expenses or related support services without application to the Bankruptcy Court.

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5.7           Corporate Governance, Directors, Officers and Corporate Action.

(a)Certificates or Articles of Incorporation and By-Laws. The certificates or articles of incorporation and by-laws of the Debtors shall be amended as necessary to satisfy the provisions of this Plan and the Bankruptcy Code. After the Effective Date, the Reorganized Debtors may amend and restate their certificates or articles of incorporation and by-laws as permitted by applicable law. In addition, prior to or on the Effective Date or as soon as reasonably practicable thereafter, the Certificate of Incorporation and By-Laws of New Pliant, substantially in the form as set forth in Exhibits A and B, respectively, to the Plan, shall go into effect and shall (i) include, among other things, pursuant to section 1123(a)(6) of the Bankruptcy Code, a provision prohibiting the issuance of non-voting equity securities, but only to the extent required by section 1123(a)(6) of the Bankruptcy Code; and (ii) authorize the issuance of New Common Stock and the Series AA Preferred Stock in an amount not less than the amount necessary to permit the distributions thereof required or contemplated by this Plan.

(b)Directors and Officers of the Reorganized Debtors. Subject to any requirement of Bankruptcy Court approval pursuant to section 1129(a)(5) of the Bankruptcy Code, as of the Effective Date, the initial directors and officers of New Pliant shall be the persons identified in Exhibit L, to be provided in the Plan Supplement. On the Effective Date, the board of directors of New Pliant shall have seven (7) members, two (2) of whom shall be elected by the Holders of a majority of the outstanding principal amount of Old Notes, four (4) of whom shall be designated by the JP Morgan Entities, as the holders of a majority of the Series A Preferred Stock and common stock of Pliant, and one (1) of whom shall be the chief executive officer. Thereafter, the Certificate of Incorporation shall govern the designation of directors. In addition, the boards of directors of the Reorganized Debtors shall be comprised of members of the board of directors of New Pliant, or such other persons as are designated by the board of directors of New Pliant. Pursuant to section 1129(a)(5), the Debtors will disclose in Exhibit L, to be provided in the Plan Supplement, the identity and affiliations of any person proposed to serve on the initial board of directors of New Pliant, and to the extent such person is an insider other than by virtue of being a director, the nature of any compensation for such person. Each such director and officer shall serve from and after the Effective Date pursuant to the terms of the Certificate of Incorporation, the other constituent documents of the Reorganized Debtors, and applicable law. Each member of the current board of directors of each of the Debtors will be deemed to have resigned on the Effective Date.

(c)Corporate Action. On the Effective Date, the adoption of the Certificate of Incorporation or similar constituent documents, the adoption of the By-

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Laws, the selection of directors and officers for New Pliant and each Reorganized Debtor, and all other actions contemplated by this Plan shall be authorized and approved in all respects (subject to the provisions of this Plan). All matters provided for in this Plan involving the corporate structure of New Pliant, the Debtors or the Reorganized Debtors, and any corporate action required by New Pliant, the Debtors or the Reorganized Debtors in connection with this Plan, shall be deemed to have timely occurred in accordance with applicable law and shall be in effect, without any requirement of further action by the security holders or directors of New Pliant, the Debtors or the Reorganized Debtors. On the Effective Date, the appropriate officers of New Pliant and/or the Reorganized Debtors and members of the boards of directors of New Pliant and/or Reorganized Debtors are authorized and directed to issue, execute and deliver the agreements, documents, securities and instruments contemplated by this Plan in the name of and on behalf of the New Pliant and/or Reorganized Debtors.

5.8           Cancellation of Notes, Instruments, Debentures, Preferred Stock, Outstanding Common Stock and Other Outstanding Common Stock Interests. On the Effective Date, except as otherwise provided for herein, (a) Old Notes, Series A Preferred Stock, Series B Preferred Stock, Outstanding Common Stock, Other Outstanding Common Stock Interests and any other notes, bonds (with the exception of surety bonds outstanding), indentures (including the Old Notes Indentures), stockholders agreements, registration rights agreements, repurchase agreements and repurchase arrangements, or other instruments or documents evidencing or creating any indebtedness or obligations of a Debtor that relate to Claims or Interests that are Impaired under this Plan shall be cancelled (with the exception of the Intercreditor Agreement), and (b) the obligations of the Debtors under any agreements, stockholders agreements, registration rights agreements, repurchase agreements and repurchase arrangements, indentures (including the Old Notes Indentures) or certificates of designation governing the Old Note Claims, Series A Preferred Stock Interests, Series B Preferred Stock Interests, Outstanding Common Stock, Other Outstanding Common Stock Interests and any other Claims or Interests or any notes, bonds, indentures, or other instruments or documents evidencing or creating any Claims or Interests against a Debtor that relate to Claims or Interests that are Impaired under this Plan shall be discharged (with the exception of the Intercreditor Agreement); provided, however, that the Old Notes Indenture shall continue in effect to the extent necessary to allow the Reorganized Debtors and the Old Indenture Trustee to make distributions pursuant to the Plan on account of Old Note Claims. As of the Effective Date, all Series A Preferred Stock, Series B Preferred Stock, Outstanding Common Stock and Other Outstanding Common Stock Interests that have been authorized to be issued but that have not been issued shall be deemed cancelled and extinguished without any further action of any party. For the avoidance of doubt, the Intercreditor Agreement, the First Lien Notes Indenture, the First Lien Notes, the Second Lien Notes Indenture and the Second Lien Notes shall remain in full force and effect in accordance with sections 3.2(d) and 3.2(e) of this Plan.

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5.9           Issuance of New Securities and Related Matters.

(a)Issuance of New Securities. On or as soon as reasonably practicable after the Effective Date, New Pliant and the Reorganized Debtors shall issue (subject to section 5.9(b) of this Plan) all instruments, certificates and other documents, including the New Common Stock, Series AA Preferred Stock and the New Senior Subordinated Notes, required to be issued or distributed pursuant to this Plan without further act or action under applicable law, regulation, order or rule. The issuance of the New Common Stock, Series AA Preferred Stock and the New Senior Subordinated Notes and the distribution thereof under this Plan shall be exempt from registration under applicable securities laws pursuant to section 1145(a) of the Bankruptcy Code. To the extent that the Supplemental First Lien Notes Indenture results in the issuance of a new security for purposes of applicable securities laws, the issuance and distribution thereof under this Plan shall be exempt from registration under applicable securities laws pursuant to section 1145(a) of the Bankruptcy Code. Without limiting the effect of section 1145 of the Bankruptcy Code, all documents, agreements and instruments entered into on or as of the Effective Date contemplated by or in furtherance of this Plan, including, without limitation, the Exit Facility Credit Agreement, the New Senior Subordinated Notes Indenture, the Supplemental First Lien Notes Indenture, the New Pliant Stockholders Agreement, the Series AA Registration Rights Agreement and any other agreement entered into in connection with the foregoing, shall become effective and binding in accordance with their respective terms and conditions upon the parties thereto.

(b)Distribution of the New Common Stock and Series AA Preferred Stock and Enforcement of the New Pliant Stockholders Agreement and the Series AA Registration Rights Agreement. On or as soon as reasonably practicable after the Effective Date, all of the shares of the New Common Stock and all of the shares of Series AA Preferred Stock to which any Holder of a Claim or Interest in Classes 7, 9, 10, 11 and 11A shall become entitled pursuant to the Plan shall be issued in the name of such Holder subject to the terms and conditions of the New Pliant Stockholders Agreement and the other terms and conditions of this Plan. In the period pending distribution of the New Common Stock and Series AA Preferred Stock to any Holder of a Class 7, 9, 10, 11 and 11A Claim or Interest, such Holder shall be bound by, have the benefit of and be entitled to enforce the terms and conditions of the New Pliant Stockholders Agreement and the Series AA Registration Rights Agreement (each to the extent applicable) and shall be entitled to exercise any voting rights and receive any dividends or other distributions payable in respect of such Holder’s New Common Stock and Series AA Preferred Stock (including, receiving any proceeds of any permitted transfer of such New Common Stock and Series AA Preferred Stock, as applicable), and to exercise all other rights in respect of the New Common Stock and Series AA Preferred Stock (so that such Holder shall be deemed for tax purposes to be the owner of the New

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Common Stock and Series AA Preferred Stock issued in the name of such Holder, as applicable).

5.10         Exit Financing. On the Effective Date, without any requirement of further action by security holders or directors of New Pliant, the Debtors or Reorganized Debtors, New Pliant and the Reorganized Debtors shall be authorized and directed to enter into the Exit Facility Credit Agreement, as well as any notes, documents or agreements in connection therewith, including, without limitation, any documents required in connection with the creation or perfection of the liens on the exit facility collateral. The Exit Facility Credit Agreement shall be designated as a Senior Credit Agreement pursuant to the terms of the Intercreditor Agreement.

5.11         Restricted Stock Incentive Plan and Deferred Cash Incentive Plan. On the Effective Date, New Pliant shall be authorized to issue 8,000 shares of Series M Preferred Stock and to designate participants in the Deferred Cash Incentive Plan. The shares of Series M Preferred Stock shall be distributed in accordance with the Restricted Stock Incentive Plan and interests in the Deferred Cash Incentive Plan shall be allocated in accordance with the Deferred Cash Incentive Plan, forms of which are annexed hereto in Exhibit E. The Restricted Stock Incentive Plan and Deferred Cash Incentive Plan shall be used for the purpose of granting awards to officers and other employees of New Pliant and the Reorganized Debtors. As provided for in the Certificate of Incorporation and the Deferred Cash Incentive Plan and as qualified in its entirety by the terms contained therein, the holders of Series M Preferred Stock and the participants in the Deferred Cash Incentive Plan shall be entitled, in the aggregate, to a maximum of 8.0% of the equity value of New Pliant.

5.12         Sources of Cash for Plan Distributions. Except as otherwise provided in this Plan or the Confirmation Order, all Cash necessary for New Pliant and/or the Reorganized Debtors to make payments pursuant to this Plan may be obtained from existing Cash balances, the operations of the Debtors and the Reorganized Debtors, sales of assets or the Exit Facility Credit Agreement. New Pliant and the Reorganized Debtors may also make such payments using Cash received from their subsidiaries through New Pliant’s and the Reorganized Debtors’ consolidated cash management systems.

5.13         Cram-Down. If any Impaired Class fails to accept the Plan by the requisite statutory majorities, the Debtors reserve the right (i) to confirm the Plan by a “cram-down” of such non-accepting Class pursuant to section 1129(b) of the Bankruptcy Code and (ii) to propose any modifications to the Plan and to confirm the Plan as modified, without re-solicitation, to the extent permitted by the Bankruptcy Code.

5.14         Additional Transactions Authorized Under the Plan. On or prior to the Effective Date, the Debtors shall be authorized to take any such actions as may be necessary or appropriate to Reinstate Claims or Interests or render Claims or Interests not Impaired.

5.15         Emergence Bonus Payments. On the Effective Date, New Pliant shall pay emergence bonus payments to a limited number of officers and other key employees of the Reorganized Debtors who are and have been principally responsible for the reorganization efforts in order to incentivize such key employees to enable the Debtors to emerge from chapter

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11 and achieve the Debtors’ Plan goals expeditiously and in a manner consistent with the Plan. The emergence bonus plan shall contain terms as set forth in Exhibit J.

5.16         Exercise of Warrants and Stock Options. On or prior to the Effective Date, each Holder of an Allowed Warrant Interest shall be deemed to have exercised its Warrant, which shall entitle such Holder to one share of common stock of Pliant for each Warrant Interest held by such Holder. In addition, each Holder of an Allowed Stock Option shall have the right to exercise such Stock Option by tendering to Pliant the contractual exercise price on or prior to the Effective Date. Each Holder of an Allowed Stock Option shall be required to designate on its Ballot an affirmative intention to exercise its Stock Option pursuant to the terms of the Plan and shall be required to provide therewith proof of such Holder’s ability to pay the contractual exercise price, which proof shall be satisfactory to the Debtors in their sole discretion. To the extent a Holder of an Allowed Stock Option does not designate its intention to exercise its Stock Option on a timely filed Ballot or does not provide adequate proof of payment with a timely filed Ballot, as required by this section, including in either instance such Holders who vote to reject the Plan or abstain from voting on the Plan, such Stock Options shall be cancelled, annulled and extinguished.

5.17         Supplemental First Lien Notes Indenture. On the Effective Date, New Pliant shall enter into the Supplemental First Lien Notes Indenture. The Supplemental First Lien Notes Indenture shall provide for additional payment in kind interest on the First Lien Notes at a rate of 0.225% per annum commencing on the Effective Date. The Supplemental First Lien Notes Indenture shall not modify the First Lien Notes Indenture in any other respect except as provided in this section 5.17. On and after the Effective Date, the First Lien Notes shall continue to be governed by the First Lien Notes Indenture, as modified by the Supplemental First Lien Notes Indenture.

ARTICLE VI

PROVISIONS GOVERNING DISTRIBUTIONS

6.1           Distributions for Claims or Interests Allowed as of the Effective Date. Unless the Holder of an Allowed Claim against or Allowed Interest in the Debtors and the Debtors agree to a different distribution date or except as otherwise provided herein or as ordered by the Bankruptcy Court, distributions to be made on account of Allowed Claims or Interests shall be made on the Effective Date or as soon thereafter as is practicable. Any distribution to be made on the Effective Date pursuant to this Plan shall be deemed as having been made on the Effective Date if such distribution is made on the Effective Date or as soon thereafter as is practicable. Any payment or distribution required to be made under this Plan on a day other than a Business Day shall be made on the next succeeding Business Day. Notwithstanding the date on which any distribution of securities is made to a Holder of an Allowed Claim or to a Holder of an Allowed Interest, as of the date of the distribution such Holder shall be deemed to have the rights of a holder of such securities (subject to the terms and conditions of this Plan) distributed as of the Effective Date.

6.2           Distributions for Claims and Interests that Become Allowed after the Effective Date. Distributions on account of Allowed Claims and Interests that first become Allowed

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Claims and Interests after the Effective Date shall be made as soon as practicable after the date that such Claim or Interest becomes Allowed pursuant to section 6.4 of this Plan.

6.3           Interest on Claims. Except as to the First Lien Note Claims and the Second Lien Note Claims as provided herein or as otherwise specifically provided for in this Plan, the Confirmation Order or other order of the Bankruptcy Court, or required by applicable bankruptcy or non-bankruptcy law, postpetition interest shall not accrue or be paid on any Claims, and no Holder of a Claim shall be entitled to interest accruing on or after the Petition Date on any Claim.

6.4           Distributions by Disbursing Agent. Other than as specifically set forth in the Plan, the Disbursing Agent shall make all distributions required to be made under this Plan. Distributions on account of Revolving Credit Facility Claims shall be made by the Disbursing Agent directly to the Revolving Credit Facility Agents. Distributions on account of the First Lien Note Claims, the Second Lien Note Claims and the Old Note Claims shall be made in accordance with the respective indentures or in accordance with this Plan where such indentures are silent. New Pliant and/or the Reorganized Debtors may act as Disbursing Agent or may employ or contract with other entities to assist in or make the distributions required by this Plan.

6.5           Delivery of Distributions and Undeliverable or Unclaimed Distributions. Unless the First Lien Notes Indenture, the Second Lien Notes Indenture, or the Old Notes Indentures provide otherwise, the following terms shall govern the delivery of distributions and undeliverable or unclaimed distributions with respect to Claims and Interests.

(a)Delivery of Distributions in General. Distributions to Holders of Allowed Claims or Interests shall be made at the addresses set forth in the Debtors’ records unless such addresses are superseded by proofs of claim or interests or transfers of claim filed pursuant to Bankruptcy Rule 3001.

(b)Undeliverable and Unclaimed Distributions.

(i)            Holding and Investment of Undeliverable and Unclaimed Distributions. If the distribution to any Holder of an Allowed Claim or Interest is returned to New Pliant, the Reorganized Debtors or the Disbursing Agent as undeliverable or is otherwise unclaimed, no further distributions shall be made to such Holder unless and until the Reorganized Debtors or the Disbursing Agent is notified in writing of such Holder’s then current address.

(ii)           After Distributions Become Deliverable. The Disbursing Agent shall make all distributions that have become deliverable or have been claimed since the Distribution Date as soon as practicable after such distribution has become deliverable.

(iii)          Failure to Claim Undeliverable Distributions. Any Holder of an Allowed Claim or Interest that does not assert a claim or interest pursuant to this Plan for an undeliverable or unclaimed distribution within one (1) year after the Effective Date shall be deemed to have forfeited its claim for

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such undeliverable or unclaimed distribution and shall be forever barred and enjoined from asserting any such claim for an undeliverable or unclaimed distribution against the Debtors or their Estates, the Reorganized Debtors or their property, New Pliant or its property. In such cases, any Cash for distribution on account of such claims for undeliverable or unclaimed distributions shall become the property of the Estates and New Pliant free of any restrictions thereon and notwithstanding any federal or state escheat laws to the contrary, subject to the liens of the Revolving Credit Facility Lenders. Any New Common Stock, Series M Preferred Stock and Series AA Preferred Stock and the New Senior Subordinated Notes held for distribution on account of such Claim or Interest shall be canceled and of no further force or effect. Nothing contained in this Plan shall require any Disbursing Agent, including, but not limited to, New Pliant or the Reorganized Debtors, to attempt to locate any Holder of an Allowed Claim. In addition, the Old Notes Indenture Trustee shall only be required to hold any unclaimed distribution to a Holder of an Old Notes Claim for a period of ninety (90) days, after the expiration of which such unclaimed distribution shall be returned to New Pliant, and New Pliant or its designee shall hold such distributions for the benefit of the Holders of Old Note Claims until one (1) year after the Effective Date as provided in this section.

6.6           Record Date for Distributions. New Pliant, the Reorganized Debtors and the Disbursing Agent will have no obligation to recognize the transfer of, or the sale of any participation in, any Allowed Claim or Interest that occurs after the close of business on the Distribution Record Date, and will be entitled for all purposes herein to recognize and distribute only to those Holders of Allowed Claims or Interests that are Holders of such Claims or Interests, or participants therein, as of the close of business on the Distribution Record Date. New Pliant, the Reorganized Debtors and the Disbursing Agent shall instead be entitled to recognize and deal for all purposes under this Plan with only those record holders stated on the official claims register as of the close of business on the Distribution Record Date.

6.7           Allocation of Plan Distributions Between Principal and Interest. Except as otherwise expressly provided in this Plan, to the extent that any Allowed Claim entitled to a distribution under this Plan is comprised of indebtedness and accrued but unpaid interest thereon, such distribution shall, for all income tax purposes, be allocated to the principal amount of the Claim first and then, to the extent that the consideration exceeds the principal amount of the Claim, to the portion of such Claim representing accrued but unpaid interest. Notwithstanding the foregoing, the distribution in respect of the Consenting Noteholders’ Professionals Fees in accordance with the first sentence of section 3.2(g) of this Plan shall be deemed a payment under the relevant fee letters, as amended, as a result of the assumption thereof and shall not be allocated either to principal or interest in respect of the Old Note Claims.

6.8           Means of Cash Payment. Payments of Cash made pursuant to this Plan shall be in U.S. dollars and shall be made, at the option and in the sole discretion of New Pliant or the Reorganized Debtors, by (a) checks drawn on or (b) wire transfer from a bank selected by New Pliant or the Reorganized Debtors. Cash payments to foreign creditors may be made, at the

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option of New Pliant or the Reorganized Debtors, in such funds and by such means as are necessary or customary in a particular foreign jurisdiction.

6.9           Withholding and Reporting Requirements. In connection with this Plan and all distributions thereunder, New Pliant and the Reorganized Debtors shall comply with all withholding and reporting requirements imposed by any federal, state, local or foreign taxing authority, and all distributions hereunder shall be subject to any such withholding and reporting requirements. New Pliant and the Reorganized Debtors shall be authorized to take any and all actions that may be necessary or appropriate to comply with such withholding and reporting requirements. All persons holding Claims or Interests shall be required to provide any information necessary to effect information reporting and the withholding of such taxes. Notwithstanding any other provision of this Plan, (a) each Holder of an Allowed Claim or Interest that is to receive a distribution pursuant to this Plan shall have sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed by any governmental unit, including income, withholding and other tax obligations, on account of such distribution and (b) no distribution shall be made to or on behalf of such Holder pursuant to this Plan unless and until such Holder has made arrangements satisfactory to New Pliant and the Reorganized Debtors for the payment and satisfaction of such tax obligations.

6.10         Setoffs. New Pliant and the Reorganized Debtors may, pursuant to section 553 of the Bankruptcy Code or applicable nonbankruptcy laws, but shall not be required to, set off against any Claim, the payments or other distributions to be made pursuant to this Plan in respect of such Claim, or claims of any nature whatsoever that the Debtors or the Reorganized Debtors may have against the Holder of such Claim; provided, however, that neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by New Pliant or the Reorganized Debtors of any such claim that the Debtors or New Pliant or the Reorganized Debtors may have against such Holder.

6.11         Fractional Shares. No fractional shares of New Common Stock and Series AA Preferred Stock shall be distributed. Where a fractional share would otherwise be called for, the actual issuance shall reflect a rounding up (in the case of more than .50) of such fraction to the nearest whole share of New Common Stock and Series AA Preferred Stock or a rounding down of such fraction (in the case of .50 or less than .50) to the nearest whole share of New Common Stock and Series AA Preferred Stock.

6.12         Denomination of New Senior Subordinated Notes. The New Senior Subordinated Notes will be issued on the Effective Date in denominations of $1,000 principal amount or integral multiples thereof. Accordingly, the Pro Rata principal amount of New Senior Subordinated Notes, as applicable, to be distributed to each Holder of an Old Note Claim as provided herein will be rounded down to the nearest $1,000 and no cash shall be payable with respect to the portion of the Pro Rata principal amount that was subtracted to effect such rounding.

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ARTICLE VII

TREATMENT OF EXECUTORY CONTRACTS, UNEXPIRED LEASES AND PENSION

PLANS

7.1           Assumption of Executory Contracts and Unexpired Leases. On the Effective Date, all executory contracts or unexpired leases of the Debtors will be deemed assumed in accordance with, and subject to, the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code, unless such executory contract or unexpired lease (i) was previously assumed or rejected by the Debtors, (ii) previously expired or terminated pursuant to its own terms, or (iii) is an executory contract that is set forth on Exhibit I hereto. Entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of such assumptions pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Each executory contract and unexpired lease assumed pursuant to this Article VII shall revest in and be fully enforceable by the respective Reorganized Debtor in accordance with its terms, except as modified by the provisions of this Plan, or any order of the Bankruptcy Court authorizing and providing for its assumption or applicable federal law.

7.2           Cure of Defaults of Assumed Executory Contracts and Unexpired Leases. Any monetary amounts by which each executory contract and unexpired lease to be assumed is in default shall be satisfied, pursuant to section 365(b)(l) of the Bankruptcy Code, by payment of the default amount in Cash on the Effective Date or on such other terms as the parties to each such executory contract or unexpired lease may otherwise agree. In the event of a dispute regarding (a) the amount of any cure payments, (b) the ability of the Reorganized Debtors or any assignee to provide “adequate assurance of future performance” (within the meaning of section 365 of the Bankruptcy Code) under the contract or lease to be assumed or (c) any other matter pertaining to assumption, the cure payments required by section 365(b)(l) of the Bankruptcy Code shall be made following the entry of a Final Order resolving the dispute and approving the assumption. Pending the Bankruptcy Court’s ruling on such motion, the executory contract or unexpired lease at issue shall be deemed assumed by the Debtors unless otherwise ordered by the Bankruptcy Court.

7.3           Post-Petition Contracts and Leases. All contracts, agreements and leases that were entered into by the Debtors or assumed by the Debtors after the Petition Date shall be deemed assigned by the Debtors to the Reorganized Debtors on the Effective Date.

7.4           Retiree Benefits and Pension Plans. In furtherance of, and without in any way limiting, section 12.7, from and after the Effective Date the Debtors shall assume the obligation and shall continue to make the payment of all retiree benefits (if any), as that term is defined in Bankruptcy Code section 1114, at the level established pursuant to subsection (e)(1)(B) or (g) of said section 1114, at any time prior to the Confirmation Date, for the duration of the period (if any) that the Debtors are obligated to provide such benefits. In addition, notwithstanding anything in the Plan to the contrary, the Pension Plans shall become obligations of the Reorganized Debtors, including, without limitation, New Pliant, and shall otherwise be unaffected by confirmation of the Plan, and such Claims shall not be discharged or released or otherwise affected by the Plan or by these proceedings.

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ARTICLE VIII

PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS
AND DISPUTED INTERESTS

8.1           Objections to and Estimation of Claims. After the Effective Date, only the applicable Reorganized Debtor against whose Estate a Claim was filed or deemed filed may object to the allowance of any Claim or Administrative Expense Claim. After the Effective Date, the applicable Reorganized Debtor against whose Estate a Claim or Administrative Expense Claim was filed or deemed filed shall be accorded the power and authority to allow or settle and compromise any Claim without notice to any other party, or approval of, or notice to the Bankruptcy Court. In addition, the Debtors or the Reorganized Debtors may, at any time, request that the Bankruptcy Court estimate any contingent or unliquidated Claim pursuant to section 502(c) of the Bankruptcy Code regardless of whether the Debtors or Reorganized Debtors have previously objected to such Claim. Unless otherwise ordered by the Bankruptcy Court, the Debtors or Reorganized Debtors shall serve and file any objections to Claims and Interests as soon as practicable, but in no event later than (a) ninety (90) days after the Effective Date or (b) such later date as may be determined by the Bankruptcy Court upon a motion which may be made without further notice or hearing.

8.2           Payments and Distributions on Disputed, Contingent and Unliquidated Claims and Interests and on Claims for Which Proofs of Claim are Filed. No partial payments and no partial distributions will be made with respect to a disputed, contingent or unliquidated Claim or Interest, or with respect to any Claim for which a proof of claim has been filed, until the resolution of such disputes or estimation or liquidation of such claims by settlement or by Final Order. As soon as practicable after a disputed, contingent or unliquidated Claim or Interest becomes an Allowed Claim or Interest in an amount certain, the Holder of such Allowed Claim or Interest will receive all payments and distributions to which such Holder is then entitled under the Plan. Without limiting the foregoing, there shall be no distribution on account of the Claims of the Durham Parties until all objections to such Claims of the Durham Parties and the Potential Durham Recovery Claims have been resolved by the Bankruptcy Court.

8.3           Classes 4, 5 and 7. Claims in Classes 4 and 5 shall be deemed Allowed in aggregate amounts equal to the outstanding principal of either the First Lien Notes or the Second Lien Notes, as applicable, plus the outstanding interest accrued thereon both prior to and after the Petition Date, plus any fees, costs or charges provided under the First Lien Notes Indenture or the Second Lien Notes Indenture, as applicable. Claims in Class 7 shall be deemed Allowed in aggregate amounts equal to the outstanding principal of the Old Notes, plus outstanding interest accrued thereon prior to the Petition Date. Distributions to all Holders of Allowed Claims in Class 7 shall be delivered to the Old Indenture Trustee for further distribution to the ultimate beneficial holders, except as otherwise provided herein with respect to the Consenting Noteholders’ Professional Fees.

ARTICLE IX

CONFIRMATION AND CONSUMMATION OF THE PLAN

9.1           Conditions to Effective Date. The Plan shall not become effective and the Effective Date shall not occur unless and until the following conditions shall have been satisfied or waived in accordance with section 9.2 of this Plan:

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(a)The Confirmation Order confirming this Plan, as such Plan may have been modified, shall have been entered by the Bankruptcy Court in form and substance reasonably satisfactory to the Debtors.

(b)The Canadian Confirmation Order confirming this Plan, as such Plan may have been modified, shall have been entered by the Canadian Court in form and substance reasonably satisfactory to the Debtors.

(c)The Exit Facility Credit Agreement and all related documents provided for therein or contemplated thereby, in form and substance satisfactory to the Debtors, shall have been executed and delivered by all parties thereto, and all conditions precedent thereto shall have been satisfied.

(d)The Certificate of Incorporation and By-Laws and the amended certificates or articles of incorporation of the Debtors, as necessary, shall have been adopted and filed with the applicable authorities of the relevant jurisdictions of incorporation and shall have become effective in accordance with such jurisdictions’ corporation laws.

(e)All authorizations, consents, certifications, approvals, rulings, no-action letters, opinions or other documents or actions required by any law, regulation or order to be received or to occur in order to implement the Plan on the Effective Date shall have been obtained or shall have occurred unless failure to do so will not have a material adverse effect on New Pliant.

(f)Seven (7) members of the board of directors of New Pliant shall have been selected and shall have expressed a willingness to serve on the board of directors of New Pliant.

(g)All other documents and agreements necessary to implement this Plan on the Effective Date shall have been executed and delivered and all other actions required to be taken in connection with the Effective Date shall have occurred.

9.2           Waiver of Conditions. Each of the conditions set forth in section 9.1 of this Plan, with the exception of those conditions set forth in subsection (c), may be waived in whole or in part by the Debtors after notice to the Bankruptcy Court and parties in interest but without the need for a hearing.

9.3           Consequences of Non-Occurrence of Effective Date. If the Confirmation Order is vacated, (a) this Plan shall be null and void in all respects; (b) any settlement of Claims or Interests provided for hereby shall be null and void without further order of the Bankruptcy

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Court; and (c) the time within which the Debtors may assume and assign or reject all executory contracts and unexpired leases shall be extended for a period of one hundred twenty (120) days after the date the Confirmation Order is vacated.

