S-1

As filed with the Securities and Exchange Commission on June 24, 2003

Registration No. 333-        

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

PLIANT CORPORATION

(Exact name of registrant as specified in its charter)

Utah	2673	87-0496065
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

PLIANT CORPORATION INTERNATIONAL

(Exact name of registrant as specified in its charter)

Utah	2673	87-0473075
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

PLIANT FILM PRODUCTS OF MEXICO, INC.

(Exact name of registrant as specified in its charter)

Utah	2673	87-0500805
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

PLIANT SOLUTIONS CORPORATION

(Exact name of registrant as specified in its charter)

Utah	2673	87-0563872
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

PLIANT PACKAGING OF CANADA, LLC

(Exact name of registrant as specified in its charter)

Utah	2673	87-0580929
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

UNIPLAST HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	2673	13-3999589
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

UNIPLAST U.S., INC.

(Exact name of registrant as specified in its charter)

Delaware	2673	04-3199066
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

TUREX, INC.

(Exact name of registrant as specified in its charter)

Rhode Island	2673	05-0354901
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

PIERSON INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Massachusetts	2673	04-2692382
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

UNIPLAST MIDWEST, INC.

(Exact name of registrant as specified in its charter)

Indiana	2673	98-0166923
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

1475 Woodfield Road, Suite 700

Schaumburg, Illinois 60173

(847) 969-3300

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

JACK E. KNOTT II

Chief Executive Officer

1475 Woodfield Road, Suite 700

Schaumburg, Illinois 60173

(847) 969-3300

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With a copy to:

Michael D. Annes, Esq.	Reed W. Topham, Esq.
Pliant Corporation	Paul M. Wilson, Esq.
1475 Woodfield Road, Suite 700	Stoel Rives LLP
Schaumburg, Illinois 60173	201 South Main Street, Suite 110
(847) 969-3300	Salt Lake City, Utah 84111
	(801) 328-3131

Approximate date of commencement of proposed sale to the public: As promptly as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:    x

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act of 1933, please check the following box.    ¨

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee
13% Senior Subordinated Notes due 2010 of Pliant Corporation	$320,000,000(1)	$320,000,000(1)	(1)(2)
Guarantees of 13% Senior Subordinated Notes due 2010	(3)	(3)	(3)

(1) Pursuant to Rule 429 of the General Rules and Regulations under the Securities Act of 1933, the prospectus that is a part of this registration statement relates to $320,000,000 of 13% Senior Subordinated Notes due 2010 of Pliant Corporation and the related guarantees issued by certain subsidiaries of Pliant Corporation that were previously registered under the Registration Statement on Form S-4 (File Nos. 333-86532 and 333-86532-01 to 09), as amended, that was declared effective by the Securities and Exchange Commission on April 25, 2002.

(2) The prospectus that is part of this registration statement will only be used by J.P. Morgan Securities Inc., which is an affiliate of Pliant Corporation, in connection with offers and sales related to market-making transactions of an indeterminate amount of the 13% Senior Subordinated Notes due 2010. Pursuant to Rule 457(q) of the General Rules and Regulations, no filing fee is required.

(3) Each of Pliant Corporation International, Pliant Film Products of Mexico, Inc., Pliant Solutions Corporation, Pliant Packaging of Canada, LLC, Uniplast Holdings Inc., Uniplast U.S., Inc., Turex, Inc., Pierson Industries, Inc. and Uniplast Midwest, Inc. have guaranteed, on a joint and several basis, the obligations of Pliant Corporation under the 13% Senior Subordinated Notes due 2010. Pursuant to Rule 457(n) of the General Rules and Regulations, no filing fee is required in respect of the guarantees.

The registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such a date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to completion, dated June 24, 2003

Prospectus

Pliant Corporation

13% Senior Subordinated Notes due 2010

Which Are Guaranteed on a Senior Subordinated Basis by

Substantially All of Our Domestic Subsidiaries

We issued in our 2002 exchange offer $100,000,000 aggregate principal amount of 13% Senior Subordinated Notes due 2010, which have been registered under the Securities Act of 1933, in exchange for our 13% Senior Subordinated Notes due 2010.

We issued in our 2000 exchange offer $220,000,000 aggregate principal amount of 13% Senior Subordinated Notes due 2010, which have been registered under the Securities Act of 1933, in exchange for our 13% Senior Subordinated Notes due 2010.

Maturity

• The Notes will mature on June 1, 2010.

Interest

• Interest on the Notes is payable June 1 and December 1 of each year.

Redemption

• We may redeem some or all of the Notes at any time on or after June 1, 2005.

• We may also redeem up to $112,000,000 of the Notes using the proceeds of certain equity offerings completed before June 1, 2003.

• The redemption prices are described on page 81.

Change of Control

• If we experience a change of control, we must offer to purchase the Notes.

Security and Ranking

• The Notes are unsecured. The Notes are subordinated to all of our existing and future senior debt, rank equally with all of our future senior subordinated debt and rank senior to all of our future subordinated debt.

Guarantees

• If we fail to make payments on the Notes, our guarantor subsidiaries must make them instead. These guarantees are senior subordinated obligations of our guarantor subsidiaries. Not all of our subsidiaries guarantee the Notes.

We prepared this prospectus for use by J.P. Morgan Securities Inc. in connection with offers and sales related to market-making transactions of the Notes. J.P. Morgan Securities Inc. may act as principal or agent in these transactions. These sales will be made at prices related to prevailing market prices at the time of sale. We will not receive any of the proceeds of these sales.

You should carefully consider the risk factors beginning on page 12 of this prospectus before making an investment decision with respect to the Notes.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is             , 2003

TABLE OF CONTENTS

	Page		Page
Market and industry data Important information	i i	Security ownership of certain beneficial owners and management and related stockholder matters	64
Summary	1	Certain relationships and related transactions	66
Risk factors	12	Description of credit facilities and other indebtedness	71
Disclosure regarding forward-looking statements	22	Description of the notes	79
Use of proceeds	23	Book-entry; delivery and form	122
Capitalization	24	Plan of distribution	125
Selected financial data	25	Legal matters	125
Management’s discussion and analysis of financial condition and results of operations		Experts	125
	27	Where you can find more information	126
Business	46	Index to consolidated financial statements	F-1
Management	55

Market and industry data

All industry data presented in this prospectus are for the year ended December 31, 2002. Unless otherwise indicated, the market share and industry data used throughout this prospectus were obtained primarily from internal company surveys and management estimates based on these surveys and our management’s knowledge of the industry. We have not independently verified any of the data from third-party sources. Similarly, internal company surveys and management estimates, while we believe them to be reliable, have not been verified by any independent sources. While we are not aware of any misstatements regarding our industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the captions “Risk factors” and “Disclosure regarding forward-looking statements” in this prospectus. Some of the industry data presented in this prospectus were obtained from the Flexible Packaging Association. Jack E. Knott II, our Chief Executive Officer, is chairman of the Flexible Packaging Association.

Important information

This prospectus refers to documents that are not delivered with this prospectus. These documents are available without charge to our security holders upon written or oral request. Security holders may request copies of documents referred to in this prospectus by writing or calling us at the following address or phone number:

Pliant Corporation

1475 Woodfield Road, Suite 700

Schaumburg, Illinois 60173

(847) 969-3300

Attention: Michael D. Annes, Secretary

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SUMMARY

The following summary highlights certain material information contained elsewhere in this prospectus but does not contain all the information that may be important to you. You should read this entire prospectus and the documents to which we refer you before making an investment decision. You should carefully consider the information set forth under “Risk factors.” In addition, certain statements include forward-looking information that involves risks and uncertainties. See “Disclosure regarding forward-looking statements.”

The information presented in this prospectus with respect to the years ended December 31, 2002, 2001 and 2000 reflect four reporting segments: Pliant U.S., Pliant Flexible Packaging, Pliant International and Pliant Solutions. In April 2003, we combined our Pliant U.S. and Pliant Solutions segments into a single segment. Therefore, beginning with the second quarter of 2003 our operating segments for financial reporting purposes will be Pliant U.S. (including our Pliant Solutions segment), Pliant Flexible Packaging and Pliant International.

The company

We are one of North America’s leading manufacturers of value-added films and flexible packaging for food, personal care, medical, agricultural and industrial applications. We offer some of the most diverse product lines in the film industry and have achieved leading positions in many of these product lines. We operate 26 manufacturing and research and development facilities worldwide and we currently have approximately 1.0 billion pounds of annual production capacity. For the twelve months ended March 31, 2003, we generated net sales of $909.6 million and a net loss of $53.3 million.

The markets in which we operate are highly competitive, and our financial performance can be affected by economic downturns and other factors beyond our control, including fluctuations in interest rates, unscheduled plant shutdowns, increased operating costs, prices and supply of raw materials, product prices and regulatory developments. Further, as a result of our substantial indebtedness, a large portion of the cash provided by our operations must be used to pay interest expense. We have experienced losses in each of our last three fiscal years, including a net loss of $43.4 million in 2002, $2.1 million in 2001 and $50.8 million in 2000. In addition to the factors described above, our losses reflect significant restructuring charges, which we incurred in an effort to improve the efficiency of our operations.

Our products are sold into numerous markets for a wide variety of end uses. As of March 31, 2003, our operations consisted of four operating segments: Pliant U.S., Pliant Flexible Packaging, Pliant International and Pliant Solutions.

• Our Pliant U.S. segment manufactures and sells films and other packaging products primarily in the United States. Our Pliant U.S. segment accounted for 61.0%, 63.2% and 63.1% of our net sales in 2002, 2001 and 2000, respectively. The principal products of our Pliant U.S. segment include personal care and medical films, converter films, agricultural films, stretch films and PVC films.

• Our Pliant Flexible Packaging segment manufactures and sells printed film and packaging products primarily in the United States. Our Pliant Flexible Packaging segment accounted for 23.5%, 24.4% and 26.2% of our net sales in 2002, 2001 and 2000, respectively. The principal products of our Pliant Flexible Packaging segment include printed products and barrier films.

• Our Pliant International segment manufactures and sells films and other flexible packaging products. The Pliant International segment has manufacturing operations located in Australia, Brazil, Canada, Germany and Mexico. These operations service Australia, Southeast Asia, Latin America, Canada, Europe and Mexico. In addition, our operation in Mexico provides the film for our Pliant Solutions segment. Our Pliant International segment accounted for 12.3%, 12.4% and

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10.7% of our net sales in 2002, 2001 and 2000, respectively. The principal products of our Pliant International segment vary depending on the particular country or region and include personal care films, converter films, printed products, barrier films, stretch and shrink films and PVC films.

• Our Pliant Solutions segment consists primarily of the consumer products business we acquired from Decora Industries, Inc. and its operating subsidiary, Decora Incorporated, in May 2002. Net sales of the Pliant Solutions segment since the acquisition date accounted for 3.2% of our net sales in 2002. Our Pliant Solutions segment markets and distributes decorative and surface coverings, including self-adhesive and non-adhesive coverings, primarily in the United States and Canada. We market these consumer products primarily under the Con-Tact^® brand name, which is considered to be the most recognized brand of consumer decorative and surface coverings.

Our principal executive offices are located at 1475 Woodfield Road, Suite 700, Schaumburg, Illinois 60173, and our telephone number is (847) 969-3300.

Industry overview

We manufacture and sell a variety of plastic films and flexible packaging products. Flexible packaging is the largest end market for plastic films. The plastic film industry serves a variety of flexible packaging markets, as well as secondary packaging and non-packaging end use markets, including pharmaceutical, medical, personal care, household, industrial and agricultural film markets. According to the Flexible Packaging Association, the North American market for flexible packaging was approximately $20.4 billion in 2002 and has grown at a compound annual growth rate, or CAGR, of approximately 3.9% from 1992 to 2002. Many of our plastic films are flexible packaging products as defined by the Flexible Packaging Association. However, the flexible packaging market, as defined by the Flexible Packaging Association, does not include certain of the products we sell, such as agricultural films, and includes certain products we do not sell, such as wax papers and aluminum foils. We believe, however, that trends affecting the flexible packaging industry also affect the markets for many of our other products.

Flexible packaging is used to package a variety of products, particularly food, which accounts for approximately half of all flexible packaging shipments. Recent advancements in film extrusion and resin technology have produced new, sophisticated films that are thinner and stronger and have better barrier and sealant properties than other materials or predecessor films. These technological advances have facilitated the replacement of many traditional forms of rigid packaging with film-based, flexible packaging that is lighter, is lower in cost and has enhanced performance characteristics. For example, in consumer applications, stand-up pouches that use plastic films are now often used instead of paperboard boxes, glass jars and metal cans. In industrial markets, stretch and shrink films are often used instead of corrugated boxes and metal strapping to unitize, bundle and protect items during shipping and storage.

Our competitive strengths

Strong market positions. We have leading market positions in many of our product lines. We are North America’s largest supplier of converter and frozen food films, its second largest supplier of films for the bread and bakery goods market and its third largest supplier of PVC films. We also maintain significant market shares in personal care and stretch films in North America. We attribute our market leadership primarily to our broad and innovative product lines, low-cost manufacturing capabilities, technological capabilities and well-established customer relationships.

Superior manufacturing capability. We have modern and efficient manufacturing facilities. During the past three fiscal years, excluding acquisitions, we have invested a total of $171.3 million to expand, upgrade and maintain our asset base and information systems. With 26 plants, we are often able to allocate lines to specific products, resulting in fewer change-overs and more efficient use of production capacity. Our combination of manufacturing flexibility and efficiency enhances our ability to bring new

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technologies to the marketplace and meet the ever-increasing performance needs of our customers in a cost-effective manner.

Low-cost production. We believe that our manufacturing costs are among the lowest in the industry because of: (a) economies of scale provided by our high volume production; (b) high plant utilization; (c) highly competitive pricing for resin and other raw materials, based on our significant purchasing requirements; (d) modern manufacturing equipment that minimizes resin requirements and waste; and (e) capital investment that has improved our technical capabilities and operating efficiencies.

Industry leading technology and product development capabilities. Our research and development group provides the latest resin and extrusion technology to our manufacturing facilities and allows us to test new resins and process technologies. Our technical center in Newport News, Virginia has a pilot plant that allows the technical center to run commercial “scale-ups” for new products. We are able to use our broad product offerings and technology to transfer technological innovations from one market to another.

Well-established customer relationships. Our films are components of flexible packaging for some of the largest food companies in the world, including household names such as General Mills, Interstate Bakeries (Wonder Bread), Kraft/Nabisco, Kroger, and Safeway. Our customers also include many of North America’s largest flexible packaging converters, such as Lawson Mardon, Pechiney, Printpack and Sonoco, and the largest national distributors of industrial films, Bunzl, Unisource, and Xpedx. In addition, we manufacture and supply film to some of the largest non-food film consumers in North America, including 3M, Baxter, Becton-Dickinson, Goodyear, Johnson & Johnson, Kimberly-Clark and Tyco/Kendall Healthcare.

Proven and committed management team. We have assembled an outstanding management team at both our corporate and operating levels. At the corporate level, our senior management has extensive and varied experience in identifying, acquiring and integrating strategic businesses and in allocating capital, developing corporate strategy and bringing financial discipline to such businesses. At the operating level, our Executive and Senior Vice Presidents have an average of more than 20 years of industry experience.

Strategy

In order to continue to expand our business and increase our profitability, we continue to focus on developing new products and new markets and enhancing customer relationships. We have brought innovative technological advances to the marketplace through acquisitions, internal product development and purchasing or licensing technology from other film companies. We have long-standing relationships with customers who value product innovation and reliable supply and, consequently, exercise great care in establishing and maintaining their supplier relationships. We intend to continue to focus on meeting the increasingly complex packaging needs of our customers with our wide array of film and flexible packaging products and product development capabilities.

History

We were founded in 1992. We have combined strategic acquisitions, internal growth, product innovation and operational improvements to grow our business from net sales of $447.7 million in 1997 to $879.2 million in 2002. We have acquired and integrated numerous film and flexible packaging operations since 1992, including, most recently:

• the August 2002 acquisition of the business of Roll-O-Sheets Canada Limited;

• the May 2002 acquisition of the business of Decora Industries, Inc. and its operating subsidiary, Decora Incorporated; and

• the July 2001 acquisition of Uniplast Holdings Inc. and its operating subsidiaries.

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On May 31, 2000, we consummated a recapitalization pursuant to an agreement dated March 31, 2000 among us, our then existing stockholders and Southwest Industrial Films, LLC, an affiliate of J.P. Morgan Partners, LLC, whereby Southwest Industrial Films acquired majority control of our common stock. The total consideration paid in the recapitalization was approximately $1.1 billion, including transaction costs. In connection with the recapitalization, we restructured our indebtedness. We refinanced all amounts outstanding under our then existing credit facility and replaced it with amended and restated secured credit facilities.

As a result of the recapitalization and subsequent investments, J.P. Morgan Partners (BHCA), L.P. and its affiliates own approximately 55% of our outstanding common stock, 75% of our preferred stock warrants to purchase common stock and 59% of our outstanding preferred stock, subject to certain preemptive rights with respect to 10,000 shares of preferred stock issued on March 25, 2003. J.P. Morgan Partners (BHCA), L.P. and its affiliates have invested a total of approximately $238.0 million in our common and preferred stock (including warrants).

Recent developments

Issuance of 2003 Notes. On May 30, 2003, we completed the sale of $250 million aggregate principal amount of 11 ¹/8% Senior Secured Notes Due 2009 (the “2003 Notes”). The 2003 Notes are our senior secured obligations and are guaranteed on a senior secured basis by the same subsidiaries that guarantee the Notes. The net proceeds from the sale of the 2003 Notes were used to repay borrowings under our credit facilities, which were amended in connection with the sale of the 2003 Notes. See “Description of credit facilities and other indebtedness—2003 Notes” for additional information about the terms of the 2003 Notes.

Amendment to our credit facilities. In connection with the issuance of the 2003 Notes, we entered into an amendment to our credit facilities, which permitted the issuance of the 2003 Notes and the second-priority liens securing the 2003 Notes and, among other things:

• required the prepayment of revolving loans with the net proceeds received from the issuance of the 2003 Notes until $75.0 million (or, if less, all) of the revolving loans were paid;

• required the prepayment of the tranche A term loans in an amount equal to 50% of the portion of such net proceeds not applied to the revolving loans and the prepayment of the tranche B term loans in an amount equal to 50% of the portion of such net proceeds not applied to the revolving loans (subject to the right of the tranche B term lenders to reject such prepayment, to the extent tranche A term loans remained, in which case such rejected prepayments were instead applied to the tranche A term loans); (A) with respect to the tranche A term loans, first, in direct order of maturities to reduce scheduled repayments of such loans through 2004, second, to reduce scheduled repayments of such loans ratably for 2005, and third, with the balance of such portion, if any, to reduce the remaining scheduled repayments of such loans ratably; and (B) with respect to the tranche B term loans, to reduce the remaining scheduled repayments of such loans ratably;

• added Uniplast Holdings Inc. and its United States subsidiaries as borrowers under our credit facilities for up to $9.4 million of loans;

• adjusted the terms pursuant to which J.P. Morgan Partners is required to purchase up to $25 million of additional equity securities to the extent necessary to enable us to meet certain leverage ratios;

• added a new financial covenant based on the ratio of indebtedness under our credit facilities and certain qualified receivables financings to consolidated EBITDA; and

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• adjusted certain financial and negative covenants, including the leverage and interest coverage ratios.

We prepaid a total of $75.0 million of our revolving loans and $165 million of our term loans with the proceeds from the issuance of the 2003 Notes. Proposed tranche B payments of $22.8 million were rejected by tranche B lenders and applied to tranche A term loans. Accordingly, a total of $105.3 million was applied to tranche A term loans and $59.7 million was applied to tranche B term loans.