ARTICLE X

EFFECT OF PLAN CONFIRMATION

10.1         Binding Effect. This Plan shall be binding upon and inure to the benefit of the Debtors, all present and former Holders of Claims and Interests, and their respective successors and assigns, including, but not limited to, the Reorganized Debtors and New Pliant.

10.2         Releases.

(a)Releases by the Debtors. As of the Effective Date, for good and valuable consideration, the adequacy of which is hereby confirmed, the Debtors and Reorganized Debtors in their individual capacities and as debtors-in-possession will be deemed to release and forever waive and discharge all claims, obligations, suits, judgments, damages, demands, debts, rights, causes of action and liabilities whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, in law, equity or otherwise that are based in whole or part on any act, omission, transaction, event or other occurrence taking place on or prior to the Effective Date in any way relating to the Debtors, the Reorganized Debtors, the Chapter 11 Cases, this Plan or the Disclosure Statement, and that could have been asserted by or on behalf of the Debtors or their Estates or the Reorganized Debtors against (i) the Debtors’ and their non-Debtor affiliates present and former officers and directors who were serving in such capacity on or after the Petition Date, (ii) the attorneys, accountants, investment bankers, restructuring consultants and financial advisors of each of the Debtors, and (iii) the Consenting Noteholders and the Consenting Noteholders’ professionals, in each case at any time up to immediately prior to the Effective Date; provided, however, that nothing in this section shall be construed to release any party from willful misconduct or gross negligence as determined by a Final Order. In addition, the releases contained in this section shall not apply to or otherwise affect the obligations of any of the Debtors’ present and former directors and officers to repay loans or advances of money or other property owed to the Debtors or their Estates.

(b)Releases by Holders of Claims and Interests. As of the Effective Date, to the fullest extent permitted by law, each Holder of a Claim or Interest that is entitled to vote on the Plan shall in consideration for the obligations of the Debtors and the Reorganized Debtors under this Plan and the Cash and the securities, contracts, instruments, releases and other agreements or documents to be delivered in connection with this Plan, be deemed to have forever released, waived and discharged all claims, demands, debts, rights,

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causes of action or liabilities (other than (x) the right to enforce the Debtors’ or the Reorganized Debtors’ obligations under, and the contracts, instruments, releases, agreements, and documents delivered, Reinstated or assumed under this Plan, and (y) any claims or causes of action arising out of willful misconduct or gross negligence as determined by a Final Order), whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, then existing or thereafter arising, in law, equity or otherwise that are based in whole or in part on any act or omission, transaction, event or other occurrence taking place on or prior to the Effective Date in any way relating to (i) the Debtors, the Reorganized Debtors, the Non-Debtor Affiliates, the Chapter 11 Cases, this Plan or the Disclosure Statement against the Debtors and the Reorganized Debtors and (ii) the present and former directors, officers, employees, agents of the Debtors and the Non-Debtor Affiliates who were serving in such capacity on or after the Petition Date and the attorneys, accountants, investment bankers, restructuring consultants and financial advisors of each of the Debtors, limited solely to such parties’ capacity set forth in this subsection (b), in each case at any time up to immediately prior to the Effective Date; provided, however, that each Holder of a Claim or Interest that is entitled to vote on the Plan may elect by checking the appropriate box provided on the Ballot not to grant the releases set forth in this section 10.2(b). Notwithstanding anything to the contrary in sections 10.2, 10.6 or elsewhere in the Plan, there shall be no exculpation or release of any Claims with respect to the Pension Plans or any Claims asserted by the Pension Benefit Guaranty Corporation.

(c)Injunction Related to Releases. The Confirmation Order will permanently enjoin the commencement or prosecution by any entity, whether directly, derivatively or otherwise, of any claims, obligations, suits, judgments, damages, demands, debts, rights, causes of action or liabilities released pursuant to this Plan, including but not limited to the claims, obligations, suits, judgments, damages, demands, debts, rights, causes of action or liabilities released in this section 10.2.

10.3         Survival of Indemnification Obligations. The obligations of the Debtors to indemnify any past and present directors, officers, agents, employees and representatives, pursuant to certificates or articles of incorporation, by-laws, contracts and/or applicable statutes, in respect of all actions, suits and proceedings against any of such officers, directors, agents, employees and representatives, based upon any act or omission related to service with or for or on behalf of the Debtors, shall not be discharged or impaired by confirmation or consummation of the Plan and shall be assumed by New Pliant and the other Reorganized Debtors.

10.4         Discharge of Claims and Termination of Interests. Except as otherwise provided herein or in the Confirmation Order, all consideration distributed under this Plan shall be in exchange for, and in complete satisfaction, settlement, discharge and release of, all Claims and Interests (other than Unimpaired Claims under this Plan that are Allowed Claims) of any nature whatsoever against the Debtors or any of their assets or properties, and regardless of whether any

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property shall have been distributed or retained pursuant to this Plan on account of such Claims and Interests. Upon the Effective Date, the Debtors shall be deemed discharged and released under section 1141(d)(l)(A) of the Bankruptcy Code from any and all Claims and Interests (other than Unimpaired Claims that are Allowed Claims), including, but not limited to, demands and liabilities that arose before the Confirmation Date, and all debts of the kind specified in section 502(g), 502(h) or 502(i) of the Bankruptcy Code, and the Outstanding Common Stock, Series A Preferred Stock, Series B Preferred Stock, Old Notes, Durham Subordinated Claims and Other Outstanding Common Stock Interests shall be terminated.

10.5         Preservation of Rights of Action and Settlement of Litigation Claims. Except as otherwise provided in this Plan, the Confirmation Order, or in any document, instrument, release or other agreement entered into in connection with this Plan, in accordance with section 1123(b) of the Bankruptcy Code, the Debtors and their Estates shall retain the Litigation Claims, which expressly include any Potential Durham Recovery Claims. New Pliant, the Reorganized Debtors, as the successors in interest to the Debtors and the Estates, may enforce, sue on, settle or compromise (or decline to do any of the foregoing) any or all of the Litigation Claims. Notwithstanding the foregoing, the Debtors and the Reorganized Debtors shall not file, commence or pursue any claim, right or cause of action under section 547 of the Bankruptcy Code or seek to disallow any Claim to the extent it may be avoidable thereunder.

10.6         Exculpation and Limitation of Liability. Notwithstanding any other provision of this Plan, neither the Debtors, the Reorganized Debtors, New Pliant, the Representative Committee, the Ad Hoc Committee of First Lien Noteholders, the Ad Hoc Committee of Second Lien Noteholders, the ad hoc committee of Consenting Noteholders, the First Lien Indenture Trustee the Second Lien Indenture Trustee, the Old Notes Indenture Trustee, the JP Morgan Entities nor any of their respective present or former members, officers, directors, employees, advisors or attorneys shall have or incur any liability to, or be subject to any right of action by, any Holder of a Claim or an Interest, or any other party in interest, or any of their respective agents, employees, representatives, financial advisors, attorneys, or agents acting in such capacity, or affiliates, or any of their successors or assigns, for any act or omission in connection with, relating to, or arising out of, the Chapter 11 Cases, formulating, negotiating or implementing this Plan, the solicitation of acceptances of this Plan, the pursuit of confirmation of this Plan, the confirmation of this Plan, the consummation of this Plan or the administration of this Plan or the property to be distributed under this Plan, except for their gross negligence or willful misconduct as determined by a Final Order, and in all respects shall be entitled to reasonably rely upon the advice of counsel with respect to their duties and responsibilities under this Plan.

10.7         Injunction.

(a)Except as otherwise provided in this Plan, the Confirmation Order shall provide, among other things, that from and after the Confirmation Date all Persons who have held, hold or may hold Claims against or Interests in the Debtors, except Allowed Claims and Interests that are Unimpaired by this Plan, are (i) permanently enjoined from taking any of the following actions against the Estate(s), or any of their property, on account of any such Claims or Interests and (ii) permanently enjoined from taking any of the following actions against any of New Pliant, the Debtors, the

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Reorganized Debtors or their property on account of such Claims or Interests: (A) commencing or continuing, in any manner or in any place, any action, or other proceeding; (B) enforcing, attaching, collecting or recovering in any manner any judgment, award, decree or order; (C) creating, perfecting or enforcing any lien or encumbrance; and (D) commencing or continuing, in any manner or in any place, any action that does not comply with or is inconsistent with the provisions of this Plan; provided, however, that nothing contained herein shall preclude such persons from exercising their rights pursuant to and consistent with the terms of this Plan.

(b)By accepting distributions pursuant to this Plan, each Holder of an Allowed Claim or Interest will be deemed to have specifically consented to the injunctions set forth in this section 10.7.

10.8         Term of Bankruptcy Injunction or Stays. All injunctions or stays provided for in the Chapter 11 Cases under section 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall remain in full force and effect until the Effective Date.

10.9         Subordination. The classification and manner of satisfying all Claims and Interests and the respective distributions and treatments hereunder take into account and/or conform to the relative priority and rights of the Claims and Interests in each Class in connection with the contractual, legal and equitable subordination rights relating thereto whether arising under contract, general principles of equitable subordination, section 510(b) of the Bankruptcy Code or otherwise. In addition, subject to the entry of an order by the Bankruptcy Court granting the Debtors’ requested relief, Claims arising from the exercise of put or repurchase rights shall be subordinated pursuant to section 510(b) of the Bankruptcy Code.

ARTICLE XI

RETENTION OF JURISDICTION

Pursuant to sections 105(c) and 1142 of the Bankruptcy Code and notwithstanding entry of the Confirmation Order and the occurrence of the Effective Date, the Bankruptcy Court will retain exclusive jurisdiction, subject to section 12.21 of this Plan, over all matters arising out of, and related to, the Chapter 11 Cases and this Plan to the fullest extent permitted by law, including, among other things, jurisdiction to:

(a)allow, disallow, determine, liquidate, classify, estimate or establish the priority or secured or unsecured status of any Claim or Interest, including the resolution of any request for payment of any Administrative Expense Claim or Priority Tax Claim and the resolution of any objections to the allowance or priority of Claims or Interests;

(b)grant or deny any applications for allowance of compensation or reimbursement of expenses authorized pursuant to the Bankruptcy Code or this Plan for periods ending on or before the Effective Date;

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(c)resolve any matters related to the assumption or assumption and assignment of any executory contract or unexpired lease to which any Debtor is a party or with respect to which any Debtor or the Reorganized Debtor may be liable and to hear, determine, and, if necessary, liquidate any Claims arising therefrom;

(d)ensure that distributions to Holders of Allowed Claims and Interests are accomplished pursuant to the provisions of this Plan;

(e)decide or resolve any motions, adversary proceedings, contested or litigated matters and any other matters and grant or deny any applications involving the Debtors that may be pending on the Effective Date;

(f)enter such orders as may be necessary or appropriate to implement or consummate the provisions of this Plan and all contracts, instruments, releases and other agreements or documents created in connection with this Plan, the Disclosure Statement or the Confirmation Order;

(g)resolve any cases, controversies, suits or disputes that may arise in connection with the consummation, interpretation, or enforcement of this Plan or any contract, instrument, release or other agreement or document that is executed or created pursuant to this Plan, or any entity’s rights arising from or obligations incurred in connection with this Plan or such documents;

(h)approve any modification of this Plan before or after the Effective Date pursuant to section 1127 of the Bankruptcy Code or approve any modification of the Disclosure Statement, the Confirmation Order or any contract, instrument, release or other agreement or document created in connection with this Plan, the Disclosure Statement or the Confirmation Order, or remedy any defect or omission or reconcile any inconsistency in any Bankruptcy Court order, this Plan, the Disclosure Statement, the Confirmation Order or any contract, instrument, release or other agreement or document created in connection with this Plan, the Disclosure Statement or the Confirmation Order, in such manner as may be necessary or appropriate to consummate this Plan;

(i)hear and determine all applications for compensation and reimbursement of expenses of Professionals under this Plan or under sections 330, 331, 363, 503(b), 1103 and 1129(c)(9) of the Bankruptcy Code, which shall be payable by the Debtors only upon allowance thereof pursuant to the order of the Bankruptcy Court, provided, however, that the fees and expenses of the Reorganized Debtors, incurred after the Effective Date, including counsel fees, may be paid by the Reorganized Debtors in the ordinary course of business and shall not be subject to the approval of the Bankruptcy Court;

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(j)issue injunctions, enter and implement other orders, or take such other actions as may be necessary or appropriate to restrain interference by any entity with consummation, implementation or enforcement of this Plan or the Confirmation Order;

(k)hear and determine causes of action by or on behalf of the Debtors or the Reorganized Debtors;

(l)hear and determine matters concerning state, local and federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy Code;

(m)enter and implement such orders as are necessary or appropriate if the Confirmation Order is for any reason or in any respect modified, stayed, reversed, revoked or vacated, or if distributions pursuant to this Plan are enjoined or stayed;

(n)determine any other matters that may arise in connection with or relate to this Plan, the Disclosure Statement, the Confirmation Order or any contract, instrument, release, or other agreement, or document created in connection with this Plan, the Disclosure Statement or the Confirmation Order;

(o)enforce all orders, judgments, injunctions, releases, exculpations, indemnifications and rulings entered in connection with the Chapter 11 Cases;

(p)hear and determine all matters related to (i) the property of the Estates from and after the Confirmation Date and (ii) the activities of the Reorganized Debtors;

(q)hear and determine disputes with respect to compensation of the Reorganized Debtors’ professional advisors;

(r)hear and determine such other matters as may be provided in the Confirmation Order or as may be authorized under the Bankruptcy Code; and

(s)enter an order closing the Chapter 11 Cases.

ARTICLE XII

MISCELLANEOUS PROVISIONS

12.1         Surrender of Instruments. As a condition to participation under this Plan, (i) the Holder of an equity security of Pliant that desires to receive the property to be distributed on account of an Allowed Interest with respect to said equity security shall surrender such security, or evidence thereof satisfactory to the Debtors or their designee, and (ii) the Holder of a note, debenture or other evidence of indebtedness of the Debtors that desires to receive the property to

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be distributed on account of an Allowed Claim based on such note, debenture or other evidence of indebtedness shall surrender such note, debenture or other evidence of indebtedness to the Debtors, or their designee (unless such Holder’s Claim will be Reinstated by the Plan, in which case such surrender shall not be required), and shall execute and deliver such other documents as are necessary to effectuate this Plan; provided, however, that if a claimant is a Holder of an equity security, note, debenture or other evidence of indebtedness for which no physical certificate was issued to the Holder but which  instead is held in book-entry form pursuant to a global security held by DTC or other securities depositary or custodian thereof, then such Holder shall be deemed to have surrendered such Holder’s equity security, note, debenture or other evidence of indebtedness upon surrender to Pliant of such global security by DTC or such other securities depositary or custodian thereof. Except as otherwise provided in this section, if no surrender of a security, note, debenture or other evidence of indebtedness occurs and a claimant does not provide an affidavit and indemnification agreement, in form and substance satisfactory to the Debtors, that such security, note, debenture or other evidence of indebtedness was lost, then no distribution may be made to any claimant whose Claim or Interest is based on such security, note, debenture or other evidence of indebtedness thereof. The Debtors shall make subsequent distributions only to the persons who surrender the securities for exchange (or their assignees) and the record holders of such securities shall be those holders of record as of the Effective Date. Except as otherwise provided herein, the Old Notes Indentures and the Stockholders Agreement shall be rendered void as of the Effective Date.

12.2         Committees. The appointment of the Representative Committee shall terminate on the Effective Date.

12.3         Post-Confirmation Date Retention of Professionals. Upon the Effective Date, any requirement that professionals employed by the Reorganized Debtors comply with sections 327 through 331 of the Bankruptcy Code in seeking retention or compensation for services rendered after such date will terminate, and the Reorganized Debtors will be authorized to employ and compensate professionals in the ordinary course of business and without the need for Bankruptcy Court approval.

12.4         Bar Date for Certain Administrative Expense Claims. All applications for final allowance of fees and expenses of professional persons employed by the Debtors or the Representative Committee pursuant to orders entered by the Bankruptcy Court and on account of services rendered prior to the Effective Date shall be filed with the Bankruptcy Court and served upon the Reorganized Debtors’ counsel at the addresses set forth in section 12.15 of this Plan no later than thirty (30) days after the Effective Date. Any such claim that is not filed within this time period shall be discharged and forever barred. Objections to any application for allowance of Administrative Expense Claims described in this section 12.4 must be filed within thirty (30) days after the filing thereof, as may be extended by the Bankruptcy Court upon request of the Reorganized Debtors.

12.5         Certain Fees and Expenses of Old Indenture Trustee, First Lien Indenture Trustee, Second Lien Indenture Trustee and New Senior Subordinated Notes Indenture Trustee. On the Effective Date, the reasonable fees and expenses of the Old Indenture Trustee, the First Lien Indenture Trustee, the Second Lien Indenture Trustee and the New Senior Subordinated Notes Indenture Trustee shall be Allowed as Administrative Expense Claims against the Debtors,

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pursuant to section 503(b) of the Bankruptcy Code, and shall be paid by the Debtors without the need for the Old Indenture Trustee, the First Lien Indenture Trustee, the Second Lien Indenture Trustee and the New Senior Subordinated Notes Indenture Trustee to file an application for allowance with the Bankruptcy Court. The Bankruptcy Court shall retain jurisdiction over any dispute regarding the reasonableness of such fees and expenses.

12.6         Effectuating Documents and Further Transactions. Each of the Debtors, New Pliant or the Reorganized Debtors is authorized to execute, deliver, file or record such contracts, instruments, releases and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement and further evidence the terms and conditions of this Plan and any notes or securities issued pursuant to this Plan, including actions that the First Lien Incentive Trustee and the Second Lien Indenture Trustee may reasonably request to further effect the terms of the Plan.

12.7         Compensation and Benefit Programs. Except as otherwise expressly provided in Exhibit I hereto, the Reorganized Debtors shall continue to perform their obligations under all employment and severance contracts and policies, and all compensation and benefit plans, policies and programs of the Debtors applicable to their employees, retirees and non-employee directors and the employees and retirees of their subsidiaries, including, without limitation, all savings plans, retirement plans, healthcare plans, disability plans, severance benefit plans, incentive plans, life and accidental death and dismemberment insurance plans. New Pliant or any one of the Reorganized Debtors may prior to the Effective Date enter into employment agreements with employees that become effective on or prior to the Effective Date and survive consummation of this Plan. Any such agreements will be annexed to the Plan Supplement or otherwise filed with the Bankruptcy Court. In addition, on the Effective Date, the unpaid portion of any insider Eligible Employee’s payment pursuant to the 2005 Management Incentive Compensation Plan shall be Allowed and shall be paid by the Debtors or Reorganized Debtors without the need for such insider Eligible Employee to file a proof of claim or an application for allowance with the Bankruptcy Court. Finally, on the Effective Date, New Pliant shall perform its obligations under the emergence bonus plan as set forth in section 5.15 of this Plan.

12.8         Corporate Action. Prior to, on, or after the Effective Date (as appropriate), all matters expressly provided for under this Plan that would otherwise require approval of the shareholders or directors of one (1) or more of the Debtors, New Pliant or the Reorganized Debtors shall be deemed to have occurred and shall be in effect prior to, on, or after the Effective Date (as appropriate) pursuant to the applicable general corporation law of the states in which the Debtors, New Pliant or the Reorganized Debtors are incorporated without any requirement of further action by the shareholders or directors of the Debtors, New Pliant or the Reorganized Debtors.

12.9         Exemption from Transfer Taxes. Pursuant to section 1146(a) of the Bankruptcy Code, (a) the issuance, transfer or exchange of notes or equity securities under this Plan; (b) the creation of any mortgage, deed of trust, lien, pledge or other security interest; (c) the making or assignment of any lease or sublease; or (d) the making or delivery of any deed or other instrument of transfer under this Plan, including, without limitation, merger agreements, agreements of consolidation, restructuring, disposition, liquidation or dissolution, deeds, bills of sale, and transfers of tangible property, will not be subject to any stamp tax or other similar tax.

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12.10       Payment of Statutory Fees. All fees payable pursuant to section 1930 of title 28 of the United States Code, as determined by the Bankruptcy Court at the Confirmation Hearing, shall be paid on the Effective Date.

12.11       Amendment or Modification of the Plan. Subject to section 1127 of the Bankruptcy Code and, to the extent applicable, sections 1122, 1123 and 1125 of the Bankruptcy Code, the Debtors may, alter, amend or modify this Plan or the Exhibits at any time prior to or after the Confirmation Date but prior to the substantial consummation of this Plan, provided that such alteration, amendment, or modification is not inconsistent with the provisions of the Term Sheet in a manner that is materially adverse to the Consenting Noteholders. A Holder of a Claim or Interest that has accepted this Plan shall be deemed to have accepted the Plan, as altered, amended or modified, if the proposed alteration, amendment or modification does not materially and adversely change the treatment of the Claim or Interest of such Holder.

12.12       Severability of Plan Provisions. If, prior to the Confirmation Date, any term or provision of this Plan is determined by the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court will have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void or unenforceable, and such term or provision will then be applicable as altered or interpreted. Notwithstanding any such holding, alteration or interpretation, the remainder of the terms and provisions of this Plan will remain in full force and effect and will in no way be affected, impaired or invalidated by such holding, alteration, or interpretation. The Confirmation Order will constitute a judicial determination and will provide that each term and provision of this Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms.

12.13       Successors and Assigns. This Plan shall be binding upon and inure to the benefit of the Debtors, and their respective successors and assigns, including, without limitation, the Reorganized Debtors and New Pliant. The rights, benefits and obligations of any entity named or referred to in this Plan shall be binding on, and shall inure to the benefit of, any heir, executor, administrator, successor or assign of such entity.

12.14       Revocation, Withdrawal or Non-Consummation. The Debtors reserve the right to revoke or withdraw this Plan as to any or all of the Debtors prior to the Confirmation Date and to file subsequent plans of reorganization. If the Debtors revoke or withdraw this Plan as to any or all of the Debtors, or if confirmation or consummation as to any or all of the Debtors does not occur, then, with respect to such Debtors, (a) this Plan shall be null and void in all respects, (b) any settlement or compromise embodied in this Plan (including the fixing or limiting to an amount certain any Claim or Interest or Class of Claims or Interests), assumption or rejection of executory contracts or leases affected by this Plan, and any document or agreement executed pursuant to this Plan shall be deemed null and void and (c) nothing contained in this Plan shall (i) constitute a waiver or release of any Claims by or against, or any Interests in, such Debtors or any other Person, (ii) prejudice in any manner the rights of such Debtors or any other Person or (iii) constitute an admission of any sort by the Debtors or any other Person.

12.15       Notice. All notices, requests and demands to or upon the Debtors or the Reorganized Debtors to be effective shall be in writing and, unless otherwise expressly provided

44

herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:

PLIANT CORPORATION

1475 Woodfield Road

Suite 700

Schaumburg, IL 60173

Telephone: (847) 969-3319

Facsimile: (847) 969-3338

Attn: Stephen T. Auburn

with a copy to:

SIDLEY AUSTIN LLP

One South Dearborn Street

Chicago, Illinois 60603

Telephone: (312) 853-7000

Facsimile: (312) 853-7036

Attn: Larry J. Nyhan

-and-

YOUNG CONAWAY STARGATT & TAYLOR, LLP

The Brandywine Building

1000 West Street, 17th Floor

P.O. Box 391

Wilmington, Delaware 19899-0391

Telephone: (302) 571-6600

Facsimile: (302) 571-1253

Attn: Robert S. Brady

Counsel to Debtors and Debtors-in-Possession

12.16       Governing Law. Except to the extent that the Bankruptcy Code, the Bankruptcy Rules or other federal law is applicable, or to the extent that an exhibit or schedule to this Plan, the First Lien Notes Indenture, the Second Lien Notes Indenture or the Old Notes Indentures provide otherwise, the rights and obligations arising under this Plan shall be governed by, and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the principles of conflicts of law of such jurisdiction.

12.17       Tax Reporting and Compliance. The Reorganized Debtors are hereby authorized, on behalf of each of the Debtors, to request an expedited determination under section 505 of the Bankruptcy Code of the tax liability of the Debtors for all taxable periods ending after the Petition Date through, and including, the Effective Date.

12.18       Exhibits. All Exhibits to this Plan are incorporated and are a part of this Plan as if set forth in full herein.

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12.19       Filing of Additional Documents. On or before substantial consummation of this Plan, New Pliant, the Reorganized Debtors and the Debtors shall File such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of this Plan.

12.20       Reservation of Rights. Except as expressly set forth herein, the Plan shall have no force and effect unless the Bankruptcy Court has entered the Confirmation Order. The filing of the Plan, any statement or provision contained in the Plan, or the taking of any action by the Debtors with respect to the Plan shall not be and shall not be deemed to be an admission or waiver of any rights of the Debtors with respect to the Holders of Claims and Interests.

12.21       DisputesConcerning Canadian Claims against and Interests in Canadian Debtors. All disputes involving the rights of a Canadian entity that is (i) the Holder of a Claim against or an Interest in a Canadian Debtor and (ii) not subject to the personal jurisdiction of the Bankruptcy Court will be determined by the Bankruptcy Court without prejudice to such entity’s right to seek to have such dispute heard instead by the Canadian Court. Notwithstanding the foregoing, all such Canadian entities will be bound by the terms and provisions of this Plan.

12.22       Obligations Under Final DIP Order. Nothing contained herein shall affect the Debtors’ obligations under the Final DIP Order, and the Debtors shall continue to honor their obligations under the Final DIP Order so long as such order is in full force and effect.

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Dated:Wilmington, Delaware	Respectfully submitted,
June 19, 2006
	PLIANT CORPORATION
	(for itself and on behalf of the Affiliate Debtors, as
	Debtors and Debtors-in-Possession)
By:	________________________
	Stephen T. Auburn
	Vice President and General Counsel
	SIDLEY AUSTIN LLP
	Larry J. Nyhan
	James F. Conlan
	William A. Evanoff
	Jessica C. Knowles
	Laura B. Franzon
	One South Dearborn Street
	Chicago, Illinois 60603
	Telephone: (312) 853-7000
	Facsimile: (312) 853-7036
	-and-
	YOUNG CONAWAY STARGATT & TAYLOR, LLP
	Robert S. Brady (No. 2847)
	Edmon L. Morton (No. 3856)
	Kenneth J. Enos (No. 4544)
	The Brandywine Building
	1000 West Street, 17th Floor
	P.O. Box 391
	Wilmington, Delaware 19899-0391
	Telephone: (302) 571-6600
	Facsimile: (302) 571-1253
	Counsel to the Debtors and Debtors-in-Possession

47

EX-2.2

Exhibit 2.2

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
PLIANT CORPORATION

ARTICLE ONE

The name of the corporation (which is hereinafter referred to as the “Corporation”) is Pliant Corporation.

ARTICLE TWO

The address of the Corporation’s registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle. The name of the Corporation’s registered agent at such address is The Corporation Trust Company.

ARTICLE THREE

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

ARTICLE FOUR

PART A. AUTHORIZED SHARES

The total number of shares of stock which the Corporation has the authority to issue is [100,336,400], consisting of:

(a)           335,600 shares of Series AA Redeemable Preferred Stock, par value $[___] per share (the “Series AA Preferred Stock”);

(b)           8,000 shares of Series M Preferred Stock, par value $[___] per share (the “Series M Preferred Stock”); and

(c)           [100,000,000](1) shares of Common Stock, par value $[___] per share (the “Common Stock”).

(1)If 100,000 shares of Common Stock issued pursuant to the Plan, at least 100,000,000 shares of Common Stock must be authorized.

The Series AA Preferred Stock and the Series M Preferred Stock are sometimes hereafter collectively referred to as the “Preferred Stock”. The Common Stock and the Preferred Stock are sometimes hereafter collectively referred to as the “Stock”.

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Notwithstanding anything herein to the contrary, the Corporation shall not be authorized to issue non-voting capital stock of any class, series or other designation to the extent prohibited by Section 1123(a)(6) of title 11 of the United States Code (the “Bankruptcy Code”); provided, however, that the foregoing restriction shall have no further force and effect beyond that required under Section 1123(a)(6) of the Bankruptcy Code.

PART B. SERIES AA REDEEMABLE PREFERRED STOCK

Section 1. Dividends.

(a)           The holders of shares of Series AA Preferred Stock will be entitled to receive, when, as and if declared by the Board of Directors out of funds of the Corporation legally available therefor, cumulative dividends on the Stated Value (as defined hereinafter) thereof at the rate of 13% per annum, or 3.25% per quarter for each of the quarterly periods ending on the last day of [March, June, September and December] of each year (such rate, the “Series AA Dividend Rate” and each such date, a “Series AA Dividend Payment Date”), and no more, payable in arrears on each succeeding Series AA Dividend Payment Date commencing on the first Series AA Dividend Payment Date after the date of original issue; provided that:  (i) if any such payment date is not a Business Day then such dividend shall be payable on the next Business Day, and (ii) accumulated and unpaid dividends for any prior quarterly period may be paid at any time. The term “Business Day” means a day other than a Saturday, Sunday or day on which banking institutions in New York, New York are authorized or required to remain closed. Such dividends shall accrue whether or not they have been declared and shall be cumulative from the date of original issue of each share of Series AA Preferred Stock, whether or not there are funds legally available for the payment of dividends on any payment date. Each such dividend shall be paid to the holders of record of the shares of Series AA Preferred Stock as they appear on the share register of the Corporation on such record date, not more than 60 days nor less than 10 days preceding the Series AA Dividend Payment Date, as shall be fixed by the Board of Directors or a duly authorized committee thereof. To the extent not paid on any Series AA Dividend Payment Date, such dividends shall be added to the Stated Value of such share of Series AA Preferred Stock as of such date and such dividends shall remain a part thereof until paid, and dividends shall thereafter accrue at the Series AA Dividend Rate and be paid on such share of Series AA Preferred Stock on the basis of the Stated Value, as so adjusted.

The term “Stated Value” means, as to each share of Series AA Preferred Stock, $1,000 per share, plus adjustments for accumulated and unpaid dividends as provided in the preceding paragraph and minus any distributions (other than dividends not previously added to the Stated Value) made with respect to such Series AA Preferred Stock, all as appropriately adjusted for any stock splits, combinations, recapitalizations and similar transactions with respect to the Series AA Preferred Stock. For purposes of this definition, the value of any payment or distribution by the Corporation of assets other than cash shall be the fair market value (as determined in good faith by the Board of Directors) of such assets, except where such assets consist of securities that are listed on a national securities exchange or quoted in the over-the-counter market, in which case the value of the assets shall be the market price thereof as of the date of receipt.

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(b)           If dividends are not paid in full, or declared in full and sums set apart for the payment thereof, upon the shares of Series AA Preferred Stock and the shares of any other series of Preferred Stock ranking on a parity as to dividends with the Series AA Preferred Stock (“Parity Stock”), all dividends declared upon shares of Series AA Preferred Stock and upon all Parity Stock shall be paid or declared pro rata so that in all cases the amount of dividends paid or declared per share on the Series AA Preferred Stock and such Parity Stock shall bear to each other the same ratio that unpaid accumulated dividends per share, including dividends accrued or in arrears, if any, on the shares of Series AA Preferred Stock and such other shares of Parity Stock bear to each other. Unless and until full cumulative dividends on the shares of Series AA Preferred Stock in respect of all past quarterly dividend periods have been paid in cash, and the full amount of dividends on the shares of Series AA Preferred Stock in respect of the then current quarterly dividend period shall have been or are contemporaneously declared in full and sums set aside for the payment thereof in cash, no dividends shall be paid or declared and set aside for payment or other distribution made upon the Common Stock or any other capital stock of the Corporation ranking junior to the Series AA Preferred Stock as to dividends (together with the Common stock, “Junior Stock”), other than in shares of, or warrants or rights to acquire, Junior Stock. Holders of shares of Series AA Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or shares of capital stock, in excess of full accrued and cumulative dividends as herein provided. No interest or sum of money in lieu of interest shall be payable in respect of any dividend payment or payments on the shares of Series AA Preferred Stock that may be in arrears.

The terms “accrued dividends,” “dividends accrued” and “dividends in arrears,” whenever used herein with reference to shares of Preferred Stock shall be deemed to mean an amount which shall be equal to dividends thereon at the annual dividend rates per share for the respective series from the date or dates on which such dividends commence to accrue to the end of the then current quarterly dividend period for such Preferred Stock (or, in the case of redemption, to the date of redemption), whether or not earned or declared and whether or not assets for the Corporation are legally available therefor, less the amount of all such dividends paid, or declared in full and sums set aside for the payment thereof, upon such shares of Preferred Stock.

(c)           Dividends payable on the shares of Series AA Preferred Stock for any period less than a full quarterly dividend period shall be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in the period for which payable.

Section 2. Optional Redemption.

(a)           The shares of Series AA Preferred Stock are redeemable at the option of the Corporation by resolution of its Board of Directors, in whole or from time to time in part, subject to the limitations set forth below, at an amount equal to the Stated Value thereof plus all accrued and unpaid dividends from and including the day after the most recent Series AA Dividend Payment Date up to (but excluding) the Redemption Date (as defined in Section 2(c)) (the “Redemption Price”) upon giving notice as provided below.

(b)           If less than all of the outstanding shares of Series AA Preferred Stock are to be redeemed, such redemption shall be made pro rata among the holders of such shares of

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Series AA Preferred Stock on the basis of the number of shares of Series AA Preferred Stock held by each such holder.

(c)           At least 10 days but not more than 60 days prior to the date fixed for the redemption of shares of Series AA Preferred Stock, a written notice shall be mailed to each holder of record of shares of Series AA Preferred Stock to be redeemed in a postage prepaid envelope addressed to such holder at such holder’s post office address as shown on the records of the Corporation, notifying such holder of the election of the Corporation to redeem such shares, stating the date fixed for redemption thereof (the “Redemption Date”), specifying the Redemption Price, and calling upon such holder to surrender to the Corporation on the Redemption Date at the place designated in such notice (which shall be in New York, New York, or at the principal executive offices of the Corporation) the certificate or certificates representing the number of shares specified in such notice of redemption. On or after the Redemption Date each holder of shares of Series AA Preferred Stock to be redeemed shall surrender the certificate or certificates for such shares to the Corporation at the place designated in such notice, and against such surrender the Redemption Price of such shares shall be paid to or on the order of the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be canceled. In case less than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.

(d)           From and after the Redemption Date (unless default shall be made in payment in full of the Redemption Price), all dividends on the shares of Series AA Preferred Stock designated for redemption in such notice shall cease to accrue, and all rights of the holders thereof as stockholders of the Corporation, except the right to receive the Redemption Price of such shares (including all accrued and unpaid dividends up to the Redemption Date) upon the surrender of certificates representing the same, shall cease and terminate and such shares shall not thereafter be transferred (except with the consent of the Corporation) on the books of the Corporation and shall not be deemed to be outstanding for any purpose whatsoever.

(e)           At its election, the Corporation prior to the Redemption Date may deposit the Redemption Price (including all accrued and unpaid dividends up to the Redemption Date) of shares of Series AA Preferred Stock called for redemption in trust for the holders thereof with a bank or trust company (having a capital surplus and undivided profits aggregating not less than $50,000,000) in New York, New York or at the principal executive offices of the Corporation, with irrevocable instructions and authority to redeem such shares upon surrender of certificates therefor, in which case the aforesaid notice to holders of shares of Series AA Preferred Stock to be redeemed shall state the date of such deposit, shall specify the office of such bank or trust company as the place of payment of the Redemption Price, and shall call upon such holders to surrender the certificates representing such shares at such place on or after the date fixed in such redemption notice (which shall not be later than the Redemption Date) against payment of the Redemption Price (including all accrued and unpaid dividends up to the Redemption Date). Any interest accrued on such funds shall be paid to the Corporation from time to time. Any moneys so deposited which remain unclaimed by the holders of such shares of Series AA Preferred Stock at the end of two years after the Redemption Date shall be returned by such bank or trust company to the Corporation; thereafter, the holders of shares of Series AA Preferred Stock redeemed on such Redemption Date shall look only to the Corporation for payment of the Redemption Price therefor.

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(f)            Shares of Series AA Preferred Stock redeemed, repurchased or retired pursuant to the provisions of this Section 2 or surrendered to the Corporation upon conversion shall thereupon be retired and may not be reissued as shares of Series AA Preferred Stock but shall thereafter have the status of authorized but unissued shares of Preferred Stock, without designation as to series until such shares are once more designated as part of a particular series of Preferred Stock.

Section 3. Voting Rights. Except as required by law or otherwise provided in Section 5(a) or Section 7 of this Part B or Part E (Board of Directors) of this Article Four, the holders of shares of Series AA Preferred Stock shall not be entitled to vote on any matter submitted to a vote of stockholders of the Corporation. Each holder of Series AA Preferred Stock shall be entitled to one vote for each share of Series AA Preferred Stock held by such stockholder that has voting power on the matter in question.

Section 4. Liquidation Rights.

(a)           In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or otherwise, the holders of shares of Series AA Preferred Stock shall be entitled to receive, out of the assets of the Corporation available for distribution to its stockholders, in cash, the amount of the Stated Value for each share of Series AA Preferred Stock, plus an amount equal to all accrued and unpaid dividends on each such share from and including the day after the most recent Series AA Dividend Payment Date up to (but excluding) the date fixed for distribution, before any distribution shall be made to the holders of shares of Junior Stock. If upon any liquidation, dissolution or winding up of the Corporation, the assets distributable among the holders of shares of Series AA Preferred Stock and all other series of Preferred Stock ranking (as to any such distribution) on a parity with the Series AA Preferred Stock are insufficient to permit the payment in full to the holders of all such shares of all preferential amounts payable to such holders, then the entire assets of the Corporation so distributable shall be distributed ratably among the holders of the shares of Series AA Preferred Stock and such other series of Preferred Stock ranking (as to any such distribution) on a parity with the Series AA Preferred Stock in proportion to the respective amounts that would be payable per share if such assets were sufficient to permit payment in full. The payments to be made with respect to the Series M Preferred Stock pursuant to Article Four, Part C, Section 6 shall rank on parity with the payments to be made with respect to the Series AA Preferred Stock pursuant hereto.

(b)           For purposes of this Section 4, a distribution of assets in any dissolution, winding up or liquidation shall not include (i) any dissolution, liquidation or winding up in connection with any reincorporation of the Corporation in another jurisdiction, (ii) a sale of all or substantially all of the Corporation’s assets or (iii) any consolidation or merger of the Corporation with or into another person, provided that effective provision is made in the certificate or articles of incorporation of the resulting or surviving corporation or otherwise for the maintenance for the holders of Preferred Stock of substantially similar rights as set forth herein or for the issuance to the holders of Preferred Stock of substantially similar securities as the Preferred Stock held by them (subject to changes contemplated by Article Four, Part B, Section 7(c)(iii)).

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(c)           After the payment of the full preferential amounts provided for herein to the holders of shares of Series AA Preferred Stock, such holders shall be entitled to no other or further participation in the distribution of the assets of the Corporation.

Section 5. Conversion.

(a)           At any time after [__________], 2011, holders of at least 40% of the outstanding shares of Series AA Preferred Stock shall have the right, exercisable at any time after such date by affirmative vote or by written consent as provided by law, to cause all outstanding shares of Series AA Preferred Stock to be converted into:

(i)            in the event that a Proposed Merger (as defined in Section 7(c)) that meets the requirements set forth in clauses (i) through (iv) of Section 7(c) (the “Merger Exception”) shall not, as of the date of conversion, have been previously consummated, a number of shares of Common Stock equal to 99.9% of the number obtained by dividing (x) the number of Fully Diluted Shares of Common Stock prior to such conversionby (y) .001; or

(ii)           in the event that a Proposed Merger (as defined in Section 7(c)) that satisfies the requirements of the Merger Exception shall, as of the date of conversion, have been previously consummated, a number of shares of Common Stock equal to 99.9% of the number obtained by dividing (x) the number of Fully Diluted Shares of Common Stock prior to such conversion(excluding, for this purpose, any shares of Common Stock issued to the shareholders of the other party to any such Proposed Merger) by (y) .001.

The date upon which the holders of at least 40% of the outstanding shares of Series AA Preferred Stock have voted or effectively consented to the exercise of the conversion rights described in this Section 5(a) is hereinafter referred to as the “Conversion Date”. If a notice of redemption has been given pursuant to Section 2, from and after the date such notice is given, the conversion right described in this Section 5(a) shall not be exercisable, unless default shall be made in payment in full of the Redemption Price. Upon conversion, no adjustment or payment will be made for dividends or interest, but if any holder surrenders shares of Series AA Preferred Stock for conversion after the close of business on the record date for the payment of a dividend and prior to the opening of business on the dividend payment date for such dividend, then, notwithstanding such conversion, the dividend payable on such dividend payment date will be paid to the registered holder of such shares on such record date. In such event, such shares, when surrendered for conversion, must be accompanied by payment of an amount equal to the dividend payable on such dividend payment date on the shares so converted (unless such shares have been called for redemption and the date fixed for redemption is after such record date and on or prior to such payment date, in which case such payment need not accompany such shares).

“Fully Diluted Shares of Common Stock” means the sum of, without duplication, (i) the number of outstanding shares of Common Stock, (ii) the maximum number of shares of Common Stock issuable upon conversion or exchange of any securities (other than the Series AA Preferred Stock and Series M Preferred Stock) convertible into or exchangeable for shares of Common Stock and (iii) the maximum number of shares of Common Stock issuable upon

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exercise of any outstanding warrants, options or other rights, whether or not vested, to subscribe for or purchase Common Stock.

(b)           Upon exercise of the conversion right described in Section 5(a), each holder of shares of Series AA Preferred Stock shall deliver the certificate or certificates therefor to the principal office of any transfer agent for the Common Stock, and (if so required by the Corporation or any conversion agent) any instruments of transfer in form satisfactory to the Corporation and to any conversion agent, duly executed by the registered holder or his duly authorized attorney, and transfer taxes, stamps or funds therefor or evidence of payment thereof if required pursuant to Section 5(d). The Corporation shall, as soon as practicable after such delivery and compliance with any other conditions herein contained, deliver at such office of such transfer agent to the person for whose account such shares of Series AA Preferred Stock were so surrendered or to the nominee or nominees of such person, certificates evidencing the number of full shares of Common Stock to which such person shall be entitled, together with a cash adjustment in respect of any fraction of a share of Common Stock as hereinafter provided. The conversion right with respect to any such shares shall be deemed to have been exercised immediately before the close of business on the Conversion Date, notwithstanding the compliance or non-compliance of any holder of shares of Series AA Preferred Stock with the provisions of this paragraph, and, effective as of the Conversion Date, the rights of each holder of shares of Series AA Preferred Stock so converted shall cease and the person or persons entitled to receive the shares of the Common Stock issuable upon such conversion shall be treated for all purposes (including without limitation for purposes of voting and the right to receive dividends and other distributions from the Corporation) as the record holder or holders of such shares of Common Stock.

(c)           No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon conversion of shares of Series AA Preferred Stock. Instead of any fractional shares of Common Stock which would otherwise be issuable upon conversion of any shares of Series AA Preferred Stock, the Corporation shall pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of (i) if the Common Stock is listed on a national securities exchange or quoted in the over-the-counter market, the closing price for the Common Stock on the last trading day preceding the date of conversion or (ii) otherwise, the fair market value (as determined in good faith by the Board of Directors) of a share of Common Stock immediately prior to conversion.

(d)           Upon conversion of the shares of Series AA Preferred Stock, the Corporation shall pay any documentary, stamp or similar issue or transfer tax due on the issue of Common Stock upon the conversion. A holder of such shares, however, shall pay to the Corporation the amount of any tax which is due (or shall establish to the satisfaction of the Corporation the payment thereof or that no such payment is due) if the shares of Common Stock issuable to such holder upon conversion are to be issued in a name other than the name of such holder and shall pay to the Corporation any amount required by the last sentence of the first paragraph of Section 5(a).

(e)           The Corporation shall reserve and shall at all times have reserved out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of Series AA Preferred Stock, enough shares of Common Stock to permit the

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conversion of the then outstanding shares of Series AA Preferred Stock. All shares of Common Stock which may be issued upon conversion of shares of Series AA Preferred Stock shall be validly issued, fully paid and nonassessable. The Corporation shall from time to time, in accordance with the laws of the State of Delaware, increase the authorized number of shares of Common Stock if at any time the number of shares of Common Stock authorized but not outstanding shall not be sufficient to permit conversion of all then-outstanding shares of Series AA Preferred Stock. In order that the Corporation may issue shares of Common Stock upon conversion of shares of Series AA Preferred Stock, the Corporation will as expeditiously as possible endeavor to comply with all applicable federal and state securities laws (including registration with or approval of any governmental authority) and will list on and keep listed such shares of Common Stock to be issued upon conversion on each securities exchange on which the Common Stock is listed.

(f)            If any of the following shall occur:  (i) any reclassification or change of outstanding shares of Common Stock issuable upon conversion of shares of Series AA Preferred Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or (ii) any consolidation or merger (including a Proposed Merger that meets the requirements of the Merger Exception) to which the Corporation is a party (other than a merger in which the Corporation is the continuing corporation and which does not result in any reclassification of, or change (other than a change in name, or par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of Common Stock), then, following conversion of the Series AA Preferred Stock pursuant to the terms of Section 5(a), each holder of each share of Series AA Preferred Stock then outstanding shall have the right to receive the kind and amount of shares of stock and other securities, cash and other property receivable upon such consolidation, merger, reclassification or change by a holder of the number of shares of Common Stock into which such share of Series AA Preferred Stock was convertible immediately prior to such consolidation, merger, reclassification or change. In any such event, effective provision shall be made (and it shall be a condition precedent to any such consolidation, merger, reclassification or change that effective provision be made), in the articles or certificate of incorporation of the resulting or surviving corporation or other corporation issuing or delivering such shares of stock, other securities, cash or other property or otherwise, so that the provisions set forth herein for the protection of the conversion rights of the Series AA Preferred Stock shall thereafter be applicable, as nearly as reasonably may be, to any such other shares of stock and other securities, cash or other property deliverable upon conversion of Series AA Preferred Stock remaining outstanding or other convertible stock or securities received by the holders of Series AA Preferred Stock in place thereof; and any such resulting or surviving corporation or other corporation issuing or delivering such shares of stock, other securities, cash or other property shall expressly assume the obligation to deliver, upon the exercise of the conversion privilege, such shares of stock, other securities, cash or other property as the holders of shares of Series AA Preferred Stock remaining outstanding, or other convertible stock or securities received by the holders of shares of Series AA Preferred Stock in place thereof, shall be entitled to receive pursuant to the provisions of this Section 5(f), and to make provision for the protection of the conversion right as above provided. In case shares of stock, other securities, cash or other property are deliverable upon conversion as aforesaid, then all references to shares of Common Stock in this Section 5 shall be deemed to apply, so far as provided and as nearly as is reasonable, to any such shares, other securities, cash or other property. The provisions of this

8

Section 5(f) shall similarly apply to successive consolidations, mergers, sales, transfers, reclassifications, changes or statutory exchanges.

Section 6. Intentionally omitted.

Section 7. Limitations. In addition to any other rights provided by applicable law, so long as any shares of Series AA Preferred Stock are outstanding:

(a)           The Corporation shall not, without the affirmative vote, or the written consent as provided by law, of the holders of at least a majority of the outstanding shares of Series AA Preferred Stock, voting separately as a class:

(i)            create or authorize (whether by means of amendment to this Certificate of Incorporation, a merger or consolidation to which the Corporation is a party or otherwise) or issue any class or series of Preferred Stock (other than the 8,000 shares of Series M Preferred Stock authorized by Part C of this Article Four) or any other class of capital stock ranking either as to payment of dividends or distribution of assets upon liquidation on a parity with or prior to the Series AA Preferred Stock;

(ii)           directly or indirectly redeem, purchase or otherwise acquire, or suffer to occur any redemption, purchase or other acquisition by any Subsidiary of, any of the Common Stock or other capital stock of the Corporation junior to the Series AA Preferred Stock (including, without limitation, warrants, options or other securities or rights exchangeable or exercisable for or convertible into or otherwise to acquire, Common Stock or other capital stock junior to the Series AA Preferred Stock); provided, however, that the foregoing shall not limit the ability of the Corporation to repurchase from a member of the Corporation’s management, upon the termination of such member’s employment with the Corporation, any capital stock of the Corporation issued to such member of management by the Corporation or any Subsidiary, if such repurchase is pursuant to a contract approved by the Board of Directors; or

(iii)          amend, supplement or modify this Section 7(a), whether by means of an amendment to this Certificate of Incorporation, a merger or consolidation to which the Corporation is a party or otherwise.

(b)           The Corporation shall not, without the affirmative vote, or the written consent as provided by law, of the holders of at least two-thirds of the outstanding shares of Series AA Preferred Stock, voting separately as a class:

(i)            sell or otherwise dispose of all or substantially all of the Corporation’s assets in any transaction or series of related transactions, unless prior to or simultaneously with the closing of such sale or disposition, (x) the Corporation gives written notice of redemption of all shares of Series AA Preferred Stock pursuant to Article Four, Part B, Section 2(c) and deposits the Redemption Price therefor with a bank or trust company pursuant to Article Four, Part B, Section 2(e) and (y) either (I) [the [_____________] (the “New Senior

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Subordinated Notes”)]  are paid in full in cash or (II) the Corporation gives written notice of redemption of all New Senior Subordinated Notes to the trustee and the holders thereof pursuant to the related indenture and deposits the redemption price therefor with a bank or trust company acting as paying agent or otherwise segregates and holds in trust the redemption price as permitted by the indenture; or

(ii)           amend, supplement or modify this Section 7(b) or any other provision of this Certificate of Incorporation, whether by means of an amendment to this Certificate of Incorporation, a merger or consolidation to which the Corporation is a party or otherwise, in a manner that materially and adversely affects the preferences, rights or powers of the Series AA Preferred Stock.

(c)           The Corporation shall not merge or consolidate with any other entity (other than a merger or consolidation (x) that qualifies as a “reorganization” within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended, or (y) that results in the conversion on the closing date thereof of all shares of Series AA Preferred Stock into an amount in cash equal to the Redemption Price as of such closing date and, on or prior to such closing date, either (I) the New Senior Subordinated Notes are paid in full in cash or (II) the Corporation gives written notice of redemption of all New Senior Subordinated Notes to the trustee and the holders thereof pursuant to the related indenture and deposits the redemption price therefor with a bank or trust company acting as paying agent or otherwise segregates and holds in trust the redemption price as permitted by the indenture, without the affirmative vote, or the written consent as provided by law, of the holders of at least two-thirds of the outstanding shares of Series AA Preferred Stock, voting separately as a class, unless, after giving effect to such merger or consolidation (each, a “Proposed Merger”):

(i)            the Pro Forma Consolidated Coverage Ratio is at least 10% higher than the Corporation’s Consolidated Coverage Ratio (in each case, using the date immediately preceding the entry by the Corporation into an agreement to effect the Proposed Merger as the date of determination);

(ii)           the Pro Forma Total Funded Debt and Preferred Stock/EBITDA Ratio is at least 10% less than the Corporation’s actual Total Funded Debt and Preferred Stock/EBITDA Ratio (in each case, using the date immediately preceding the entry by the Corporation into an agreement to effect the Proposed Merger as the date of determination);

(iii)          the conversion right described in Section 5(a) is preserved so as to, if exercised, result in the conversion of all shares of Series AA Preferred Stock (or securities into which the Series AA Preferred Stock is converted pursuant to such merger or consolidation) into (x) if the Corporation is the survivor, a number of shares of Common Stock equal to at least 51% of the sum of (i) the number of Fully Diluted Shares of Common Stock plus (ii) the number of shares of Common Stock to be issued to the shareholders of the other party to the Proposed Merger, or (y) otherwise, a number of shares of common stock or an amount of other common equity, of the ultimate parent entity of the survivor of the Proposed

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Merger equal to at least 51% of the fully-diluted shares of common stock, or other common equity, of such entity following such conversion; and

(iv)          the holders of the outstanding shares of Series AA Preferred Stock shall continue to have the right to elect, after _______, 2011, a majority of the board of directors of the ultimate parent entity of the survivor of the Proposed Merger, in substantially the same manner as provided in Section 1(d) of Part E of this Article Four.

In connection with any Proposed Merger that meets the requirements set forth in clauses (i) through (iv) of the preceding sentence and does not otherwise require the approval of the holders of at least two-thirds of the outstanding shares of Series AA Preferred Stock pursuant to Section 7(b)(ii) above, the Series AA Preferred Stock shall not have any voting rights, consent rights or appraisal rights with respect to such Proposed Merger (including without limitation the creation, in connection therewith, of any class or series of Common Stock having anti-dilution protection that maintains its percentage ownership of all Common Stock in the event of a conversion of the Series AA Preferred Stock). Nothing herein shall require any holder of Series AA Preferred Stock to consent to, vote in favor of or waive any objections to or dissenters’ rights, appraisal rights or similar rights in connection with any Proposed Merger as to any shares of Common Stock held by such holder of Series AA Preferred Stock.

(d)           Except as otherwise required by applicable law, nothing herein contained shall require a vote or consent of the holders of the Series AA Preferred Stock in connection with (i) any increase in the total number of authorized shares of Common Stock, (ii) the authorization or increase of any class or series of shares ranking, as to dividends and in liquidation, junior to the Series AA Preferred Stock or (iii) the amendment or deletion of the restriction set forth in the last sentence of Part A of this Article Four.

(e)           When used in this Section 7, the following terms have the following meanings:

“Affiliate” means, with respect to any Person, any other Person which directly or indirectly controls, is controlled by or is under common control with such Person. For purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies or investment decisions of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the term “controlled” has a meaning correlative to the foregoing.

“Attributable Debt” means, in respect of a Sale/Leaseback Transaction at the time of determination, the present value (discounted at 13%, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended).

“Capitalized Lease Obligations” means obligations that are required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Funded Debt represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP.

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“Consolidated Coverage Ratio” means, as of any date of determination, the ratio of (a) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters for which financial statements are available ending prior to the date of such determination to (b) Consolidated Interest Expense and Dividends for such four consecutive fiscal quarters.

“Consolidated Interest Expense” means, for any period, the total interest expense of the Corporation and its Subsidiaries plus, to the extent incurred by the Corporation and its Subsidiaries in such period but not included in such interest expense, (a) interest expense attributable to Capitalized Lease Obligations and the interest expense attributable to operating leases constituting part of a Sale/Leaseback Transaction, (b) amortization of debt discount and debt issuance costs, (c) capitalized interest, (d) non-cash interest expense, (e) commissions, discounts and other fees and charges attributable to letters of credit and bankers’ acceptance financing, (f) interest accruing on any indebtedness of any other Person to the extent such indebtedness is guaranteed by the Corporation or any Subsidiary or secured by the assets of the Corporation or any Subsidiary, (g) net costs associated with hedging obligations (including amortization of fees), provided, however, that if hedging obligations result in net benefits rather than costs, such benefits shall be credited in determining Consolidated Interest Expense unless, pursuant to GAAP, such net benefits are otherwise reflected in Consolidated Net Income, (h) dividends and distributions declared and paid in respect of all Disqualified Stock of the Corporation and all preferred stock of any of the Subsidiaries of the Corporation, to the extent held by Persons other than the Corporation or its wholly owned Subsidiary, (i) interest incurred in connection with investments in discontinued operations, and (j) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Corporation) in connection with indebtedness incurred by such plan or trust. Notwithstanding anything to the contrary contained herein, commissions, discounts, yield and other fees and charges incurred in connection with any transaction pursuant to which the Corporation or any of its Subsidiaries may sell, convey or otherwise transfer or grant a security interest in any accounts receivable or related assets shall be included in Consolidated Interest Expense.

“Consolidated Interest Expense and Dividends” means, for any period, (i) Consolidated Interest Expense for such period plus (ii) accrued dividends (whether or not paid) in respect of the Series AA Preferred Stock for such period.

“Consolidated Net Income” means, for any period, the net income (loss) of the Corporation and its Subsidiaries for such period; provided, however, that there shall not be included in such Consolidated Net Income:

(a)           any net income (loss) of any Person (other than the Corporation) if such Person is not a Subsidiary, except that (i) subject to the limitations contained in clauses (d), (e) and (f) below, the Corporation’s equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Corporation or a Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution made to a Subsidiary, to the limitations contained in clause (c) below) and (ii) the Corporation’s equity in a net loss of

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any such Person for such period shall be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from the Corporation or a Subsidiary;

(b)           any net income (or loss) of any Person acquired by the Corporation or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition;

(c)           any net income (or loss) of any Subsidiary if such Subsidiary is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions or loans or intercompany advances by such Subsidiary, directly or indirectly, to the Corporation, except that (i) subject to the limitations contained in clauses (d), (e) and (f) below, the Corporation’s equity in the net income of any such Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed, loaned or advanced by such Subsidiary during such period to the Corporation or another Subsidiary as a dividend, distribution, loan or advance (subject, in the case of a dividend, distribution, loan or advance made to another Subsidiary, to the limitation contained in this clause) and (ii) the Corporation’s equity in a net loss of any such Subsidiary for such period shall be included in determining such Consolidated Net Income;

(d)           any gain (loss) realized upon the sale or other disposition of any asset of the Corporation or its Subsidiaries (including pursuant to any Sale/Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business and any gain (loss) realized upon the sale or other disposition of any capital stock of any Person;

(e)           any extraordinary gain or loss; and

(f)            the cumulative effect of a change in accounting principles.

“Disqualified Stock” means, with respect to any Person, any capital stock of such Person which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable) or upon the happening of any event (a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (b) is convertible or exchangeable for Funded Debt or Disqualified Stock (excluding capital stock convertible or exchangeable solely at the option of the Corporation or any Subsidiary thereof, provided that any such conversion or exchange shall be deemed an issuance of Funded Debt or an issuance of Disqualified Stock, as applicable) or (c) is redeemable at the option of the holder thereof, in whole or in part; provided, however, that only the portion of capital stock that so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed Disqualified Stock; and provided further that any class of capital stock of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or other payment obligations or otherwise by delivery of capital stock that is not Disqualified Stock, and that is not convertible, puttable or exchangeable for Disqualified Stock or Funded Debt, shall not be deemed Disqualified Stock so long as such Person satisfies its obligations with respect thereto solely by the delivery of capital stock that is not Disqualified Stock.