See “Description of credit facilities and other indebtedness—The credit facilities” for additional information about our credit facilities, as amended.

Summary of the terms of the notes

Issuer	Pliant Corporation.
Notes	$320 million aggregate principal amount of 13% Senior Subordinated Notes due 2010.
Maturity	June 1, 2010.
Interest Payment Dates	June 1 and December 1 of each year.
Optional Redemption	On or after June 1, 2005, we may redeem some or all of the Notes at the redemption prices listed in the section entitled “Description of the notes – Optional redemption.” Prior to such date, we may not redeem the Notes, except as described in the following paragraph. At any time prior to June 1, 2003, we may redeem up to 35% of the original aggregate principal amount of the Notes issued under the applicable indenture with the net cash proceeds of certain equity offerings at a redemption price equal to 113% of the principal amount thereof, plus accrued interest, so long as (a) at least 65% of the original aggregate amount of the Notes remains outstanding after each such redemption and (b) any such redemption by us is made within 120 days of such equity offering.
Guarantees	Each of our existing domestic restricted subsidiaries has, and each of our future domestic restricted subsidiaries will, fully and unconditionally guarantee the Notes on an unsecured senior subordinated basis. Also, if any of our existing or future restricted foreign subsidiaries guarantees any senior debt (other than a foreign subsidiary that guarantees senior debt of another foreign subsidiary), such foreign subsidiary will be required to fully and unconditionally guarantee the Notes on an unsecured senior subordinated basis. If we fail to make payments on the Notes, our subsidiaries that are guarantors must make them instead. Guarantees of the Notes are subordinated to the guarantees of our senior debt under our credit facilities.
Ranking	The Notes will be unsecured and: •      are subordinated to all of our existing and any future senior debt; •      rank equally with all of our existing and any future senior subordinated debt;

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•      rank senior to any future subordinated debt; •      are effectively subordinated to our secured debt to the extent of the value of the assets securing such indebtedness; and •      are effectively subordinated to all liabilities of our subsidiaries that do not guarantee the Notes. Similarly, the guarantees of the Notes by our subsidiaries that also guarantee our credit facilities are unsecured and; •      are subordinated to all of the applicable guarantors’ existing and any future senior debt; •      rank equally with all of the applicable guarantors’ existing and any future senior subordinated debt; •      rank senior to any of the applicable guarantors’ future subordinated debt; and •      are effectively subordinated to any secured debt of such guarantor to the extent of the value of the assets securing such debt. As of March 31, 2003, after giving effect to the issuance of the 2003 Notes and the use of proceeds therefrom: •      we would have had $470.5 million of senior debt to which the Notes would have been subordinated (which amount does not include the remaining availability of $88.1 million under our revolving credit facility after giving effect to outstanding letters of credit and current borrowing limitations under our indentures); •      we would not have had any senior subordinated debt other than the Notes; •      we would not have had any subordinated debt; and •      our subsidiaries that are not guarantors of the Notes would have had $54.5 million of liabilities, including trade payables, excluding liabilities owed to us. The indentures relating to the Notes permit us to incur a significant amount of additional senior debt. In addition to the $470.5 million of senior debt outstanding as of March 31, 2003, after giving effect to the issuance of the 2003 Notes and the use of proceeds therefrom, the indentures permit us to incur approximately $88.1 million of additional senior debt, plus any additional amount of senior debt incurred under overdraft facilities. We currently maintain a $5 million overdraft facility. In addition, if we satisfy certain fixed charge coverage ratios in future periods, the indentures will permit us to incur additional senior debt.

Payment Blockage Provisions

The indentures relating to the Notes prohibit us from making payments on or redeeming the Notes if: •      any principal, interest or certain other payments or fees with respect to our credit facilities, the 2003 Notes and other senior indebtedness

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designated by us is not paid when due; or •      any other default on such designated senior indebtedness occurs and the maturity of such designated senior indebtedness is accelerated in accordance with its terms unless: •      the default has been cured or waived and any acceleration has been rescinded; •      the amount of such designated senior indebtedness has been repaid in full; or •      the trustee under the indentures receives written notice from the representative of such designated senior indebtedness approving a payment with respect to the Notes. During the continuance of any other default with respect to any designated senior indebtedness pursuant to which the maturity thereof may be accelerated immediately, we may not make payments on the Notes if the trustee under the indentures has received a notice of default from the representative of such designated senior indebtedness and such notice specifies an election to effect a payment blockage period. A payment blockage period continues for 179 days unless terminated earlier: •      by written notice from the representative of the designated senior indebtedness; •      by repayment in full of the designated senior indebtedness; or •      because the default giving rise to the payment blockage is no longer continuing. See “Description of the notes—Ranking.”

Certain Covenants

The indentures relating to the Notes limit our ability and the ability of our subsidiaries to: •      borrow money; •      make distributions, redeem equity interests or redeem subordinated debt; •      make investments; •      use assets as security in other transactions; •      sell assets; •      guarantee other debt; •      enter into agreements that restrict dividends from subsidiaries; •      sell capital stock of subsidiaries; •      merge or consolidate; and •      enter into transactions with affiliates.

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These covenants are subject to a number of important exceptions. For more details, see “Description of the notes – Certain covenants.”

Change of Control

Upon the occurrence of a change of control, unless we have exercised our right to redeem all of the Notes as described above, you will have the right to require us to repurchase all or a portion of your Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued interest to the date of repurchase. However, we may not be able to repurchase the Notes if we do not have sufficient funds. Further, we may be contractually restricted under the terms of our senior indebtedness from repurchasing all of the Notes tendered by holders upon a change of control unless we repay such senior indebtedness or obtain the requisite consents of the lenders to permit the repurchase of the Notes. If we do not obtain such consents or repay such indebtedness, we will remain prohibited from repurchasing the Notes and we will be unable to make an offer to purchase your Notes. Our failure to make such an offer would constitute an event of default under the indentures relating to the Notes, which in turn would constitute a default under our credit facilities and the indenture relating to the 2003 Notes. See “Description of credit facilities and other indebtedness,” “Description of the notes – Change of control” and “Risk factors.”

Risk factors

Investing in the Notes involves substantial risk. You should carefully consider all the information contained in this prospectus and, in particular, should consider carefully the factors set forth under the caption “Risk factors” before making an investment in the Notes.

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Summary financial data

The following table sets forth summary financial data for the fiscal years ended December 31, 2000, 2001 and 2002, for the three months ended March 31, 2002 and as of and for the three months ended March 31, 2003 and for the the twelve months ended March 31, 2003. The summary financial data for the years ended December 31, 2000, 2001 and 2002 have been summarized from our consolidated financial statements and are qualified in their entirety by reference to our consolidated financial statements. The summary financial data for the three months ended March 31, 2002 and as of and for the three months ended March 31, 2003 and for the twelve months ended March 31, 2003 have been derived from our unaudited consolidated financial statements. In the opinion of management, the unaudited information reflects all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of the results for those periods. Results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year or any future period. You should read the following summary financial data together with “Capitalization,” “Selected financial data,” “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and the notes thereto included elsewhere in this prospectus.

	Years ended December 31,									Three months ended March 31,						Twelve months ended March 31,
	2000			2001			2002			2002			2003			2003
										(unaudited)						(unaudited)
	(Dollars in millions)
Statement of operations data:
Net sales	$	843.8		$	840.4		$	879.2		$	210.1		$	240.5		$	909.6
Cost of sales		696.7			665.1			714.5			164.4			197.7			747.7
Gross profit		147.1			175.3			164.7			45.7			42.8			161.9
Total operating expenses(1)		132.7			101.1			136.6			24.7			28.8			140.6
Operating income		14.4			74.2			28.1			21.0			14.0			21.3
Interest expense(2)		(68.5	)		(76.0	)		(75.3	)		(16.9	)		(19.9	)		(78.3	)
Loss on extinguishment of debt(3)		(18.7	)		—			—			—			—			—
Other income (expense), net		0.3			6.5			2.3			0.4			0.6			2.3
Income (loss) before income taxes		(72.5	)		4.7			(44.9	)		4.5			(5.3	)		(54.7	)
Income tax expense (benefit)		(21.7	)		6.8			(1.5	)		1.9			2.0			(1.4	)
Net income (loss)	$	(50.8	)	$	(2.1	)	$	(43.4	)	$	2.6		$	(7.3	)	$	(53.3	)
Other financial data:
EBITDA(4)	$	35.5		$	127.7		$	77.3		$	32.7		$	25.8		$	70.3
Net cash provided by (used in) operating activities		60.3			30.3			43.6			11.9			(1.5	)		30.2
Net cash provided by (used in) investing activities		(65.6	)		(87.3	)		(55.2	)		(10.5	)		(3.6	)		(48.4	)
Net cash provided by (used in) financing activities		0.3			55.0			12.4			(2.7	)		7.7			22.8
Depreciation and amortization		39.5			47.0			46.9			11.3			11.2			46.7
Restructuring and other costs(1)		19.4			(4.6	)		43.1			3.3			6.1			45.9
Non-cash stock-based compensation expense		2.6			7.0			—			—			—			—
Capital expenditures		65.6			56.4			49.2			10.5			3.6			42.3
Ratio of earnings to fixed charges(5)		—			1.1	x		—			1.3	x		—			—

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	(Dollars in millions)
Balance sheet data at March 31, 2003 (unaudited):
Cash and cash equivalents	$	4.5
Working capital		56.7
Total assets		870.0
Total debt		736.3
Total liabilities		974.5
Redeemable preferred stock(6)		167.0
Redeemable common stock		13.0
Stockholders’ equity (deficit)		(284.6	)

(1) Total operating expenses for the three months ended March 31, 2003 include $6.1 million for restructuring and other costs. These costs include $2.8 million for plant closing costs related to the closure of our facilities in Merced, California and Shelbyville, Indiana, production rationalization costs for our plant in Toronto, Canada and the relocation costs of certain lines from our Merced plant and Fort Edward plant to other facilities. These costs also include $3.3 million related to the present value of future lease payments on two buildings that we do not currently occupy. In connection with the 2001 restructuring plan, we vacated and subleased these facilities in 2001. During the first quarter of 2003, the sublessees defaulted on the subleases. Total operating expenses for the three months ended March 31, 2002 include $3.3 million for restructuring and other costs. These costs primarily include costs of relocating production lines from the plants acquired and closed as a result of the acquisition of Uniplast Holdings, Inc.

Total operating expenses for 2002 include $43.1 million of restructuring and other costs, including $19.2 million related to the closure of our plant in Merced, California, a portion of our plant in Shelbyville, Indiana, a part of our plant in Toronto, Canada, one of our plants in Mexico, and our Fort Edward, New York facility (acquired as part of the Decora acquisition). In addition, these costs reflect $7.9 million for the costs of relocating several of our production lines related to plant closures and costs associated with production rationalizations at several plants. Total operating expenses for 2002 also include $7.4 million related to severance costs, including benefits for several company-wide workforce reduction programs that were completed in 2002. An $8.6 million charge for the impairment of goodwill on our Pliant International segment is also reflected in total operating expenses for 2002.

Total operating expenses for 2001 include $7.0 million of non-cash stock-based compensation expense, $3.0 million of restructuring and other costs, $4.0 million for expenses related to the relocation of our corporate headquarters, $6.0 million of fees and expenses relating to our supply chain cost initiative, and a $3.0 million increase in depreciation expenses relating primarily to the purchase of a new computer system. In addition, total operating expenses for 2001 include a credit for $7.6 million related to the reversal of the previously accrued charge for the closure of our Harrington plant. In 2001, we decided not to proceed with our previously announced closure of our Harrington plant. Total operating expenses for 2000 include $10.8 million of costs related to the recapitalization and related transactions, $10.8 million of fees and expenses relating to our supply chain cost initiative, $19.4 million of restructuring and other costs, $7.1 million of costs related to the relocation of our corporate headquarters and a reduction in force, and $2.6 million of non-cash stock-based compensation expense.

(2) After giving effect to the issuance of the 2003 Notes and the use of proceeds therefrom, we would have had interest expense of $95.2 million for the twelve months ended March 31, 2003. The estimated issuance costs of $10.0 million relating to the issuance of the 2003 Notes will be amortized to interest expense as a non-cash charge on an effective interest method basis until the maturity of the notes.

(3) In 2000, we refinanced most of our long-term debt and recorded a loss to write-off unamortized deferred debt issuance costs. In addition, during 2000, we recorded a loss related to our tender offer for our 9 ¹/8% senior subordinated notes due 2007.

(4) EBITDA reflects income before interest expense, income taxes, depreciation and amortization. We believe that EBITDA information enhances an investor’s understanding of our financial performance and our ability to satisfy principal and interest obligations with respect to our indebtedness and to utilize cash for other purposes. In addition, EBITDA is used internally by our management to measure operating performance. Although we believe EBITDA is most directly comparable to net income under U.S. generally accepted accounting principles, EBITDA does not represent and should not be considered as an alternative to net income as determined by U.S. generally accepted accounting principles and may not be comparable to other similarly titled measures of other companies. In addition, there may be contractual, legal, economic or other reasons which may prevent us from satisfying principal and interest obligations with respect to our indebtedness and may require us to allocate funds for other purposes. A reconciliation of EBITDA to net income as set forth in our consolidated statements of operations is as follows:

	Years ended December 31,									Three months ended March 31,					Twelve months ended March 31,
	2000			2001			2002			2002		2003			2003
												(unaudited)			(unaudited)
	(Dollars in millions)
Net income (loss)	$	(50.8	)	$	(2.1	)	$	(43.4	)	$	2.6	$	(7.3	)	$	(53.3	)
Adjustments:
Income tax expense (benefit)		(21.7	)		6.8			(1.5	)		1.9		2.0			(1.4	)
Interest expense		68.5			76.0			75.3			16.9		19.9			78.3
Depreciation and amortization		39.5			47.0			46.9			11.3		11.2			46.7
EBITDA	$	35.5		$	127.7		$	77.3		$	32.7	$	25.8		$	70.3

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(5) For purposes of this ratio, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of (i) interest, whether expensed or capitalized, (ii) amortization of debt issuance costs and (iii) an allocation of one-third of the rental expense from operating leases, which we consider to be a reasonable approximation of the interest factor of operating lease payments. For the three months ended March 31, 2003, earnings were insufficient to cover fixed charges by approximately $5.3 million. In 2000 and 2002, earnings were insufficient to cover fixed charges by approximately $72.5 million and $44.9 million, respectively. For the twelve months ended March 31, 2003, earnings were insufficient to cover fixed charges by approximately $54.7 million.

(6) The amount presented includes proceeds of $141.0 million from the issuance of preferred stock in 2000, 2001 and 2003, plus the accrued and unpaid dividends of $55.9 million, less the unamortized discount due to detachable preferred stock warrants and unamortized issuance costs totaling $29.9 million.

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Risk factors

The risks below are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business operations. All of the following risks could affect our business, financial condition or results of operations. In such a case, you may lose all of or a part of your original investment. You should carefully consider the risks described below as well as other information and data included in this prospectus before making an investment decision with respect to the Notes.

Risks related to the notes

Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations under the Notes.

We are highly leveraged, which means that we have a large amount of indebtedness relative to our stockholders’ deficit. We are highly leveraged particularly in comparison to some of our competitors.

As of March 31, 2003, we would have had, on a pro forma basis after giving effect to the issuance of the 2003 Notes and the use of proceeds therefrom, the following credit statistics:

	Pro forma as of March 31, 2003
	(dollars in millions)
Total debt	$	782.4
Redeemable preferred stock		167.0
Redeemable common stock		13.0
Stockholders’ equity (deficit)		(290.8	)

Our ratio of earnings to fixed charges is a broad measure of how well our earnings from operations cover interest expense and other fixed charges. For purposes of this ratio, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of (i) interest, whether expensed or capitalized, (ii) amortization of debt issuance costs and (iii) an allocation of one-third of the rental expense from operating leases, which we consider to be a reasonable approximation of the interest factor of operating lease payments. For the three months ended March 31, 2003, earnings were insufficient to cover fixed charges by approximately $5.3 million. On a pro forma basis, after giving effect to the issuance of the 2003 Notes and the use of proceeds therefrom, our earnings for the three months ended March 31, 2003 were insufficient to cover fixed charges by approximately $9.4 million. In 2000 and 2002, our earnings were insufficient to cover fixed charges by approximately $72.5 million and $44.9 million, respectively. For the twelve months ended March 31, 2003, earnings were insufficient to cover fixed charges by approximately $54.7 million. These deficits indicate that it may be difficult for us to generate sufficient earnings to cover fixed charges in future years.

Our high degree of leverage could have important consequences for you, including the following:

• it may limit our ability to obtain additional financing for working capital, capital expenditures, product development, debt service requirements, acquisitions and general corporate or other purposes;

• a substantial portion of our cash flows from operations must be dedicated to the payment of principal and interest on our indebtedness and is not available for other purposes, including our operations, capital expenditures and future business opportunities;

• the debt service requirements of our other indebtedness could make it more difficult for us to make payments on the Notes;

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• certain of our borrowings, including borrowings under our credit facilities, are at variable rates of interest, exposing us to the risk of increased interest rates;

• it may limit our ability to adjust to changing market conditions and to withstand competitive pressures, putting us at a competitive disadvantage; and

• we may be vulnerable in a downturn in general economic conditions or in our business, or we may be unable to carry out capital spending that is important to our growth and productivity improvement programs.

We may not be able to generate sufficient cash to service all of our indebtedness, including the Notes, and be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

After giving effect to payments made through June 1, 2003, our estimated debt service for the remainder of 2003 is approximately $59.6 million, consisting solely of interest payments.

Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. These factors include:

• fluctuations in interest rates;

• unscheduled plant shutdowns;

• increased operating costs;

• prices and supply of raw materials; and

• product prices and regulatory developments.

We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. See “Disclosure regarding forward-looking statements” and “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources.”

If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance our indebtedness, including the Notes. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. Our credit facilities and indentures restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or to obtain the proceeds which we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due. See “Description of credit facilities and other indebtedness” and “Description of the notes.”

Our variable rate indebtedness subjects us to interest rate risk, which could cause our annual debt service obligations to increase significantly.

Certain of our borrowings, including borrowings under our credit facilities, are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease. After giving effect to the issuance of the 2003 Notes and the use of the proceeds therefrom and after accounting for the effect of our interest rate hedge agreements, an increase of 1.0% in the interest rates payable on our variable rate indebtedness would increase our 2003 estimated debt service requirements by approximately $1.0 million.

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Accordingly, an increase in interest rates from current levels could cause our annual debt service obligations to increase significantly.

If we default on our obligations to pay our indebtedness we may not be able to make payments on the Notes.

Any default under the agreements governing our indebtedness, including a default under our credit facilities that is not waived by the required lenders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal, premium, if any, and interest on the Notes and substantially decrease the market value of the Notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness (including covenants in our indentures and our credit facilities), we could be in default under the terms of the agreements governing such indebtedness, including our credit facilities and our indentures governing the Notes and the 2003 Notes. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under our credit facilities could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. For the third quarter ended September 30, 2000, we entered into an amendment to our credit facilities to avoid being in default under our leverage ratio financial covenant. Effective April 2, 2002, we entered into an amendment to our credit facilities which, among other changes, further revised our leverage and interest coverage ratio financial covenants. Effective September 30, 2002, we entered into an amendment to our credit facilities which, among other changes, further revised our leverage and interest coverage ratio financial covenants. Effective March 24, 2003, we entered into an amendment to our credit facilities which, among other changes, further adjusted the leverage and interest coverage ratios, required us to issue $10 million of equity securities and use the proceeds to reduce our term debt and required us to obtain a commitment for the purchase of up to $25 million of additional equity securities to the extent necessary to enable us to comply with our leverage ratio or the target senior debt leverage ratio specified in the amendment at the end of any calendar quarter or fiscal year ending on or before December 31, 2004. Effective May 22, 2003, we entered into an amendment to our credit facilities which, among other things, further revised our leverage ratio and interest coverage ratio to ease our covenant obligations, added a first-lien leverage ratio covenant and adjusted the terms pursuant to which J.P. Morgan Partners is required to purchase the additional equity securities referenced above. If our operating performance declines we may in the future need to obtain waivers from the required lenders under our credit facilities to avoid being in default. If we breach our covenants under the credit facilities and seek a waiver, we may not be able to obtain a waiver from the required lenders. If this occurs, we would be in default under the credit facilities and the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation. See “Description of credit facilities and other indebtedness” and “Description of the notes.”