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“EBITDA” means, for any period, the Consolidated Net Income for such period, excluding the following to the extent included in calculating such Consolidated Net Income:  (a) income tax expense of the Corporation and its Subsidiaries, (b) Consolidated Interest Expense and Dividends, (c) depreciation expense of the Corporation and its Subsidiaries, (d) amortization expense of the Corporation and its Subsidiaries (but excluding amortization expense attributable to a prepaid cash item that was paid in a prior period), (e) other noncash charges of the Corporation and its Subsidiaries (excluding any such noncash charge to the extent that it represents an accrual of or reserve for cash expenditures in any future period), (f) income or loss from discontinued operations, (g) plant closing costs (as defined by GAAP) and (h) noncash stock-based compensation expense. Notwithstanding the foregoing, the provision for taxes based on the income or profits of, and the depreciation and amortization and noncash charges of, a Subsidiary of the Corporation shall be added to Consolidated Net Income to compute EBITDA only to the extent (and in the same proportion) that the net income (loss) of such Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be distributed as a dividend, loaned or advanced to the Corporation by such Subsidiary without prior approval of Persons other than the Board of Directors or holders of the Corporation’s Stock (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Subsidiary or its stockholders.

“Funded Debt” means, with respect to any Person on any date of determination (without duplication):  (a) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money; (b) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (c) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto); (d) all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of such Person, any preferred stock (but excluding, in each case, any accrued dividends); (e) all indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such indebtedness is assumed by such Person, provided, however, that the amount of indebtedness of such Person shall be the lesser of (i) the fair market value of such asset at such date of determination and (ii) the amount of such indebtedness of such other Persons; (f) all Capitalized Lease Obligations and all Attributable Debt of such Person; and (g) all obligations of the type referred to in clauses (a) through (f) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any guarantee.

“GAAP” means generally accepted accounting principles in the United States of America as in effect as of the date hereof, including those set forth in (a) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (b) statements and pronouncements of the Financial Accounting Standards Board, (c) such other statements by such other entities as are approved by a significant segment of the accounting profession and (d) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC.

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“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

“Person” means any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or governmental body.

“Pro Forma” means, as of any date of determination, the Consolidated Coverage Ratio or Total Funded Debt and Preferred Stock/EBITDA Ratio, as the case may be, after giving pro forma effect to the Proposed Merger as if such merger or consolidation occurred on the first day of the relevant four quarter period. For purposes of this definition, whenever pro forma effect is to be given to a Proposed Merger, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any indebtedness incurred in connection therewith, the pro forma calculations shall be determined in good faith by a responsible financial or accounting officer of the Corporation. Any such pro forma calculations may include operating expense reductions for the relevant four quarter period resulting from the Proposed Merger which is being given pro forma effect that (a) would be permitted pursuant to Article 11 of Regulation S-X under the Securities Act or (b) have been realized or for which the steps necessary for realization have been taken or are reasonably expected to be taken within six months following any such acquisition, including, but not limited to, the execution or termination of any contracts, the termination of any personnel or the closing (or approval by the Board of Directors of any closing) of any facility, as applicable, provided that, such adjustments are set forth in an officers’ certificate signed by the Corporation’s chief financial officer and another officer which states (i) the amount of such adjustment or adjustments, and (ii) that such adjustment or adjustments are based on the reasonable good faith beliefs of the officers executing such officers’ certificate at the time of such execution. If any indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any interest rate agreement or currency agreement applicable to such indebtedness if such interest rate agreement or currency agreement has a remaining term as at the date of determination in excess of 12 months).

 “Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by the Corporation or any of its Subsidiaries whereby the Corporation or a such Subsidiary transfers such property to a Person and the Corporation or such Subsidiary leases it from such Person, other than leases between the Corporation and a wholly owned Subsidiary of the Corporation or between wholly owned Subsidiaries of the Corporation.

“SEC” means the Securities and Exchange Commission.

“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which more than 50% of the total voting power of shares of capital stock or other interests (including partnership or membership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, representatives, managers or trustees thereof is at the time owned or

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controlled, directly or indirectly, by (a) such Person, (b) such Person and one or more Subsidiaries of such Person or (c) one or more Subsidiaries of such Person.

“Total Funded Debt and Preferred Stock/EBITDA Ratio” means, as of any date of determination, the ratio of (a) the aggregate amount of Total Funded Debt and Preferred Stock as of the end of the period of the most recent four consecutive fiscal quarters for which financial statements are available ending prior to the date of such determination to (b) EBITDA for such four consecutive fiscal quarters.

“Total Funded Debt and Preferred Stock” means, as of any date of determination, the total amount of Funded Debt plus the aggregate Stated Value of the outstanding shares of Series AA Preferred Stock and of any other class or series of capital stock of the Corporation (other than the Series M Preferred) ranking on a parity with or prior to the Series AA Preferred Stock.

Section 8. Dividend Received Deduction. For federal income tax purposes, the Corporation shall report distributions on the Series AA Preferred Stock as dividends, to the extent of the Corporation’s current and accumulated earnings and profits (as determined for federal income tax purposes). In addition, the Corporation covenants not to take any action voluntarily which could reasonably be expected to cause dividends on the Series AA Preferred Stock to fail to be eligible for the dividend received deduction pursuant to Section 244 of the Internal Revenue Code of 1986, as amended from time to time.

PART C. SERIES M PREFERRED STOCK

Section 1. Mandatory Redemption.

(a)           Subject to the Corporation having funds legally available for such purpose, the Corporation shall redeem all shares of the Series M Preferred Stock then outstanding on the date (the “Series M Mandatory Redemption Date”) immediately following the consummation of the first Deemed Liquidation Event occurring after _______________ __, 2006 (the “Series M Mandatory Redemption”). The per share redemption price at which the Series M Preferred Stock shall be redeemed pursuant to this Section 1(a) shall be an amount in cash equal to the product of (x) the then applicable Series M Liquidation Multiple and (y) the Net Proceeds resulting from the first event constituting a Deemed Liquidation Event, if any (the “Series M Mandatory Redemption Price”); notwithstanding the foregoing, in the event of a Stock Sale or Merger in which there are Retained Securities, the Corporation shall have the option to pay all or any portion (up to (x) the then applicable Series M Liquidation Multiple times (y) the Post-Hurdle Retained Securities Amount (as defined below)) of the Series M Mandatory Redemption Price by the delivery of securities in the same class and/or series as the Retained Securities having a fair market value (as determined in good faith by the Board) equal to the portion of the Series M Mandatory Redemption Price to be so paid; provided, however, that (1) if there is more than one class or series of Retained Securities, the portion of the Series M Mandatory Redemption price payable by the delivery of Retained Securities will include a proportionate amount of each such class or series and (2) the former holders of Series M Preferred Stock are provided similar rights relating to registration of securities, redemption rights and tag along rights as provided to any other holder of Covered Classes of an equivalent class or

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series with respect to such Retained Securities (it being understood that such former holders of Series M Preferred Stock will be seriesentitled to participate in any collective rights of a class or group of former holders of Covered Classes (such as rights permitting a majority of the holders of a class or series of securities to require a redemption or a registration), and the foregoing shall not provide any such former holder of Series M Preferred Stock an individual (rather than collective) right with respect to such matter). The “Post-Hurdle Retained Securities Amount” shall mean, in connection with any Stock Sale or Merger, an amount equal to the lesser of (x) the quotient of the fair market value of all of the Retained Securities in such Stock Sale or Merger (as determined in good faith by the Board) divided by the then applicable Series M Factor and (y) the amount by which the Liquidation Proceeds exceeds the Hurdle Amount.

(b)           If (x) the funds of the Corporation legally available for the Series M Mandatory Redemption shall be insufficient to permit the payment of the Series M Mandatory Redemption Price required to be paid pursuant to Section 1(a) after giving effect to the Deemed Liquidation Event, or (y) the payment of the Series M Mandatory Redemption Price is prohibited by, or would result in or cause a default or an event of default under, any of the agreements governing any Indebtedness (the “Indebtedness Agreements”), then consummation of the Deemed Liquidation Event shall be prohibited and the Series M Holders shall have no right to require the redemption of any shares of Series M Preferred Stock until (i) in the case of clause (x), the Corporation has sufficient funds legally available to permit the payment of the Series M Mandatory Redemption Price, in full and (ii) in the case of clause (y), the provisions of Section 1(g) of this Part C have been satisfied in full.

(c)           On and after the Series M Mandatory Redemption Date (unless a default shall be made in the payment of the Series M Mandatory Redemption Price, in which event such rights shall be exercisable until such default is cured), to the extent permitted by applicable law (x) all rights with respect to the Series M Preferred Stock, except the right (subject to Section 1(g) below) to receive the Series M Mandatory Redemption Price shall cease and terminate, and (y) such shares shall no longer be deemed to be outstanding, whether or not the certificates representing such shares have been received by the Corporation.

(d)           (i)            At any time on or after the Series M Mandatory Redemption Date, the Series M Holders shall be entitled to receive the Series M Mandatory Redemption Price upon actual delivery to the Corporation or its agent of the certificates representing shares of Series M Preferred Stock; provided, however, that (i) the Corporation shall not consummate a Series M Mandatory Redemption until all the requirements of this Section 1, including without limitation the requirements of Section 1(g), have been satisfied and (ii) until the requirements of Section 1(g) have been satisfied, the Series M Holders shall have no right to require the redemption of any shares of Series M Preferred Stock upon the consummation of any Deemed Liquidation Event.

(ii)           Any portion of the Series M Mandatory Redemption Price not delivered to the Series M Holders as a result of a deferral of payment of any Liquidation Proceeds by reason of any escrow or holdback obligation, or otherwise, shall be delivered to the Series M Holders pro rata in accordance with prior payments of the Series M Mandatory Redemption Price promptly upon release of any such Liquidation Proceeds to the Corporation (in the case of an Asset Sale or a Liquidation) or its stockholders (in the case of a Stock Sale or a Merger).

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(iii)          Subject to Sections 1(i) and (j), the Board shall make all determinations, calculations and interpretations hereunder and determine whether a Deemed Liquidation Event has occurred.

(e)           Not less than ten (10) days and not more than sixty (60) days prior to the date of the consummation of a Deemed Liquidation Event in connection with the Series M Mandatory Redemption referred to above, the Corporation shall send by first-class mail, postage prepaid, to each Series M Holder, at the address for such Series M Holder appearing in the register maintained by or on behalf of the Corporation, a notice (a “Series M Mandatory Redemption Notice”) stating (1) that the Board has determined that a Deemed Liquidation Event is to be consummated and that all shares of Series M Preferred Stock are subject to mandatory redemption; (2) the details of the Deemed Liquidation Event, (3) the Series M Mandatory Redemption Price and the Series M Mandatory Redemption Date; (4) that, on and after the Series M Mandatory Redemption Date (unless the Corporation defaults in the payment of the Series M Mandatory Redemption Price for any shares of Series M Preferred Stock validly tendered or unless the requirements of Section 1(g) are not satisfied by the Series M Mandatory Redemption Date), to the extent permitted by applicable law, all rights with respect to such shares of Series M Preferred Stock, except the right to receive the Series M Mandatory Redemption Price, shall cease and terminate and such shares shall no longer be deemed to be outstanding as of the Series M Mandatory Redemption Date; and (5) any other procedures that a Series M Holder must follow in connection with the Series M Mandatory Redemption; provided, however, that any such Series M Mandatory Redemption Notice shall be of no force or effect if the Deemed Liquidation Event described therein is not consummated.

(f)            [Intentionally omitted.]

(g)           If the provisions of any Indebtedness Agreement would prohibit the Corporation from making a Series M Mandatory Redemption or paying the Series M Mandatory Redemption Price (including any limitations on dividends or distributions), or if immediately after consummating the Series M Mandatory Redemption or giving  effect to the payment of the Series M Mandatory Redemption Price, a default or event of default under any such agreement or instrument would be caused thereby, as a condition to the consummation of a Deemed Liquidation Event and the redemption of any shares of Series M Preferred Stock upon the consummation of any Deemed Liquidation Event, the Corporation shall, to the extent required to permit the redemption of Series M Preferred Stock pursuant to this Section 1, (i) obtain the consent of the requisite holders of such Indebtedness to permit the consummation of the Series M Mandatory Redemption by the Corporation, (ii) refinance all such Indebtedness outstanding with the proceeds of other Indebtedness or equity securities that permit or do not prohibit the consummation of the Series M Mandatory Redemption by the Corporation or (iii) otherwise comply with the terms of such Indebtedness required to permit the consummation of the Series M Mandatory Redemption by the Corporation. The Corporation shall not consummate a Deemed Liquidation Event unless the conditions contained in this Section 1(g) are satisfied or waived by the Corporation and the Requisite Series M Holders.

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(h)           If the Corporation has issued any outstanding Preferred Stock (other than the Series AA Preferred Stock or Series M Preferred Stock) which is pari passu with, or junior to, the Series AA Preferred Stock, and the Corporation is required to make a redemption or repurchase offer or to make a distribution with respect to such other Preferred Stock in the event of a Deemed Liquidation Event, the Corporation shall not consummate any such offer or distribution with respect to such other Preferred Stock until such time as the Corporation shall have paid the Series M Mandatory Redemption Price in full to the Series M Holders and shall otherwise have consummated the Series M Mandatory Redemption.

(i)            If the Requisite Series M Holders dispute the determination by the Board of the cash value of any non-cash Liquidation Proceeds or the fair market value of any assets to be distributed to stockholders of the Corporation in connection with any determination of Other Distributions (the “Disputed Items”), the Requisite Series M Holders may (within ten (10) days following receipt of notice of such determination) notify the Corporation of such dispute in writing (the “Dispute Notice”). If the Requisite Series M Holders deliver the Dispute Notice in a timely manner, then, within a further period of twenty (20) days following receipt of the Dispute Notice by the Corporation, the Requisite Series M Holders and the Corporation will attempt to resolve in good faith any Disputed Items and reach a written agreement with respect thereto. Failing such resolution, each of the Corporation and the Requisite Series M Holders shall submit the unresolved Disputed Items to an appraiser (the “Appraiser”) jointly selected by the Corporation and the Requisite Series M Holders. If the Requisite Series M Holders and the Corporation cannot agree upon a mutually acceptable Appraiser, then the Appraiser shall be one of the “big four” national accounting firms or four nationally recognized investment banking firms (two designated by the Corporation and two by the Requisite Series M Holders) selected by lot; provided, however, that the Appraiser selected shall not have had any material prior business relationship with the Corporation or the Series M Holders. The fees and expenses of the Appraiser shall be paid by the Corporation. The Appraiser’s determination of the Disputed Items shall be (a) in writing, (b) furnished to the Corporation and the Series M Holders as soon as practicable after the items in dispute have been referred to the Appraiser and (c) made in accordance with the terms hereof. If the Appraiser’s determination of the cash value or fair market value of the Disputed Items exceeds the Board’s determination of the Disputed Items by more than five percent, then the final determination hereunder of the Disputed Items shall be the amount calculated by the Appraiser; otherwise the Board’s determination of the cash value or the fair market value of the Disputed Items shall constitute the final determination hereunder.  The final determinations of the cash value or fair market value of the Disputed Items, whether by the Appraiser or the Board, as applicable, shall be non-appealable and incontestable by the Corporation and the Series M Holders and each of their respective Affiliates and successors and assigns and not subject to collateral attack for any reason other than manifest error or fraud. For purposes of this Section 1(i) and Section 1(j), the “Board” shall not include any Series M Holder.

(j)            In the event of any dispute between the Requisite Series M Holders and the Corporation regarding any determination, calculation or interpretation hereunder, any determination by the Board shall be subject to de novo review by any forum deciding the disputed issue; provided, however, that such de novo review shall not otherwise change or shift the burden of proof in connection with any dispute resolution proceeding (including the appraisal proceedings described in Section 1(i)).

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Section 2. Dividends.

(a)           Upon a redemption by the Corporation of any shares of Series AA Preferred Stock pursuant to the terms thereof at any time prior to a Liquidation Event, to the extent the Redemption Proceeds are in excess of the then applicable Hurdle Amount, the Series M Holders shall be entitled to receive for each share of Series M Preferred Stock, a cash dividend equal to the product of (x) the then applicable Series M Liquidation Multiple and (y) the portion of the Redemption Proceeds which are in excess of the then applicable Hurdle Amount immediately prior to such redemption. The Corporation shall not redeem any shares of Series AA Preferred Stock unless (x) after giving effect to such transaction the Corporation has sufficient funds legally available to pay the dividends required by this paragraph, and (y) prior thereto or simultaneously therewith the Board has declared the dividend required by this paragraph in full, and set aside funds sufficient to pay such dividend in full.

(b)           Upon a Qualified Public Offering, and immediately prior to the automatic conversion of the Series M Preferred Stock pursuant to Section 3 below, the Series M Holders shall be entitled to receive for each share of Series M Preferred Stock, a cash dividend equal to the product of (x) the then applicable Series M Liquidation Multiple and (y) the Pre-QPO Other Distributions.

(c)           Notwithstanding the foregoing, the Corporation shall not make any dividend payment pursuant to this Section 2, and no Series M Holder shall have any right to require the payment of any dividend pursuant to this Section 2, unless the requirements of Section 2(d) have been satisfied.

(d)           If the provisions of any Indebtedness Agreement would prohibit the Corporation from declaring or paying the dividends required to be paid pursuant to Section 2(a) or (b), or if immediately after paying or declaring such dividend, a default or event of default under any such agreement or instrument would be caused thereby, then as a condition to the consummation of the redemption of any shares of Series AA Preferred Stock or Qualified Public Offering, the Corporation shall, to the extent required to permit the payment of such dividend in full, (i) obtain the consent of the requisite holders of such Indebtedness to permit the payment of such dividend in full, (ii) refinance all such Indebtedness outstanding with the proceeds of other Indebtedness or equity securities that permit or do not prohibit the payment of such dividend or (iii) otherwise comply with the terms of such Indebtedness required to permit the payment of such dividend in full.

(e)           For purposes of clarification, in the event of the occurrence of a Liquidation Event which includes or is consummated substantially simultaneously with a redemption of any of the shares of Series AA Preferred Stock, regardless of the actual order of the transaction, such transaction shall be deemed to be a single transaction and shall be deemed to be a Liquidation Event, with the proceeds of the redemption portion of such transaction to be deemed to be proceeds payable in connection with such transaction, and, accordingly, no dividend payment shall be required pursuant to this Section 2 in connection therewith.

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Section 3. Automatic Conversion.

(a)           Upon the consummation of a Qualified Public Offering, each share of Series M Preferred Stock then outstanding shall, by virtue of and simultaneously with such occurrence, be deemed automatically converted into that number of fully paid and nonassessable shares of Covered Classes issued by the Corporation and outstanding immediately following the consummation of such Qualified Public Offering equal to the product of (x) the then applicable Series M Liquidation Multiple and (y) the quotient of (1) the total number of shares of such class of equity security of Covered Classes outstanding (including all outstanding options, warrants and rights to purchase equity securities (including any non-equity securities which are convertible into equity securities) issued on account of any Covered Classes in connection with such Qualified Public Offering) immediately following the consummation of the Qualified Public Offering (but excluding any shares of Common Stock issued pursuant to such Qualified Public Offering) and prior to giving effect to the automatic conversion provided by this Section 3(a) divided by (2) the then applicable Series M Factor. For the purposes hereof, such conversion shall be deemed to have occurred immediately after any redemption of Series AA Preferred Stock and the payment of any Redemption Proceeds (other than Redemption Proceeds paid in equity securities of the Corporation) which is consummated in connection with, or upon application of the proceeds of, such Qualified Public Offering, and the payment of any dividend required with respect to the Series M Preferred Stock in connection therewith pursuant to Section 2.

(b)           As promptly as practicable after the consummation of the Qualified Public Offering and delivery to the Corporation of the certificate or certificates of Series M Preferred Stock which have been converted, duly endorsed or assigned in blank to the Corporation (if required by it), the Corporation shall issue and deliver to such Series M Holder, or upon the written order of any Series M Holder, to the place designated by such Series M Holder, a certificate or certificates for the number of shares of each class of equity security to which such Series M Holder is entitled as provided in Section 3(a) above. The Person in whose name the certificate or certificates such equity securities are to be issued shall be deemed to have become a stockholder of record on the date of the consummation of the Qualified Public Offering and on such date the Series M Preferred Stock shall cease to be outstanding, whether or not the certificates representing such shares have been received by the Corporation.

Section 4. Rights, Generally and Voting Rights.

(a)           Except for those rights and privileges specifically conferred to the Series M Holders under this Certificate of Incorporation, the Series M Holders do not have any rights, privileges, preferences, or powers with respect to the Series M Preferred Stock whether created by law, contract or otherwise.

(b)           The Series M Holders shall not be entitled or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the Corporation, except as otherwise required under Delaware law or as expressly set forth in this Part C.

(c)           The Corporation may, upon first obtaining the affirmative written consent or approval of the Requisite Series M Holders, alter and change the terms, designations, powers, preferences or relative, participating, optional or other special rights of the Series M Preferred Stock in any manner materially adverse to the Series M Holders. The Requisite Series M

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Holders shall be entitled to waive, on behalf of all the Series M Holders, any terms, designations, powers,  preferences or relative, participating, optional or other special rights of the Series M holders hereunder.

Section 5. Reissuance of Series M Preferred Stock. Shares of Series M Preferred Stock that have been issued and reacquired in any manner, including without limitation shares purchased, redeemed or exchanged, shall (upon compliance with any applicable provisions of the laws of the State of Delaware) have the status of authorized and unissued shares of Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of Preferred Stock; provided, however, that any issuance of such shares of Preferred Stock must be in compliance with the terms hereof.

Section 6. Liquidation Rights.

(a)           In the event of a True Liquidation, the holders of shares of Series M Preferred Stock shall be entitled to receive, out of the assets of the Corporation available for distribution to its stockholders, an amount in cash equal to the product of (x) the then applicable Series M Liquidation Multiple and (y) the Net Proceeds resulting from such True Liquidation, if any. The payments to be made pursuant hereto shall rank on on parity with the payments to be made with respect to the Series AA Preferred Stock pursuant to Article Four, Part B, Section 4.

(b)           After the payment of the full preferential amounts provided for herein to the holders of shares of Series M Preferred Stock, such holders shall be entitled to no other or further participation in the distribution of the assets of the Corporation.

Section 7. Definitions. As used in this Part C, the following terms shall have the following meanings:

“Affiliate” shall have the meaning set forth in Section 7(e) of Part B of this Article Four.

“Asset Sale” shall have the meaning set forth in the definition of “Deemed Liquidation Event”.

“Board” means the Board of Directors of the Corporation.

“Covered Classes” shall mean securities of any of the following classes and series of stock issued by the Corporation:  (a) Series AA Preferred Stock, (b) Common Stock, (c) any class or series of equity securities which are issued as a dividend or distribution with respect to, or pursuant to a recapitalization of, any then outstanding Covered Class of equity securities.

“Deemed Liquidation Event” means any of the consummation of (i) the sale (including in one or a series of related transactions) of all or substantially all of the Corporation’s consolidated assets to a person or a group of persons acting in concert (other than to a Subsidiary of the Corporation) (an “Asset Sale”); (ii) the sale or transfer (including in one or a series of related transactions) of a majority of the outstanding Common Stock (assuming conversion of all then outstanding capital stock which is directly or indirectly convertible into Common Stock) to a person or a group of persons acting in concert (other than to JPMP) (a “Stock Sale”); or (iii) the

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merger (other than a reincorporation merger) or consolidation of the Corporation with or into another person (other than JPMP) (a “Merger”); provided, that, in the case of clause (iii) above, a Deemed Liquidation Event shall not occur under circumstances in which all of the holders of the voting power of the outstanding Common Stock immediately prior to such transaction collectively own, directly or indirectly, a majority in voting power of the outstanding Common Stock or other voting securities having, in the aggregate, the right to elect a majority of the board of directors of the Corporation or the surviving or resulting corporation or acquirer, as the case may be, immediately following such transaction. Notwithstanding the foregoing, a Qualified Public Offering shall not be a Deemed Liquidation Event.

“Grossed-up Other Distributions” shall mean the quotient of (x) the amount of Other Distributions divided by (y) the then applicable Series M Factor.

“Hurdle Amount” means an amount equal to $[243.8 million]; provided, that upon any redemption by the Corporation of Series AA Preferred Stock in accordance with the terms thereof, the Hurdle Amount shall be reduced by an amount equal to the aggregate Redemption Proceeds in connection with such redemption; provided, that in no event shall the Hurdle Amount be less than zero.

“Indebtedness” means:

(a)           indebtedness of the Corporation for borrowed money;

(b)           obligations of the Corporation evidenced by bonds, debentures, notes or other similar instruments;

(c)           all obligations of the Corporation in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto);

(d)           all obligations of the Corporation to pay the deferred and unpaid purchase price of property or services (except trade payables and other accrued liabilities arising in the ordinary course of business), which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services; and

(e)           all Capitalized Lease Obligations (as defined in Section 7(e) of Part B of this Article Four).

“JPMP” means J.P. Morgan Partners (BHCA), L.P., a Delaware limited partnership and its Affiliates.

“Liquidation Event” means the consummation of either (x) a Deemed Liquidation Event or (y) a True Liquidation.

“Liquidation Proceeds” means (a) in connection with an Asset Sale or a True Liquidation, the quotient of (x) the Net Asset Proceeds divided by (y) the then applicable Series M Factor and (b) in connection with a Stock Sale or a Merger, the quotient of (x) Net Stock Proceeds divided by (y) the then applicable Series M Factor. Any Liquidation Proceeds which

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are deposited into an escrow account (whether such escrow account is established by the Corporation or any purchaser, acquiror or other similar party in connection with a Deemed Liquidation Event) or subject to being held-back by the purchaser for distribution upon the occurrence or satisfaction of any event shall not be included in calculating “Liquidation Proceeds” until such time as such amounts are released to the Corporation (in the case of an Asset Sale or a Liquidation) or its stockholders (in the case of a Stock Sale or a Merger).

“Merger” shall have the meaning set forth in the definition of “Deemed Liquidation Event”.

“Net Asset Proceeds” means the aggregate net proceeds payable to the stockholders of securities in Covered Classes, on account of such securities, assuming a dissolution of the Corporation immediately following either (x) a Deemed Liquidation Event resulting from an Asset Sale or (y) a True Liquidation, after the repayment and prepayment of all Indebtedness of the Corporation and its Subsidiaries (including premium, interest and fees in respect thereof), all corporate taxes and similar fees and charges, all transaction fees and expenses (including but not limited to accounting, legal and investment banking fees) and all costs and expenses incurred upon such Deemed Liquidation Event or True Liquidation.

“Net Proceeds” means the sum of (x) Grossed-Up Other Distributions plus (y) Liquidation Proceeds minus (z) the Hurdle Amount.

“Net Stock Proceeds” means the sum of (x) the fair market value as of the date of determination of the aggregate consideration (whether cash, notes, stock or other securities) actually received by the stockholders of securities in Covered Classes on account of such securities upon a Deemed Liquidation Event resulting from a Stock Sale or Merger minus all transaction fees and expenses (including but not limited to accounting, legal and investment banking fees) and all cost and expenses incurred by the stockholders of the Corporation, upon such Stock Sale or Merger plus (y) without any duplication of amounts included pursuant to clause (x), the fair market value as of the date of determination of all the capital stock of Covered Classes  not transferred, if any, by the stockholders of the Corporation in connection with such Deemed Liquidation Event. For the purpose of calculating the fair market value of (i) any publicly traded equity securities issued in consideration of the capital stock in Covered Classes transferred by the stockholders of the Corporation in connection with such Deemed Liquidation Event, the fair market value of such securities shall equal the average closing trading price of such securities over the thirty-day period prior to the date of such Deemed Liquidation Event and (ii) any other securities issued in consideration of the capital stock transferred by the stockholders of the Corporation in connection with such Deemed Liquidation Event, the fair market value of such securities shall be determined in good faith by the Board.

“Other Distributions” means the aggregate amount of (x) cash distributions actually paid, and (y) the fair market value of any assets (other than cash) actually distributed by the Corporation to its stockholders solely in respect of the shares of any Covered Classes of the Corporation during the period commencing on __________ ___, 2006 through, the date of the consummation of a Liquidation Event or Qualified Public Offering, as the case may be. The Board shall in good faith calculate the fair market value of any such assets.  Notwithstanding the foregoing, Other Distributions shall not include (i) any accruing but unpaid dividends payable on

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any shares of Covered Classes of the Corporation until such time as such dividends are actually paid in cash, (ii) any Liquidation Proceeds, (iii) Redemption Proceeds or (iv) any shares of capital stock issued in connection with a Qualified Public Offering, which remain outstanding immediately after the consummation thereof.

“Pre-QPO Other Distributions” shall mean the positive difference, if any, of the Grossed-Up Other Distributions made prior to, or substantially concurrently with, a Qualified Public Offering minus (2) the Hurdle Amount (as reduced on account of any Redemption Proceeds from any redemption of Series AA Preferred Stock made prior to, or substantially concurrently with, a Qualified Public Offering).

“Qualified Public Offering” shall mean the sale in an underwritten public offering registered under the Securities Act of 1933, as amended, of shares of capital stock of the Corporation to the public resulting in aggregate proceeds (net of underwriting discounts and commissions) to the Corporation of not less than one hundred million dollars ($100 million).

 “Redemption Proceeds” means the quotient of (x) cash proceeds received by the holders of the Series AA Preferred Stock upon any redemption of the Series AA Preferred Stock divided by (y) the then applicable Series M Factor.

“Requisite Series M Holders” means, as of any date of determination, the Series M Holders holding not less than fifty one percent (51%) of the then outstanding shares of Series M Preferred Stock.

“Retained Securities” shall mean, in connection with any Stock Sale or Merger, (x) any capital stock in Covered Classes not transferred, if any, by the stockholders of the Corporation in connection with such Deemed Liquidation Event and/or (y) any capital stock or debt securities received in consideration or exchange for, capital stock in Covered Classes in connection with such Deemed Liquidation Event.

“Series M Factor” means .92.

“Series M Holders” means, at any time of determination, the holders of record of the outstanding shares of Series M Preferred Stock.

“Series M Liquidation Multiple” means, with respect to each share of Series M Preferred Stock, .00001.

“Stock Sale” shall have the meaning set forth in the definition of “Deemed Liquidation Event”.

“True Liquidation” means any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, other than (i) any dissolution, liquidation or

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winding up in connection with any reincorporation of the Corporation in another jurisdiction, (ii) a sale of all or substantially all of the Corporation’s assets or (iii) any consolidation or merger of the Corporation with or into another person, provided that effective provision is made in the certificate or articles of incorporation of the resulting or surviving corporation or otherwise for the maintenance for the holders of Preferred Stock of substantially similar rights as set forth herein or for the issuance to the holders of Preferred Stock of substantially similar securities as the Preferred Stock.

PART D. COMMON STOCK

Section 1. Dividends. Subject to the rights and preferences of the Preferred Stock, as and when dividends are declared or paid on the Common Stock, whether in cash, securities or other property, out of the assets of the Corporation which are legally available therefor, the holders of Common Stock shall be entitled to participate in such dividends ratably on a per share basis.

Section 2. Voting Rights. Except as otherwise provided in this Certificate of Incorporation or as otherwise required by applicable law, the holders of Common Stock shall be entitled to one vote per share on all matters to be voted on by the stockholders of the Corporation.

Section 3. Liquidation Rights. Subject to the rights and preferences of the Preferred Stock, the holders of the Common Stock shall be entitled to participate ratably on a per share basis in all distributions to the holders of the Stock in any liquidation, dissolution or winding up of the Corporation. Neither the consolidation or merger of the Corporation into or with any other entity or entities, nor the sale or transfer by the Corporation of all or any part of its assets, nor the reduction in capital stock of the Corporation, in and of itself, shall be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this Section 3.

Section 4. Amendment and Waiver. Any provision of this Part D may be waived by holders of a majority of the shares of Common Stock outstanding at the time such action is taken. No amendment or modification of this Part D will be binding or effective with respect to any provision of this Part D without (a) the affirmative vote, or the prior written consent as provided by the law, of the Board of Directors of the Corporation and (b) the affirmative vote, or the prior written consent, as provided by law, of the holders of at least a majority of the shares of Common Stock outstanding at the time such action is taken.

PART E. BOARD OF DIRECTORS

Section 1. Number and Election of Directors. (a) Subject to Section 1(d), the number of directors that shall constitute the whole Board of Directors of the Corporation shall be seven (7).

(b)           In the election of directors of the Corporation, the holders of the Common Stock, voting separately as a single class to the exclusion of all other classes of the Corporation’s capital stock, shall be entitled to elect five (5) directors (the “Common Stock Directors”) to serve on the Board of Directors, with each such director to serve on the Board until the successor of

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such director is duly elected or until such director is removed from office by the holders of the Common Stock. A Common Stock Director may only be removed by the vote of the holders of record of a majority of the outstanding shares of Common Stock. Any vacancy in the office of a Common Stock Director may be filled by the affirmative vote or the written consent, as provided by law, of a majority of the Common Stock Directors remaining in office or by vote of the holders of record of the outstanding shares of Common Stock.

(c)           In the election of directors of the Corporation, the holders of the Series AA Preferred Stock, voting separately as a single class to the exclusion of all other classes of the Corporation’s capital stock, shall be entitled to elect two (2) directors (the “Series AA Directors”) to serve on the Board of Directors, with each such director to serve on the Board until the successor of such director is duly elected or until such director is removed from office by the holders of the Series AA Preferred Stock. In any such election the holders of outstanding shares of Series AA Preferred Stock shall be entitled to cast one vote per share of Series AA Preferred Stock held of record on the record date for the determination of stockholders entitled to vote on such election (or, if no such record date is established, on the date such vote is taken). A Series AA Director may only be removed by the vote of the holders of record of a majority of the outstanding shares of Series AA Preferred Stock. Any vacancy in the office of a Series AA Director may be filled by the affirmative vote, or the written consent as provided by law, of the remaining Series AA Director or, if any Additional Series AA Directors have then been elected, a majority of Series AA Directors and Additional Series AA Directors remaining in office or by vote of the holders of record of the outstanding shares of Series AA Preferred Stock.

(d)           If the Series AA Preferred Stock has not been redeemed pursuant to Section 2 of Part B of this Article Four, otherwise repurchased or acquired by the Corporation or converted pursuant to Section 5 of Part B of this Article Four, in any case by the 60th day after [___________](2), 2011, then (a) the number of directors that shall constitute the whole Board of Directors shall automatically be increased, without any action by the Board of Directors or the stockholders of the Corporation, by the number of (i) directors elected by the holders of Common Stock minus (ii) one, (b) the holders of the Series AA Preferred Stock, voting separately as a class, shall have the right, exercisable at any time after such date, to elect the directors to such newly created directorships (such directors, the “Additional Series AA Directors”) and (c) the Board of Directors shall promptly call a special meeting of the holders of the Series AA Preferred Stock for the purpose of electing the Additional Series AA Directors. An Additional Series AA Director may only be removed by the vote of the holders of record of a majority of the outstanding shares of Series AA Preferred Stock. Any vacancy in the office of an Additional Series AA Director may be filled by the affirmative vote, or the written consent as provided by law, of a majority of the Additional Series AA Directors and Series AA Directors remaining in office or by vote of the holders of record of the outstanding shares of Series AA Preferred Stock.

(2)Fifth anniversary of the effective date of the Plan

Section 2. Voting Rights. (a)  Except as provided in paragraph (b) of this Section 2, each director shall be entitled to one vote on all matters to be voted on by the Corporation’s directors.

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(b)           On and after [_________], 2010, on any matter that is considered by the Board of Directors and that relates to a proposed Sale of the Corporation (including the initiation of a process that is intended to result in a Sale of the Corporation), each Common Stock Director shall be entitled to one vote and each Series AA Director shall be entitled to three votes.

“Sale of the Corporation” means (i) any sale or transfer of all or substantially all of the assets of the Corporation and the subsidiaries of the Corporation on a consolidated basis in any transaction or series of transactions or (ii) any merger or consolidation of the Corporation with any other entity, other than a merger or consolidation that qualifies as a “reorganization” within the meaning of Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended.

PART F. RESTRICTIONS ON TRANSFER OF COMMON STOCK

The following restrictions shall apply to any transfer of shares of Common Stock:

Section 1. Certain Transfers Prohibited. (a) If an individual, partnership, limited liability company, firm, corporation, association, trust, unincorporated organization or other entity, as well as any syndicate or group deemed to be a person under Section 14(d)(2) of the Securities Exchange Act (each, for purposes of this Part F, a “Person”), shall attempt to transfer in any manner whatsoever, including by way of sale, transfer, assignment, conveyance or other disposition, including without limitation by merger, operation of law, bequest or pursuant to any domestic relations order, whether voluntarily or involuntarily (other than a sale, transfer, assignment, conveyance or other disposition by or to the Corporation), any shares of Common Stock (any such transfer or assignment being a “Transfer”), provided, however, that a transaction that is a pledge shall not be deemed a Transfer, but a foreclosure pursuant thereto shall be deemed to be a Transfer), then such Transfer shall be void and shall not be recognized by the Corporation, except as authorized pursuant to this Part F.

(b)           The restrictions contained in this Part F are for the purpose of insuring that the Common Stock is held of record, for purposes of Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”), by less than 500 persons. In connection therewith, and to provide for the effective policing of these provisions, a potential transferor or transferee who proposes to effect a Transfer, prior to the date of the proposed Transfer, must submit a request in writing (a “Request”) that the Corporation review the proposed Transfer and authorize or not authorize the proposed Transfer pursuant to Section 2 hereof. A Request shall be mailed or delivered to the General Counsel of the Corporation or, if the Corporation does not have a General Counsel at the time of such Request, to the Chief Financial Officer of the Corporation (such executive hereinafter referred to as the “Reviewer”) at the Corporation’s principal place of business or telecopied to the Corporation’s telecopier number at its principal place of business. Such Request shall be deemed to have been delivered when actually received by the Corporation. A Request shall include (i) the name, address and telephone number of the proposed transferee, (ii) a description of the interest proposed to be Transferred by the proposed transferee, (iii) the date on which the proposed Transfer is expected to take place, (iv) the name of the proposed transferor of the interest to be Transferred, (v) the percentage of the proposed transferor’s total interest to be Transferred and (vi) a Request that the Corporation authorize, if appropriate, the Transfer pursuant to Section 2 hereof and inform the proposed transferor and transferee of his or her determination regarding the proposed Transfer.

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If the proposed transferor or transferee seeks to effect a Transfer, the Corporation will act, within fifteen (15) business days after receipt of a Request, to determine whether to authorize the proposed Transfer described in the Request under Section 2 hereof. Each such Request shall be reviewed, on behalf of the Corporation, by the Reviewer. Subject to Section 2 hereof, the Reviewer shall conclusively determine whether to authorize the proposed Transfer, in his or her sole discretion and judgment, and shall immediately inform the proposed transferee or transferor making the Request of such determination.

Section 2. Authorization of Transfer of Common Stock. Notwithstanding anything to the contrary set forth in Section 1 hereof, the Reviewer shall authorize (A) any Transfer by a record holder of Common Stock to another record holder of Common Stock, (B) any Transfer of all shares of Common Stock owned by the proposed transferor to a single Person who is treated as a single record holder under the Securities Exchange Act or (C) any Transfer if, following such Transfer, the outstanding Common Stock will be held of record, for purposes of Section 12(g) of the Securities Exchange Act, by 500 or fewer persons. For the avoidance of doubt, the Reviewer shall address requests for Transfers contemplated in the order in which the Requests are received. In deciding whether to approve any proposed Transfer, the Reviewer may seek the advice of outside counsel to the Corporation and may request all relevant information from the proposed transferor and/or the transferee necessary to make such determination.

Section 3. Effect of Unauthorized Transfer. Any Transfer attempted to be made in violation of this Part F will be null and void. The proposed transferee shall not be entitled to any rights of a holder of Common Stock, including, but not limited to, the rights to vote or to receive dividends and liquidating distributions, with respect to the Common Stock that was the subject of such attempted Transfer.

Section 4. Prompt Enforcement; Further Actions. After learning of a Transfer not in compliance with this Part F, the Corporation shall demand the surrender of, or cause to be surrendered, to it, the certificates representing the Common Stock that was the subject of such noncompliant Transfer, or any proceeds received upon a sale of such securities, and any dividends or other distributions made after such noncompliant transfer with respect to such securities, if any. Nothing in this Section 4 shall be deemed inconsistent with the Transfer of such securities being deemed null and void pursuant to Section 3 hereof.

Section 5. Legend on Certificates. (a)  For so long as the restrictions on Transfer in this Part F are in effect, all certificates for shares of Common Stock shall conspicuously bear the following legend (in addition to any other legends required to be placed thereon):

THE CERTIFICATE OF INCORPORATION OF THE CORPORATION CONTAINS RESTRICTIONS PROHIBITING THE TRANSFER OF ANY COMMON STOCK WITHOUT THE PRIOR AUTHORIZATION OF THE CORPORATION. NO REGISTRATION OR TRANSFER OF THESE SHARES WILL BE MADE ON THE BOOKS OF THE CORPORATION UNLESS AND UNTIL SUCH RESTRICTIONS SHALL HAVE BEEN COMPLIED WITH. THE CORPORATION WILL FURNISH WITHOUT CHARGE TO THE HOLDER OF RECORD OF THIS CERTIFICATE A COPY OF THE

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CERTIFICATE OF INCORPORATION, CONTAINING THE ABOVE-REFERENCED RESTRICTIONS ON TRANSFERS OF STOCK, UPON WRITTEN REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS.

(b)           In the event that the Common Stock shall cease to be subject to the restrictions on transfer of this Part F, the Corporation shall, upon the written request of the holder thereof, issue to such holder a new certificate evidencing such stock without such legend.

Section 6. Conditions to Transfer; Responsibilities of Transfer Agent. The Corporation may require, as a condition precedent to the registration of the Transfer of any of its Common Stock or the payment of any distribution on any of its Common Stock, that the proposed transferor and transferee or payee furnish to the Corporation all information reasonably requested by the Corporation with respect to all the direct or indirect ownership interests in such Common Stock. The Corporation may make such arrangements or issue such instructions to its stock transfer agent as may be determined by the Board of Directors to be necessary or advisable to implement this Part F, including, without limitation, instructing the transfer agent not to register any Transfer of Common Stock on the Corporation’s stock transfer records if it has knowledge that such Transfer is prohibited by this Part F, and/or authorizing such transfer agent to require an affidavit from a transferee or transferor regarding such Person’s actual and constructive ownership of Common Stock and other evidence that a Transfer will not be prohibited by this Part F, as a condition to registering any Transfer.

Section 7. Severability. If any provision of this Part F is judicially determined to be invalid or otherwise unenforceable, such invalidity or unenforceability shall not affect the remainder of the provisions of this Part F, which shall be thereafter interpreted as if the invalid or unenforceable part were not contained herein, and, to the maximum extent possible, in a manner consistent with insuring that the Common Stock is held of record, for purposes of Section 12(g) of the Securities Exchange Act, by less than 500 persons.

Section 8. Expiration. The provisions of this Part F shall apply until the earliest of (i) any public offering of Common Stock registered under the Securities Act of 1933, as amended, (ii) the filing by the Corporation of a registration statement with respect to the Common Stock pursuant to Section 12(g) of the Securities Exchange Act, and (iii) such time as the Board of Directors determines that the provisions of this Part F are no longer necessary for the preservation of the Corporation’s status as a non-reporting company under the Securities Exchange Act.

ARTICLE FIVE

The Corporation hereby elects not to be governed by Section 203 of the General Corporation Law of the State of Delaware.

ARTICLE SIX

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter or repeal the Bylaws of the Corporation, subject to any specific limitation on such power contained in the Bylaws of the Corporation.

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Elections of directors need not be by written ballot unless the Bylaws of the Corporation so provide.

ARTICLE SEVEN

Section 1. Exculpation. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. If the General Corporation Law of Delaware is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of Delaware, as so amended. Any repeal or modification of this Article Seven by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.

Section 2. Corporate Opportunity. To the maximum extent permitted from time to time under the General Corporation Law of Delaware, and notwithstanding anything contained in this Article Seven to the contrary, in the event that any director of the Corporation acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both (A) the Corporation or any subsidiary of the Corporation, on the one hand, and (B) Affiliates of such director, on the other hand, such director shall have no duty (contractual or otherwise) to communicate or present such corporate opportunity to the Corporation or any subsidiary of the Corporation and shall not be liable to the Corporation or any subsidiary of the Corporation or any of their Affiliates for breach of any duty (contractual or otherwise) solely by reasons of the fact that such Affiliate of such director directly or indirectly pursues or acquires such opportunity for itself, directs such opportunity to another Person, or does not present such opportunity to the Corporation or any subsidiary of the Corporation or any of their Affiliates, provided, however, that nothing herein shall exonerate any such director from any liability arising from any disclosure of confidential information of the Corporation or any of its subsidiaries or Affiliates to any Affiliate of any such director.

ARTICLE EIGHT

Each person who is or was a director or officer of the Corporation and each person who serves or served at the request of the Corporation as a director or officer of another enterprise, shall be indemnified by the Corporation in accordance with, and to the fullest extent authorized by, the General Corporation Law of Delaware as it may be in effect from time to time.

ARTICLE NINE

The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon the stockholders herein are granted subject to this reservation.

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IN WITNESS WHEREOF, the undersigned, being the incorporator named above, has executed this Certificate of Incorporation on this [___] day of [____________], 2006.

PLIANT CORPORATION,

a Delaware corporation

By:

Name:

Its:

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EX-2.3

Exhibit 2.3

PLIANT CORPORATION

STOCKHOLDERS’ AGREEMENT

DATED AS OF [____________], 2006

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS; RULES OF CONSTRUCTION	1
1.1	Definitions	1
1.2	Rules of Construction	8
ARTICLE II	ISSUANCES AND TRANSFERS OF SECURITIES	9
2.1	Issuances and Transfers of Securities	9
2.2	Intentionally Omitted	10
2.3	Required Sale in Connection with a Sale of the Company	10
ARTICLE III	RIGHTS TO SUBSCRIBE FOR SECURITIES	12
3.1	General	12
3.2	Excluded Securities	13
3.3	Application	14
ARTICLE IV	BOARD	14
4.1	Election of Directors; Voting	14
4.2	Subsidiaries	15
ARTICLE V	REGISTRATION RIGHTS	15
5.1	Required Registration	15
5.2	Piggyback Registration	16
5.3	Registrations on Form S-3	17
5.4	Holdback Agreement	18
5.5	Preparation and Filing	18
5.6	Expenses	21
5.7	Indemnification	22
5.8	Underwriting Agreement	24
5.9	Information by Holder	24
5.10	Suspension	24
5.11	Exchange Act Compliance	25
ARTICLE VI	MANAGEMENT INCENTIVE PLAN	25
ARTICLE VII	LEGENDS; NO REPRESENTATIONS	25
7.1	Restrictive Legends	25
7.2	No Representations	26

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		Page
ARTICLE VIII	AMENDMENT AND WAIVER	26
8.1	Amendment	26
8.2	Waiver	27
ARTICLE IX	TERMINATION	27
ARTICLE X	MISCELLANEOUS	27
10.1	Severability	27
10.2	Entire Agreement	27
10.3	Independence of Agreements and Covenants	28
10.4	Successors and Assigns	28
10.5	Counterparts; Facsimile Signatures; Validity	28
10.6	Remedies	28
10.7	Notices	29
10.8	Governing Law	30
10.9	Waiver of Jury Trial	30
10.10	Further Assurances	30
10.11	Prior Agreements	31
10.12	Regulatory Covenants	31
10.13	Third Party Reliance	31
10.14	Confidentiality	31

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STOCKHOLDERS’ AGREEMENT dated as of [________], 2006 (this “Agreement”), among Pliant Corporation, a Delaware corporation (the “Company”); the Investor Stockholders (as defined herein); the Bond Stockholders (as defined herein); and the Other Stockholders (as defined herein).

WHEREAS, Pliant (Utah), certain of the Investor Stockholders and certain of the Bond Stockholders are parties to the Support Agreement dated as of December __, 2005 (as amended, modified or supplemented, the “Support Agreement”), which Support Agreement provided for the Debtors (as defined herein) to file the Plan with the Bankruptcy Court.

WHEREAS, on January 3, 2006, Pliant (Utah) and certain of its subsidiaries, Uniplast Holdings, Inc., Pliant Corporation International, Pliant Solutions Corporation, Pliant Film Products of Mexico, Inc., Pliant Packaging of Canada, LLC, Pliant Investment, Inc., Alliant Company LLC, Uniplast U.S., Inc., Uniplast Industries Co., and Pliant Corporation of Canada Ltd. (collectively, the “Debtors”), filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.

WHEREAS, pursuant to the Support Agreement, the Debtors filed the Plan with the Bankruptcy Court, which Plan, among other things, provides for the execution and delivery of this Agreement by the Company, the Investor Stockholders, the Bond Stockholders and the Other Stockholders.

WHEREAS, the Debtors, the creditors and other interest-holders of Pliant (Utah) have approved, and the Bankruptcy Court has confirmed, the Plan.

WHEREAS, the Bankruptcy Court has entered an order pursuant to Section 1129 of the Bankruptcy Code, confirming the Plan and authorizing and approving this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as set forth herein.

ARTICLE I

DEFINITIONS; RULES OF CONSTRUCTION

1.1          Definitions

As used in this Agreement, the following terms shall have the meanings set forth below.

“2003 Indenture” means the indenture, dated as of May 30, 2003, as amended, modified, restated or supplemented from time to time, by and among Pliant (Utah), the guarantors party thereto and Wilmington Trust Company, a Delaware banking corporation, as trustee.

“2003-Indenture Permitted Holder” means any “Permitted Holder” as such term is defined in the 2003 Indenture.

“2004 Indenture” means the amended and restated indenture, dated as of February 17, 2004, as amended and restated as of May 6, 2005 and as may be further amended, modified, restated or supplemented from time to time, by and among Pliant (Utah), the guarantors party thereto and Wilmington Trust Company, a Delaware banking corporation, as trustee.

“2004-Indenture Permitted Holder” means any “Permitted Holder” as such term is defined in the 2004 Indenture.

“Additional Series AA Directors” has the meaning ascribed to it in the Certificate.

“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with, such Person.

“Agreement” has the meaning ascribed to it in the caption.

“Approved Sale” has the meaning ascribed to it in Section 2.3(a).

“Approved Sale Notice” has the meaning ascribed to it in Section 2.3(b).

“Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. §§ et seq.

“Bankruptcy Court” means the United States Bankruptcy Court for the District of Delaware.

“Board” means the board of directors of the Company.

“Bond Stockholders” means, collectively: (a) all Persons who receive Common Stock in respect of Class 7 Claims under the Plan, including the Persons listed on Exhibit A attached hereto and made a part hereof (as the same may be amended by the Company to reflect any such Persons not listed thereon on the date hereof); and (b) any Person who is or becomes a holder of Stockholder Shares by Transfer of Stockholder Shares from a Bond Stockholder and who becomes a party to this Agreement as a Bond Stockholder pursuant to Section 2.1(c), in each case, only for so long as such Person holds Stockholder Shares.

“Business Day” means any day except a Saturday, a Sunday or any other day on which commercial banks are not required by law to be open in New York, New York.

“By-laws” means the By-laws of the Company, as amended, modified, supplemented or restated and in effect from time to time.

“Certificate” means the certificate of incorporation of the Company, as amended, modified, supplemented or restated and in effect from time to time, including any certificates of

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designation, correction or amendment filed with the Secretary of State of the State of Delaware pursuant to the terms thereof.

“Commission” means the Securities and Exchange Commission and any other Governmental Authority at the time administering the Securities Act.

“Common Stock” means, collectively, all of the common stock of the Company of any class and any other class of capital stock of the Company hereafter authorized that is not limited to a fixed sum or percentage of par or stated value with respect to the rights of the holders thereof to participate in dividends and in the distribution of assets upon any liquidation, dissolution or winding up of the Company.

“Common Stock Directors” has the meaning ascribed to it in the Certificate.

“Company” has the meaning ascribed to it in the caption.

“Control” means, (including, with correlative meaning, the terms “Controlling,” “Controlled by” and “under common Control with”) with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or investment decisions of such Person, whether through the ownership of voting Securities, by contract or otherwise.

“Debtors” has the meaning ascribed to it in the recitals.

“Demand Registration” has the meaning ascribed to such term in Section 5.1(a).

“Directors” has the meaning ascribed to it in Section 4.1(c).

“Eligible Stockholder” means, as determined from time to time, a Stockholder who (i) is an “accredited investor” as such term is defined in Rule 501 of the Securities Act and (ii) holds in excess of __%(1) of the then outstanding Stockholder Shares.

(1)Should be high enough to pick up all Investor and Bond Stockholders.

“Equity Incentive Plan” means the Pliant Corporation 2006 Restricted Stock Incentive Plan attached as Exhibit B hereto, as the same may be amended from time to time in accordance with the terms thereof and, to the extent applicable, Article VI hereof.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor Federal statute then in force, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time.

“Excluded Securities” has the meaning ascribed to it in Section 3.2.

“Form S-1,” “Form S-3,” “Form S-4” or “Form S-8” means Form S-1, Form S-3, Form S-4 or Form S-8, as appropriate, promulgated under the Securities Act (or any successor forms thereto).

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“Governmental Authority” means any domestic or foreign government or political subdivision thereof, whether on a Federal, state or local level and whether executive, legislative or judicial in nature, including any agency, authority, board, bureau, commission, court, department or other instrumentality thereof.

“Inclusion Request” has the meaning ascribed to such term in Section 5.1(a).

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

“Information” has the meaning ascribed to such term in Section 5.5(i).

“Initial Public Offering” means the first underwritten Public Offering of Common Stock pursuant to a Registration Statement.

“Initial Subscribing Stockholder” has the meaning ascribed to it in Section 3.1(d).

“Initiating Request” has the meaning ascribed to such term in Section 5.1(a).

“Inspectors” has the meaning ascribed to such term in Section 5.5(i).

“Investor Stockholders” means, collectively: (a) (i) Flexible Films, LLC, a Delaware limited liability company, (ii) Flexible Films II, LLC, a Delaware limited liability company, (iii) Southwest Industrial Films, LLC, a Delaware limited liability company, (iv) Southwest Industrial Films II, LLC, a Delaware limited liability company, (v) New York Life Capital Partners, L.P., (vi) The Northwestern Mutual Life Insurance Company, and (vii) Wachovia Capital Partners, LLC; and (b) any Person who is or becomes a holder of Stockholder Shares by Transfer of Stockholder Shares from an Investor Stockholder and who becomes a party to this Agreement as an Investor Stockholder pursuant to Section 2.1(c), in each case, only for so long as such Person holds Stockholder Shares.

“Joinder Agreement” has the meaning ascribed to it in Section 2.1(b).

“Material Transaction” means any material transaction in which the Company or any of its Subsidiaries proposes to engage or is engaged, including a purchase or sale of assets or securities, financing, merger, tender offer or any other transaction that would require disclosure pursuant to the Exchange Act, and with respect to which the Board reasonably has determined in good faith that compliance with this Agreement would require the Company to disclose material, non-public, competitive or sensitive information prior to such time as it would otherwise be required to be disclosed and thereby materially interfere with the ability of the Company or such Subsidiary to consummate such transaction.

“NASD” means the National Association of Securities Dealers, Inc.

“NASDAQ” means The National Association of Securities Dealers Automated Quotations System.

“New Investor” has the meaning ascribed to it in Section 3.1(c).

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“New Senior Subordinated Notes” means [_________].(2)

(2)To be determined.

“Offered Securities” has the meaning ascribed to it in Section 3.1(a).

“Other Eligible Stockholder” has the meaning ascribed to it in Section 3.1(d).

“Other Shares” means, at any time, those shares of Common Stock which do not constitute Registrable Shares or Primary Shares.

“Other Stockholders” means any party hereto other than the Company, the Bond Stockholders and the Investor Stockholders.

“Percentage Ownership” means with respect to any Stockholder, the fraction, expressed as a percentage, the numerator of which is the total number of shares of Common Stock held by such Stockholder and the denominator of which is the total number of shares of Common Stock issued and outstanding at the time of determination.

“Permitted-Holder Directors” has the meaning ascribed to it in Section 4.1(a)(i).

“Permitted Holder” has the meaning ascribed to such term in the applicable Indenture.

“Permitted-Holder Stockholders” has the meaning ascribed to it in Section 4.1(a)(i).

“Person” shall be construed as broadly as possible and shall include an individual person, a partnership (including a limited liability partnership), a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and a Governmental Authority.

“Plan” means the Debtors’ Second Amended Joint Plan of Reorganization filed with the Bankruptcy Court on April 18, 2006.

“Pliant (Utah)” means Pliant Corporation, a Utah corporation.

“Primary Shares” means, at any time, the authorized but unissued shares of Common Stock or shares of Common Stock held in the treasury of the Company.

“Prospectus” means the prospectus included in any Registration Statement, including any amendment or prospectus subject to completion, and any such prospectus as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Shares and, in each case, by all other amendments and supplements to such prospectus, including post-effective amendments, and in each case including all material incorporated by reference therein.

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“Public Offering” means the closing of a public offering of Common Stock pursuant to a Registration Statement declared effective under the Securities Act, except that a Public Offering shall not include an offering of Securities to be issued as consideration in connection with a business acquisition or an offering of Securities issuable pursuant to an employee benefit plan.

“Records” has the meaning ascribed to it in Section 5.5(i).

“Refused Securities” has the meaning ascribed to it in Section 3.1(c).

“Registrable Holders” means, on the date of determination, those Investor Stockholders and Bond Stockholders who hold in the aggregate more than fifty percent (50%) of the Registrable Shares held by all of the Investor Stockholders and the Bond Stockholders in the aggregate on such date of determination.

“Registrable Shares” means at any time, and with respect to any Stockholder, the shares of Common Stock (including any shares of Common Stock issued upon conversion of any other Securities) held by, or issuable to, such Stockholder. As to any particular Registrable Shares, such Registrable Shares shall cease to be Registrable Shares: (a) when an offering of such Registrable Shares has been registered under the Securities Act, the Registration Statement in connection therewith has been declared effective and such Registrable Shares have been disposed of pursuant to and in the manner described in such effective Registration Statement; (b) following an Initial Public Offering, when such Registrable Shares are sold or distributed to the public, or are eligible to be sold or distributed, through a broker, dealer or market maker pursuant to Rule 144(k); (c) when such Registrable Shares have ceased to be outstanding; or (d) following an Initial Public Offering, if such Registrable Shares are freely tradeable pursuant to Section 1145 of the Bankruptcy Code; provided, that in the cases of clauses (b) and (d), such shares shall be deemed Registrable Shares for purposes of an Initial Public Offering.

“Registration Date” means the date upon which the Registration Statement filed by the Company to effect its Initial Public Offering shall have been declared effective by the Commission.

“Registration Request Notice” has the meaning ascribed to it in Section 5.1(a).

“Registration Statement” means any registration statement of the Company filed with the Commission that covers an offering of any Registrable Shares, and all amendments and supplements to any such registration statement, including post-effective amendments, in each case, including the prospectus contained therein, all exhibits thereto and all material incorporated by reference therein.