We may not be able to repurchase the Notes upon a change of control.

Upon a change of control, we must offer to repurchase all of the outstanding Notes at 101% of the principal amount thereof, plus accrued interest to the date of repurchase. We may not be able to repurchase the Notes upon a change of control because we may not have sufficient funds. Further, we may be contractually restricted under the terms of our senior indebtedness from repurchasing all of the Notes tendered by holders upon a change of control unless we repay such senior indebtedness or obtain the requisite consents of the lenders to permit the repurchase of the Notes. If we do not obtain such consents or repay such indebtedness, we will remain prohibited from repurchasing the Notes and we will be unable to make an offer to repurchase the Notes. Our failure to make such an offer would constitute an event of default under the indentures relating to the Notes, which in turn would constitute a default under our credit facilities and the indenture relating to the 2003 Notes. As a result of the limitations on our

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ability to repurchase the Notes upon a change of control, the change of control provision may not necessarily protect holders of the Notes if we engage in a highly leveraged transaction or certain other transactions involving us or our subsidiaries. See “Description of credit facilities and other indebtedness” and “Description of the notes—Change of control.”

We will rely significantly on the funds received from our subsidiaries to meet our debt service obligations on the Notes, but our subsidiaries may not be able to distribute sufficient funds to us.

Although we are an operating company, a significant amount of our revenue is generated by our subsidiaries. For the year ended December 31, 2002, 21% of our net sales was generated by our subsidiaries. As a result, our ability to pay interest on the Notes and to satisfy our other debt service obligations will depend significantly on our receipt of dividends or other intercompany transfers of funds from our operating subsidiaries. The payment of dividends to us by our subsidiaries is contingent upon the earnings of those subsidiaries and subject to various business considerations as well as certain contractual provisions which may restrict the payment of dividends and distributions and the transfer of assets to us. See “Description of credit facilities and other indebtedness” and “Description of the notes—Certain covenants—Limitation on Restrictions on Distributions from Restricted Subsidiaries.” In the event of bankruptcy, liquidation or reorganization of our subsidiaries, claims of creditors of our subsidiaries will generally have priority as to the assets of such subsidiaries over our claims as the holder of the equity of our subsidiaries.

Your right to receive payments on the Notes is subordinated in right of payment to the prior payment in full of our and our subsidiaries’ senior indebtedness, including our credit facilities and the 2003 Notes, which means that if we become insolvent, our remaining assets may not be sufficient to pay amounts due on the Notes.

The payment of principal, premium, if any, and interest on, and any other amounts owing in respect of, the Notes is subordinated in right of payment to the prior payment in full of all of our existing and future senior indebtedness, including all amounts owing under our credit facilities and the 2003 Notes. In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding, our assets will be available to pay obligations on the Notes only after all of our senior indebtedness has been paid in full, and there may not be sufficient assets remaining to pay amounts due on all or any of the Notes. As of March 31, 2003, after giving effect to the issuance of the 2003 Notes and the use of the proceeds therefrom, the aggregate principal amount of our senior indebtedness would have been $470.5 million (which amount does not include the remaining availability of $88.1 million under our revolving credit facility after giving effect to outstanding letters of credit and current borrowing limitations under our indentures). The guarantees by our subsidiaries are unsecured senior subordinated obligations of theirs and subordinated in right of payment to all of their existing and future senior indebtedness, including all amounts owing under our credit facilities and the 2003 Notes. As of March 31, 2003, after giving effect to the issuance of the 2003 Notes and the use of the proceeds therefrom, there would have been no senior indebtedness of our subsidiary guarantors other than the guarantees under our credit facilities and the 2003 Notes.

Because each guarantor’s liability under its guarantee may be reduced to zero, avoided or released under certain circumstances, you may not receive any payments from some or all of the guarantors.

The holders of the Notes have the benefit of the full and unconditional guarantees of the guarantors. However, the guarantees by our subsidiary guarantors are limited to the maximum amount which the guarantors are permitted to guarantee under applicable law. As a result, a guarantor’s liability under its guarantee could be reduced to zero, depending upon the amount of other obligations of the guarantors. Further, under the circumstances discussed more fully below, a court under federal and state fraudulent conveyance and transfer statutes could void the obligations under the guarantee or further subordinate it to all other obligations of the guarantor. In addition, you will lose the benefit of a particular subsidiary

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guarantee if it is released under certain circumstances described under “Description of the notes—The Note guarantees.”

The Notes are structurally subordinated in right of payment to the indebtedness of those of our subsidiaries that are not guaranteeing the Notes and, if the guarantees are deemed unenforceable, to those of our guarantor subsidiaries, and the remaining assets of such subsidiaries may not be sufficient to make any payments on the Notes.

The Notes are effectively subordinated to all liabilities of our subsidiaries which are not guarantors. In addition, although the guarantees provide the holders of the Notes with a direct claim as a creditor against the assets of the subsidiary guarantors, the guarantees may not be enforceable as described in more detail below. If the guarantees by the subsidiary guarantors are not enforceable, the Notes would be effectively subordinated to all liabilities of the subsidiary guarantors, including trade payables. As a result of being effectively subordinated to the liabilities of a subsidiary, if there was a dissolution, bankruptcy, liquidation or reorganization of such subsidiary, the holders of the Notes would not receive any amounts with respect to the Notes until after the payment in full of the claims of creditors of such subsidiary.

Our subsidiaries that are not guarantors generated 15.4% of our net sales for the year ended December 31, 2002. As of December 31, 2002, our subsidiaries that are not guarantors accounted for 12.2% of our total assets and had total liabilities (excluding liabilities owed to us) of $57.1 million. As of March 31, 2003, after giving effect to the issuance of the 2003 Notes and the use of proceeds therefrom, our subsidiaries that are not guarantors would have had total liabilities (excluding liabilities owed to us) of $54.5 million and our subsidiaries that are guarantors would have had total liabilities (excluding liabilities owed to us and guarantees of our credit facilities, the Notes and the 2003 Notes) of $16.5 million.

Federal and state fraudulent transfer laws permit a court to void the Notes and the guarantees, and if that occurs, you may not receive any payments on the Notes.

Our issuance of the Notes and the issuance of the Guarantees by our subsidiary guarantors may be subject to review under federal and state fraudulent transfer and conveyance statutes. While the relevant laws may vary from state to state, under such laws the payment of consideration will be a fraudulent conveyance if (1) we paid the consideration with the intent of hindering, delaying or defrauding creditors or (2) we or any of our subsidiary guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for issuing either the Notes or a Guarantee, and, in the case of (2) only, one of the following is also true:

• we or any of our subsidiary guarantors were or was insolvent, or rendered insolvent, by reason of such transactions;

• paying the consideration left us or any of our subsidiary guarantors with an unreasonably small amount of capital to carry on the business; or

• we or any of our subsidiary guarantors intended to, or believed that we or it would, be unable to pay debts as they matured.

If a court were to find that the issuance of the Notes or a Guarantee was a fraudulent conveyance, the court could avoid the payment obligations under the Notes or such guarantee or further subordinate the Notes or such guarantee to presently existing and future indebtedness of ours or of such guarantor, or require the holders of the Notes to repay any amounts received with respect to the Notes or such guarantee. In the event of a finding that a fraudulent conveyance occurred, you may not receive any repayment on the Notes. Further, the avoidance of the Notes could result in an event of default with respect to our other debt and that of our subsidiaries, which could result in acceleration of such debt.

Generally, an entity would be considered insolvent if, at the time it incurred indebtedness:

• the sum of its debts was greater than the fair value of all its assets;

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• the present fair saleable value of its assets is less than the amount required to pay the probable liability on its existing debts and liabilities as they become due; or

• it can not pay its debts as they become due.

If we default under our senior secured credit facilities or the 2003 Notes, the lenders or holders could foreclose on the assets we have pledged to them, to the exclusion of you as the holders of the Notes.

Our obligations under the Notes are unsecured, but our obligations under the credit facilities and the 2003 Notes and each guarantor’s obligations under their guarantees are secured by a security interest in substantially all of our assets. If we are declared bankrupt or insolvent, or if we default under the credit facilities or the 2003 Notes, the lenders or holders, as the case may be, could declare all of the funds borrowed thereunder, together with accrued interest, immediately due and payable. If we were unable to repay such indebtedness, the lenders or holders, as the case may be, could foreclose on the pledged assets to the exclusion of holders of the Notes, even if an event of default exists under our indentures at such time. Furthermore, if the lenders or holders, as the case may be, foreclose and sell the equity interests in any subsidiary of ours that is a guarantor under the Notes, then that guarantor will be released from its guarantee of the Notes automatically and immediately upon such sale. See “Description of credit facilities and other indebtedness.”

An active trading market may not develop for the Notes, which may make the Notes illiquid and adversely affect the market price quoted for the Notes.

You cannot be sure that an active trading market will develop for the Notes. We do not intend to have the Notes listed on a national securities exchange. We have been advised by J.P. Morgan Securities Inc. that J.P. Morgan Securities Inc. currently intends to continue to make a market in the Notes. J.P. Morgan Securities Inc. is not obligated to do so, however, and any market-making activities with respect to the Notes may be discontinued at any time without notice. In addition, such market-making activity is subject to limits imposed by the Securities Act and the Securities Exchange Act of 1934. Because J.P. Morgan Securities Inc. is our affiliate, J.P. Morgan Securities Inc. is required to deliver a current “market-making” prospectus and otherwise comply with the registration requirements of the Securities Act in any secondary market sale of the Notes. Accordingly, the ability of J.P. Morgan Securities Inc. to make a market in the Notes may, in part, depend on our ability to maintain a current market-making prospectus. If we are unable to maintain a current market-making prospectus, J.P. Morgan Securities Inc. may be required to discontinue its market-making activities without notice.

Historically, the market for noninvestment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Notes. The market, if any, for the Notes may experience similar disruptions and any such disruptions may adversely affect the prices at which you may sell your Notes. If a trading market does not develop for the Notes or is not maintained, you may experience difficulty in reselling the Notes or you may be unable to sell them at all. If a market develops for the Notes, future trading prices of the Notes will depend on many factors, including, among other things, prevailing interest rates, our financial condition and results of operations, and the market for similar notes. Depending on these and other factors, the Notes may trade for less than what you paid for them.

Risks related to our business

A sudden increase in resin prices or the loss of a key resin supplier could lead to increased costs and lower profit margins.

We use large quantities of polyethylene, PVC, polypropylene and other resins in manufacturing our products. For the year ended December 31, 2002 and the three months ended March 31, 2003, resin costs comprised approximately 62% and 60%, respectively, of our total manufacturing costs. Significant increases in the price of resins would increase our costs, reduce our operating margins and impair our

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ability to service our debt unless we were able to pass all of the increase on to our customers. The price of resins is a function of, among other things, manufacturing capacity, demand, and the price of crude oil and natural gas feedstocks. Since the resins used by us are derived from petroleum and natural gas, the instability in the world markets for petroleum and natural gas could adversely affect the prices of our raw materials and their general availability. We may not be able to pass such increased costs on to customers. In addition, we rely on certain key suppliers of resin for most of our resin supply. Some of this resin has characteristics proprietary to the supplier. The loss of a key source of supply, our inability to obtain resin with desired proprietary characteristics, or a delay in shipments could adversely affect our revenues and profitability and force us to purchase resin in the open market at higher prices. We may not be able to make such open market purchases at prices that would allow us to remain competitive. See “Management’s discussion and analysis of financial condition and results of operations” and “Business—Raw materials.”

Over the past several months, we have experienced a period of extreme uncertainty with respect to resin supplies and prices. High crude oil and natural gas pricing, resulting in part from harsh winter weather conditions in the eastern United States and uncertainties regarding the situation with Iraq, have had a significant impact on the price and supply of resins. During the same period, many major suppliers of resin have announced price increases to cover their increases in feedstock costs. While the prices of our products generally fluctuate with the price of resins, certain of our customers have contracts that limit our ability to pass the full cost of higher resin pricing through to our customers immediately. Further, competitive conditions in our industry may make it difficult for us to sufficiently increase our selling prices for all customers to reflect the full impact of increases in raw material costs. If this period of high resin pricing continues, we may be unable to pass on the entire effect of these price increases to our customers, which would adversely affect our profitability and working capital. In addition, further increases in crude oil and natural gas prices could make it difficult for us to obtain an adequate supply of resin from manufacturers affected by these factors.

We operate in highly competitive markets and our customers may not continue to purchase our products, which could lead to our having reduced revenues and loss of market share.

The markets in which we operate are highly competitive on the basis of service, product quality, product innovation and price. Small and medium-sized manufacturers that compete primarily in regional markets service a large portion of the film and flexible packaging market, and there are relatively few large national manufacturers. In addition to competition from many smaller competitors, we face strong competition from a number of large film and flexible packaging companies. Some of our competitors are substantially larger, are more diversified, and have greater resources than we have, and, therefore, may have certain competitive advantages.

If we lose one or more of our major customers, our results of operations and our ability to service our indebtedness could be adversely affected.

Although no single customer accounted for more than 10% of our net sales for the year ended December 31, 2002, we are dependent upon a limited number of large customers with substantial purchasing power for a significant percentage of our sales. Our top ten customers accounted for approximately 27.6% of our net sales in 2002. Several of our largest customers satisfy some of their film requirements by manufacturing film themselves. The loss of one or more major customers, or a material reduction in sales to these customers as a result of competition from other film manufacturers, insourcing of film requirements or other factors, would have a material adverse effect on our results of operations and on our ability to service our indebtedness. See “Management’s discussion and analysis of financial condition and results of operations” and “Business—Products, markets and customers.”

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Our ongoing efforts to achieve cost savings may not improve our operating results.

We regularly evaluate our operations in order to identify potential cost savings. From time to time, we implement plant restructurings or other initiatives designed to improve the efficiency of our operations and reduce our costs. These initiatives may not result in cost savings, however, particularly if our estimates and assumptions relating to the anticipated cost savings prove to be incorrect. Further, even if a cost savings initiative is successful, we may not be able to improve our operating results as a result of other factors discussed in the prospectus, many of which are beyond our control, such as a reduction in the demand for our products or increases in raw material costs.

We may not be able to adequately protect our intellectual property, which could cause our revenues to decrease.

We rely on patents, trademarks and licenses to protect our intellectual property, which is significant to our business. We also rely on unpatented proprietary know-how, continuing technological innovation and other trade secrets to develop and maintain our competitive position. We routinely seek to protect our patents, trademarks and other intellectual property, but our precautions may not provide meaningful protection against competitors or protect the value of our trademarks. In addition to our own patents, trade secrets and proprietary know-how, we license from third parties the right to use some of their intellectual property. We routinely enter into confidentiality agreements to protect our trade secrets and proprietary know-how. However, these agreements may be breached, may not provide meaningful protection or may not contain adequate remedies for us if they are breached.

Future acquisitions may not be successfully integrated with our business and could cause our revenues to decrease, operating costs to increase or reduce cash flows, which in turn could adversely affect our ability to service our indebtedness.

We expect to continue to make acquisitions as opportunities arise within the constraints of our credit facilities, as amended. However, without the consent of the lenders under our credit facilities, we cannot make an acquisition under the terms of our credit facilities unless our leverage ratio will be equal to or less than 4.0 to 1.0 after the acquisition is completed. Our efforts to integrate businesses acquired in the future may not result in increased profits. Difficulties encountered in any transition and integration process for newly acquired companies could cause revenues to decrease, operating costs to increase or reduce cash flows, which in turn could adversely affect our ability to service our indebtedness.

Our operations outside of the United States are subject to additional currency exchange, political, investment and other risks that could hinder us from making our debt service payments, increase our operating costs and adversely affect our results of operations.

We operate facilities and sell products in several countries outside the United States. Our operations outside the United States include plants and sales offices in Mexico, Canada, Germany, Australia and Brazil. As a result, we are subject to risks associated with selling and operating in foreign countries which could have an adverse affect on our financial condition and results of operations, our operating costs and our ability to make payments on our debt obligations, including our ability to make payments on the Notes and certain borrowings under our credit facilities. These risks include devaluations and fluctuations in currency exchange rates, unstable political conditions, imposition of limitations on conversion of foreign currencies into U.S. dollars and remittance of dividends and other payments by foreign subsidiaries. The imposition or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries, hyperinflation in certain foreign countries, and restrictions on investments and other restrictions by foreign governments could also have a negative effect on our business and profitability.

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We are controlled by J.P. Morgan Partners, LLC and its interests as an equity holder may conflict with yours as a creditor.

Affiliates of J.P. Morgan Partners, LLC beneficially own approximately 55% of our outstanding common stock, 75% of our preferred stock warrants to purchase common stock and 59% of our outstanding preferred stock, subject to certain preemptive rights with respect to 10,000 shares of preferred stock issued on March 25, 2003. Subject to certain limitations contained in the stockholders’ agreement among us, our stockholders, and holders of our preferred stock warrants, J.P. Morgan Partners, LLC, through its affiliate, controls us. The interests of J.P. Morgan Partners, LLC may not in all cases be aligned with your interests as a holder of the Notes.

If we do not maintain good relationships with our employees, our business could be adversely affected by a loss of revenues, increased costs or reduced profitability.

Although we consider our current relations with our employees to be good, if major work disruptions were to occur, our business could be adversely affected by, for instance, a loss of revenues, increased costs or reduced profitability. As of March 31, 2003, we had approximately 3,250 employees, of which approximately 1,000 employees were subject to a total of 12 collective bargaining agreements that expire on various dates between February 19, 2004 and March 7, 2007. We have had one labor strike in the United States in our history, which occurred at our Chippewa Falls, Wisconsin plant in March 2000 and lasted approximately two weeks. In October 2001, we entered into a five year agreement with the union representing the approximately 150 employees at our Chippewa Falls, Wisconsin manufacturing plant. We also had a temporary work stoppage at our Australia facility in 2001 that lasted approximately 30 days.

The cost of complying with federal and state environmental laws could be significant and increase our operating costs.

Complying with existing and future environmental laws and regulations that affect our business could impose material costs and liabilities on us. Our manufacturing operations are subject to certain federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, the protection of the environment and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. In the ordinary course of business, we are subject to periodic environmental inspections and monitoring by governmental enforcement authorities. We could incur substantial costs, including fines and civil or criminal sanctions, as a result of actual or alleged violations of environmental laws. In addition, our production facilities require environmental permits that are subject to revocation, modification and renewal. Violations of environmental permits can also result in substantial fines and civil or criminal sanctions. The ultimate costs under environmental laws and the timing of such costs are difficult to predict and potentially significant expenditures could be required in order to comply with environmental laws that may be adopted or imposed in the future.

Risks related to our prior auditors

Arthur Andersen LLP, our former auditors, audited certain financial information included in this prospectus. In the event such financial information is later determined to contain false statements, you may be unable to recover damages from Arthur Andersen LLP.

Arthur Andersen LLP completed its audit of our financial statements as of December 31, 2001 and for the two years then ended and issued its report with respect to such financial statements on January 28, 2002. Subsequently, Arthur Andersen was convicted of obstruction of justice for activities relating to its previous work for Enron Corp.