“Representative” means with respect to a particular Person, any director, officer, employee, agent, consultant, advisor or other representative of such Person, including legal counsel, accountants and financial advisors.

“Requisite Bond Stockholders” means, on the date of determination, those Bond Stockholders who hold in the aggregate more than fifty percent (50%) of the Common Stock held by all of the Bond Stockholders on such date of determination.

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“Requisite Investor Stockholders” means, on the date of determination, those Investor Stockholders who hold in the aggregate more than fifty percent (50%) of the Common Stock held by all of the Investor Stockholders on such date of determination.

 “Rule 144” means Rule 144 (including Rule 144(k) and all other subdivisions thereof) promulgated by the Commission under the Securities Act, as such rule may be amended from time to time, or any similar or successor rule then in force.

“Sale of the Company” means the consummation of (a) the sale or transfer (in one or a series of related transactions) of all or substantially all of the Company’s consolidated assets to a Person or a group of Persons acting in concert (other than to a Subsidiary of the Company), provided that such Person is not, and such group of Persons does not include any Person who is, an Affiliate of any Investor Stockholder; (b) the sale or transfer (in one or a series of related transactions) of a majority of the outstanding Common Stock of the Company to one Person or a group of Persons acting in concert, provided that such Person is not, and such group of Persons does not include any Person who is, an Affiliate of any Investor Stockholder; or (c) the merger or consolidation of the Company with or into another Person, provided that such Person is not an Affiliate of any Investor Stockholder; provided, that, in the case of clause (c) above, a Sale of the Company shall not occur under circumstances in which the holders of a majority of the voting power of the outstanding Common Stock of the Company immediately prior to such transaction own, directly or indirectly, a majority in voting power of the outstanding Common Stock or other voting Securities having, in the aggregate, the right to elect a majority of the board of directors of the Company or the surviving or resulting corporation or acquirer, as the case may be, immediately following such transaction. A sale (or multiple related sales) of one or more Subsidiaries of the Company (whether by way of merger, consolidation, reorganization or sale of all or substantially all assets or Securities) which constitutes all or substantially all of the consolidated assets of the Company shall be deemed a “Sale of the Company.”

“Securities” means “securities” as defined in Section 2(1) of the Securities Act and includes, with respect to any Person, such Person’s capital stock or other equity interests or any options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, such Person’s capital stock or other equity or equity-linked interests, including phantom stock and stock appreciation rights.

“Securities Act” means the Securities Act of 1933, as amended, or any successor Federal statute, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time.

“Series AA Directors” has the meaning ascribed to it in the Certificate.

“Series AA Preferred Stock” means the Series AA Redeemable Preferred Stock of the Company, par value [ ] per share.

“Series M Preferred Stock” means the Series M Preferred Stock of the Company, par value [ ] per share.

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“Special Incentive Plan” means the Pliant Corporation Deferred Cash Incentive Plan attached as Exhibit C hereto, as the same may be amended from time to time in accordance with the terms thereof and, to the extent applicable, Article VI hereof.

“Stockholder Shares” means (a) the Common Stock or (b) any Securities issued or issuable directly or indirectly with respect to the Securities referred to in clause (a) above by way of conversion, exercise or exchange, stock dividend or stock split or in connection with a combination of shares, recapitalization, reclassification, merger, consolidation or other reorganization. As to any particular shares constituting Stockholder Shares, such shares shall cease to be Stockholder Shares when they have been effectively registered under the Securities Act and disposed of in accordance with the Registration Statement covering them. For the avoidance of doubt, shares of Series AA Preferred Stock shall not be considered Stockholder Shares.

“Stockholders” means the Investor Stockholders, Bond Stockholders and/or Other Stockholders or any of them individually.

“Stockholders’ Counsel” has the meaning ascribed to it in Section 5.5(b).

“Subscription Offer Acceptance Notice” has the meaning ascribed to it in Section 3.1(b).

“Subscription Offer Notice” has the meaning ascribed to it in Section 3.1(a).

“Subscription Offer Period” has the meaning ascribed to it in Section 3.1(a).

“Subsidiary” means, at any time, with respect to any Person (the “Subject Person”), any other Person of which either (a) fifty percent (50%) or more of the Securities or other interests entitled to vote in the election of directors or comparable governance bodies performing similar functions or (b) an interest of 50% or more in the profits or capital of such Person, are at the time owned or controlled directly or indirectly by the Subject Person or through one or more Subsidiaries of the Subject Person.

“Support Agreement” has the meaning ascribed to it in the recitals.

“Suspension Period” has the meaning ascribed to it in Section 5.10.

“Transfer” of Securities shall be construed broadly and shall include any sale, assignment, transfer, participation, gift, bequest, distribution, or other disposition thereof, or any pledge or hypothecation thereof, placement of a lien thereon or grant of a security interest therein or other encumbrance thereon, in each case whether voluntary or involuntary or by operation of law or otherwise.

“Transferee” means a Person acquiring or intending to acquire Stockholder Shares  through a Transfer.

“Transferor” means a Stockholder Transferring or intending to Transfer Stockholder Shares.

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1.2Rules of Construction

The use in this Agreement of the term “including” means “including, without limitation.”  The words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole, including the schedules and exhibits, as the same may from time to time be amended, modified, supplemented or restated, and not to any particular section, subsection, paragraph, subparagraph or clause contained in this Agreement. All references to sections, schedules and exhibits mean the sections of this Agreement and the schedules and exhibits attached to this Agreement, except where otherwise stated. The title of and the section and paragraph headings in this Agreement are for convenience of reference only and shall not govern or affect the interpretation of any of the terms or provisions of this Agreement. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement has been chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party. Unless expressly provided otherwise, the measure of a period of one month or year for purposes of this Agreement shall be that date of the following month or year corresponding to the starting date; provided, that if no corresponding date exists, the measure shall be that date of the following month or year corresponding to the next day following the starting date. For example, one month following February 18 is March 18, and one month following March 31 is May 1.

ARTICLE II

ISSUANCES AND TRANSFERS OF SECURITIES

2.1Issuances and Transfers of Securities

(a)           The provisions in this Article II shall apply to all Stockholder Shares now owned or hereafter acquired by a Stockholder, including Stockholder Shares acquired by reason of original issuance, dividend, distribution, exchange, conversion and acquisition of outstanding Stockholder Shares from another Person, and such provisions shall apply to any Stockholder Shares obtained by a Stockholder upon the exercise, exchange or conversion of any option, warrant or other derivative Security (including upon the conversion of the Series AA Preferred Stock).

(b)           Any Person who is not already a party to this Agreement and who subscribes for Stockholder Shares shall, as a condition to such acquisition, execute and deliver to the Company a joinder agreement in substantially the form attached hereto as Exhibit D (a “Joinder Agreement”), pursuant to which such Person will thereupon become a party to, and be bound by and obligated to comply with the terms and provisions of, this Agreement.

(c)           No Stockholder shall Transfer any Stockholder Shares to a Person not already a party to this Agreement as a Stockholder unless (i) such Person executes and delivers to the Company a Joinder Agreement, pursuant to which such Person will thereupon become a party to, and be bound by and obligated to comply with the terms and provisions of, this

9

Agreement, as a Stockholder hereunder and (ii) such Transfer is made in compliance with this Article II. Any Transfer of Stockholder Shares in violation of this Section 2.1(c) shall be deemed to be a breach of this Agreement by the Transferor.

(d)           On or before the fifth anniversary of the date hereof, no Stockholder who is both a 2003-Indenture Permitted Holder and 2004-Indenture Permitted Holder shall Transfer (other than pursuant to a Transfer effected pursuant to the “Merger Exception” as defined in Article Four, Part B, Section 5(a) of the Certificate) any Stockholder Shares to any Person unless (i) no “Change of Control” (as defined in the applicable Indenture) occurs under the applicable Indenture (if such Indenture is then in effect) as a result of such Transfer and the Transferee agrees to be bound by the restrictions set forth in this Section 2.1(d) with respect to any subsequent proposed Transfer of such Stockholder Shares by such Transferee, or (ii) such Transfer is made only after all shares of the Series AA Preferred Stock have been redeemed and New Senior Subordinated Notes have been repaid in full in cash.

(e)           On or before the fifth anniversary of the date hereof, the Company shall not issue or sell any Securities to any Person in the event that such issuance or sale would cause a “Change of Control” as defined in either Indenture (if such Indenture is then in effect) without the prior written consent of the Requisite Investor Stockholders and the Requisite Bond Stockholders.

2.2Intentionally Omitted

2.3Required Sale in Connection with a Sale of the Company

(a)           Subject to the provisions set forth in Section 2.1(d) and this Section 2.3, if the Requisite Investor Stockholders and the Board approve a Sale of the Company (an “Approved Sale”), each Stockholder shall consent to, vote in favor of and raise no objections against the Approved Sale, and if the Approved Sale is structured as a sale of the issued and outstanding capital stock of the Company (whether by merger, recapitalization, consolidation or Transfer of Stockholder Shares, other Securities or otherwise), then each Stockholder shall waive any dissenters rights, appraisal rights or similar rights in connection with such Sale of the Company and each Stockholder shall agree to sell his, her or its Stockholder Shares on the terms and conditions approved by the Requisite Investor Stockholders and the Board. Each Stockholder shall take all necessary and desirable actions in connection with the consummation of the Approved Sale, including, but not limited to, the execution of such agreements and instruments and other actions necessary to provide the representations, warranties, indemnities, covenants, conditions, escrow agreement and other provisions and agreements relating to such Approved Sale. In the event that any Stockholder fails for any reason to take any of the foregoing actions after reasonable notice thereof, he, she or it hereby grants an irrevocable power of attorney and proxy to the Company or its designees to take all necessary actions and execute and deliver all documents deemed necessary or desirable by such Person to effectuate the terms of this Section 2.3. The restrictions on Transfers of Stockholder Shares and the other terms set forth in Sections 2.1 (other than Section 2.1(d), if applicable) shall not apply in connection with an Approved Sale.

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(b)           The Company shall deliver written notice to each Stockholder setting forth in reasonable detail the terms (including price, time and form of payment) of any Approved Sale (the “Approved Sale Notice”). Within ten (10) days following receipt of the Approved Sale Notice, each Stockholder shall deliver to the Company written notice (in form and substance reasonably satisfactory to the Company) setting forth such holders’ agreement to consent to and raise no objections against, or impediments to, the Approved Sale (including waiving all dissenter’s and similar rights) and (ii) if the Approved Sale is structured as a sale of stock, to sell his, her or its Stockholder Shares on the terms and conditions set forth in the Approved Sale Notice.

(c)           The obligations of the Stockholders to participate in any Approved Sale pursuant to this Section 2.3 are subject to the satisfaction of the following conditions:

(i)            upon the consummation of the Approved Sale, each Stockholder shall receive the same proportion of the aggregate consideration from such Approved Sale that such holder would have received if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in the Certificate as in effect immediately prior to such Approved Sale (giving effect to applicable orders of priority and the provisions of the various agreements relating to vested stock or vested options of the Company);

(ii)           if any Stockholders are given an option as to the form and amount of consideration to be received with respect to Securities in a class, all holders of Securities of such class will be given the same option;

(iii)          no Stockholder shall be obligated to pay more than his, her or its pro rata amount of reasonable expenses incurred in connection with a consummated Approved Sale to the extent such expenses are incurred for the benefit of all Stockholders and are not otherwise paid by the Company or the acquiring party (expenses incurred by or on behalf of a Stockholder for its or his sole benefit not being considered expenses incurred for the benefit of all Stockholders);

(iv)          with respect to the obligations of the Bond Stockholders only to so participate in such an Approved Sale, and except in a transaction effected pursuant to the “Merger Exception” as defined in Article Four, Part B, Section 5(a)(i) of the Certificate, the terms of the Approved Sale shall provide that (A) the holders of the Series AA Preferred Stock shall receive an amount in cash equal to at least the aggregate liquidation preference of all outstanding shares of Series AA Preferred Stock and, (B) prior to or simultaneously with the closing of such Approved Sale, either (I) the New Senior Subordinated Notes are paid in full in cash or (II) the Company gives written notice of redemption of all New Senior Subordinated Notes to the trustee and the holders thereof pursuant to the related indenture and deposits the redemption price therefor with a bank or trust company acting as paying agent or otherwise segregates and holds in trust the redemption price as permitted by the indenture; and

(v)           any indemnification obligations for breaches of representations, warranties and covenants made by the Company and its Subsidiaries shall be pro-rata among the Stockholders based on the aggregate consideration payable with respect to the equity Securities of the Company.

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(d)           The obligations of the Stockholders set forth in this Section 2.3 shall apply solely with respect to the Stockholder Shares and shall not apply with respect to any shares of Series AA Preferred Stock owned by any Stockholder.

ARTICLE III

RIGHTS TO SUBSCRIBE FOR SECURITIES

3.1General

(a)           Prior to the occurrence of a Public Offering, in the event that the Company proposes to issue any equity Securities (the “Offered Securities”), other than Excluded Securities, the Company shall deliver to each Eligible Stockholder written notice (which notice shall state the number or amount of the Offered Securities proposed to be issued, the purchase price therefor and any other terms or conditions of the proposed issuance, including any linked or grouped Securities which comprise Offered Securities) of such issuance (the “Subscription Offer Notice”) at least fifteen (15) days prior to the date of the proposed issuance (the “Subscription Offer Period”).

(b)           Each Eligible Stockholder shall have the option, exercisable at any time during the Subscription Offer Period by delivering written notice to the Company (a “Subscription Offer Acceptance Notice”), (i) to subscribe for the number or amount of such Offered Securities up to its Percentage Ownership (excluding for the purposes of this calculation Stockholder Shares held by Stockholders who are not Eligible Stockholders) of the total number or amount of Offered Securities proposed to be issued and (ii) to offer to subscribe for up to its Percentage Ownership (excluding for the purposes of this calculation Stockholder Shares held by Stockholders who are not Eligible Stockholders) of the Offered Securities not subscribed for by other Eligible Stockholders (as further described below). Any Offered Securities not subscribed for by an Eligible Stockholder shall be deemed to be re-offered to and accepted by the Eligible Stockholders exercising their options specified in clause (ii) of the immediately preceding sentence with respect to the lesser of (x) the amount specified in their respective Subscription Offer Acceptance Notices and (y) an amount equal to their respective Percentage Ownership (excluding for the purposes of this calculation Stockholder Shares held by Stockholders who have not exercised their option specified in clause (ii) of the immediately preceding sentence) with respect to such deemed re-offer. Such deemed re-offer and acceptance procedures described in the immediately preceding sentence shall be deemed to be repeated until either (i) all of the Offered Securities are accepted by the Eligible Stockholders or (ii) no Eligible Stockholders desire to subscribe for more Offered Securities. The Company shall notify each Eligible Stockholder within five (5) Business Days following the expiration of the Subscription Offer Period of the number or amount of Offered Securities which such Eligible Stockholder has subscribed to purchase.

(c)           If Subscription Offer Acceptance Notices are not given by the Eligible Stockholders for all the Offered Securities, the Company may issue the part of such Offered Securities as to which Subscription Offer Acceptance Notices have not been given by the Eligible Stockholders (the “Refused Securities”) to any Person (a “New Investor”) in accordance with the terms and conditions set forth in the Subscription Offer Notice. Any Refused Securities

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not purchased by one or more New Investors in accordance with this Section 3.1 within ninety (90) days after the date of the Subscription Offer Notice may not be sold or otherwise disposed of until they are again offered to the Eligible Stockholders under the procedures specified in this Section 3.1.

(d)           Notwithstanding anything to the contrary contained herein, the Company may, in order to expedite the issuance of the Offered Securities hereunder, issue all or a portion of the Offered Securities to one or more Persons (each, an “Initial Subscribing Stockholder”), without complying with the provisions of this Section 3.1; provided, that prior to such issuance, either: (i) each Initial Subscribing Stockholder agrees to offer to sell to each Eligible Stockholder who is not an Initial Subscribing Stockholder (each such Stockholder, an “Other Eligible Stockholder”) such Other Eligible Stockholder’s respective Percentage Ownership (excluding for the purposes of this calculation Stockholder Shares held by Stockholders who are not Eligible Stockholders) of such Offered Securities on the same terms and conditions as issued to the Initial Subscribing Stockholders and in a manner which provides such Other Eligible Stockholder with rights substantially similar to the rights outlined in Sections 3.1(b) and 3.1(c); provided, however, that the purchase price payable by the Other Eligible Stockholders to the Initial Subscribing Stockholders may include (A) an amount equal to any accrued and unpaid dividends thereon or (B) a reasonable rate of interest, in each case calculated from the date such Initial Subscribing Stockholder purchase such Offered Securities through the date of sale to the Other Eligible Stockholders; or (ii) the Company shall offer to sell an additional amount of Offered Securities to each Other Eligible Stockholder only in an amount and manner which provides such Other Eligible Stockholder with rights substantially similar to the rights outlined in Sections 3.1(b) and 3.1(c). The Initial Subscribing Stockholders or the Company, as applicable, shall offer to sell such Offered Securities to each Other Eligible Stockholder within sixty (60) days after the closing of the purchase of the Offered Securities by the Initial Subscribing Stockholders.

3.2Excluded Securities

The rights of the Eligible Stockholders under Section 3.1 shall not apply to the following Securities issued by the Company at any time (the “Excluded Securities”):

(a)           Securities issued as a stock dividend or distribution or upon any stock split, recapitalization or other subdivision or combination of Securities;

(b)           Securities issued upon the exercise, conversion or exchange of any warrants, options or any other derivative or convertible Securities of the Company (including the Series AA Preferred Stock and the Series M Preferred Stock);

(c)           Securities issued in connection with (i) the acquisition (whether by stock sale, merger, recapitalization, asset sale or otherwise) of another Person (or portion thereof), or (ii) a joint venture or strategic alliance with another Person, in each case, that is approved by the Board;

(d)           Securities issued in a Public Offering;

(e)           Securities issued pursuant to the terms of the Equity Incentive Plan;

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(f)            Securities issued as a bona fide “equity kicker” to a lender or placement agent in connection with a financing; and

(g)           Securities issued for non-cash consideration or upon the conversion of debt that by its terms is convertible into equity Securities.

3.3Application

This Article III shall not apply in connection with an Approved Sale.

ARTICLE IV

BOARD

4.1Election of Directors; Voting

(a)           Subject to the provisions of Section 4.1(b) hereof, except with the prior written consent of the Requisite Investor Stockholders and the Requisite Bond Stockholders, each Stockholder hereby covenants and agrees to vote all of his, her or its Stockholder Shares against any proposed amendment to or restatement of the Certificate that would cause the number of directors constituting the Board to be any greater than, or less than, seven (7). At each annual meeting of the Stockholders, and at each special meeting of the holders of any class of Stockholder Shares called for the purpose of electing Common Stock Directors, and at any time at which holders of Stockholder Shares shall have the right to vote for or consent in writing to the election of Common Stock Directors, then, and in each such event, each Stockholder shall vote all of the Stockholder Shares owned by them for, or consent in writing with respect to such shares in favor of, the election of Common Stock Directors to the Board constituted as follows:

(i)            four (4) representatives (the “Permitted-Holder Directors”) designated by the holders of a majority of the shares of Common Stock held by the Stockholders who are both 2003-Indenture Permitted Holders and 2004-Indenture Permitted Holders (the “Permitted-Holder Stockholders”), which designees shall, in accordance with the Plan, initially be [_______ and ________];

(ii)           one (1) representative who shall be, if the Company has employed a permanent chief executive officer at such time, the chief executive officer of the Company from time to time.

(b)           The Stockholders shall vote their shares (i) to remove any Permitted-Holder Director whose removal is required by the holders of a majority of the shares of Common Stock held by the Permitted-Holder Stockholders and (ii) to promptly fill any vacancy created by the removal, resignation or death of a Common Stock Director, in each case for the election of a new Common Stock Director designated, if approval is required, in accordance with the provisions of this Section 4.1. The Company and the Stockholders shall use their best efforts to fill any vacancies of the Permitted-Holder Directors as soon as practicable following any such designation.

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(c)           The Company shall pay all reasonable out-of-pocket fees, charges and expenses (including travel and related expenses) incurred by each of the  members of the Board, including, for the avoidance of doubt, the Series AA Directors and any Additional Series AA Directors (collectively, the “Directors”) in connection with (i) attending the meetings of the Board and all committees thereof and (ii) conducting any other Company business requested by the Company. So long as any Director serves on the Board and for three (3) years thereafter, the Company shall maintain directors and officers indemnity insurance coverage reasonably satisfactory to the Requisite Investor Stockholders and the Requisite Bond Stockholders, and the Company’s Certificate and By-laws shall provide for indemnification and exculpation of Directors to the fullest extent permitted under applicable law.

4.2Subsidiaries

At the election of the Series AA Directors (such election to be made in writing at least five (5) Business Days prior to the effectiveness thereof), the board of directors or board of managers, as applicable, of each Subsidiary of the Company shall include one of the Series AA Directors on such board.

ARTICLE V

REGISTRATION RIGHTS

5.1Required Registration

(a)           If, at any time following the third-year anniversary of the date hereof, the Company shall be requested in writing (an “Initiating Request”) by the Registrable Holders to effect the registration under the Securities Act of an offering of Registrable Shares (a “Demand Registration”), then the Company shall, subject to Sections 5.1(b), (c) and (d) below, promptly use its reasonable best efforts to effect a registration under the Securities Act of an offering of all the Registrable Shares that the Company has been requested pursuant to such Initiating Request and in any Inclusion Request (as hereinafter defined) for sale in accordance with this Section 5.1(a) and with the method of distribution specified in the Initiating Request. The Company shall promptly give written notice to all Stockholders (a “Registration Request Notice”) of the Company’s requirement to register such offering. The Stockholders shall have 30 days after delivery of a Registration Request Notice to deliver to the Company a request in writing (an “Inclusion Request”) that the Company include in such registration the number of Registrable Shares of all Stockholders so specified in the Inclusion Request.

(b)           Anything contained in Section 5.1(a) to the contrary notwithstanding, the Company may delay the filing or effectiveness of any Registration Statement for a period of up to 120 days after the date that the Registrable Holders make an Initiating Request, if at the time of such Initiating Request: (i) any other registration statement (other than on Form S-4 or Form S-8) pursuant to which equity Securities of the Company are to be or were offered and sold has been filed and not withdrawn or has been declared effective within the prior ninety (90) days (180 days in the case of the Initial Public Offering); or (ii) the Board determines in good faith that (A) it is in possession of material, non-public information concerning pending or threatened litigation and disclosure of such information would jeopardize such litigation or otherwise

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materially harm the Company or (B) a Material Transaction that has not been publicly disclosed is reasonably likely to occur; provided, however, that the Company may not utilize this right more than once in any twelve-month period.

(c)           With respect to any registration pursuant to Section 5.1(a), the Company may include in such registration any other Registrable Shares, Primary Shares or Other Shares; provided, however, that if the managing underwriter advises the Company that the inclusion of all Registrable Shares, Primary Shares and Other Shares proposed to be included in such registration would materially adversely affect the offering and sale (including pricing) of all such Securities, then the number of Registrable Shares, Primary Shares, and Other Shares proposed to be included in such registration shall be included in the following order:

(i)            first, the Registrable Shares owned by the Stockholders, pro rata based upon the number of Registrable Shares owned by each such Stockholder at the time of such registration;

(ii)           second, the Primary Shares; and

(iii)          third, the Other Shares.

(d)           Subject to paragraphs (f) and (g), the Company shall not be required pursuant to Section 5.1(a) to effect more than one (1) registration of an offering of Registrable Shares on Form S-1.

(e)           If any offering pursuant to a Demand Registration involves an underwritten offering, the Registrable Holders shall select the managing underwriter or underwriters to administer the offering, which managing underwriters shall be a firm of nationally recognized standing.

(f)            Any Stockholder initiating or requesting the inclusion of Registrable Shares in a Demand Registration may, by written notice to the Company delivered prior to the effectiveness of the Registration Statement, withdraw its request to have its Registrable Shares included in such Demand Registration. In the event that either: (i) the conditions to closing specified in an underwriting agreement to which the Company is a party with respect to a Demand Registration are not satisfied or waived; or (ii) any Registration Statement filed pursuant to this Section 5.1(a) is not declared effective for any reason, then in each such case such registration shall not be deemed a Demand Registration for purposes of this Section 5.1(a).

(g)           The Registrable Holders that own a majority of the Registrable Shares requested to be included in a Registration Statement pursuant to this Section 5.1(a) shall have the right to terminate or withdraw any registration initiated pursuant to this Section 5.1(a) by written notice to the Company delivered prior to the effectiveness of such Registration Statement and such withdrawn registration shall not be deemed a Demand Registration for purposes of this Section 5.1(a) if such Registrable Holders within 30 days after the delivery of such written notice fully reimburse the Company for all costs, fees and expenses incurred by the Company (including legal fees) in connection with such withdrawn registration.

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5.2Piggyback Registration

(a)           If the Company at any time proposes for any reason to register Primary Shares or Other Shares under the Securities Act (other than on Form S-4 or Form S-8), it shall promptly give written notice to each Stockholder of its intention to register the Primary Shares or Other Shares and, upon the written request of any Stockholder (given within twenty (20) days after delivery of any such notice to each Stockholder by the Company) to include in such registration Registrable Shares (which request shall specify the number of Registrable Shares proposed to be included in such registration), the Company shall use its reasonable best efforts to cause all such Registrable Shares requested to be included in such registration to be included on the same terms and conditions as the Securities otherwise being sold in such registration; provided, however, that if the managing underwriter advises the Company that the inclusion of all Registrable Shares or Other Shares proposed to be included in such registration would interfere with the successful offering and sale (including pricing) of Primary Shares proposed to be offered and sold by the Company, then the number of Primary Shares, Registrable Shares and Other Shares proposed to be included in such registration shall be included in the following order:

(i)            first, the Primary Shares;

(ii)           second, the Registrable Shares owned by the Stockholders requesting that their Registrable Shares be included in such registration pursuant to the terms of this Section 5.2, pro rata based upon the number of Registrable Shares owned by each such Stockholder at the time of such registration; and

(iii)          third, the Other Shares.

(b)           The number of requests by the Stockholders permitted by this Section 5.2 shall be unlimited.

5.3Registrations on Form S-3

(a)           Subject to Sections 5.3(c) and (d), at such time as the Company shall have qualified for the use of Form S-3, the Stockholders shall have the right to request registrations on Form S-3, and to effect a registration under the Securities Act of Registrable Shares in accordance with this Section 5.3.

(b)           If the Company shall be requested in writing by any Stockholder to effect a registration under the Securities Act of Registrable Shares in accordance with this Section 5.3, then the Company shall promptly give written notice of such proposed registration to all Stockholders and shall include in such proposed registration any Registrable Shares requested to be included in such proposed registration by all Stockholders provided that such Stockholders respond in writing to the Company’s notice within twenty (20) days after delivery by the Company of such notice (which response shall specify the number of Registrable Shares proposed to be included in such registration). The Company shall promptly use its commercially reasonable efforts to effect such registration on Form S-3 of the Registrable Shares that the Company has been so requested to register.

(c)           The Company shall not be obligated to effect any registration under the Securities Act requested by the Stockholders under this Section 5.3 if either: (i) with respect to

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any request made by a Stockholder pursuant to this Section 5.3, the anticipated gross offering price of all Registrable Shares to be included in such registration would be less than $5,000,000; or (ii) the Company shall have effected four (4) or more Registration Statements on Form S-3 pursuant to this Section 5.3 during the twelve-month period prior to the date of such request for registration (unless the Company shall have waived such limitation).

(d)           The Company may delay the filing or effectiveness of any Registration Statement for a period not to exceed one hundred twenty (120) days after the date of a request for registration pursuant to this Section 5.3 if (i) any other registration statement (other than on Form S-4 or Form S-8) pursuant to which Securities of the Company are to be or were offered and sold has been filed and not withdrawn or has been declared effective within the prior ninety (90) days; or (ii) the Board determines in good faith that (A) it is in possession of material, non-public information concerning pending or threatened litigation and disclosure of such information would jeopardize such litigation or otherwise materially harm the Company or (B) a Material Transaction that has not been publicly disclosed is reasonably likely to occur; provided, however, that the Company may not utilize this right more than once in any twelve-month period.

(e)           With respect to any registration pursuant to this Section 5.3, the Company may include in such registration any Registrable Shares, Primary Shares or Other Shares; provided, however, that if the managing underwriter advises the Company that the inclusion of all Registrable Shares, Primary Shares and Other Shares proposed to be included in such  registration would materially adversely affect the offering or sale (including pricing) of all such securities, then the number of Registrable Shares, Primary Shares and Other Shares proposed to be included in such registration shall be included in the following order:

(i)            first, the Registrable Shares owned by the Stockholders, pro rata based upon the number of Registrable Shares owned by each such Stockholder at the time of such registration;

(ii)           second, the Primary Shares; and

(iii)          third, the Other Shares.

(f)            The number of requests by the Stockholders permitted by this Section 5.3 shall be unlimited.

5.4Holdback Agreement

(a)           If the Company at any time shall register an offering and sale of shares of Common Stock under the Securities Act in an underwritten offering and such offering and sale is the first Public Offering for the account of the Company or is effected pursuant to Section 5.1(a), the Stockholders shall not sell, make any short sale of, grant any option for the purchase of, or otherwise dispose of any shares of Common Stock (other than (i) those Registrable Shares included in such registration pursuant to Section 5.1 or 5.2 or (ii) subject to the consent of the underwriters, a Transfer to an Affiliate) without the prior written consent of the Company for a period as shall be determined by the managing underwriters, which period cannot begin more

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than seven (7) days prior to the effectiveness of such Registration Statement and cannot last more than 180 days after the effective date of such Registration Statement.

(b)           If the Company at any time shall register an offering and sale of shares of Common Stock for the account of the Company under the Securities Act in an underwritten offering pursuant to any registration under the Securities Act other than the first Public Offering for the account of the Company (other than on Form S-4 or Form S-8), the Stockholders participating in such registered offering shall not sell, make any short sale of, grant any option for the purchase of, or otherwise dispose of any shares of Common Stock (other than (i) those Registrable Shares included in such registration pursuant to Sections 5.1, 5.2 or 5.3 or (ii) subject to the consent of the underwriters, a Transfer to an Affiliate) without the prior written consent of the Company for a period as shall be determined by the managing underwriters, which period cannot begin more than seven (7) days prior to the effectiveness of such Registration Statement and cannot last more than ninety (90) days after the effective date of such Registration Statement.

5.5Preparation and Filing

If and whenever the Company is under an obligation pursuant to the provisions of this Agreement to use its reasonable best efforts to effect the registration of an offering and sale of any Registrable Shares, the Company shall, as expeditiously as practicable:

(a)           use its reasonable best efforts to cause a Registration Statement that registers such offering of Registrable Shares to become and remain effective for a period of 120 days or until all of such Registrable Shares have been disposed of (if earlier);

(b)           furnish, at least five (5) Business Days before filing a Registration Statement that registers such Registrable Shares, a draft Prospectus relating thereto and any amendments or supplements relating to such Registration Statement or Prospectus, to one counsel (the “Stockholders’ Counsel”) selected by the Registrable Holders that own a majority of the Registrable Shares to be included in such Registration Statement, copies of all such documents proposed to be filed (it being understood that such five (5) Business Day period need not apply to successive drafts of the same document proposed to be filed so long as such successive drafts are supplied to such counsel in advance of the proposed filing by a period of time that is customary and reasonable under the circumstances), and shall reflect in each such document, when so filed with the Commission, such comments as the Stockholders whose Registrable Shares are to be covered by such Registration Statement may reasonably propose;

(c)           prepare and file with the Commission such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective for a period of at least 120 days or until all of such Registrable Shares have been disposed of (if earlier) and to comply with the provisions of the Securities Act with respect to the offering and sale or other disposition of such Registrable Shares;

(d)           notify the Stockholders’ Counsel promptly in writing of (i) any comments by the Commission with respect to such Registration Statement or Prospectus, or any request by

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the Commission for the amending or supplementing thereof or for additional information with respect thereto; (ii) the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement or Prospectus or any amendment or supplement thereto or the initiation of any proceedings for that purpose; and (iii) the receipt by the Company of any notification with respect to the suspension of the qualification of such Registrable Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes;

(e)           use its reasonable best efforts to register or qualify such Registrable Shares under such other securities or “blue sky” laws of such jurisdictions as any seller of Registrable Shares reasonably requests and do any and all other acts and things that may reasonably be necessary or advisable to enable such seller of Registrable Shares to consummate the disposition in such jurisdictions of the Registrable Shares owned by such seller; provided, however, that the Company will not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this Section 5.5(e);

(f)            furnish to each seller of such Registrable Shares such number of copies of a summary Prospectus or other Prospectus, including a preliminary Prospectus, in conformity with the requirements of the Securities Act, and such other documents as such seller of Registrable Shares may reasonably request in order to facilitate the public offering and sale or other disposition of such Registrable Shares;

(g)           use its reasonable best efforts to cause such offering and sale of Registrable Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the seller or sellers thereof to consummate the disposition of such Registrable Shares;

(h)           promptly notify on a timely basis each seller of such Registrable Shares at any time when a Prospectus relating to such Registrable Shares is required to be delivered under the Securities Act of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of such seller, prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such Prospectus as may be necessary so that, as thereafter delivered to the offerees of such shares, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

(i)            make available for inspection by any seller of such Registrable Shares, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by any such seller or underwriter (collectively, the “Inspectors”), all pertinent financial, business and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”), as shall reasonably be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information (together with the Records, the “Information”) reasonably requested by any such Inspector in connection with such Registration Statement (and

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any of the Information that the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, shall not be disclosed by the Inspectors unless (i) the disclosure of such Information is necessary to avoid or correct a misstatement or omission in the Registration Statement; (ii) the release of such Information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or is otherwise required by law; (iii) such Information has been made generally available to the public; or (iv) the seller of Registrable Shares agrees that it will, upon learning that disclosure of such Information is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of the Information deemed confidential);

(j)            use its reasonable best efforts to obtain from its independent certified public accountants a “cold comfort” letter in customary form and covering such matters of the type customarily covered by cold comfort letters;

(k)           use its reasonable best efforts to obtain, from its counsel, an opinion or opinions in customary form and covering such matters of the type customarily covered by such opinions (which shall also be addressed to the Stockholders selling Registrable Shares in such registration);

(l)            provide and maintain a transfer agent and registrar (which may be the same entity and which may be the Company) for such Registrable Shares;

(m)          issue to any underwriter to which any seller of Registrable Shares may sell shares in such offering certificates evidencing such Registrable Shares;

(n)           list such Registrable Shares on any national securities exchange on which any shares of the Common Stock are listed or, if the Common Stock is not listed on a national securities exchange, take all reasonable action required to qualify such Registrable Shares for quotation on the NASDAQ OTC Bulletin Board Service;

(o)           otherwise comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable but not later than eighteen (18) months after the effective date, earnings statements (which need not be audited) covering a period of twelve (12) months beginning within three (3) months after the effective date of the Registration Statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

(p)           use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the lifting of any suspension or exemption from qualification of any of the Registrable Shares for sale in any jurisdiction as soon as is practicable;

(q)           use its reasonable best efforts to take all other steps necessary to effect the registration of such Registrable Shares contemplated hereby; and

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(r)            cause officers or key employees of the Company, as applicable, to participate in any “road show” or “road shows” reasonably requested by the managing underwriter.

5.6Expenses

All expenses incident to the Company’s performance of or compliance with Sections 5.1, 5.2, 5.3 and 5.5, including, without limitation: (a) all registration and filing fees, and any other fees and expenses associated with filings required to be made with any stock exchange and the Commission (including, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel as may be required by the rules and regulations of the NASD); (b) all fees and expenses of compliance with state securities or “blue sky” laws (including fees and disbursements of counsel for the underwriters or Stockholders in connection with “blue sky” qualifications of the Registrable Shares and determination of their eligibility for investment under the laws of such jurisdictions as the managing underwriters may designate); (c) all printing and related messenger and delivery expenses (including expenses of printing certificates for the Registrable Shares in a form eligible for deposit with The Depository Trust Company) and of printing prospectuses, all fees and disbursements of counsel for the Company and of all independent certified public accountants of the issuer (including the expenses of any special audit and “cold comfort” letters required by or incident to such performance); (d) Securities Act liability insurance if the Company so desires or the underwriters so require; (e) all fees and expenses incurred in connection with the listing of the Registrable Shares on any securities exchange and all rating agency fees; (f) all reasonable fees and disbursements of the Stockholders’ Counsel to represent such Stockholders in connection with such registration; (g) all fees and disbursements of underwriters customarily paid by the issuer or sellers of Securities, excluding underwriting discounts and commissions and transfer taxes, if any, and fees and disbursements of counsel to underwriters; and (h) fees and expenses of other Persons retained by the Company, will be borne by the Company, regardless of whether the Registration Statement becomes effective. In addition, the Company will, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any audit and the fees and expenses of any Person, including special experts, retained by the Company.

5.7Indemnification

(a)           In connection with any registration of any offering and sale of Registrable Shares under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless the seller of such Registrable Shares, each underwriter, broker or any other Person acting on behalf of such seller, each other Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act and each Representative of any of the foregoing Persons, against any losses, claims, damages or liabilities, joint or several, to which any of the foregoing Persons may become subject, whether commenced or threatened, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement under which such Registrable Shares were registered, any preliminary Prospectus or final Prospectus contained therein, any amendment or supplement thereto or any document incident to registration or qualification of any offering and

22

sale of any Registrable Shares, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or, with respect to any Prospectus, necessary to make the statements therein in light of the circumstances under which they were made not misleading, or any violation by the Company of the Securities Act or state securities or “blue sky” laws applicable to the Company and relating to action or inaction required of the Company in connection with such registration or qualification under such state securities or “blue sky” laws, and the Company shall promptly reimburse such seller, underwriter, broker, controlling Person or Representative for any legal or other expenses incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall not be liable to any such Person to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in said Registration Statement, preliminary Prospectus, amendment thereto, or any document incident to registration or qualification of any Registrable Shares in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such Person, or a Person duly acting on their behalf, specifically for use in the preparation thereof; provided, further, however, that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any untrue statement or allegedly untrue statement in, or omission or alleged omission made in any preliminary Prospectus but eliminated or remedied in the final Prospectus (filed pursuant to Rule 424 of the Securities Act), such indemnity agreement shall not inure to the benefit of any indemnified party from whom the Person asserting any loss, claim, damage, liability or expense purchased the Registrable Shares which are the subject thereof, if a copy of such final Prospectus had been timely made available to such indemnified party and such final Prospectus was not delivered to such Person with or prior to the written confirmation of the sale of such Registrable Shares to such Person.

(b)           In connection with any registration of an offering and sale of Registrable Shares under the Securities Act pursuant to this Agreement, each seller of Registrable Shares shall indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 5.7(a)) the Company, each underwriter or broker involved in such offering, each other seller of Registrable Shares under such Registration Statement, each Person who controls any of the foregoing Persons within the meaning of the Securities Act and any Representative of the foregoing Persons with respect to any untrue statement or allegedly untrue statement in or omission or alleged omission from such Registration Statement, any preliminary Prospectus or final Prospectus contained therein, any amendment or supplement thereto or any document incident to registration or qualification of any such offering and sale of Registrable Shares, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company or such underwriter through an instrument duly executed by such seller or a Person duly acting on such Seller’s behalf specifically for use in connection with the preparation of such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement; provided, however, that the maximum amount of liability in respect of such indemnification shall be limited, in the case of each seller of Registrable Shares, to an amount equal to the net proceeds actually received by such seller from the sale of Registrable Shares effected pursuant to such registration.

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(c)           Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in the preceding paragraphs of this Section 5.7, such indemnified party will, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action (provided, however, that an indemnified party’s failure to give such notice in a timely manner shall only relieve the indemnification obligations of an indemnifying party to the extent such indemnifying party is materially prejudiced by such failure). In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, however, that if any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are in addition to or in conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity agreement provided in this Section 5.7, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party and such indemnifying party shall reimburse such indemnified party and any Person controlling such indemnified party for that portion of the fees and expenses of any one lead counsel (plus appropriate special and local counsel) retained by the indemnified party that are reasonably related to the matters covered by the indemnity agreement provided in this Section 5.7.

(d)           If the indemnification provided for in this Section 5.7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage or liability referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other hand in connection with the statements or omissions that resulted in such loss, claim, damage or liability as well as any other relevant equitable considerations; provided, however, that the maximum amount of liability in respect of such contribution shall be limited, in the case of each seller of Registrable Shares, to an amount equal to the net proceeds actually received by such seller from the sale of Registrable Shares effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. No Person guilty of fraud shall be entitled to indemnification or contribution hereunder.

(e)           The indemnification and contribution provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party and will survive the transfer of Registrable Shares.

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5.8Underwriting Agreement

(a)           If requested by the managing underwriters in connection with a request for a Demand Registration under Sections 5.1 or 5.3, the Company shall enter into a firm commitment underwriting agreement with such underwriters, such agreement to be reasonably satisfactory in substance and form to the Company, the Registrable Holders and the underwriters, and to contain such representations, warranties and undertakings (including undertakings with respect to holdback periods) by the Company and such other terms as are customary in agreements of that type, including, without limitation, indemnification and contribution to the effect and to the extent provided in Section 5.7.

(b)           No Stockholder may participate in any registration hereunder that is underwritten unless such Stockholder agrees (i) to sell such Stockholder’s Registrable Shares proposed to be included therein on the basis provided in any underwriting arrangements acceptable to the Company in the case of an offering of Primary Shares, or, in the case of an offering pursuant to Section 5.1 hereof, the Company and the Registrable Holders and (ii) as expeditiously as possible, to notify the Company of the occurrence of any event concerning such Stockholder as a result of which the Prospectus relating to such registration contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

5.9Information by Holder

Each holder of Registrable Shares to be included in any registration shall furnish to the Company and the managing underwriter such written information regarding such holder and the distribution proposed by such holder as the Company or the managing underwriter may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Agreement.

5.10Suspension

Anything contained in this Agreement to the contrary notwithstanding, the Company may (not more than once in any twelve-month period), by notice in writing to each holder of Registrable Shares to which a Prospectus relates, require such holder to suspend, for up to 90 days (the “Suspension Period”), the use of any Prospectus included in a Registration Statement filed under Sections 5.2 or 5.3 if a Material Transaction exists that would require an amendment to such Registration Statement or supplement to such Prospectus (including any such amendment or supplement made through incorporation by reference to a report filed under Section 13 of the Exchange Act). The period during which such Prospectus must remain effective shall be extended by a period equal to the Suspension Period. The Company may (but shall not be obligated to) withdraw the effectiveness of any Registration Statement subject to this provision.

5.11Exchange Act Compliance

From and after the Registration Date or such earlier date as a registration statement filed by the Company pursuant to the Exchange Act relating to any class of the Company’s Securities shall have become effective, the Company shall comply with all of the reporting requirements of the Exchange Act (whether or not it shall be required to do so) and shall comply with all other

25

public information reporting requirements of the Commission that are conditions to the availability of Rule 144 for the sale of the Common Stock. The Company shall cooperate with each Stockholder in supplying such information as may be necessary for such Stockholder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144.

ARTICLE VI

MANAGEMENT INCENTIVE PLANS

6.1Certain Amendments

The Company shall not, without the prior written consent of the Requisite Bond Stockholders, (i) grant any shares of capital stock, or options, warrants or rights to purchase capital stock, of the Company to any director, officer or employee of the Company, other than shares of Series M Preferred Stock to be granted pursuant to the Equity Incentive Plan, (ii) except as authorized by the Special Incentive Plan, grant any stock appreciation rights or other equity participation interests to any director, officer or employee of the Company, (iii) increase the Share Limit (as defined in the Equity Incentive Plan) above 8,000 shares of Series M Preferred Stock, (iv)  increase the Series M Liquidation Multiple (as defined in the Certificate) above .00001, (v) increase the Applicable Percentage (as defined in the Special Incentive Plan) above 8.0% or (vi) decrease the Series M Factor (as defined in the Certificate) below .92.

ARTICLE VII

LEGENDS; NO REPRESENTATIONS

7.1Restrictive Legends

(a)           Each certificate for Stockholder Shares held by an Affiliate of the Company shall be stamped or otherwise imprinted with a legend in substantially the following terms:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS.”

(b)           Each certificate evidencing Stockholder Shares and each certificate issued in exchange for or upon the Transfer of any Stockholder Shares (if such shares remain Stockholder Shares as defined herein after such Transfer) shall be stamped or otherwise imprinted with a legend in substantially the following form:

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“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS’ AGREEMENT DATED AS OF [_______], 2006 (AS AMENDED, MODIFIED, SUPPLEMENTED OR RESTATED FROM TIME TO TIME, THE “AGREEMENT”), AMONG THE ISSUER OF SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF THE COMPANY’S STOCKHOLDERS. THE TERMS OF SUCH AGREEMENT INCLUDE, AMONG OTHER THINGS, RESTRICTIONS ON TRANSFERS. A COPY OF THE AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

(c)           The legend set forth in paragraph (b) shall be removed from the certificates evidencing any shares which cease to be Stockholder Shares in accordance with the terms of this Agreement.

7.2No Representations

THE COMPANY MAKES NO REPRESENTATIONS CONCERNING THE RIGHT OF ANY PERSON TO TRADE IN THE REGISTRABLE SHARES ISSUED UNDER THE PLAN. THE COMPANY RECOMMENDS THAT STOCKHOLDERS CONSULT THEIR OWN COUNSEL CONCERNING WHETHER THEY MAY FREELY TRADE SUCH SECURITIES WITHOUT REGISTRATION UNDER THE SECURITIES ACT.

ARTICLE VIII

AMENDMENT AND WAIVER

8.1Amendment

The terms and provisions of this Agreement may not be amended, modified or waived except pursuant to a writing signed by (a) the Company; (b) the Requisite Investor Stockholders; and (c) the Requisite Bond Stockholders; provided, however, that any amendment, modification or waiver that discriminates against the Other Stockholders or treats the Other Stockholders in a manner materially adversely different from Investor Stockholders and Bond Stockholders, after giving effect to such amendment, modification or waiver, shall not be effective as to the Other Stockholders without the prior written consent of the holders of a majority of the shares of Common Stock held by the Other Stockholders; and provided, further, any amendment, modification or waiver that discriminates against any particular Stockholder or treats any particular Stockholder in a manner materially adversely different from other Stockholders of the same class (i.e., Investor Stockholders, Bond Stockholders or Other Stockholders, as the case may be), after giving effect to such amendment, modification or waiver, shall not be effective as to such particular Stockholder without his, her or its prior written consent.

8.2Waiver

No course of dealing between the Company and the Stockholders (or any of them) or between any of the Stockholders or any delay in exercising any rights hereunder will operate as a

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waiver of any rights of any party to this Agreement. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

ARTICLE IX

TERMINATION

The provisions of this Agreement, except as otherwise expressly provided herein, shall terminate upon the first to occur of (a) the dissolution, liquidation or winding-up of the Company; (b) a Sale of the Company; or (c) the approval of such termination by the Company, the Requisite Investor Stockholders and the Requisite Bond Stockholders; provided, however, that Article II, Article III and Article IV shall terminate upon the consummation of an Initial Public Offering. Anything contained herein to the contrary notwithstanding, as to any particular Stockholder, this Agreement shall no longer be binding or of further force or effect as to such Stockholder, except as otherwise expressly provided herein, as of the date such Stockholder has Transferred all of such Stockholder’s Stockholder Shares.

ARTICLE X

MISCELLANEOUS

10.1Severability

It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

10.2Entire Agreement

This Agreement and the other agreements referred to herein and to be executed and delivered in connection herewith embody the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and thereof and supersede and preempt any and all prior and contemporaneous understandings, agreements, arrangements or representations by or among the parties, written or oral, which may relate to the subject matter hereof or thereof in any way.

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10.3Independence of Agreements and Covenants

All agreements and covenants hereunder shall be given independent effect so that if a certain action or condition constitutes a default under a certain agreement or covenant, the fact that such action or condition is permitted by another agreement or covenant shall not affect the occurrence of such default, unless expressly permitted under an exception to such initial agreement or covenant.

10.4Successors and Assigns

Except as otherwise provided herein, this Agreement will bind and inure to the benefit of and be enforceable by the Company and its successors and permitted assigns and the Stockholders and any subsequent holders of Stockholder Shares and the respective successors and permitted assigns of each of them, so long as they hold Stockholder Shares. Except as specifically set forth herein, the Company may not assign its rights or obligations hereunder without the prior written consent of the Requisite Investor Stockholders and the Requisite Bond Stockholders.

10.5Counterparts; Facsimile Signatures; Validity

This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered (by facsimile or otherwise) to the other party, it being understood that all parties need not sign the same counterpart. Any counterpart or other signature hereupon delivered by facsimile shall be deemed for all purposes as constituting good and valid execution and delivery of this Agreement by such party.

10.6Remedies

(a)           Each Stockholder shall have all rights and remedies reserved for such Stockholder pursuant to this Agreement and all rights and remedies which such holder has been granted at any time under any other agreement or contract and all of the rights which such holder has under any law or equity. Any Person having any rights under any provision of this Agreement will be entitled to enforce such rights specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or equity.

(b)           It is acknowledged that it will be impossible to measure in money the damages that would be suffered by any party hereto if any other Person party hereto fails to comply with any of the obligations imposed on it upon them in this Agreement and that in the event of any such failure, the aggrieved party will be irreparably damaged and will not have an adequate remedy at law. Any such aggrieved party shall, therefore, be entitled to equitable relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

10.7Notices

All notices, amendments, waivers or other communications pursuant to this Agreement shall be in writing and shall be deemed to have been duly given if personally delivered,

29

telecopied, sent by nationally recognized overnight courier or mailed by registered or certified mail with postage prepaid, return receipt requested, to the parties hereto at the following addresses (or at such other address for a party as shall be specified by like notice):

(a)  if to the Company, to:

Pliant Corporation
1475 Woodfield Road, Suite 700
Schaumburg, Illinois  60173
Attention: President
Facsimile: (847) 969-3338
Telephone: (847) 969-3330

with copies to:

Sidley Austin LLP
One South Dearborn
Chicago, Illinois 60603
Attention: Larry J. Nyhan, Esq.
                  John R. Box, Esq.
Facsimile: (312) 853-7036
Telephone: (312) 853-7425; and

O’Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, New York 10036
Attn: Ilan S. Nissan, Esq.
Facsimile:  (212) 326-2061
Telephone: (212) 408-2443

(b) if to any Stockholder to it at its address set forth on Schedule I attached hereto. Any such notice or communication shall be deemed to have been given and received (a) when delivered, if personally delivered; (b) when sent, if sent by telecopy on a Business Day (or, if not sent on a Business Day, on the next Business Day after the date sent by telecopy); (c) on the next Business Day after dispatch, if sent by nationally recognized overnight courier guaranteeing next Business Day delivery; and (d) on the fifth Business Day following the date on which the piece of mail containing such communication is posted, if sent by mail.

10.8Governing Law

EXCEPT AS SET FORTH BELOW, THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICTS OF LAWS OR PRINCIPLES THEREOF THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE. ALL MATTERS WHICH ARE THE SUBJECT OF THIS AGREEMENT RELATING TO MATTERS OF

30

INTERNAL GOVERNANCE OF THE COMPANY SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY LAW OR RULE THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. WITH RESPECT TO ANY LAWSUIT OR PROCEEDING ARISING OUT OF OR BROUGHT WITH RESPECT TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY, EACH OF THE PARTIES HERETO IRREVOCABLY (a) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL AND DELAWARE STATE COURTS LOCATED IN THE COUNTY OF NEW CASTLE IN THE STATE OF DELAWARE; (b) WAIVES ANY OBJECTION IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT; (c) WAIVES ANY CLAIM THAT SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM; AND (d) FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDINGS, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PART.

10.9Waiver of Jury Trial

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF. EACH OF THE PARTIES HERETO ALSO WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND THAT MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE OTHER PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT. EACH OF THE PARTIES HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED OR HAD THE OPPORTUNITY TO REVIEW THIS WAIVER WITH ITS RESPECTIVE LEGAL COUNSEL, AND THAT IT  KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH SUCH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

10.10Further Assurances

Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the provisions of this Agreement and the consummation of the transactions contemplated hereby or thereby.

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10.11Prior Agreements

Upon the execution and delivery of this Agreement, the Stockholders’ Agreement and the Registration Rights Agreement, each dated as of May 31, 2000, as amended from time to time, by and between Pliant (Utah) and its stockholders, shall each be terminated and of no further force or effect.

10.12Regulatory Covenants

The Company shall comply, and the Stockholders will cause the Company to comply, with the terms and provisions contained in Exhibit E attached hereto and made a part hereof.

10.13Third Party Reliance

Anything contained herein to the contrary notwithstanding, the covenants of the Company contained in this Agreement (a) are being given by the Company as an inducement to the Stockholders to enter into this Agreement (and the Company acknowledges that the Stockholders have expressly relied thereon) and (b) are solely for the benefit of the Stockholders. Accordingly, no third party (including, without limitation, any holder of Securities of the Company) or anyone acting on behalf of any thereof other than the Stockholders, shall be a third party or other beneficiary of such covenants and no such third party shall have any rights of contribution against the Stockholders or the Company with respect to such covenants or any matter subject to or resulting in indemnification under this Agreement or otherwise.

10.14Confidentiality

Except as otherwise required by law, each Stockholder shall, and shall cause its Representatives to, hold in confidence all nonpublic information of the Company provided or made available to such Stockholder and Representative until such time as such information has become publicly available other than as a consequence of any breach by such Stockholder or Representative of its confidentiality obligations hereunder (provided that such information may be disclosed to any other Stockholder, Representative, or, in the case of a Stockholder that is a private investment fund, any partner in such fund) so long as such Person agrees to keep such information confidential upon receipt thereof). The obligations of each Stockholder under this Section 10.14 shall terminate upon the earlier of (a) the second anniversary of the date on which such Stockholder has Transferred all of such Stockholder’s Stockholder Shares or (b) the termination of this Agreement.

*******

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IN WITNESS WHEREOF, the undersigned have duly executed this Stockholders’ Agreement as of the date first written above.

PLIANT CORPORATION
By:
Name:
Title:
FLEXIBLE FILMS, LLC
FLEXIBLE FILMS II, LLC
SOUTHWEST INDUSTRIAL FILMS, LLC
SOUTHWEST INDUSTRIAL FILMS II, LLC
By:	J.P. Morgan Partners (BHCA), L.P.,
	its Member,
	By:	JPMP Master Fund Manager, L.P.,
		its General Partner
			By:	JPMP Capital Corp.,
				its General Partner
			By:
			Name:
			Title:
NEW YORK LIFE CAPITAL PARTNERS, L.P.
By:	NYLCAP Manager LLC,
	its Investment Manager
By:
	Name:
	Title:

THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By:
	Name:
	Title:
WACHOVIA CAPITAL PARTNERS, LLC
By:
	Name:
	Title:
[OTHERS]
[BOND HOLDERS]
By:		[                          ]
		By:
			Name:
			Its:
[OTHER STOCKHOLDERS]

Schedule I

Stockholders

Name and Address of Investor Stockholders

Flexible Films, LLC
Flexible Films II, LLC
Southwest Industrial Films, LLC
Southwest Industrial Films II, LLC
c/o J.P. Morgan Partners, LLC
1221 Avenue of the Americas
New York, New York  10020
Attention: Timothy Walsh
Facsimile:  (2120 899-3755
Telephone: (212) 899-3400

with a copy to:

O’Melveny & Myers LLP
Times Square Tower
7 Times Square
New York, New York 10036
Attn: Ilan S. Nissan, Esq.
Facsimile:  (212) 326-2061
Telephone: (212) 408-2443

New York Life Capital Partners, L.P.
c/o [___________]
[Address]
[City, State Zip]
Attention:  [__________]
Facsimile:  [__________]
Telephone: [__________]

The Northwestern Mutual Life Insurance Company
c/o [___________]
[Address]
[City, State Zip]
Attention:  [__________]
Facsimile:  [__________]
Telephone: [__________]

i

Wachovia Capital Partners, LLC
c/o [___________]
[Address]
[City, State Zip]
Attention:  [__________]
Facsimile:  [__________]
Telephone: [__________]

[Bond Stockholders]
c/o [___________]
[Address]
[City, State Zip]
Attention:  [__________]
Facsimile:  [__________]
Telephone: [__________]

Name and Address of Other Stockholders

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Exhibit A

Bond Stockholders

Exhibit D

JOINDER AGREEMENT

The undersigned is executing and delivering this Joinder Agreement pursuant to the Stockholders’ Agreement dated as of [          ], 2006 (as amended, modified, restated or supplemented from time to time, the “Stockholders’ Agreement”), among Pliant Corporation, a Delaware corporation (the “Company”), and its stockholders named therein.

By executing and delivering this Joinder Agreement to the Company, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the provisions of the Stockholders’ Agreement in the same manner as if the undersigned were an original signatory to such agreement.

The undersigned agrees that the undersigned shall be [a] [an] [Investor Stockholder] [Other Stockholder] [Bond Stockholder], as such term[s] [is] [are] defined in the Stockholders’ Agreement.(3)

(3)Type of Stockholder shall be the same as the transferor of the transferred Securities.  Any Person purchasing Stockholder Shares from the Company shall sign this Joinder Agreement as an Other Stockholder if such Person is not already a Stockholder at the time of such purchase. If such Person is already a Stockholder at such time, such Person shall sign this Joinder Agreement as the same type of Stockholder.  A Stockholder cannot be classified into more than one type of Stockholder simultaneously (e.g.,  a Stockholder cannot simultaneously be an Other Stockholder and a Bond Stockholder).

Accordingly, the undersigned has executed and delivered this Joinder Agreement as of                                           .

Signature of Stockholder

Print Name of Stockholder

Address

Facsimile

Telephone

Exhibit E

Section 1.              Regulatory Matters Generally.

(a)           In the event that any Investor reasonably determines that it has a Regulatory Problem, the Company agrees to take all such actions as are reasonably requested by the Investor in order (i) to effectuate and facilitate any transfer by the Investor of any equity interests of the Company then held by the Investor to any Person designated by the Investor, (ii) to permit the Investor (or any of its Affiliates) to exchange all or any portion of the voting equity interests then held by such Person on a share-for-share basis for shares of a class of non-voting equity interests of the Company, which non-voting equity interests shall be identical in all respects to such voting equity interests, except that such new equity interests shall be non-voting and shall be convertible into voting equity interests on such terms as are requested by the Investor and reasonably acceptable to the Company in light of regulatory considerations then prevailing, and (iii) to grant the Investor or its designee the reasonable equivalent of any voting rights arising out of the Investor’s ownership of voting equity interests and/or provided for in the By-laws and the Stockholders’ Agreement that were diminished as a result of the transfers and amendments referred to above; provided, that, in the case of clause (i) above, such transferee shall agree to be bound by and subject to the terms of the By-laws and the Stockholders’ Agreement in the same manner as the Investor. If the Investor elects to transfer equity interests of the Company in order to avoid a Regulatory Problem to an Affiliate (subject to limitations on its voting or total ownership interest in the Company), the Company and such Affiliate shall enter into such mutually acceptable agreements as such Affiliate may reasonably request in order to assist such Affiliate in complying with applicable Laws. Such agreements may include restrictions on the redemption, repurchase or retirement of equity interests of the Company that would result or be reasonably expected to result in such Affiliate holding more voting equity interests or total interests (determined by such Affiliate’s ownership of equity and debt of the Company) than it is permitted to hold under such Laws.