In May 2002 both our audit committee and our board of directors approved the appointment of Ernst & Young LLP as our independent public accountants to audit our financial statements for fiscal year 2002. Ernst & Young replaced Arthur Andersen, which had served as our independent auditors since 1997. We

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had no disagreements required to be disclosed pursuant to Item 304 of Regulation S-K with Arthur Andersen on any matter of accounting principle or practice, financial statement disclosure or auditing scope or procedure. Arthur Andersen audited the financial statements that we include in this prospectus as of December 31, 2001 and 2000, and for each of the years in the two-year period ended December 31, 2001, as set forth in its report herein. We include these financial statements in reliance on the authority of Arthur Andersen as experts in giving said reports.

We have not been able to obtain, after reasonable efforts, the written consent of Arthur Andersen to the inclusion in this prospectus of its report with respect to the consolidated financial statements and financial statement schedule of Pliant Corporation included in this prospectus as of December 31, 2001 and for the two years then ended, as required by Section 7 of the Securities Act of 1933. Accordingly, we have dispensed with the requirement to file such consent in reliance upon Rule 437a of the Securities Act. Because Arthur Andersen has not consented to the inclusion of its report in this prospectus, you may have no effective remedy against Arthur Andersen under Section 11 of the Securities Act for any untrue statements of a material fact contained in the financial statements audited by Arthur Andersen, or any omissions to state a material fact required to be stated therein.

Arthur Andersen has stopped conducting business before the SEC and has limited assets available to satisfy the claims of creditors. As a result, you may be limited in your ability to recover damages from Arthur Andersen under federal or state law if it is later determined that there are false statements contained in this prospectus relating to or contained in financial data audited by Arthur Andersen.

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Disclosure regarding forward-looking statements

This prospectus includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, business trends and other information that is not historical information and, in particular, appear under the headings “Summary,” “Management’s discussion and analysis of financial condition and results of operations” and “Business.” When used in this prospectus, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements, including, without limitation, management’s examination of historical operating trends, are based upon our current expectations and various assumptions. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. But, management’s expectations, beliefs and projections may not result or be achieved.

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in this prospectus. Important factors that could cause our actual results to differ materially from the forward-looking statements we make in this prospectus are set forth in this prospectus, including under the heading “Risk factors.” As stated elsewhere in this prospectus, such risks, uncertainties and other important factors include, among others:

• general economic and business conditions, particularly an economic downturn;

• industry trends;

• increases in our leverage;

• interest rate increases;

• changes in our ownership structure;

• raw material costs and availability, particularly resin;

• competition;

• the loss of any of our major customers;

• changes in demand for our products;

• new technologies;

• changes in distribution channels or competitive conditions in the markets or countries where we operate;

• costs of integrating any future acquisitions;

• loss of our intellectual property rights;

• foreign currency fluctuations and devaluations and political instability in our foreign markets;

• changes in our business strategy or development plans;

• availability, terms and deployment of capital;

• availability of qualified personnel; and

• increases in the cost of compliance with laws and regulations, including environmental laws and regulations.

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There may be other factors that may cause our actual results to differ materially from the forward-looking statements.

All forward-looking statements attributable to us or persons acting on our behalf apply only as of the date of this prospectus and are expressly qualified in their entirety by the cautionary statements included in this prospectus. We undertake no obligation to publicly update or revise forward-looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events.

Use of proceeds

This prospectus is delivered in connection with the sale of the Notes by J.P. Morgan Securities Inc. in market-making transactions. We will not receive any of the proceeds from these transactions.

The net proceeds of approximately $204.7 million from the Notes and related warrants originally issued in 2000 were used to fund a portion of the recapitalization and related transactions. We used all of the net proceeds of approximately $98.8 million from the Notes originally issued in 2002 to repay indebtedness under our credit facilities, including a repayment of approximately $68.8 million on our revolving credit facility and a $30 million repayment on our term loans.

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Capitalization

The following table sets forth our capitalization as of March 31, 2003 on an actual basis and on an as adjusted basis to reflect the issuance of the 2003 Notes.

	March 31, 2003
	Actual			As adjusted
				(unaudited)
	(Dollars in millions)
Cash and cash equivalents(1)	$	4.5		$	40.6
Total debt:
Credit facilities
Revolving credit facility(2)	$	38.9		$	—
Tranche A facility and Mexico facility(3)		139.1			33.8
Tranche B facility(3)		245.5			185.8
13% Senior subordinated notes due 2010		311.9			311.9
11 1/8% Senior secured notes due 2009		—			250.0
Obligations under capital leases and other		.9			.9
Total debt		736.3			782.4
Redeemable preferred stock		167.0			167.0
Redeemable common stock		13.0			13.0
Stockholders’ deficit(4)		(284.6	)		(290.8	)
Total capitalization	$	631.7		$	671.6

(1) The as adjusted cash balance reflects the increase in cash from the issuance of the 2003 Notes after the repayment of the $38.9 million outstanding balance on our revolving credit facility at March 31, 2003 and the repayment of $165 million on our tranche A and tranche B facilities.

(2) The amount shown does not include $6.6 million of outstanding letters of credit that reduce available borrowings under our revolving credit facility. As of May 31, 2003, the outstanding borrowings under the revolving credit facility were $1.0 million. Amounts outstanding under the revolving credit facility vary on a daily basis.

(3) The as adjusted amounts outstanding under the tranche A facility and the tranche B facility reflect prepayments of term loans with a portion of the proceeds from the issuance of the 2003 Notes. Proposed tranche B payments of $22.8 million were rejected by tranche B lenders and applied to tranche A term loans. Accordingly, a total of $105.3 million was applied to tranche A term loans and $59.7 million was applied to tranche B term loans.

(4) The as adjusted stockholders’ deficit gives effect to the after tax write off of $6.2 million of debt issuance costs.

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Selected financial data

The following table sets forth selected financial data as of and for the fiscal years ended December 31, 1998, 1999, 2000, 2001 and 2002 and as of and for the three months ended March 31, 2002 and 2003. The selected financial data have been summarized from our consolidated financial statements and are qualified in their entirety by reference to, and should be read in conjunction with, such consolidated financial statements, “Capitalization” and “Management’s discussion and analysis of financial condition and results of operations.” The selected financial data as of and for the three months ended March 31, 2002 and 2003 have been derived from our unaudited consolidated financial statements. In the opinion of management, the unaudited information reflects all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of the results for those periods. Results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year or any future period.

	Years ended December 31,															Three months ended March 31,
	1998			1999			2000			2001			2002			2002			2003
																			(unaudited)
	(Dollars in millions)
Statement of operations data:
Net sales	$	681.1		$	813.7		$	843.8		$	840.4		$	879.2		$	210.1		$	240.5
Cost of sales		561.6			655.7			696.7			665.1			714.5			164.4			197.7
Gross profit		119.5			158.0			147.1			175.3			164.7			45.7			42.8
Total operating expenses(1)		70.1			82.0			132.7			101.1			136.6			24.7			28.8
Operating income		49.4			76.0			14.4			74.2			28.1			21.0			14.0
Interest expense(2)		(37.5	)		(44.0	)		(68.5	)		(76.0	)		(75.3	)		(16.9	)		(19.9	)
Loss on extinguishment of debt(3)		—			—			(18.7	)		—			—			—			—
Other income (expense), net		(0.8	)		0.4			0.3			6.5			2.3			0.4			0.6
Income (loss) before income taxes and discontinued operations		11.1			32.4			(72.5	)		4.7			(44.9	)		4.5			(5.3	)
Income tax expense (benefit)		8.6			14.1			(21.7	)		6.8			(1.5	)		1.9			2.0
Income (loss) before discontinued operations		2.5			18.3			(39.5	)		(2.1	)		(43.4	)		2.6			(7.3	)
Income from discontinued operations(4)		0.6			—			—			—			—			—			—
Gain on sale of discontinued operations(4)		5.2			—			—			—			—			—			—
Net income (loss)	$	8.3		$	18.3		$	(50.8	)	$	(2.1	)	$	(43.4	)	$	2.6		$	(7.3	)
Other financial data:
EBITDA(5)	$	81.5		$	111.4		$	35.5		$	127.7		$	77.3		$	32.7		$	25.8
Net cash provided by operating activities		45.5			51.4			60.3			30.3			43.6			11.9			(1.5	)
Net cash used in investing activities		(314.8	)		(46.0	)		(65.6	)		(87.3	)		(55.2	)		(10.5	)		(3.6	)
Net cash provided by financing activities		275.9			(16.7	)		0.3			55.0			12.4			(2.7	)		7.7
Depreciation and amortization		27.1			35.0			39.5			47.0			46.9			11.3			11.2
Restructuring and other costs(1)		4.9			2.5			19.4			(4.6	)		43.1			3.3			6.1
Non-cash stock-based compensation expense		—			0.8			2.6			7.0			—			—			—
Capital expenditures		52.1			35.7			65.6			56.4			49.2			10.5			3.6
Ratio of earnings to fixed charges(6)		1.3	x		1.7	x		—			1.1	x		—			1.3	x		—

	December 31,													March 31,
	1998		1999		2000			2001			2002			2002			2003
														(unaudited)			(unaudited)
	(Dollars in millions)
Balance sheet data (at period end):
Cash and cash equivalents	$	19.2	$	9.1	$	3.1		$	4.8		$	1.6		$	4.2		$	4.5
Working capital		93.4		103.8		57.6			58.4			45.8			81.2			56.7
Total assets		734.3		769.0		785.0			851.7			853.2			861.1			870.0
Total debt		524.9		510.4		687.4			713.3			736.4			710.4			736.3
Total liabilities		662.5		675.4		885.9			903.0			960.1			907.2			974.5
Redeemable preferred stock(7)		—		—		88.7			126.1			150.8			132.1			167.0
Redeemable common stock		1.2		2.9		16.5			16.8			13.0			16.8			13.0
Stockholders’ equity (deficit)		70.6		90.7		(206.0	)		(194.5	)		(270.9	)		(195.1	)		(284.6	)

(1) Total operating expenses for the three months ended March 31, 2003 include $6.1 million for restructuring and other costs. These costs include $2.8 million for plant closing costs related to the closure of our facilities in Merced, California and Shelbyville, Indiana, production rationalization costs for our plant in Toronto, Canada and the relocation costs of certain lines from our Merced plant and Fort Edward plant to other facilities. These costs

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also include $3.3 million related to the present value of future lease payments on two buildings that we do not currently occupy. In connection with the 2001 restructuring plan, we vacated and subleased these facilities in 2001. During the first quarter of 2003, the sublessees defaulted on the subleases. Total operating expenses for the three months ended March 31, 2002 include $3.3 million for restructuring and other costs. These costs primarily include costs of relocating production lines from the plants acquired and closed as a result of the acquisition of Uniplast Holdings, Inc.

Total operating expenses for 2002 include $43.1 million of restructuring and other costs, including $19.2 million related to the closure of our plant in Merced, California, a portion of our plant in Shelbyville, Indiana, a part of our plant in Toronto, Canada, one of our plants in Mexico, and our Fort Edward, New York facility (acquired as part of the Decora acquisition). In addition, these costs reflect $7.9 million for the costs of relocating several of our production lines related to plant closures and costs associated with production rationalizations at several plants. Total operating expenses for 2002 also include $7.4 million related to severance costs, including benefits for several company-wide workforce reduction programs that were completed in 2002. A $8.6 million charge for the impairment of goodwill on our Pliant International segment is also reflected in total operating expenses for 2002.

Total operating expenses for 2001 include $7.0 million of non-cash stock-based compensation expense, $3.0 million of restructuring and other costs, $4.0 million for expenses related to the relocation of our corporate headquarters, $6.0 million of fees and expenses relating to our supply chain cost initiative, and a $3.0 million increase in depreciation expenses relating primarily to the purchase of a new computer system. In addition, total operating expenses for 2001 include a credit for $7.6 million related to the reversal of the previously accrued charge for the closure of our Harrington plant. In 2001, we decided not to proceed with our previously announced closure of our Harrington plant. Total operating expenses for 2000 include $10.8 million of costs related to the recapitalization and related transactions, $10.8 million of fees and expenses relating to our supply chain cost initiative, $19.4 million of restructuring and other costs, $7.1 million of costs related to the relocation of our corporate headquarters and a reduction in force, and $2.6 million of non-cash stock-based compensation expense.

(2) After giving effect to the issuance of the 2003 Notes and the use of proceeds therefrom, we would have had interest expense of $95.2 million for the twelve months ended March 31, 2003. The estimated issuance costs of $10.0 million relating to the issuance of the 2003 Notes will be amortized to interest expense as a non-cash charge on an effective interest method basis until the maturity of the notes.

(3) In 2000, we refinanced most of our long-term debt and recorded a loss to write-off unamortized deferred debt issuance costs. In addition, during 2000, we recorded a loss related to our tender offer for our 9 ¹/8% senior subordinated notes due 2007.

(4) In 1998, we sold our entire interest in our foam products operations, which were operated exclusively in Europe. The financial position and results of operations of this separate business segment are reflected as discontinued operations for the applicable years presented.

(5) EBITDA reflects income before interest expense, income taxes, depreciation and amortization. We believe that EBITDA information enhances an investor’s understanding of our financial performance and our ability to satisfy principal and interest obligations with respect to our indebtedness and to utilize cash for other purposes. In addition, EBITDA is used internally by our management to measure operating performance. Although we believe EBITDA is most directly comparable to net income under U.S. generally accepted accounting principles, EBITDA does not represent and should not be considered as an alternative to net income as determined by U.S. generally accepted accounting principles and may not be comparable to other similarly titled measures of other companies. In addition, there may be contractual, legal, economic or other reasons which may prevent us from satisfying principal and interest obligations with respect to our indebtedness and may require us to allocate funds for other purposes. A reconciliation of EBITDA to net income as set forth in our consolidated statements of operations is as follows:

	Years ended December 31,													Three months ended March 31,
	1998		1999		2000			2001			2002			2002		2003
														(unaudited)		(unaudited)
	(Dollars in millions)
Net income (loss)	$	8.3	$	18.3	$	(50.8	)	$	(2.1	)	$	(43.4	)	$	2.6	$	(7.3	)
Adjustments:
Income tax expense (benefit)		8.6		14.1		(21.7	)		6.8			(1.5	)		1.9		2.0
Interest expense		37.5		44.0		68.5			76.0			75.3			16.9		19.9
Depreciation and amortization		27.1		35.0		39.5			47.0			46.9			11.3		11.2
EBITDA	$	81.5	$	111.4	$	35.5		$	127.7		$	77.3		$	32.7	$	25.8

(6) For purposes of this ratio, earnings consist of income before income taxes plus fixed charges. Fixed charges consist of (i) interest, whether expensed or capitalized, (ii) amortization of debt issuance costs and (iii) an allocation of one-third of the rental expense from operating leases, which we consider to be a reasonable approximation of the interest factor of operating lease payments. For the three months ended March 31, 2003, earnings were insufficient to cover fixed charges by approximately $5.3 million. In 2000 and 2002, earnings were insufficient to cover fixed charges by approximately $72.5 million and $44.9 million, respectively.

(7) The amount presented for March 31, 2003 includes proceeds of $141.0 million from the issuance of preferred stock in 2000, 2001 and 2003, plus the accrued and unpaid dividends of $55.9 million, less the unamortized discount due to detachable preferred stock warrants and unamortized issuance costs totaling $29.9 million.

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Management’s discussion and analysis of

financial condition and results of operations

The purpose of this section is to discuss and analyze our consolidated financial condition, liquidity and capital resources and results of operations. This analysis should be read in conjunction with the consolidated financial statements and notes which appear elsewhere in this prospectus. This section contains certain “forward-looking statements” within the meaning of federal securities laws that involve risks and uncertainties, including statements regarding our plans, objectives, goals, strategies and financial performance. Our actual results could differ materially from the results anticipated in these forward-looking statements as a result of factors set forth under “Disclosure regarding forward-looking statements” and “Risk factors” and elsewhere in this prospectus.

All references in this section to the consolidated financial statements or condensed consolidated financial statements and related notes included elsewhere in this prospectus refer to those of Pliant Corporation and its subsidiaries.

General

We generate our revenues, earnings and cash flows from the sale of film and flexible packaging products throughout the world. We manufacture these products at 26 facilities located in the United States, Australia, Brazil, Canada, Germany and Mexico. Our sales have grown primarily as a result of strategic acquisitions made over the past several years, increased levels of production at acquired facilities, return on capital expenditures and the overall growth in the market for film and flexible packaging products. In addition, as discussed below under “Acquisitions in 2002 and 2001,” we recently acquired a consumer products business that manufactures and sells products under the Con-Tact^® brand name.

Acquisitions in 2002 and 2001

In August 2002, we purchased substantially all of the assets and assumed certain liabilities of the business of Roll-O-Sheets Canada Limited (“Roll-O-Sheets”). The Roll-O-Sheets business consists of one plant in Barrie, Canada engaged in the conversion and sale of PVC and polyethylene film for the food industry. In addition, the business includes the distribution of purchased polyester film, polypropylene food trays and other food service products.

In May 2002, we acquired substantially all of the assets and assumed certain liabilities of Decora Industries, Inc. and its operating subsidiary, Decora Incorporated (collectively, “Decora”), a New York based manufacturer and reseller of printed, plastic films, including plastic films and other consumer products sold under the Con-Tact^® brand name. Our purchase of Decora’s assets was approved by the United States Bankruptcy Court. The initial purchase price was approximately $18 million. The purchase price was negotiated with the creditors committee and was paid in cash using borrowings from our existing revolving credit facility. The assets purchased consisted of one plant in Fort Edward, New York, and related equipment used by Decora primarily to print, laminate and convert films into adhesive shelf liner. We have substantially completed the process of closing the Decora plant in Fort Edward, New York and have moved the production to our facilities in Mexico and Danville, Kentucky. The final purchase price after adjustments totaled $23.2 million.

In July 2001, we acquired 100% of the outstanding stock of Uniplast Holdings, Inc. (“Uniplast”), a manufacturer of multi-layer packaging films, industrial films and cast-embossed films, with operations in the United States and Canada, for an initial purchase price of approximately $56.0 million in cash and equity. In connection with the acquisition of Uniplast, we announced a plan to close three of Uniplast’s six plants, move certain purchased assets to other locations and terminate certain of the sales, administration and technical employees of Uniplast. All three of these plants were closed in 2001 and sold in the first six months of 2002. The final purchase price after adjustments totaled $59.3 million.

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We expect to continue to make acquisitions as opportunities arise within the constraints of our credit facilities, as amended. However, without the consent of the lenders under our credit facilities, we cannot make an acquisition under the terms of our amended credit facilities unless our leverage ratio will be equal to or less than 4.0 to 1.0 after the acquisition is completed.

Critical accounting policies

In the ordinary course of business, we make a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of financial statements in conformity with generally accepted accounting principles. Actual results could differ significantly from those estimates under different assumptions and conditions. We believe the following discussion addresses our most critical accounting policies. These policies require management to exercise judgments that are often difficult, subjective and complex due to the necessity of estimating the effect of matters that are inherently uncertain.

Revenue recognition. Sales revenue is recognized when title transfers, the risks and rewards of ownership have been transferred to the customer, the price is fixed and determinable and collection of the related receivable is probable, which is generally at the time of shipment.

We have several rebate programs with certain of our customers and a cash discount program on accounts receivable. These costs are estimated at the time of sale and are reported as a reduction to sales revenue. Periodic adjustments are made as a part of our ongoing evaluation of all receivable related allowances.

Accounts receivable. We evaluate accounts receivable on a quarterly basis and review any significant customers with delinquent balances to determine future collectibility. We base our determinations on legal issues (such as bankruptcy status), past history, current financial and credit agency reports, and the experience of the credit representatives. We reserve accounts that we deem to be uncollectible in the quarter in which we make the determination. We maintain additional reserves based on our historical bad debt experience. Although there is a greater risk of uncollectibility in an economic downturn, we believe, based on past history and proven credit policies, that the net accounts receivable as of March 31, 2003 are of good quality.

Goodwill and other identifiable intangible assets. Goodwill associated with the excess purchase price over the fair value of assets acquired is currently not amortized. We have determined that certain of our trademarks have indefinite lives, and thus they are not amortized. This is in accordance with Statements of Financial Accounting Standards No. 142 effective for fiscal years beginning after December 15, 2001. Goodwill and trademarks are currently tested annually for impairment or more frequently if circumstances indicate that they may be impaired. Other identifiable intangible assets, such as customer lists, and other intangible assets are currently amortized on the straight-line method over their estimated useful lives. These assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may be less than the undiscounted cash flows.

Retirement plans. We value retirement plan assets and liabilities based on assumptions and actuarial valuations. Assumptions for the retirement plans are subject to the occurrence of future events, which are out of our control and could differ materially from the amounts currently reported.

Insurance. Our insurance for worker’s compensation and employee-related health care benefits are covered using high deductible insurance policies. A third-party administrator is used to process such claims. We require all worker’s compensation claims to be reported within 24 hours. As a result, we accrue our worker’s compensation liability based upon the claim reserves established by the third-party administrator each month. Our employee health insurance benefit liability is based on our historical claims experience rate. Our earnings would be impacted to the extent actual claims vary from historical experience. We review our accruals associated with the exposure to these liabilities for adequacy at the end of each reporting period.

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Deferred taxes. We record deferred tax assets and liabilities for the differences in the carrying amounts of assets and liabilities for financial and tax reporting purposes. Deferred tax assets include amounts for net operating loss, foreign tax credit and alternative minimum tax credit carryforwards. Valuation allowances are recorded for amounts that management believes are not recoverable in future periods.

Recent accounting pronouncements

In April 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 145, “Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” Under Statement 4, all gains and losses from extinguishment of debt were required to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. Upon adoption of Statement No. 145, gains and losses on the extinguishment of debt will no longer be classified as an extraordinary item and any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented that does not meet the criteria in Accounting Principles Board Opinion 30 for classification as an extraordinary item shall be reclassified. The provisions of this Statement related to the rescission of Statement 4 shall be applied in fiscal years beginning after May 15, 2002. We adopted this Statement on January 1, 2003 and reclassified amounts related to the extinguishment of debt in 2000 that were previously reported as an extraordinary item in the consolidated financial statements.

In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The primary difference between this Statement and Issue No. 94-3 relates to its requirements for recognition of a liability for a cost associated with an exit or disposal activity. This Statement requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002. We adopted this Statement on January 1, 2003. This Statement did not have any impact on our consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin (ARB) No. 51” (the “Interpretation”). The Interpretation introduces a new consolidation model which determines control and consolidation based on potential variability in gains and losses of the entity being evaluated for consolidation. The Interpretation applies to variable interest entities created after January 31, 2003, and to variable interest entities in which a company obtains an interest after that date. The Interpretation applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which a company holds a variable interest that it acquired before February 1, 2003. We are currently evaluating the impact of the Interpretation on our consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This standard is effective for financial instruments entered into or modified after May 31, 2003. We are currently evaluating the impact of this Statement on our consolidated financial statements.

Results of operations

The following table sets forth the amount of certain statement of operations items and such amounts as a percentage of net sales, for the periods indicated.

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	Three months ended March 31,								Year ended December 31,
	2003				2002				2002				2001					2000
	(Dollars in millions)
Net sales	$	240.5	100.0	%	$	210.1	100.0	%	$	879.2	100.0	%	$	840.4		100.0	%	$	843.8	100.0	%
Cost of sales		197.7	82.2			164.4	78.3			714.5	81.3			665.1		79.2			696.7	82.6
Gross profit		42.8	17.8			45.7	21.7			164.7	18.7			175.3		20.8			147.1	17.4
Operating expenses before restructuring and other costs		22.7	9.5			21.4	10.2			93.5	10.6			105.7		12.6			113.3	13.4
Restructuring and other costs		6.1	2.5			3.3	1.6			43.1	4.9			(4.6	)	(0.6	)		19.4	2.3
Total operating expenses		28.8	12.0			24.7	11.8			136.6	15.5			101.1		12.0			132.7	15.7
Operating income	$	14.0	5.8	%	$	21.0	9.9	%	$	28.1	3.2	%	$	74.2		8.8	%	$	14.4	1.7	%

Three months ended March 31, 2003 compared with the three months ended March 31, 2002

Net sales. Net sales increased by $30.4 million, or 14.5%, to $240.5 million for the first quarter of 2003 from $210.1 million for the three months ended March 31, 2002. The increase was primarily due to a 4.7% increase in sales volume and a 9.5% increase in our average selling price resulting primarily from increases in our raw material costs. See “—Operating segment review” below for a detailed discussion of sales volumes and selling prices by segment and division.

Gross profit. Gross profit decreased by $2.9 million, or 6.3%, to $42.8 million for the first quarter of 2003, from $45.7 million for the three months ended March 31, 2002. This decrease was primarily due to lower margins, partially offset by the effect of higher sales volumes. See “—Operating segment review” below for a detailed discussion of the margin variances by segment.

Total operating expenses before restructuring and other costs. Total operating expenses before restructuring and other costs increased $1.3 million, or 6.1%, to $22.7 million for the first quarter of 2003 from $21.4 million for the first quarter of 2002. This increase was principally due to the selling, general and administrative expenses of the Pliant Solutions segment, which was created from the acquisition of the assets of Decora Industries, Inc. and its operating subsidiary in May 2002.

Restructuring and other costs. Restructuring and other costs increased by $2.8 million to $6.1 million for the first quarter of 2003 from $3.3 million for the three months ended March 31, 2002. The costs for the first quarter of 2003 included an accrual for the present value of future lease payments on two buildings that we do not currently occupy, the exit costs related to the closure of our Merced facility and costs of moving production lines to our Toronto plant, costs related to the transition of production from the Fort Edward plant to our plant in Mexico and exit costs related to the closure of our Shelbyville plant.

The costs for the first quarter of 2002 included costs of relocating production lines from the plants acquired and closed as a result of the acquisition of Uniplast Holdings, Inc.

Operating income. Operating income decreased by $7.0 million, or 33.3%, to $14.0 million for the three months ended March 31, 2003 from $21.0 million for the three months ended March 31, 2002, due to the factors discussed above.

Interest expense. Interest expense increased by $3.0 million, or 17.8%, to $19.9 million for the three months ended March 31, 2003 from $16.9 million for the three months ended March 31, 2002. This increase was principally due to the higher interest costs resulting from the issuance of an additional $100 million of senior subordinated notes in April 2002.

Other income. Other income was $0.4 million for the three months ended March 31, 2003, which was comparable to the amount of other income for the three months ended March 31, 2002 of $0.6 million.

Income tax expense (benefit). Income tax expense for the three months ended March 31, 2003 was $2.0 million on pretax losses of $5.3 million as compared to $1.9 million on pretax income of $4.5 million for the same period in 2002. See Note 5 to the unaudited condensed consolidated financial statements included elsewhere in this prospectus for a discussion of the change in the effective income tax rate.

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Year ended December 31, 2002 compared with the year ended December 31, 2001

Net sales. Net sales increased by $38.8 million, or 4.6%, to $879.2 million for 2002 from $840.4 million for 2001. An increase in sales volume of 7.2% was partially offset by a decrease in selling prices of 2.4 cents per pound, or 2.4%. See “—Operating segment review” below for a detailed discussion of sales volumes and selling prices by segment and division.

Gross profit. Gross profit decreased by $10.6 million, or 6.0%, to $164.7 million for 2002 from $175.3 million for 2001. This decrease was primarily due to lower margins, partially offset by the effect of higher sales volumes. See “—Operating segment review” below for a detailed discussion of the margin variances by segment.

Operating expenses before restructuring and other costs. Operating expenses before restructuring and other costs decreased $12.2 million, or 11.5%, to $93.5 million for 2002 from $105.7 million for 2001. This decrease was due primarily to stock based compensation expenses of $7.0 million in 2001, and reductions in operating expenses due to cost reduction programs implemented in 2002. In addition, expenses for 2001 included $6.0 million related to fees and expenses incurred in connection with a company-wide supply chain cost initiative. These decreases were partially offset by additional selling and general expenses of $5.9 million related to the Decora acquisition (the Pliant Solutions segment) and a $2.6 million charge for bad debts in 2002.

Restructuring and other costs. Restructuring and other costs increased to $43.1 million for 2002 from a credit of $4.6 million in 2001. Restructuring and other costs for 2002 reflect approximately $13.2 million related to the partial closure of our Shelbyville, Indiana facility (including non-cash charges of $12.2 million related to impaired assets), $3.7 million related to the closure of our Merced, California facility (including non-cash charges of $0.7 million related to impaired assets), $3.9 million related to costs associated with moving production lines purchased in the Uniplast acquisition, approximately $7.4 million related to severance costs related to several company-wide workforce reduction programs implemented in 2002, approximately $2.3 million related to costs associated with moving production equipment from our Fort Edward, New York facility to our Mexico facility (including the costs associated with the closure of the Fort Edward plant acquired in the Decora acquisition), a non-cash charge of $1.0 million related to the impairment of certain manufacturing assets in our U.S. plants, a non-cash charge of $8.6 million related to the impairment of goodwill in our International segment and approximately $3.0 million related to other costs associated with re-alignment of production resources at several other plants. See Note 4 to the consolidated financial statements included elsewhere in this prospectus.

Due to our decision not to proceed with the previously announced closure of our Harrington plant, approximately $7.6 million of the costs accrued for plant closures in 2000 was credited to plant closing costs in 2001. This credit was partially offset by $3.0 million of plant closing costs incurred during the fourth quarter of 2001, related primarily to the relocation of production lines as a result of the Uniplast acquisition.

Operating income. Operating income decreased $46.1 million, or 62.1%, to $28.1 million for 2002 from $74.2 million for 2001 for the reasons discussed above.

Interest expense. Interest expense decreased $0.7 million, or 1%, to $75.3 million for 2002 from $76.0 million for 2001. The decrease in interest expense, which resulted from lower outstanding term loans, due to repayments, and lower interest rates applicable to our term debt and revolving credit facilities, due to a decrease in LIBOR, was partially offset by higher interest costs from the issuance of an additional $100 million of subordinated debt in April 2002.

Other income (expense). Other income decreased $4.2 million to $2.3 million in 2002 from $6.5 million for 2001. The decrease reflects an amount of other income for the 2001 period that was primarily due to the proceeds and assets received from a settlement with a potential customer in the second quarter of 2001.

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Income tax expense (benefit). In 2002 our income tax benefit was $1.5 million, compared to an income tax expense of $6.8 million in 2001. These amounts represent effective tax rates of (3.3)% and 143.8% for the years ended December 31, 2002 and 2001, respectively. The fluctuation in income tax expense (benefit) relates primarily to the fluctuation in our income (loss) before income taxes for the years presented. The fluctuation in the effective tax rate is principally the result of foreign tax rate differences, the provision for valuation allowances and the amortization of goodwill in 2001. These differences increase the effective tax rate in years in which we have pretax profit and decrease our effective tax rate in years in which we have pretax loss. Pretax loss in 2002 was $44.9 million as compared to pretax income of $4.7 million in 2001. As of December 31, 2002, our deferred tax assets totaled approximately $79.1 million, of which $46.2 million related to net operating loss carryforwards. Our deferred tax liabilities totaled approximately $84.0 million. Due to uncertainty regarding the timing of the future reversals of existing deferred tax liabilities we have recorded a valuation allowance of approximately $3.8 million to offset the deferred tax asset relating to the net operating loss carryforwards. Due to uncertainty regarding the realization of our foreign tax credit carryforwards, we have recorded a valuation allowance of approximately $7.0 million to offset all of our foreign tax credit carryforwards.

Year ended December 31, 2001 compared with the year ended December 31, 2000

Net sales. Net sales decreased by $3.4 million, or 0.4%, to $840.4 million for 2001 from $843.8 million for 2000. A decrease in selling prices of 6.0 cents per pound, or 5.9%, was partially offset by an increase in sales volume of 5.8%. See “—Operating segment review” below for a detailed discussion of sales volumes and selling prices by segment and division.

Gross profit. Gross profit increased by $28.2 million, or 19.2%, to $175.3 million for 2001 from $147.1 million for 2000. This increase was primarily due to the effect of higher sales volumes and improved margins. See “—Operating segment review” below for a detailed discussion of the margin variances by segment.

Operating expenses before restructuring and other costs. Operating expenses before restructuring and other costs decreased $7.6 million, or 6.7%, to $105.7 million for 2001 from $113.3 million for 2000. As a percentage of sales, our operating expenses were relatively high in both periods due to several unusual items in 2001 and 2000.

The unusual items in 2001 included:

• $7.0 million of non-cash stock compensation costs;

• $4.0 million related to the relocation of our corporate offices from Salt Lake City, Utah to Schaumburg, Illinois;

• $6.0 million related to fees and expenses incurred in connection with a company-wide supply chain cost initiative; and

• $3.0 million increase in depreciation expenses due primarily to new computer systems.

The unusual items in 2000 included:

• $10.8 million of costs related to the recapitalization;

• $10.8 million related to fees and expenses incurred in connection with a company-wide supply chain cost initiative;

• $7.1 million related to a company-wide work force reduction program; and

• $2.6 million of non-cash stock compensation costs.

Restructuring and other costs. Restructuring and other costs for 2001 consisted of a credit of $4.6 million as compared to restructuring and other expenses of $19.4 million in 2000. Due to our decision not to

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proceed with the previously announced closure of our Harrington plant, approximately $7.6 million of the costs accrued for plant closures in 2000 were credited to plant closing costs in 2001. This credit was partially offset by $3.0 million of plant closing costs incurred during the fourth quarter of 2001, related primarily to the relocation of production lines as a result of the Uniplast acquisition. The restructuring and other costs for 2000 included costs related to the closure of our facilities in Birmingham, Alabama and Dallas, Texas. In addition, the restructuring and other costs for 2000 included costs for the expected closure of our Harrington facility.

Operating income. Operating income increased $59.8 million to $74.2 million for 2001 from $14.4 million for 2000 for the reasons discussed above.

Interest expense. Interest expense increased by $7.5 million, or 11%, to $76.0 million for 2001 from $68.5 million for 2000. This increase was principally a result of the recapitalization in May 2000. The increased interest expense attributable to increased borrowings was partially offset by a reduction in LIBOR, which decreased the variable interest rate on our term debt.

Income tax expense (benefit). In 2001, our income tax expense was $6.8 million, compared to an income tax benefit of $21.7 million in 2000. These amounts represent effective tax rates of 143.8% and (30.0%) for the years ended December 31, 2001 and 2000, respectively. The fluctuation in income tax expense (benefit) relates primarily to the fluctuation in our income (loss) before income taxes for the years presented. The fluctuation in the effective tax rate is principally the result of foreign tax rate differences and amortization of goodwill, which are relatively fixed and therefore have a greater impact on the effective rate in years in which our pre-tax income or loss is relatively low. Pretax income in 2001 was $4.7 million as compared to a pre-tax loss of $72.5 million in 2000. As of December 31, 2001, our deferred tax assets totaled approximately $47.9 million of which $30.6 million related to net operating loss carryforwards. Our deferred tax liabilities totaled $69.6 million. Due to uncertainty regarding the realization of our foreign tax credit carryforwards, we have recorded a valuation allowance of approximately $1.9 million to offset all of our foreign tax credit carryforwards.

Operating segment review

General

Operating segments are components of our business for which separate financial information is available that is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and in assessing performance. We evaluate the performance of our operating segments based on net sales (excluding intercompany sales) and segment profit. The segment profit reflects income before discontinued operations, interest expense, income taxes, depreciation, amortization, restructuring and other costs and other non-cash charges. For more information on our operating segments, including a reconciliation of segment profit to income before taxes, see Note 14 to the consolidated financial statements and Note 8 to the unaudited condensed consolidated financial statements included elsewhere in this prospectus.

During the first quarter of 2003, we reorganized our operations under four operating segments. On May 7, 2003 we filed our quarterly report on Form 10-Q for the period ended March 31, 2003 reflecting four operating segments: Pliant U.S., Pliant Flexible Packaging, Pliant International and Pliant Solutions. Segment information with respect to 2002, 2001 and 2000 has been restated to reflect the operating segments as of March 31, 2003 for comparative purposes.

In April 2003, we combined our Pliant U.S. and Pliant Solutions segments into a single segment. Therefore, beginning with the second quarter of 2003 our operating segments for financial reporting purposes will be Pliant U.S. (including our current Pliant Solutions segment), Pliant Flexible Packaging and Pliant International.

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Three months ended March 31, 2003 compared with the three months ended March 31, 2002

Summary of segment information (in millions of dollars):

	Pliant U.S.		Pliant Flexible Packaging		Pliant International		Pliant Solutions			Unallocated Corporate Expenses			Total
Quarter ended March 31, 2003
Net sales	$	151.9	$	51.8	$	28.0	$	8.8		$	—		$	240.5
Segment profit	$	26.8	$	7.7	$	2.9	$	(0.9	)	$	(4.4	)	$	32.1
Quarter ended March 31, 2002
Net sales	$	132.9	$	48.7	$	28.5		—		$	—		$	210.1
Segment profit(1)	$	26.7	$	8.2	$	5.5		—		$	(4.4	)	$	36.0

(1) See Note 8 to the unaudited condensed consolidated financial statements included elsewhere in this prospectus for a reconciliation of segment profit to income before taxes.

Pliant U.S

Net sales. The net sales of our Pliant U.S. segment increased $19.0 million, or 14.3%, to $151.9 million for the first quarter of 2003 from $132.9 million for the first quarter of 2002. This increase was primarily due to a 5.1% increase in our sales volumes, and an increase in our average selling prices of 7.6 cents per pound, or 8.7%. The increase in sales volumes is discussed for each Pliant U.S. division below, and the increase in our average selling prices is discussed under “Segment profit,” below. Net sales in our Industrial Films division increased $11.1 million, or 30.6%, to $47.4 million for the first quarter of 2003 from $36.3 million for the first quarter of 2002. This increase was principally due to an increase in sales volumes of 7.0 million pounds, or 13%, and an increase in our average selling prices of 10.5 cents per pound, or 15.6%. The increase in sales volume was primarily the result of incremental sales from new stretch film production lines at our Lewisburg plant and an increase in demand in this market during the first quarter of 2003. Net sales in our Specialty Films division increased $6.8 million, or 16.5%, to $48.1 million for the first quarter of 2003 from $41.3 million for the first quarter of 2002. This increase was principally due to an increase in our sales volume of 4.7 million pounds, or 12.1%, and an increase in our average selling prices of 4.1 cents per pound, or 3.9%. The increase in sales volume was primarily the result of incremental sales from a new film line at our Washington, Georgia plant. Net sales in our Converter Films division increased $1.1 million, or 1.9%, to $56.4 million for the first quarter of 2003 from $55.3 million for the first quarter of 2002. This increase was principally due to an increase in our average selling prices of 8.4 cents per pound, or 9.1%, partially offset by the effect of lower sales volumes, which decreased 6.6%. The sales volumes decreased primarily as a result of the slowdown in the economy.

Segment profit. The Pliant U.S. segment profit was $26.8 million for the first quarter of 2003 as compared to $26.7 million for the first quarter of 2002. The increases in sales volumes discussed above were offset by lower gross margins. The decrease in gross margins was principally due to the fact that the higher selling prices discussed above were not sufficient to offset the increase in raw material prices. Our raw material costs for this segment increased 10.5 cents per pound, or 27.5%, for the first quarter of 2003 as compared to the first quarter of 2002.