(b)           In the event any Investor has the right to acquire any of the Company’s equity interests from the Company or any other Person (as the result of a preemptive offer, pro rata offer or otherwise), and the Investor reasonably determines that it has a Regulatory Problem, at the Investor’s request the Company will offer to sell to the Investor non-voting equity interests (or, if the Company is not the proposed seller, will arrange for the exchange of any voting equity interests for non-voting equity interests immediately prior to or simultaneous with such sale) on the same terms as would have existed had the Investor acquired the equity interests so offered and immediately requested their exchange for non-voting equity interests pursuant to subsection (a) above.

(c)           In furtherance of its obligations pursuant to Section 1(b), the Company and the Stockholders shall take all corporate actions necessary so as to permit the issuance of non-voting equity interests.

(d)           In the event that any Affiliate of the Company ever offers to issue any of its securities to an Investor, then the Company will cause such Affiliate to enter into an agreement with the Investor with terms substantially similar to those contained in this Agreement.

Section 2.              Cross Marketing Activities.

The Company hereby represents and warrants that neither the Company nor any of the Subsidiaries (i) offers or markets, directly or through any arrangement, any product or service of any depository institution that is owned by J.P. Morgan Chase & Co. or (ii) permits any of its products or services to be offered or marketed, directly or through any arrangement, by or through any depository institution that is owned by J.P. Morgan Chase & Co.

Section 3.              Covenants.

(a)           The Company shall give the Investor thirty (30) days prior written notice before taking any affirmative steps which would cause the representations and warranties contained in Section 2 to become untrue.

(b)           The Company shall use its best efforts to notify the Investor promptly at any time in which the Company reasonably believes the representations contained in Section 2 to be untrue, whether as a result of the Company’s affirmative action or otherwise.

Section 4.              Participation Interests and Pledge.

Notwithstanding anything to the contrary contained in the Stockholders’ Agreement, an Investor shall be permitted to grant participation interests in the Company’s equity interests held by the Investor to Affiliates of the Investor without prior disclosure or consent of the Company or any other Person, so long as the participation agreement or other agreement or document pursuant to which such participation interest is granted requires such Affiliate to comply with the Stockholders’ Agreement as if it were a record owner of such equity interests and a direct party to the Stockholders’ Agreement.

Section 5.              No Change of Control.

Notwithstanding anything to the contrary set forth in this Exhibit E, the Investor shall comply with its obligations under Section 2.1(d) of the Stockholders’ Agreement and the Company shall take no action under this Exhibit E that would facilitate a Transfer of Stockholder Shares by the Investor in contravention of such Section 2.1(d).

Section 6.              Definitions.

Any terms used in this Exhibit E and not otherwise defined in the Stockholders’ Agreement shall have the meanings ascribed to them as follows:

“Banking Regulations” means all federal, state and foreign Laws applicable to banks, bank holding companies and their Affiliates, including without limitation, the Bank Holding Company Act and the Federal Reserve Act.

“Investor” means, collectively: (i) Flexible Films, LLC, a Delaware limited liability company; (ii) Flexible Films II, LLC, a Delaware limited liability company; (iii) Southwest Industrial Films, LLC, a Delaware limited liability company; and (iv) Southwest Industrial Films II, LLC, a Delaware limited liability company.

“Law” with respect to any Person, means (i) all provisions of all laws, statutes, ordinances, rules, regulations, permits, certificates or orders of any governmental authority applicable to such Person or any of its assets or property or to which such Person or any of its assets or property is subject, including, without limitation, Banking Regulations, and (ii) all judgments, injunctions, orders and decrees of all courts and arbitrators in proceedings or actions in which such Person is a party or by which it or any of its assets or properties is or may be bound or subject.

“Regulatory Problem” means any set of facts or circumstances in which the Investor’s ownership of equity interests issued by the Company (i) gives rise to a violation of Law by the Investor or any of its Affiliates, or gives rise to a reasonable belief by the Investor that such a violation is likely to occur or (ii) gives rise to a limitation in Law that will impair the ability of the Investor or any Affiliate to conduct its business or gives rise to a reasonable belief by the Investor that such a limitation is likely to arise.

*              *              *              *              *

EX-2.4

Exhibit 2.4

PLIANT CORPORATION
DEFERRED CASH INCENTIVE PLAN

Pliant Corporation, a Delaware corporation, has determined that it is in the best interest of the Company to adopt the Pliant Corporation Deferred Cash Incentive Plan (the “Plan”) to provide financial benefits to key management employees of the Company and its subsidiaries in the event of a Liquidation Event or a Redemption (each as herein defined) in accordance with the terms and conditions set forth herein.

The purpose of the Plan is to provide designated key employees with financial rewards in the event of a Liquidation Event or Redemption in order to incentivize such employees to increase the value of the Company and to secure their continued commitment and dedication to the Company.

1.             Definitions. The following definitions shall apply for purposes of this Plan:

(a)           “Applicable Percentage” means 8.0%.

(b)           “Asset Sale” has the meaning set forth in the definition of “Liquidation Event” contained in Article Four, Part C, Section 6 of the Certificate of Incorporation.

(c)           “Bonus” means with respect to an eligible Participant upon a Liquidation Event or Redemption, the amount payable to such eligible Participant under Section 3 of the Plan.

(d)           “Bonus Percentage” means the fixed percentage of the Bonus Pool assigned to a Participant as set forth in Exhibit A, with  the Bonus Percentages to be assigned by the Board of Directors of the Company, following consultation and discussions with the Company’s Chief Executive Officer; provided, however, that the Bonus Percentage of any Participant may not be reduced without the prior written consent of such Participant. The sum of the Bonus Percentages for the Participants, in the aggregate, may be less than, but shall not exceed, 100%.

(e)           “Bonus Pool” means:

(i)With respect to a Liquidation Event, an aggregate positive amount, if any, equal to the Applicable Percentage of the lesser of:

(A)the Hurdle Amount (or, to the extent the Initial Redemption has not occurred prior thereto but there have been one or more prior redemptions of Series AA Preferred Stock for which no Bonus Pool has been created, [$243.8 million]); and

(B)the sum of (x) the Liquidation Proceeds of such Liquidation Event plus (y) the Grossed-Up Other Distributions as of the date of such Liquidation Event, plus, (z) only to the extent

the Initial Redemption had not occurred prior thereto but there had been prior redemptions of Series AA Preferred Stock for which no Bonus Pool had been created, the sum of the Redemption Proceeds in connection with all such prior redemptions.

(ii)With respect to a Redemption, an aggregate amount equal to the Applicable Percentage of the Redemption Proceeds (which in the case of the Initial Redemption, shall include the Redemption Proceeds from any prior redemptions of Series AA Preferred Stock by the Company occurring prior to the occurrence of the Initial Redemption for which no Bonus Pool has been created);

provided, however, that the amount of all Bonus Pools created pursuant to clauses (i) and (ii) above shall in no event exceed an aggregate amount equal to the Applicable Percentage of $[243.8 million].  For purposes of clarification, in the event of the occurrence of a Liquidation Event which includes or is consummated substantially simultaneously with a Redemption, regardless of the actual order of the transaction, such transaction shall be deemed to be a single transaction and shall be deemed to be a Liquidation Event (and not a Redemption), with the proceeds of the redemption portion of such transaction to be deemed to be proceeds payable in connection with such transaction.

(f)            “Cause” means:

(i)with respect to Harold Bevis, “cause” as defined in Harold Bevis’ Employment Agreement with the Company, dated as of _________, 2006 (as it may be amended, modified or restated from time to time, the “Bevis Employment Agreement”); and

(ii)with respect to any other Participant:

(A)the Participant’s commission of a crime involving his or her fraud, theft or dishonesty or engagement in willful or wrongful activities that are materially detrimental to the Company;

(B)the material and willful breach by the Participant of his or her responsibilities as an employee of the Company or willful failure to comply with reasonable directives or policies of the Company, the Board of Directors, the Chief Executive Officer or his designees, but only if the Company has given Participant written notice specifying the breach or failure to comply, demanding that the

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Participant remedy the breach or failure to comply and the Participant (1) failed to remedy the alleged breach or failed to comply within thirty days after receipt of the written notice and (2) failed to take all reasonable steps to that end during the thirty days after he received the notice.

(C)the continued use of alcohol or drugs by the Participant to an extent that such use interferes with the performance of the Participant’s duties and responsibilities.

Notwithstanding the foregoing, the term “Cause” shall not include any one or more of the following: (i) bad management decision-making by the Participant or (ii) any act or omission reasonably believed by the Participant in good faith to have been in and not opposed to the best interests of the Company (without intent of the Participant to gain, directly or indirectly, a profit to which the Participant was not legally entitled) and reasonably believed by the Participant not to have been improper or unlawful.

(g)           “CEO” means the Chief Executive Officer of the Company.

(h)           “Company” means Pliant Corporation, a Delaware corporation, including its successor in interest by merger, consolidation, purchase or otherwise.

(i)            “Covered Classes” shall mean securities of any of the following classes and series of stock issued by the Company:  (a) Series AA Preferred Stock, (b) Common Stock, and (c) any class or series of equity securities which are issued as a dividend or distribution with respect to, or pursuant to a recapitalization of, any then outstanding Covered Class of equity securities.

(j)            “Disability” means any medically determinable physical or mental impairment that has lasted, or is reasonably expected to last, for a period of at least six (6) months, can reasonably be expected to be permanent or of indefinite duration, and renders the Participant unable to perform his duties hereunder, as certified by a physician jointly selected by the Company and the Participant or the Participant’s legal representative.

(k)           “Effective Date” means __________, 2006.

(l)            “Good Reason” means:

(i)with respect to Harold Bevis, “good reason” as defined in the Bevis Employment Agreement .; and

(ii)with respect to any other Participant, any of the following events in response to which the Participant terminates his employment with the Company and its subsidiaries:

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(A) the assignment to the Participant of any material duty materially inconsistent with the Participant’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities;

(B)  any reduction in the Participant’s base salary or bonus compensation (other than any decrease in bonus compensation as a result of a failure to achieve reasonable performance targets which are consistent with past performance targets applied in connection with determining bonus compensation); or

(C)the Company requires the Participant to, or assigns duties to the Participant which would reasonably require him to, relocate his principal business office more than forty (40) miles from where it is located on the date hereof;

provided, however that an event described above will not constitute “Good Reason” unless (1) such event occurs without the Participant’s express written consent, (2) the Participant delivers a written notice to the Company of the occurrence of any such event not more than ninety (90) days following the occurrence of such events, and (3) the Company fails to cure or remedy such event within thirty days (the “Cure Period”) after receiving written notice thereof from the Participant. The failure by the Participant to terminate his or her employment with the Company and its subsidiaries within thirty days after the end of the Cure Period in respect of an event otherwise qualifying as Good Reason will preclude the Participant from invoking such event as the basis for Good Reason.

(m)          “Grossed-Up Other Distributions” shall mean the quotient of (x) the amount of Other Distributions divided by (y) the then applicable Inverse Multiple.

(n)           “Hurdle Amount” shall mean an amount equal to [$243.8 million]; provided that upon any redemption by the Company of Series AA Preferred Stock in accordance with the terms thereof, the Hurdle Amount shall be reduced by an amount equal to the aggregate Redemption Proceeds in connection with such redemption; provided, that in no event shall the Hurdle Amount be less than zero.

(o)           “Inverse Multiple” shall mean 0.92.

(p)           “JPMP” means J.P. Morgan Partners (BHCA), L.P., a Delaware limited partnership, and its Affiliates (as defined pursuant to the Charter).

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(q)           “Liquidation” has the meaning set forth in Article Four, Part C, Section 6 of the Certificate of Incorporation.

(r)            “Liquidation Event” has the meaning set forth in Article Four, Part C, Section 6 of the Certificate of Incorporation.

(s)           “Liquidation Proceeds” means (a) in connection with an Asset Sale or a Liquidation, the quotient of (x) the Net Asset Proceeds divided by (y) the then applicable Inverse Multiple and (b) in connection with a Stock Sale or a Merger, the quotient of (x) Net Stock Proceeds divided by (y) the then applicable Inverse Multiple. Any Liquidation Proceeds which are deposited into an escrow account (whether such escrow account is established by the Corporation or any purchaser, acquiror or other similar party in connection with a Liquidation Event) or subject to being held-back by the purchaser for distribution upon the occurrence or satisfaction of any event shall not be included in calculating “Liquidation Proceeds” until such time as such amounts are released to the Corporation (in the case of an Asset Sale or a Liquidation) or its stockholders (in the case of a Stock Sale or a Merger).

(t)            “Merger” has the meaning set forth in the definition of “Liquidation Event” contained in Article Four, Part C, Section 6 of the Certificate of Incorporation.

(u)           “Net Asset Proceeds” has the meaning set forth in Article Four, Part C, Section 6 of the Certificate of Incorporation.

(v)           “Net Stock Proceeds” has the meaning set forth in Article Four, Part C, Section 6 of the Certificate of Incorporation.

(w)          “Other Distributions has the meaning set forth in Article Four, Part C, Section 6 of the Certificate of Incorporation.

(x)            “Participant” means a person who at the time of designation is an employee of the Company or a subsidiary of the Company and is designated for participation in this Plan by the Company’s Chief Executive Officer with the approval of the Board; provided, however, that it shall be a condition to the participation in this Plan, and partial consideration for the rights granted hereunder, that any employee who owned Series B Preferred Stock in the Company’s predecessor agree to waive his or her right to receive any cash payment payable in consideration of the extinguishment of the Series B Preferred Stock pursuant to the Company’s Plan of Reorganization. The Participants shall be identified in Exhibit A, which may be amended by the Company’s Chief Executive Officer with the approval of the Board to reflect the addition of additional Participants; provided, however, that the Bonus Percentages of any Participant may not be reduced with the written consent of such Participant.

(y)           “Plan” means the Pliant Corporation Deferred Cash Incentive Plan, as set forth herein and as amended from time to time.

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(z)            “Qualified Public Offering”shall mean the sale in an underwritten public offering registered under the Securities Act of 1933, as amended, of shares of capital stock of the Company to the public resulting in aggregate proceeds (net of underwriting discounts and commissions) to the Company of not less than one hundred million dollars ($100 million).

(aa)         “Redemption” means either an Initial Redemption or a Subsequent Redemption as follows:

(i)An “Initial Redemption”will occur at such time as the Company has redeemed shares of Company’s Series AA Preferred Stock resulting in aggregate Redemption Proceeds, including, without limitation the Redemption Proceeds from any prior such Redemptions, of not less than [$50 million].

(ii)A “Subsequent Redemption” will occur on any date after the Initial Redemption that the Company redeems any shares of Series AA Preferred Stock.

(bb)         “Redemption Proceeds” means, with respect to any redemption of the Company’s Series AA Preferred Stock, the cash proceeds received by the holders of the Series AA Preferred Stock upon such redemption divided by the Inverse Multiple in effect at the time of such redemption.

(cc)         “Retained Securities” shall mean, in connection with any Liquidation Event which is a Merger or Stock Sale, (i) any capital stock in Covered Classes not transferred, if any, by the stockholders of the Company in connection with such Liquidation Event and/or (ii) any capital stock or debt securities received in consideration or exchange for, capital stock in Covered Classes in connection with such Liquidation Event.

(dd)         “Stock Sale” has the meaning set forth in the definition of “Liquidation Event” contained in Article Four, Part C, Section 6 of the Certificate of Incorporation.

2.             Eligibility for Bonus.

(a)           A Participant (other than Harold Bevis) shall be eligible to receive payment of his or her Bonus with respect to a Liquidation Event or a Redemption as provided in Section 3(a) if and only if the Liquidation Event or Redemption occurs:

(i)While the Participant is employed by the Company or a subsidiary; or

(ii)At any time within ninety (90) days after the Participant’s termination of employment with the Company or a subsidiary of the Company (x) by the Company or a subsidiary of the Company

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without Cause, (y) by the Participant for Good Reason, or (z) due to the Participant’s death or Disability.

(b)           Harold Bevis shall be eligible to receive payment of his Bonus with respect to a Liquidation Event or Redemption as provided in Section 3(a) if the Liquidation Event or Redemption occurs:

(i)While Harold Bevis is employed by the Company or a subsidiary of the Company;

(ii)At any time within one (1) year after Harold Bevis’ termination of employment with the Company and all subsidiaries of the Company (x) by the Company or subsidiary of the Company without Cause or (y) by Harold Bevis for Good Reason; or

(iii)At any time within ninety (90) days after Harold Bevis’ termination of employment with the Company and all subsidiaries of the Company due to his death or Disability.

(c)           Harold Bevis shall be eligible to receive payment of his Bonus with respect to a Liquidation Event or Redemption as provided in Section 3(b) if he does not otherwise meet the eligibility criteria in Section 2(b) and Harold Bevis’ employment with the Company and all of its subsidiaries is terminated after the effective date of the Company’s plan of reorganization.

(d)           Notwithstanding any provision herein to the contrary, no Bonus will be paid to any Participant if no Liquidation Event or Redemption occurs prior to the twentieth (20th) anniversary of the effective date of this Plan.

3.             Bonus Payable Upon Creation of a Bonus Pool.

(a)           Simultaneously with the occurrence of a Liquidation Event or a Redemption, the Company shall pay each eligible Participant who satisfies the eligibility requirements described in Section 2(a) or (b) above a Bonus, payable, subject to the terms of Section 3(c), in cash, in an amount equal to the Bonus Pool established with respect to such Liquidation Event or Redemption multiplied by the Participant’s Bonus Percentage, as set forth in Exhibit A.

(b)           If Harold Bevis does not otherwise meet the eligibility criteria in Section 2(b) with respect to a Liquidation Event or Redemption and his employment with the Company and its subsidiaries is terminated after the effective date of the Company’s plan of reorganization, then simultaneously with the occurrence of a Liquidation Event or Redemption,  the Company shall pay Harold Bevis a Bonus in an amount equal to the product of (x) the Bonus Pool established with respect to such Liquidation Event or Redemption multiplied by (y) Harold Bevis’ Bonus Percentage multiplied by (z) a fraction (not to exceed one (1)), the numerator of which is the number of months, if any,

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that transpire from the effective date of the Company’s plan of reorganization and his termination of employment with the Company and all of the subsidiaries of the Company, and the denominator of which is thirty-six (36).

(c)           Notwithstanding anything in this Section 3 to the contrary, to the extent that in connection with a Liquidation Event which is a Merger or Stock Sale in which there are Retained Securities, if (x) the aggregate fair market value of the Retained Securities (as determined in good faith by the Board) divided by the then applicable Inverse Multiple is in excess of (y) the greater of (1) $0 and (2) the difference of the Liquidation Proceeds in connection with such Liquidation Event minus the then applicable Hurdle Amount (the amount of any such excess of (x) over (y) being referred to as the “Pre-Hurdle Retained Securities Amount”), the Company shall have the option to pay a portion of the Bonuses payable pursuant to this Plan in connection with such Liquidation Event, not to exceed the Maximum In-Kind Amount (as defined in Section 3(d) below), by the delivery of securities in the same class and/or series as the Retained Securities having a fair market value (as determined in good faith by the Board) equal to the portion of the Bonuses to be so paid; provided that Participants receiving any such Retained Securities are provided similar rights relating to registration of securities, redemption rights and tag along rights as provided to any holder of Covered Classes of an equivalent class or series with respect to such Retained Securities (it being understood that such Participants will be entitled to participate in any collective rights of a class or group of former holders of Covered Classes (such as rights permitting a majority of the holders of a class or series of securities to require a redemption or a registration), and the foregoing shall not provide any Participant an individual (rather than collective) right with respect to such matter).  If there is more than one class or series of Retained Securities, the portion of the Bonuses payable by the delivery of Retained Securities shall include a proportionate amount of each such class or series. In the event that any portion of the Bonuses hereunder are paid in Retained Securities, the Bonuses received by each Participant will consist of substantially identical (subject to rounding in order to avoid delivery of fractional shares) proportions of (i) cash and (ii) Retained Securities of each such class or series.

(d)           For the purposes of this Section 3, the “Maximum In-Kind Amount” shall mean the lesser of (x) the aggregate amount of the Bonus Pool created in connection with such Liquidation Event minus the Mandatory Cash Portion and (y) the Applicable Percentage of the Pre-Hurdle Retained Securities Amount. For the purposes hereof, the “Mandatory Cash Portion” shall mean the greater of:

(i) the Applicable Percentage of the sum of (x) any Grossed-Up Other Distributions plus (y) only to the extent that the Initial Redemption had not occurred prior to the date of such Liquidation Event but there has been redemption of Series AA Preferred Stock for which no Bonus Pool had been created, the Redemption Proceeds in connection with all such prior redemptions; and

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(ii)40% of the Bonus Pool created in connection with such Liquidation Event .

(e)           Any portion of the Bonus Pool not delivered to the Participants as a result of a deferral of payment of any Liquidation Proceeds by reason of any escrow or holdback obligation, or otherwise, shall be delivered to the Participants pro rata in accordance with the payments of the Bonus Pool promptly upon release of any such Liquidation Proceeds to the Corporation (in the case of an Asset Sale or a Liquidation) or its stockholders (in the case of a Stock Sale or a Merger).

(f)            To the extent that a Participant is not also a holder of Series M Preferred Stock issued pursuant to the Company’s 2006 Restricted Stock Incentive Plan (the “Restricted Stock Incentive Plan”), then, by acceptance of an award pursuant to this Plan, the Participant will be deemed to be bound by, and agree to the terms of, Section 8.9 of the Restricted Stock Incentive Plan, as if such Participant was a holder of Series M Preferred Stock with respect to such Participant’s award hereunder and payment in respect of such award under the circumstances described in Section 8.9 of the Restricted Stock Incentive Plan.

4.             Withholding Taxes. The Company shall withhold from the Bonus payable under this Plan, all income, employment and payroll taxes which, by applicable federal, state, local or other law, the Company is required to withhold.

5.             Termination or Amendment of Plan.

(a)           Subject to subsection (b) below, this Plan shall remain in effect until the earliest to occur of (i) the twentieth (20th) anniversary of the Effective Date, (ii) the first occurrence of a Liquidation Event, (iii) there have been Redemptions resulting in Redemption Proceeds in excess of $243.8 million or (iii) the consummation of a Qualified Public Offering. Upon consummation of a Qualified Public Offering, the Plan will be terminated after distribution of all Bonuses payable with respect to any Bonus Pool to be established as a result of any Redemption in connection with, or as a result of the use of proceeds from, the Qualified Public Offering. Except as provided in the preceding sentence, no Bonuses will be payable hereunder with respect to any Liquidation Event or Redemption that occurs after the termination of this Plan.

(b)           The Company may amend, modify or terminate this Plan, in writing, at any time; provided, however; that no amendment, modification or termination of the Plan that may adversely affect the rights or potential rights of any Participant shall become effective, unless the Participant consents to such amendment, modification or termination in writing. Notwithstanding the foregoing, as a purely ministerial action, the Company’s Chief Executive Officer may amend or modify Exhibit A from time to time as necessary to reflect the identification of the Participants and their respective Bonus Percentages in accordance with the terms of the Plan.

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6.             Action by the Company. Any action required or permitted to be taken by the Company under this Plan shall be approved by the Board of Directors of the Company.

(a)           If the payment of any Bonus hereunder is prohibited by, or would result in or cause a default or an event of default under, any of the agreements governing any Indebtedness (as defined in the Company’s Certificate of Incorporation), then consummation of the Liquidation Event (other than an involuntary liquidation, dissolution or liquidation winding up of the affairs of the Corporation) or the making of a redemption of the Series AA Preferred Stock shall be prohibited until the provisions of Section 6(b) have been satisfied in full.

(b)           If the provisions of any Indebtedness Agreement (as defined in the Company’s Certificate of Incorporation) would prohibit the Corporation from paying any Bonus pursuant hereto, or if immediately after giving effect to the payment of any such Bonus, a default or event of default under any such agreement or instrument would be caused thereby, as a condition to the consummation of a Liquidation Event or a redemption of Series AA Preferred Stock, and the payment of any Bonus hereunder, the Company shall, to the extent required to permit the payment of the applicable Bonuses hereunder, (i) obtain the consent of the requisite holders of such Indebtedness to permit the payment of such Bonuses by the Company, (ii) refinance all such Indebtedness outstanding with the proceeds of other Indebtedness or equity securities that permit or do not prohibit the payment of such Bonuses by the Company or (iii) otherwise comply with the terms of such Indebtedness required to permit the payment by the Company of the Bonuses. The Company shall not consummate a Liquidation Event or a redemption of Series AA Preferred Stock unless the conditions contained in this Section 6(b) are satisfied or waived by the Participants with a majority of the outstanding Bonus Percentages then outstanding pursuant to this Plan.

7.             Successors.

(a)           Subject to Section 5(a), this Plan shall not be terminated by any merger, consolidation, stock exchange or similar event involving the Company whereby the Company is or is not the surviving or resulting corporation or other entity. In the event of any merger, consolidation, stock exchange or similar event, the provisions of this Plan shall be binding upon the surviving or resulting corporation or other entity.

(b)           This Plan shall inure to the benefit of and be enforceable by each Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If a Participant shall die while any amounts are payable to the Participant hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to such person or persons appointed in writing by the Participant to receive such amounts or, if no person is so appointed, to the Participant’s estate.

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8.             Governing Law; Validity. The interpretation, construction and performance of this Plan shall be governed by and construed and enforced in accordance with the laws of the State of New York without regard to the principle of conflicts of laws. The invalidity or unenforceability of any provision of this Plan shall not affect the validity or enforceability of any other provision of this Plan, which other provisions shall remain in full force and effect.

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9.             Miscellaneous.

(a)           The Company shall not be required to fund or otherwise segregate assets to be used for the payment of any benefits under the Plan. The Company shall make such payments only out of its general assets, and therefore its obligation to make such payments shall be subject to any claims of its other creditors having priority as to its assets.

(b)           This Plan does not constitute a contract of employment or impose on the Company any obligation to retain the Participant as an employee, to change the status of the Participant’s employment, or to change the policies of the Company regarding termination of employment.

(c)           This Plan does not grant to any Participant any of the rights or privileges of equity ownership in the Company.

(d)           This Plan and Exhibit A attached hereto constitute the sole agreement by and between the Company and the Participants with respect to the subject matter contained herein.

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Exhibit A

Participants
(as of ____________, 2006)

The following individuals shall be Participants under this Deferred Cash Incentive Plan with the indicated Bonus Percentage:

Participant Bonus Percentage

EX-99.1

Exhibit 99.1

June 16, 2006

FOR IMMEDIATE RELEASE

PLIANT REACHES AGREEMENT WITH KEY BONDHOLDERS AND SHAREHOLDERS

SCHAUMBURG, IL - - - Pliant Corporation announced today that it has reached an agreement with representatives of its key classes of bondholders and shareholders as part of the company’s previously announced financial restructuring. The parties to the agreement have agreed to withdraw all objections to confirmation of the company’s Plan of Reorganization.

The agreement was reached with representatives of Pliant’s 1st Lien, 2nd Lien, and Sr. Subordinated Noteholders as well as holders of existing preferred and common stock. Terms of the agreement include a 0.225% increase in the interest rate of Pliant’s existing 1st Lien notes, a $4 million cash consent fee for holders of the company’s 2nd Lien notes, and a 1.5% increase in the allocation of the company’s new preferred equity to holders of Pliant’s existing Sr. Subordinated Notes. The company will file an amended Plan of Reorganization to reflect this updated agreement.

Harold Bevis, President and CEO said, “Today’s agreement is a significant step forward for Pliant’s emergence from Chapter 11. We look forward to final confirmation of our financial restructuring plan and a vastly improved balance sheet and cash flow. This is a terrific result for Pliant.”

A hearing on confirmation of Pliant’s amended Plan of Reorganization is scheduled for June 23, 2006 and, if the Plan is confirmed, the company expects to emerge from Chapter 11 shortly thereafter.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:

All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company’s plans, beliefs, estimates, and expectations. Actual results may differ from these forward-looking statements due to numerous factors beyond our control. Those factors include, but are not limited to, our ability to complete timely negotiations and documentation of the new credit agreement and to otherwise satisfy all conditions (including bankruptcy court confirmation) to the effectiveness of our proposed plan of reorganization, as well as other factors discussed in more detail in our Annual Report on Form 10-K for 2005 and in subsequent filings with the Securities and Exchange Commission. Any forward-looking statements should be considered in light of these factors.

ABOUT PLIANT

Pliant Corporation is a leading producer of value-added film and flexible packaging products for personal care, medical, food, industrial, and agricultural markets. The company operates 23

manufacturing and research and development facilities around the world and employs approximately 2,940 people.

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CONTACT:

Steve Auburn

Vice President and General Counsel

E-mail: steve.auburn@pliantcorp.com

Phone: 847-969-3319

Company Web Site: www.pliantcorp.com

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