Pliant Flexible Packaging

Net sales. The net sales of our Pliant Flexible Packaging segment increased $3.1 million, or 6.4%, to $51.8 million for the first quarter of 2003 from $48.7 million for the first quarter of 2002. This increase was principally due to an increase in our sales volumes of 3.3%, primarily due to incremental sales from a

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new printing press and a new extrusion line, and an increase in our average selling prices of 4.4 cents per pound, or 3.0%.

Segment profit. The Pliant Flexible Packaging segment profit decreased $0.5 million, or 6.1%, to $7.7 million for the first quarter of 2003 from $8.2 million for the first quarter of 2002. This decrease in segment profit was primarily due to a decrease in gross margins, which was partially offset by the effect of higher sales volumes discussed above. The decrease in gross margins was principally due to the fact that the higher selling prices discussed above were not sufficient to offset the increase in raw material prices. Our raw material costs for this segment increased 10.9 cents per pound, or 20.2%, for the first quarter of 2003 as compared to the first quarter of 2002.

Pliant International

Net sales. The net sales of our Pliant International segment decreased $0.5 million, or 1.8%, to $28.0 million for the first quarter of 2003 from $28.5 million for the first quarter of 2002. This decrease was principally due to a 7.1% decrease in our sales volume, partially offset by an increase in our average selling prices of 5.4 cents per pound, or 6.0%. Among other factors, our sales volumes were adversely affected by a reduction in sales of personal care films sold in Latin America.

Segment profit. The Pliant International segment profit decreased $2.6 million, to $2.9 million for the first quarter of 2003 from $5.5 million for the first quarter of 2002. The decrease was due principally to the decrease in sales volume and lower gross margins. The decrease in gross margins was principally due to the fact that the higher selling prices discussed above were not sufficient to offset the increase in raw material prices. Our raw material costs for this segment increased 9.9 cents per pound, for the first quarter of 2003 as compared to the first quarter of 2002.

Pliant Solutions

Our Pliant Solutions segment was created following the Decora acquisition in May 2002. Therefore, a discussion of results of operations for this segment as compared to the first quarter of 2002 is not presented.

Pliant Solutions had net sales of $8.8 million and a segment loss of $0.9 million for the first quarter of 2003.

Unallocated Corporate Expenses

Unallocated corporate expenses remained unchanged at $4.4 million for the three months ended March 31, 2003 and 2002.

Summary for years ended December 31, 2002, 2001 and 2000

Summary of segment information (in millions of dollars):

	Pliant U.S.		Pliant Flexible Packaging		Pliant International		Pliant Solutions		Unallocated Corporate Expenses			Total
Year ended December 31, 2002
Net sales	$	535.6	$	207.0	$	108.3	$	28.3	$	—		$	879.2
Segment profit		85.5		32.5		15.6		2.7		(14.7	)		121.6
Year ended December 31, 2001
Net sales	$	530.8	$	205.3	$	104.3		—	$	—		$	840.4
Segment profit		97.9		38.6		19.4		—		(14.1	)		141.8
Year ended December 31, 2000
Net sales	$	532.4	$	220.8	$	90.6		—	$	—		$	843.8
Segment profit(1)		82.8		27.6		17.1		—		(19.9	)		107.6

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(1) See Note 14 to the consolidated financial statements included elsewhere in this prospectus for a reconciliation of segment profit to income before taxes.

Year ended December 31, 2002 compared with the year ended December 31, 2001

Pliant U.S.

Net sales. The net sales of our Pliant U.S. segment increased $4.8 million, or 0.9%, to $535.6 million for 2002 from $530.8 million for 2001. This increase was primarily due to a 4.3% increase in our sales volumes, partially offset by a decrease in our average selling prices of 3.0 cents per pound, or 3.3%. The increase in sales volumes is discussed for each Pliant U.S. division, below, and the decrease in our average selling prices is discussed under “—Segment profit,” below.

Net sales in our Industrial Films division decreased $2.8 million, or 1.7%, to $158.7 million for 2002 from $161.5 million for 2001. This decrease was principally due to a decrease in our average selling prices of 5.2 cents per pound, or 6.8%, partially offset by a 5.4% increase in sales volumes. The increase in sales volume was primarily the result of incremental sales from new stretch film production lines at our Lewisburg plant. Net sales in our Specialty Films division decreased $2.8 million, or 1.8%, to $155.9 million for 2002 from $158.7 million for 2001. This decrease was principally due to a decrease in our average selling prices of 4.3 cents per pound, or 4.0%, partially offset by a 0.3% increase in sales volumes. Net sales in our Converter Films division increased $10.4 million, or 4.9%, to $221.0 million for 2002 from $210.6 million for 2001. This increase was principally due to an increase in our sales volumes of 6.0%, primarily as a result of the Uniplast acquisition in July 2001, partially offset by a decrease in our average selling prices of 1.0 cent per pound, or 1.0%.

Segment profit. The Pliant U.S. segment profit decreased $12.4 million, or 12.7%, to $85.5 million for 2002 from $97.9 million for 2001, primarily due to a decrease in gross margins. The decrease in gross margins was principally a result of lower selling prices, partially offset by the effect of the increase in sales volumes discussed above.

Our average raw material costs for 2002 as a whole were comparable to average raw material costs in 2001. However, there was a significant fluctuation in raw material costs during the two year period. Raw material costs were relatively high at the beginning of 2001 and declined throughout 2001 and the first quarter of 2002. Raw material costs sharply increased throughout the second and third quarters of 2002. As raw material costs declined in 2001, our average selling prices also declined to reflect lower raw material costs partially offset by a lag of contractual selling prices. As raw material costs began to sharply increase, lagging contractual prices and a competitive pricing environment resulted in a compression between our average selling prices and average raw material costs. The lagging contractual prices were the result of specific agreements with certain customers that in some cases delayed the implementation of price increases and decreases as raw material costs changed. As a result of these factors, our average selling prices continued to remain low during the second half of 2002 while our average raw material costs increased. A change in our sales mix toward lower margin products, in part resulting from the slowdown in the economy, also contributed to a decrease in our average selling prices. Segment profit was also adversely affected by a $2.6 million charge related to bad debts.

Pliant Flexible Packaging

Net sales. Net sales of our Flexible Packaging segment increased $1.7 million, or 0.8%, to $207.0 million for 2002 from $205.3 million for 2001. This increase was principally due to an increase in our sales volumes of 7.1%, primarily due to incremental sales from a new printing press, partially offset by a decrease in our average selling prices of 8.9 cents per pound, or 5.9%.

Segment Profit. The Pliant Flexible Packaging segment profit decreased $6.1 million, or 15.8%, to $32.5 million for 2002 from $38.6 million for 2001, primarily due to a decrease in gross margins. The decrease in gross margins was principally a result of lower selling prices, partially offset by the effect of the

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increase in sales volumes discussed above. See Pliant U.S. “—Segment profit” above for a discussion on the effect of raw material prices on segment profits.

Pliant International

Net sales. The net sales of our Pliant International segment increased $4.0 million, or 3.8%, to $108.3 million for 2002 from $104.3 million for 2001. This increase was principally due to a 13.9% increase in our sales volume, primarily due to the Uniplast acquisition in July 2001, partially offset by a decrease in our average selling prices of 9 cents per pound, or 8.9%. Among other factors, our average selling prices were adversely affected by a reduction in sales of our higher value personal care film sold in Mexico and Argentina, each of which has experienced economic turmoil.

Segment profit. The Pliant International segment profit decreased $3.8 million, or 19.6%, to $15.6 million for 2002 from $19.4 million for 2001. The decrease was due principally to lower gross margins as a result of lower selling prices as discussed above.

Pliant Solutions

Our Pliant Solutions segment was created in 2002 following the Decora acquisition. Therefore, a discussion of results of operations for this segment as compared to 2001 is not presented. Pliant Solutions had net sales of $28.3 million and segment profit of $2.7 million from the date of acquisition in May 2002 to December 31, 2002.

Unallocated Corporate Expenses

Unallocated corporate expenses increased $0.6 million, or 4.3%, to $14.7 million for 2002 from $14.1 million for 2001.

Year ended December 31, 2001 compared with the year ended December 31, 2000

Pliant U.S.

Net sales. The net sales of our Pliant U.S. segment decreased $1.6 million, or 0.3%, to $530.8 million for 2001 from $532.4 million for 2000. This decrease was primarily due to a decrease in our average selling prices of 5.0 cents per pound, or 5.2%, partially offset by an increase in our sales volumes of 5.2%. The increase in sales volumes is discussed for each Pliant U.S. division, below, and the decrease in our average selling prices is discussed under “—Segment profit,” below.

Net sales in our Industrial Films division increased $15.6 million, or 10.7%, to $161.5 million for 2001 from $145.9 million for 2000. This increase was principally due to a 16.9% increase in sales volumes partially offset by a decrease in our average selling prices of 4.2 cents per pound, or 5.3%. The increase in sales volume was primarily the result of increased sales of stretch film. Net sales in our Specialty Films division decreased $30.0 million, or 15.9%, to $158.7 million for 2001 from $188.7 million for 2000. This decrease was principally due to a decrease in sales volumes of 14.7% and a decrease in our average selling prices of 2.5 cents per pound, or 2.3%. The sales volumes decreased due to a significant reduction in sales at our Harrington plant, which was downsized in 2001, and a reduction in sales volume at our Washington plant due to a decrease in sales of our personal care films. Net sales in our Converter Films division increased $12.8 million, or 6.5%, to $210.6 million for 2001 from $197.8 million for 2000. This increase was principally due to an increase in our sales volumes of 10.6%, primarily as a result of the Uniplast acquisition in July 2001, partially offset by a decrease in our average selling prices of 3.7 cents per pound, or 3.7%.

Segment profit. The Pliant U.S. segment profit increased $15.1 million, or 18.2%, to $97.9 million for 2001 from $82.8 million for 2000. The increase was primarily due to the increase in sales volumes, discussed above, and an increase in gross margins. The increase in gross margins was principally a result of lower raw material prices that were only partially offset by lower selling prices during 2001.

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Pliant Flexible Packaging

Net sales. Net sales of our Flexible Packaging segment decreased $15.5 million, or 7.0%, to $205.3 million for 2001 from $220.8 million for 2000. This decrease was principally due to a decrease in sales volumes of 5.7% due to the closure of our Birmingham, Alabama plant, substantial downsizing of our Shelbyville, Indiana plant and a decrease in our average selling prices of 2.4 cents per pound, or 1.6%.

Segment profit. The Pliant Flexible Packaging segment profit increased $11.0 million, or 39.9%, to $38.6 million for 2001 from $27.6 million for 2000. The increase was primarily due to an increase in gross margins partially offset by the effect of lower sales volumes discussed above. The increase in gross margins was principally a result of lower raw material prices that were only partially offset by lower selling prices during 2001.

Pliant International

Net sales. The net sales of our Pliant International segment increased $13.7 million, or 15.1%, to $104.3 million for 2001 from $90.6 million for 2000. This increase was principally due to a 31.2% increase in our sales volume, primarily due to the Uniplast acquisition in July 2001, partially offset by a decrease in our average selling prices of 14.2 cents per pound, or 12.2%. Our average selling prices decreased due to a change in sales mix.

Segment profit The Pliant International segment profit increased $2.3 million, or 13.5%, to $19.4 million for 2001 from $17.1 million for 2000. The increase was due principally to the effect of higher sales volume discussed above, partially offset by lower gross margins as a result of lower selling prices discussed above.

Pliant Solutions

Our Pliant Solutions segment was created in 2002 following the Decora acquisition. Therefore, a discussion of results of operations for this segment is not presented.

Unallocated Corporate Expenses

Unallocated corporate expenses decreased $5.8 million, or 29.1%, to $14.1 million for 2001 from $19.9 million for 2000. Unallocated corporate expenses were relatively high in both periods due to several unusual items in 2001 and 2000. For a discussion of these items see “Year ended December 31, 2001 compared with the year ended December 31, 2000 – Operating expenses before restructuring and other costs.”

Liquidity and capital resources

Our principal sources of funds are cash generated by our operations and borrowings under our credit facilities. In addition, we have raised funds through the issuance of our senior subordinated notes and the sale of shares of our preferred stock.

Credit facilities

As amended, our credit facilities consist of:

• tranche A term loans in an aggregate principal amount of $9.6 million outstanding as of May 31, 2003;

• Mexico term loans in an aggregate principal amount of $24.2 million outstanding as of May 31, 2003;

• tranche B term loans in an aggregate principal amount of $185.8 million outstanding as of May 31, 2003; and

• revolving credit facility in an aggregate principal amount of up to $100 million.

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• Up to $30.0 million (plus an additional amount up to $40.0 million to support certain borrowings by our principal Mexican subsidiary) of the revolving credit facility is available in the form of letters of credit.

The interest rates under the revolving credit facility, the tranche A facility and the Mexico facility are, at our option, Adjusted LIBOR or ABR, plus a spread determined by reference to our leverage ratio. In accordance with the March 24, 2003 amendment to our credit facilities described below, the spread will not exceed 4.0% for Adjusted LIBOR or 3.0% for ABR. Adjusted LIBOR is the London inter-bank offered rate adjusted for statutory reserves. ABR is the alternate base rate, which is the higher of the lender’s prime rate or the federal funds effective rate plus 1/2 of 1%. The interest rates under the tranche B facility are, at our option, Adjusted LIBOR or ABR, plus a spread determined by reference to our leverage ratio. As amended, our credit facilities provide that the spread will not exceed 4.75% for Adjusted LIBOR or 3.75% for ABR. We may elect interest periods of one, two, three or six months for Adjusted LIBOR borrowings. The calculation of interest is on the basis of actual days elapsed in a year of 360 days (or 365 or 366 days, as the case may be, in the case of ABR loans based on the Prime Rate) and interest is payable at the end of each interest period and, in any event, at least every three months.

Compliance with financial covenants

Our credit facilities currently require us to maintain certain key financial ratios on a quarterly basis. These key ratios include a leverage ratio and an interest coverage ratio. Effective March 24, 2003, we entered into an amendment (the “Amendment”) of our credit facilities to, among other things, permit us to issue up to $50 million of our common stock, qualified preferred stock, warrants to acquire our common stock or qualified preferred stock, or any combination of our common stock, qualified preferred stock or warrants, or other capital contributions with respect to our common stock or qualified preferred stock. The Amendment also adjusted certain financial covenants, including the leverage and interest coverage ratios. As a condition to the effectiveness of the Amendment, we agreed to issue 10,000 shares of our Series A preferred stock and warrants to purchase 43,962 shares of our common stock to J.P. Morgan Partners (BHCA), L.P. (“J.P. Morgan Partners”), and J.P. Morgan Partners agreed to purchase such shares and warrants for $10 million. We completed this sale on March 25, 2003. All of the proceeds of this sale were used to reduce our term debt. In addition, the Amendment allows us to issue an additional $40 million of equity securities between March 25, 2003 and March 31, 2005 in order to obtain cash to reduce the revolving borrowings and/or term borrowings under our credit facilities. J.P. Morgan Partners is required to purchase up to $25 million of such additional equity securities to the extent necessary to enable us to meet our leverage ratio or the target senior debt leverage ratio specified in the Amendment at the end of any calendar quarter or fiscal year ending on or before December 31, 2004. Any such additional issuance of Series A preferred stock to J.P. Morgan Partners will also include warrants to purchase 4.3962 shares of our common stock for every $1,000 face amount of preferred stock issued. Our obligations to issue, and J.P. Morgan Partners’ obligation to purchase such equity securities are set forth in a Securities Purchase Agreement dated as of March 25, 2003. Generally, if we are required to issue any portion of such $25 million of equity securities under the Amendment with respect to any fiscal quarter in 2003, we must use 50% of the net proceeds from the issuance of any such equity securities to reduce our revolving borrowings, and 50% to reduce our term borrowings. If we are required to issue any such equity securities under the Amendment with respect to any fiscal quarter in 2004, we must use 100% of the net proceeds to reduce our term borrowings. The issuance of the remaining $15 million of equity securities is voluntary on our part, and neither J.P. Morgan Partners nor any other person is required to purchase such equity securities. We incurred an amendment fee of $2.2 million in connection with the Amendment. We also incurred approximately $0.5 million of legal and administrative expenses in connection with negotiating the Amendment and the issuance of 10,000 shares of Series A preferred stock and related warrants.

On May 22, 2003, we entered into an additional amendment to our credit facilities, which permitted us to issue $250 million of senior secured notes, as described below, and, among other things:

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• required the prepayment of revolving loans with the net proceeds received from the issuance of the senior secured notes until $75.0 million (or, if less, all) of the revolving loans were paid;

• required the prepayment of the tranche A term loans in an amount equal to 50% of the portion of such net proceeds not applied to the revolving loans and the prepayment of the tranche B term loans in an amount equal to 50% of the portion of such net proceeds not applied to the revolving loans (subject to the right of the tranche B term lenders to reject such prepayment, to the extent tranche A term loans remained, in which case such rejected prepayments were instead applied to the tranche A term loans); (A) with respect to the tranche A term loans, first, in direct order of maturities to reduce scheduled repayments of such loans through 2004, second, to reduce scheduled repayments of such loans ratably for 2005, and third, with the balance of such portion, if any, to reduce the remaining scheduled repayments of such loans ratably; and (B) with respect to the tranche B term loans, to reduce the remaining scheduled repayments of such loans ratably;

• added Uniplast Holdings Inc. and its United States subsidiaries as borrowers under our credit facilities for up to $9.4 million of loans;

• adjusted the terms pursuant to which J.P. Morgan Partners is required to purchase up to $25 million of additional equity securities to the extent necessary to enable us to meet certain leverage ratios;

• added a new financial covenant based on the ratio of indebtedness under the credit facilities and certain qualified receivables financings to consolidated EBITDA; and

• adjusted certain financial and negative covenants, including the leverage and interest coverage ratios.

We prepaid a total of $75.0 million of our revolving loans and $165 million of our term loans with the proceeds from the issuance of the 2003 Notes. Proposed tranche B payments of $22.8 million were rejected by tranche B lenders and applied to tranche A term loans. Accordingly, a total of $105.3 million was applied to tranche A term loans and $59.7 million was applied to tranche B term loans.

Based on our current earnings forecast, our cash flow forecast and the proceeds received from the sale of $10 million of Series A preferred stock, as described above, we believe that we will comply with the covenants contained in our credit facilities, as amended, during 2003. Further, J.P. Morgan Partners’ commitment to purchase additional equity securities will allow us to raise up to $25 million of additional funds, as described above, to the extent necessary to enable us to comply with the financial covenants if we do not meet our earnings and cash flow forecast. However, if our actual earnings and cash flow are significantly below expectations and we are unable to raise enough funds to maintain compliance with the financial covenants through the sale of equity securities to J.P. Morgan Partners, we may not be able to comply with our financial covenants. Absent a waiver or further amendment of our credit facilities, the failure to comply with our financial covenants would cause us to be in default under our credit facilities. Any such default would have a material adverse effect on our liquidity and financial condition.

We are required to make annual mandatory prepayments of the term loans under our credit facilities within 90 days following the end of each year in an amount equal to the amount by which 100% of excess cash flow for such year (or 50% of excess cash flow if our leverage ratio at the end of such year is less than or equal to 4.0 to 1.0) exceeds the aggregate amount of voluntary prepayments made since the last excess cash flow payment, subject to certain adjustments. In addition, the term loan facilities are subject to mandatory prepayments in an amount equal to (a) 100% of the net cash proceeds of equity and debt issuances by us or any of our restricted subsidiaries, and (b) 100% of the net cash proceeds of asset sales or other dispositions of property by us or any of our restricted subsidiaries, in each case subject to certain exceptions. See “Description of credit facilities and other indebtedness.”

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Senior secured notes

On May 30, 2003, we completed the sale of $250 million aggregate principal amount of 11 ¹/8% Senior Secured Notes Due 2009 (the “2003 Notes”). The 2003 Notes mature on September 1, 2009, and interest is payable on March 1 and September 1 of each year. The net proceeds from the sale of the 2003 Notes were used to repay borrowings under our credit facilities in accordance with the amendment to our credit facilities, described above. The 2003 Notes rank equally with our existing and future senior debt and rank senior to our existing and future subordinated indebtedness, including the Notes. The 2003 Notes are secured, on a second-priority lien basis, by a substantial portion of our assets. Due to this second-priority status, the 2003 Notes effectively rank junior to (1) our obligations under our credit facilities and any other existing and future obligations secured by a first-priority lien on the collateral securing the 2003 Notes to the extent of the value of such collateral, and (2) our obligations under our credit facilities and any other existing and future obligations that are secured by a lien on assets that are not part of the collateral securing the 2003 Notes, to the extent of the value of such assets. The 2003 Notes are guaranteed by some of our subsidiaries.

Prior to June 1, 2007, we may, on one or more occasions, redeem up to a maximum of 35% of the original aggregate principal amount of the 2003 Notes with the net cash proceeds of one or more equity offerings by us at a redemption price equal to 111.125% of the principal amount thereof, plus accrued and unpaid interest. Otherwise, we may not redeem the Notes prior to June 1, 2007. On or after that date, we may redeem some or all of the 2003 Notes at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest: 105.563% if redeemed prior to June 1, 2008; 102.781% if redeemed prior to June 1, 2009; and 100% if redeemed on or after June 1, 2009.

Senior subordinated notes

In 2000, we issued $220 million aggregate principal amount of 13% Senior Subordinated Notes due 2010. In 2002, we issued an additional $100 million of 13% Senior Subordinated Notes due 2010. The Notes mature on June 1, 2010, and interest on the Notes is payable on June 1 and December 1 of each year. The Notes are subordinated to all of our existing and future senior debt, rank equally with any future senior subordinated debt, and rank senior to any future subordinated debt. The Notes are guaranteed by some of our subsidiaries. The Notes are unsecured. Prior to June 1, 2003, we may, on one or more occasions, redeem up to a maximum of 35% of the original aggregate principal amount of the Notes with the net cash proceeds of one or more equity offerings by us at a redemption price equal to 113% of the principal amount thereof, plus accrued and unpaid interest. Otherwise, we may not redeem the Notes prior to June 1, 2005. On or after that date, we may redeem the Notes, in whole or in part, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest: 106.5% if redeemed prior to June 1, 2006; 104.333% if redeemed prior to June 1, 2007; 102.167% if redeemed prior to June 1, 2008; and 100% if redeemed on or after June 1, 2008. See “Description of the notes.”

Preferred stock

We have approximately $141 million of Series A Cumulative Exchangeable Redeemable Preferred Stock outstanding. The Series A preferred stock accrues dividends at the rate of 14% per annum; however, our board of directors has never declared or paid any dividends on the Series A preferred stock. Unpaid dividends accumulate and are added to the liquidation amount of the Series A preferred stock. After May 31, 2005 the annual dividend rate increases to 16% unless we pay dividends in cash. The dividend rate also increases to 16% if we fail to comply with certain of our obligations or upon certain events of bankruptcy. The Series A Preferred Stock is mandatorily redeemable on May 31, 2011. See Note 10 to the consolidated financial statements included elsewhere in this prospectus.

Net cash provided by operating activities

Net cash used in operating activities was $1.5 million for the three months ended March 31, 2003, a decrease of $13.4 million, as compared to net cash provided by operations of $11.9 million for the same

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period in 2002. This decrease was largely due to changes in working capital items, including increases in accounts receivable and inventory. Accounts receivable increased due to significantly higher sales volume in March 2003 and increases in selling prices for our products. Inventory increased principally due to the price increase for raw materials.

Net cash provided by operating activities was $43.6 million for the year ended December 31, 2002, an increase of $13.3 million, or 43.9%, from $30.3 million in 2001. The increase was primarily due to changes in working capital items, changes in restructuring and other costs and changes in operating earnings. Working capital improved principally due to lower accounts receivable at December 31, 2002, as compared to December 31, 2001, as a result of improved collections and lower sales volumes in 2002. In addition, other liabilities increased primarily due to the increase in accrued long-term pension liabilities.

Net cash used in investing activities

Net cash used in investing activities was $3.6 million for the three months ended March 31, 2003, as compared to $10.5 million for the same period in 2002, in each case for capital expenditures. Capital expenditures for the first quarter of 2003 were principally for ongoing maintenance. Capital expenditures in the first quarter of 2002 were primarily for expansion projects as well as ongoing maintenance costs.

Net cash used in investing activities was $55.2 million for the year ended December 31, 2002, compared to $87.3 million for the same period in 2001. Capital expenditures were $49.2 million and $56.4 million for the years ended December 31, 2002 and 2001, respectively. Capital expenditures in both periods were primarily for major expansion projects in all of our product lines, costs for upgrading our information systems, and for company-wide maintenance projects. We received $17.1 million and $7.9 million as part of sale-leaseback transactions of newly-acquired machinery and equipment in 2002 and 2001, respectively. In addition, we invested $23.2 million consisting of investments in the Decora and Roll-O-Sheets acquisitions and additional adjustments to the Uniplast acquisition in 2002 and invested $38.8 million in cash in the Uniplast acquisition in 2001.

Net cash provided by financing activities

Net cash provided by financing activities was $7.7 million for the three months ended March 31, 2003, as compared to net cash used in financing activities of $2.7 million for the three months ended March 31, 2002. The activity for the first quarter of 2003 includes the net proceeds (after financing fees and expenses) from the issuance of $10 million of Series A preferred stock and warrants and the use of these proceeds to repay term debt. We paid $2.2 million in financing fees for a related amendment to our credit facilities and the issuance of the Series A preferred stock and warrants. The activity for both periods also includes scheduled principal payments on our term loans and borrowings and repayments under our revolving credit facility.

Net cash provided by financing activities was $12.4 million in 2002, as compared with $55.0 million in 2001. The 2002 activity represents principally the net proceeds from the issuance of $100 million of 13% Senior Subordinated Notes due 2010, partially offset by repayments of term debt and revolving debt under our credit facilities. The activity in 2001 represents the proceeds of $31.0 million from the issuance of shares of preferred stock and preferred stock warrants used to fund the Uniplast acquisition and scheduled repayments of term debt, net of borrowings and repayments under our revolving credit facility.

Liquidity

As of March 31, 2003, we had approximately $56.7 million of working capital. As of March 31, 2003, we had approximately $54.5 million available for borrowings under our $100.0 million revolving credit facility, with outstanding borrowings of approximately $38.9 million and approximately $6.6 million of letters of credit issued under our revolving credit facility. Our outstanding borrowings under our revolving credit facility fluctuate significantly during each quarter as a result of the timing of payments

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for raw materials, capital and interest, as well as the timing of customer collections. The outstanding balance of our revolving credit facility had a peak balance of $81.2 million during the quarter ended March 31, 2003. We may borrow amounts under the revolving credit facility upon satisfaction of certain customary conditions including compliance with our indentures. As of May 31, 2003, we had approximately $87.1 million available for borrowings under our revolving credit facility and $1.0 million of borrowings outstanding thereunder. As of December 31, 2002, the debt under our credit facilities and our senior subordinated notes bore interest at a weighted average rate of 9.5%, including the effect of interest rate derivative agreements.

As of March 31, 2003, we had approximately $4.5 million in cash and cash equivalents. A portion of this amount was held by our foreign subsidiaries. Repatriation tax rates may limit our ability to access cash and cash equivalents generated by our foreign operations for use in our U.S. operations, including to pay principal, premium and interest on the outstanding borrowings.

We expect that our total capital expenditures will be approximately $20 to $30 million in each of 2003 and 2004. These expenditures will consist primarily of ongoing maintenance capital expenditures.

The following table sets forth our total contractual cash obligations as of March 31, 2003 and after giving effect to the issuance of the 2003 Notes and the use of proceeds therefrom:

	Payments Due by Period
Contractual Cash Obligations	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
Long-term debt (including capital lease obligations)	$	782,399	$	304	$	25,596	$	128,424	$	628,075
Operating leases		65,902		13,215		22,686		16,198		13,803
Redeemable preferred stock		167,046		—		—		—		167,046
Total contractual cash obligations	$	1,015,347	$	13,519	$	48,282	$	144,622	$	808,924

After giving effect to payments made through June 1, 2003, our estimated debt service for the remainder of 2003 is approximately $59.6 million, consisting solely of interest payments. Although our outstanding preferred stock accrues dividends, these dividends are only paid if declared. We do not expect to declare any dividends on our preferred stock for the foreseeable future.

The credit facilities and the indentures relating to the Notes and the 2003 Notes impose certain restrictions on us, including restrictions on our ability to incur indebtedness, pay dividends, make investments, grant liens, sell our assets and engage in certain other activities. In addition, the credit facilities require us to maintain certain financial ratios.

The interest expense and scheduled principal payments on our borrowings affect our future liquidity requirements. We expect that cash flows from operating activities and available borrowings under our revolving credit facility of $100 million will provide sufficient cash flow to operate our business, to make expected capital expenditures and to meet foreseeable liquidity requirements. As discussed above, we have a commitment from J.P. Morgan Partners to purchase up to an additional $25 million of equity securities if necessary to maintain our financial covenants under our credit facilities. However, any proceeds from the issuance of any such equity securities must be used to repay amounts outstanding under our credit facilities as described above.

Changes in raw material costs can significantly affect the amount of cash provided by our operating activities, which can affect our liquidity requirements. Over the past several months, we have experienced a period of extreme uncertainty with respect to resin supplies and prices. High crude oil and natural gas pricing, resulting in part from harsh winter weather conditions in the eastern United States and uncertainties regarding the situation with Iraq have had a significant impact on the price and supply of resins. During the same period, many major suppliers of resin have announced price increases to cover their increases in feedstock costs. While the prices of our products generally fluctuate with the prices of

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resins, certain of our customers have contracts that limit our ability to pass the full cost of higher resin pricing through to our customers immediately. Further, competitive conditions in our industry may make it difficult for us to sufficiently increase our selling prices for all customers to reflect the full impact of increases in raw material costs. If this period of high resin pricing continues, we may be unable to pass on the entire effect of the price increases to our customers, which would adversely affect our profitability and working capital. In addition, further increases in crude oil and natural gas prices could make it difficult for us to obtain an adequate supply of resin from manufacturers affected by these factors.

If (a) we are not able to increase prices to cover historical and future raw materials cost increases, (b) we are unable to obtain adequate supply of resin, (c) volume growth does not continue as expected, or (d) we experience any significant negative effects to our business, we may not have sufficient cash flow to operate our business, make expected capital expenditures or meet foreseeable liquidity requirements. Any such event would have a material adverse effect on our liquidity and financial condition.

Other Developments

On June 10, 2002, we entered into a separation agreement with Richard P. Durham, our former Chairman and Chief Executive Officer. As of the date of the separation agreement, Mr. Durham owned 28,289 shares of common stock, 12,083 performance-vested shares, 2,417 time-vested shares, warrants to purchase 1,250.48 shares of common stock and 1,232 shares of preferred stock of Pliant. All of Mr. Durham’s time-vested shares and 2,416 of Mr. Durham’s performance-vested shares had vested as of the date of the separation agreement. Pursuant to the separation agreement, Mr. Durham agreed to convert an outstanding promissory note issued as payment for a portion of his shares into two promissory notes. The first note (the “Vested Secured Note”), in the principal amount of $2,430,798, relates to Mr. Durham’s time-vested shares and the vested portion of his performance-vested shares. The second note (the “Non-Vested Secured Note”), in the principal amount of $4,862,099, related to the 9,667 performance-vested shares which had not vested as of the date of the separation agreement. In addition to these notes, Mr. Durham had an additional outstanding promissory note (the “Additional Note”), with an outstanding balance of $1,637,974 at the date of his resignation, relating to a portion of the shares of common stock held by Mr. Durham. In accordance with the separation agreement, we repurchased and cancelled Mr. Durham’s 9,667 unvested shares in exchange for cancellation of the Non-Vested Secured Note on October 3, 2002.

The separation agreement preserved a put option established by Mr. Durham’s employment agreement with respect to his shares. For purposes of this put option, the separation agreement provides that the price per share to be paid by us is $483.13 with respect to common stock, $483.13 less any exercise price with respect to warrants, and the liquidation preference with respect to preferred stock. On July 9, 2002, Mr. Durham exercised his put option with respect to 28,289 shares of common stock, 1,232 shares of preferred stock and warrants to purchase 1,250.48 shares of common stock. Mr. Durham’s put option is subject to any financing or other restrictive covenants to which we are subject at the time of the proposed repurchase. Restrictive covenants under our credit facilities limit the number of shares we can currently repurchase from Mr. Durham. On October 3, 2002, as permitted by the covenants contained in our credit facilities, we purchased 8,204 shares from Mr. Durham for a purchase price of $3,963,599 less the outstanding amount of the Additional Note, which was cancelled. In December 2002 we purchased an additional 1,885 shares of common stock from Mr. Durham for an aggregate purchase price of approximately $910,700. As of December 31, 2002, our total remaining purchase obligation to Mr. Durham was approximately $10,623,097, excluding accrued preferred dividends. We are limited by our credit facilities to a maximum purchase from Mr. Durham of $5,000,000 of shares in 2003, which purchase may only be made if we meet certain leverage ratios. In connection with Mr. Durham’s resignation as Chairman and Chief Executive Officer, Jack E. Knott II was appointed our Chief Executive Officer. Mr. Timothy J. Walsh, a director since May 31, 2000, and a Partner of J.P. Morgan Partners, LLC, was appointed as the non-executive Chairman of the Board of Directors. Mr. Durham continues to

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serve as a member of our Board of Directors as a designee of The Christena Karen H. Durham Trust, which holds 158,917 shares, or approximately 27.5%, of our outstanding common stock.

During 2001, we completed the transition of our corporate headquarters from Salt Lake City, Utah to Schaumburg, Illinois, and we made certain changes in our management. During the first quarter of 2001, we incurred non-cash stock-based compensation expense of approximately $7.0 million as a result of certain modifications to our senior management employment arrangements with two executive officers.

Quantitative and qualitative disclosures about market risk

We are exposed to various interest rate and resin price risks that arise in the normal course of business. We enter into interest rate collar and swap agreements to manage interest rate market risks and commodity collar agreements to manage resin market risks. However, significant increases in interest rates or the price of resins could adversely affect our operating margins, results of operations and ability to service our indebtedness.

We finance our operations with borrowings comprised primarily of variable rate indebtedness. Market risk arises from changes in interest rates. Based on amounts outstanding as of March 31, 2003, an increase of 1% in interest rates payable on our variable rate indebtedness would increase our annual interest expense by approximately $2.2 million, after accounting for the effect of our interest rate hedge agreements. We have six interest rate derivative agreements with financial institutions that would reduce the impact of changes in interest rates on our floating-rate, long-term debt. These agreements include interest rate cap agreements, interest rate swap agreements and an interest rate collar agreement. These agreements have a notional amount of $358.0 million and expire from December 31, 2003 through January 18, 2005. See Note 6 to the consolidated financial statements included elsewhere in this prospectus.

Our raw material costs are comprised primarily of resins. Our resin costs comprised approximately 62% of our total manufacturing costs in 2002 and approximately 60% of our total manufacturing costs for the three months ended March 31, 2003. Market risk arises from changes in resin costs. Based upon our results of operations for the year ended December 31, 2002, an increase in our cost of raw materials of $0.01 per pound would have increased our costs of sales and our net loss by approximately $8.8 million, assuming we were unable to pass any of this cost increase through to our customers. Although the average selling prices of our products generally increase or decrease as the cost of resins increases or decreases, the impact of a change in resin prices is more immediately reflected in our raw material costs than in our selling prices. From time to time we enter into commodity collar agreements to manage resin market risks. At March 31, 2003, we did not have any commodity collar agreements outstanding.

Fluctuations in exchange rates may also adversely affect our financial results. The functional currencies for our foreign subsidiaries are the local currency. As a result, certain of our assets and liabilities, including certain bank accounts, accounts receivable and accounts payable, exist in non U.S. dollar-denominated currencies, which are sensitive to foreign currency exchange rate fluctuations.

We enter into certain transactions denominated in foreign currencies but, because of the relatively small size of each individual currency exposure, we do not employ hedging techniques designed to mitigate foreign currency exposures. Gains and losses from these transactions as of March 31, 2003 have been immaterial and are reflected in the results of operations.

We are exposed to credit losses in the event of nonperformance by the counterparty to a financial instrument to which we are a party. We anticipate, however, that each of the counterparties to the financial instruments to which we are a party will be able to fully satisfy its obligations under the contract.

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Business

General

Pliant Corporation, with 2002 revenues of approximately $879 million, is one of North America’s leading manufacturers of value-added films and flexible packaging for food, personal care, medical, agricultural and industrial applications. We offer some of the most diverse product lines in the film industry and have achieved leading positions in many of these product lines. We operate 26 manufacturing and research and development facilities worldwide and we currently have approximately 1.0 billion pounds of annual production capacity.

We were founded in 1992. We have combined strategic acquisitions, internal growth, product innovation and operational improvements to grow our business from net sales of $447.7 million in 1997 to $879.2 million in 2002. We have acquired and integrated numerous strategic film and flexible packaging operations since 1992.

Recapitalization

On May 31, 2000, we consummated a recapitalization pursuant to an agreement dated March 31, 2000 among us, our then existing stockholders and Southwest Industrial Films, LLC, an affiliate of J.P. Morgan Partners, LLC, whereby Southwest Industrial Films acquired majority control of our common stock. The total consideration paid in the recapitalization was approximately $1.1 billion, including transaction costs. Pursuant to the recapitalization agreement:

• we redeemed all of the shares of our common stock held by Jon M. Huntsman, our founder, then majority stockholder and then Chairman of the Board;

• Southwest Industrial Films purchased approximately one-half of the shares of our common stock held collectively by The Christena Karen H. Durham Trust and by members of our current and former senior management;

• Southwest Industrial Films and certain other institutional investors purchased shares of common stock directly from us;

• the trust and the management investors at that time retained or “rolled-over” approximately one-half of the shares of our common stock collectively owned by them prior to the recapitalization; and

• we issued to Southwest Industrial Films and to certain other institutional investors a new series of senior cumulative exchangeable redeemable preferred stock and detachable warrants for our common stock.

In connection with the recapitalization, we restructured our indebtedness. We refinanced all amounts outstanding under our then existing credit facility and replaced it with amended and restated secured credit facilities.

Controlling shareholder

J.P. Morgan Partners (BHCA), L.P. and its affiliates own approximately 55% of our outstanding common stock, 75% of our preferred stock warrants to purchase common stock and 59% of our outstanding preferred stock, subject to certain preemptive rights with respect to 10,000 shares of preferred stock issued on March 25, 2003. J.P. Morgan Partners (BHCA), L.P. and its affiliates have invested a total of approximately $238.0 million in our common and preferred stock (including warrants). J.P. Morgan Partners, LLC serves as investment advisor to J.P. Morgan Partners (BHCA), L.P. J.P. Morgan Partners, LLC is the private equity group of J.P. Morgan Chase & Co., which is one of the largest financial holding companies in the United States. J.P. Morgan Partners, LLC is a global private equity organization, with over $25 billion under management. J.P. Morgan Partners, LLC has closed over 1,000 individual

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transactions since its inception in 1984 and has more than 150 investment professionals in eight offices throughout the world.

Recent acquisitions

In August 2002, we purchased substantially all of the assets and assumed certain liabilities of the business of Roll-O-Sheets Canada Limited. The Roll-O-Sheets business consists of one plant in Barrie, Canada engaged in the conversion and sale of PVC and polyethylene film for the food industry. In addition, the business includes the distribution of purchased polyester film and polypropylene food trays and other food service products.

In May 2002, we acquired substantially all of the assets and assumed certain liabilities of Decora Industries, Inc. and its operating subsidiary, Decora Incorporated (collectively, “Decora”), a New York based manufacturer and marketer of adhesive and non-adhesive decorative and surface coverings, including plastic films and other consumer products sold under the Con-Tact^® brand name. The initial purchase price was approximately $18 million. The assets purchased consisted of one plant in Fort Edward, New York, and related equipment used by Decora primarily to print, laminate and convert films into adhesive shelf liner. In addition, we accrued certain liabilities related to acquisition costs and expenses related to the relocation of the production facility, including severance payments to terminated employees. The final purchase price after adjustments totaled $23.2 million.

In July 2001, we acquired 100% of the outstanding stock of Uniplast Holdings, Inc., a manufacturer of multi-layer packaging films, industrial films and cast-embossed films, with operations in the United States and Canada, for an initial purchase price of approximately $56.0 million in cash and equity. In addition, we accrued certain liabilities related to acquisition costs and expenses related to the relocation of the production facility including severance payments to terminated employees. The final purchase price after adjustments totaled $59.3 million.

Products, markets and customers

Our products are sold into numerous markets for a variety of end uses. Operating segments are components of our business for which separate financial information is available that is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and in assessing performance. During the first quarter of 2003, we reorganized our operations under four operating segments: Pliant U.S., Pliant Flexible Packaging, Pliant International and Pliant Solutions and our financial information contained in this prospectus is presented on that basis. In April 2003, we combined our Pliant U.S. and Pliant Solutions segments into a single segment. Therefore, beginning with the second quarter of 2003 our operating segments for financial reporting purposes will be Pliant U.S. (including our current Pliant Solutions segment), Pliant Flexible Packaging and Pliant International. For more information on our operating segments and geographic information, see Note 14 to the consolidated financial statements included elsewhere in this prospectus.

Pliant U.S.

Our Pliant U.S. segment manufactures and sells films and other flexible packaging products primarily in the United States. Our Pliant U.S. segment accounted for 61.0%, 63.2% and 63.1% of our net sales in 2002, 2001 and 2000, respectively. The principal products of our Pliant U.S. segment include personal care and medical films, converter films, agricultural films, stretch films and PVC films.

Personal Care and Medical Films. We are a leading producer of personal care films used in disposable diapers, feminine care products and adult incontinence products. Personal care films must meet diverse and highly technical specifications. We are also a specialized manufacturer of medical films. Our medical films are used in disposable surgical drapes and gowns. We also produce protective packaging for medical supplies, such as disposable syringes and intravenous fluid bags.

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Converter Films. We are North America’s largest producer of converter films. Converter films are sold to converters of flexible packaging who laminate them to foil, paper or other films, and/or print them, and ultimately fabricate them into the final flexible packaging product. Our converter films are a key component in a wide variety of flexible packaging products. Generally, our converter films add value by providing the final packaging product with specific performance characteristics.

Agricultural Films. We are a leading manufacturer of polyethylene mulch films that are sold to fruit and vegetable growers and to nursery operators. Our mulch films are used extensively in North America and Latin America. Commercial growers of crops like peppers, tomatoes, cucumbers and strawberries are the primary consumers of our mulch films. We are one of North America’s two largest producers of mulch films.

Stretch Films. Our stretch films are used to bundle, unitize and protect palletized loads during shipping and storage. Stretch films continue to replace more traditional packaging, such as corrugated boxes and metal strapping, because of stretch films’ lower cost, higher strength, and ease of use. We are North America’s fourth largest producer of stretch films.

PVC Films. Our PVC films are used by supermarkets, delicatessens and restaurants to wrap meat, cheese and produce. PVC films are preferred in these applications because of their clarity, elasticity and cling. We also produce PVC films for laundry and dry cleaning bags. Finally, we produce PVC films that are repackaged by us and other companies in smaller cutterbox rolls for sale in retail markets in North America, Latin America and Asia. We are the third largest producer of PVC films in North America.

The following table presents the net sales, excluding intercompany sales, contributed by the primary divisions in our Pliant U.S. segment. The Industrial Films division includes our stretch films and PVC films product categories. The Specialty Films division includes the majority of the sales from our personal care and medical films categories, as well as the sales from our agricultural films category and sales from our facility in Newport News, Virginia, which conducts a majority of our research and development. The Converter Films division consists of our converter films product category and some sales from our personal care and medical films product categories.

Net sales, excluding intercompany sales (dollars in millions):

	2002		2001		2000
Industrial Films	$	158.7	$	161.5	$	145.9
Specialty Films		155.9		158.7		188.7
Converter Films		221.0		210.6		197.8
Total Pliant U.S.	$	535.6	$	530.8	$	532.4

Pliant Flexible Packaging

Our Pliant Flexible Packaging segment manufactures and sells printed film and packaging products primarily in the Unites States. Our Pliant Flexible Packaging segment accounted for 23.5%, 24.4% and 26.2% of our net sales in 2002, 2001 and 2000, respectively. The principal products of our Pliant Flexible Packaging segment include printed products and barrier films.

Printed Products. Our printed products include printed rollstock, bags and sheets used to package food, consumer goods and personal care products. Printed bags or rollstock are sold to bakeries, fresh and frozen food processors, manufacturers of personal care products, textile manufacturers and other dry goods processors. We are the leading manufacturer of films used for frozen foods packaging in North America. In addition, we are the second largest manufacturer of films for the bread and bakery goods market in North America.

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Barrier Films. We manufacture a variety of barrier films, primarily for food packaging. We are North America’s second largest producer of films for cookie, cracker and cereal box liners. We are also a leading manufacturer of barrier films for liners in multi-wall pet food bags, frozen baked goods and dry mix packaging.

Pliant International

Our Pliant International segment manufactures and sells films and other flexible packaging products. We have manufacturing operations located in Australia, Brazil, Canada, Germany and Mexico. These operations service Australia, Southeast Asia, Latin America, Canada, Europe and Mexico. In addition, our operation in Mexico provides the film for our Pliant Solutions segment. Our Pliant International segment accounted for 12.3%, 12.4% and 10.7% of our net sales in 2002, 2001 and 2000, respectively. The principal products of our Pliant International segment vary depending on the particular country or region.

Mexico

Our facility in Mexico produces a variety of films and flexible packaging products. These products are sold primarily in Mexico, although we have a few customers in other Latin American countries. Our facility in Mexico manufactures personal care films, printed products and barrier films. We also sell stretch films and PVC films manufactured by our U.S. plants in Mexico and the Latin America region.

Personal Care Films. We believe we are a leading supplier of personal care films in Mexico. We produce both printed and unprinted films for use in disposable diapers, feminine care products and adult incontinence products.

Printed Products. Our facility in Mexico produces printed rollstock, bags and sheets used to package food and consumer products.

Barrier Films. We manufacture co-extruded barrier films in our Mexico facility. These films are used for cookie, cracker and cereal box liners.

Stretch and Shrink Films. We believe we are a leading supplier of stretch and shrink films in Mexico. Stretch films are used to bundle, unitize and protect palletized loads during shipment and storage. These stretch films are manufactured by our U.S. plants. Shrink film is produced in our Mexican operations as well as our U.S. plants for sale into this region.

PVC Films. We also sell PVC films in Mexico. Like our stretch films, our PVC films are manufactured by our U.S. plants and shipped to customers in Mexico.

Germany

Our facility in Germany produces PVC films primarily for sale throughout Europe. We are a leading producer of PVC films in Europe, where our films are sold primarily to supermarkets and processors of red meat and poultry. In Southern Europe, we also sell our PVC films to produce suppliers.

Australia

Our facility in Australia produces PVC films primarily for sale in Australia, New Zealand and Southeast Asia. In this region, we sell our PVC films primarily to supermarkets, delicatessens and restaurants to wrap meat, cheese and produce. We also sell PVC films to converters that rewind and slit the PVC films for use in retail cutter boxes.

Canada

We are a leading supplier of converter films in Canada. We manufacture converter films at both our Canadian facilities and our U.S. facilities for sale in Canada. In Canada, we sell our converter films primarily to converters of flexible packaging, distributors and end users.

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Pliant Solutions

Our Pliant Solutions segment consists primarily of the consumer products business we acquired from Decora in May 2002. Net sales of the Pliant Solutions segment since the acquisition date accounted for 3.2% of our net sales in 2002. Our Pliant Solutions segment markets and distributes decorative and surface coverings, including self-adhesive and non-adhesive coverings, primarily in the United States and Canada. We market these consumer products primarily under the Con-Tact^® brand name, which is considered to be the most recognized brand of consumer decorative and surface coverings.

Decorative and surface coverings are manufactured through the conversion of various films into consumer packaged goods. These products are sold by retailers to consumers for a wide range of applications, including shelf-lining, decorative accenting, glass covering, surface repair, resurfacing and arts and crafts projects. Product lines currently marketed by our Pliant Solutions segment under the Con-Tact^® brand name include multipurpose decorative coverings, Shelf Liner^™, Grip Liner^™ and glass coverings. Consumers purchase these products based upon their ease of application, design, durability and price.

We believe we are the largest provider of decorative and surface coverings in the United States, which we attribute to the strength of our Con-Tact^® brand name. In North America, we sell our Con-Tact^® brand products primarily to retailers, including mass merchants, home centers, specialty stores, grocery stores, and drug stores.

Sales and marketing

Because of our broad range of product offerings and customers, our sales and marketing efforts are generally specific to a particular product, customer or geographic region. We market in various ways, depending on both the customer and the product. However, most of our salespeople are dedicated to a specific product line and sometimes to specific customers.

The majority of our films are sold by our own direct sales force. These salespeople are supported by customer service and technical specialists assigned to each salesperson, and in some cases, to specific customers. In addition, certain of our personal care and barrier films, and all of our agricultural films are sold through brokers in the United States. Most of our printed products are sold domestically through brokers. National grocery chains and some smaller customer accounts are serviced by our own direct sales force.

Our stretch films and PVC films are generally sold to distributors, although we also sell stretch films directly to large national accounts. We have an independent contract sales force that sells our stretch films to national and regional distributors. Our PVC films are sold by our own sales force to regional and national distributors, directly to national grocery chains, and directly to converters, who repackage the film into cutterbox rolls for sale in retail markets.

No single customer accounted for more than 10% of our net sales for the year ended December 31, 2002.

Manufacturing

During the past three fiscal years, excluding acquisitions, we have invested a total of $171.3 million to expand, upgrade and maintain our asset base and information systems. With 26 plants, we are often able to allocate lines to specific products. Our multiple manufacturing sites and varied production capabilities also allow us to offer multiple plant service to our national customers. Generally, our manufacturing plants operate 24 hours a day, seven days a week.

We manufacture our film products using both blown and cast extrusion processes. In each process, thermoplastic resin pellets are combined with other resins, plasticizers or modifiers in a controlled, high-temperature, pressurized process to create films with specific performance characteristics. Blown film is produced by extruding molten resin through a circular die and chilled air ring to form a bubble. In the cast film process, molten resin is extruded through a horizontal die onto a chill roll, where the film is quickly

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cooled. These two basic film manufacturing processes produce films with uniquely different performance characteristics. Cast films are generally clearer, softer and more uniform in thickness. Blown films offer enhanced physical properties, such as increased tear and puncture resistance and better barrier protection.

We also produce a significant amount of printed films and bags. We employ both flexographic and rotogravure printing equipment in our printing operations.

Technology and research and development

We believe our technology base and research and development support provide critical support to our business and customers. Our research and development group provides the latest resin and extrusion technology to our manufacturing facilities and allows us to test new resins and process technologies. Our technical center in Newport News, Virginia has a pilot plant that allows the technical center to run commercial “scale-ups” for new products. We are able to use our broad product offerings and technology to transfer technological innovations from one market to another.

Our technical representatives often work with customers to help them develop new, more competitive products. This allows us to enhance our relationships with these customers by providing the technical service needed to support commercialization of new products and by helping them to improve operational efficiency and quality throughout a product’s life cycle.

We spent $8.1 million, $9.8 million and $8.6 million on research and development in 2002, 2001 and 2000, respectively, before giving effect to revenues from pilot plant sales.

Intellectual property rights

Patents, trademarks and licenses are significant to our business. We have patent protection on many of our products and processes, and we regularly apply for new patents on significant product and process developments. We have registered trademarks on many of our products. We also rely on unpatented proprietary know-how, continuing technological innovation and other trade secrets to develop and maintain our competitive position. In addition to our own patents, trade secrets and proprietary know-how, we license from third parties the right to use some of their intellectual property. Although we constantly seek to protect our patents, trademarks and other intellectual property, our precautions may not provide meaningful protection against competitors and the value of our trademarks could be diluted.

Raw materials

Polyethylene, PVC, polypropylene and other resins and additives constitute the major raw materials for our products. We purchase most of our resin from major oil companies and petrochemical companies in North America. For the year ended December 31, 2002, resin costs comprised approximately 62% of our total manufacturing costs. The price of resins is a function of, among other things, manufacturing capacity, demand, and the price of crude oil and natural gas feedstocks. Resin shortages or significant increases in the price of resin could have a significant adverse effect on our business.

Over the past several months, we have experienced a period of extreme uncertainty with respect to resin supplies and prices. High crude oil and natural gas pricing, resulting in part from harsh winter weather conditions in the eastern United States and uncertainties regarding the situation with Iraq, have had a significant impact on the price and supply of resins. During the same period, many major suppliers of resin have announced price increases to cover their increases in feedstock costs. While the prices of our products generally fluctuate with the price of resins, certain of our customers have contracts that limit our ability to pass the full cost of higher resin pricing through to our customers immediately. Further, competitive conditions in our industry may make it difficult for us to sufficiently increase our selling prices for all customers to reflect the full impact of increases in raw material costs. If this period of high resin pricing continues, we may be unable to pass on the entire effect of the price increases to our customers, which would adversely affect our profitability and working capital. In addition, further

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increases in crude oil and natural gas prices could make it difficult for us to obtain an adequate supply of resin from manufacturers affected by these factors.

Employees

As of March 31, 2003, we had approximately 3,250 employees, of which approximately 1,000 employees were subject to a total of 12 collective bargaining agreements that expire on various dates between February 19, 2004 and March 7, 2007. We consider our current relations with our employees to be good. However, if major work disruptions were to occur, our business could be adversely affected.

Properties

Our principal executive offices are located at 1475 Woodfield Road, Suite 700, Schaumburg, Illinois 60173. We own most of the improved real property and other assets used in our operations. We lease all or part of seven of the sites at which we have manufacturing operations. We also lease warehouse and office space at various locations. We consider the condition of our plants, warehouses and other properties and the other assets owned or leased by us to be generally good.

In an effort to maximize the efficiency of our facilities, we closed and disposed of a number of facilities in 2000, 2001 and 2002, including certain facilities acquired in connection with recent acquisitions. Production from these facilities was moved in large part to plants that were not operating at capacity. During 2000, we closed a facility in Dallas, Texas. In 2001, we closed a facility in Birmingham, Alabama, two facilities in Palmer, Massachusetts, a facility in Columbus, Indiana and a part of our facility in Toronto, Canada. During 2003, we are continuing a process to consolidate our two plants in Mexico. In addition, during the fourth quarter of 2002 we substantially completed the closure of our facility in Merced, California and a portion of our plant in Shelbyville, Indiana. The remaining portion of the Shelbyville, Indiana plant continues to operate as part of the Alliant joint venture. Alliant is a joint venture between us and Supreme Plastics Ltd., a company based in the United Kingdom. Alliant manufactures and sells recloseable zipper products. We have also substantially completed the process of closing a facility in Fort Edward, New York, which was acquired as part of the Decora acquisition, and have moved the production to our facilities in Mexico and Danville, Kentucky.

We have an annual film production capacity of approximately one billion pounds. Our principal manufacturing plants are listed below. Unless otherwise indicated, we own each of these properties.

Location	Products
Pliant U.S.
Barrie, Canada*	PVC and polyethylene films
Burrillville, Rhode Island	Converter films
Calhoun, Georgia	PVC films
Chippewa Falls, Wisconsin	Converter and personal care films
Dalton, Georgia	Converter, barrier and custom films
Danville, Kentucky	Stretch and converter films
Deerfield, Massachusetts	Converter films
Harrington, Delaware	Personal care, medical and converter films
Lewisburg, Tennessee	Stretch films
McAlester, Oklahoma	Personal care, medical and converter films
Newport News, Virginia	Research facility and pilot plant
Shelbyville, Indiana	Reclosable zipper products
Toronto, Canada	PVC films
Washington, Georgia	Personal care, medical and agricultural films

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Pliant Flexible Packaging
Bloomington, Indiana*	Barrier and custom films
Kent, Washington	Printed bags and rollstock
Langley, British Columbia*	Printed bags and rollstock
Macedon, New York+	Personal care films, printed bags and rollstock
Odon, Indiana*	Barrier and custom films
Pliant International
Mexico City, Mexico*	Barrier and personal care films, printed bags and rollstock
Orillia, Canada (two plants)	Converter films
Phillipsburg, Germany	PVC films
Porte Allegra, Brazil	Personal care bags
Preston, Australia*	PVC films
Pliant Solutions
Danville, Kentucky*	Packaging and distribution

* Indicates a leased building.

+ Indicates a building that is approximately 95% owned and 5% leased.

Environmental matters

Our operations are subject to environmental laws in the United States and abroad, including those described below. Our capital and operating budgets include costs and expenses associated with complying with these laws, including the acquisition, maintenance and repair of pollution control equipment, and routine measures to prevent, contain and clean up spills of materials that occur in the ordinary course of our business. In addition, our production facilities require environmental permits that are subject to revocation, modification and renewal. We believe that we are in substantial compliance with environmental laws and our environmental permit requirements, and that the costs and expenses associated with such compliance are not material to our business. However, additional operating costs and capital expenditures could be incurred if, for example, additional or more stringent requirements relevant to our operations are promulgated.

From time to time, contaminants from current or historical operations have been detected at some of our present and former sites, principally in connection with the removal or closure of underground storage tanks. The cost to remediate these sites has not been material, and we are not currently aware that any of our facility locations have material outstanding claims or obligations relating to contamination issues.

Competition

The markets in which we operate are highly competitive on the basis of service, product quality, product innovation and price. Small and medium-sized manufacturers that compete primarily in regional markets service a large portion of the film and flexible packaging market, and there are relatively few large national manufacturers. In addition to competition from many smaller competitors, we face strong competition from a number of large film and flexible packaging companies. Some of our competitors are substantially larger, are more diversified, and have greater resources than we have, and, therefore, may have certain competitive advantages.

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Legal proceedings

On November 19, 2001, S.C. Johnson & Son, Inc. and S.C. Johnson Home Storage, Inc. (collectively, “S.C. Johnson”) filed a complaint against us in the U.S. District Court for the District of Michigan, Northern Division (Case No. 01-CV-10343-BC). The complaint alleges misappropriation of proprietary trade secret information relating to certain componentry used in the manufacture of reclosable “slider” bags. We counterclaimed alleging that S.C. Johnson misappropriated certain of our trade secrets relating to the extrusion of flange zipper and unitizing robotics. Both the S.C. Johnson complaint and our counterclaim seek damages and injunctive and declaratory relief. We intend to resist S.C. Johnson’s claims and to pursue our counterclaim vigorously. We do not believe this proceeding will have a material adverse affect on our financial condition or results of operations.

On February 26, 2003, former employees of our Fort Edward, New York manufacturing facility, which we acquired as part of the Decora acquisition, named us as defendants in a complaint filed in the Supreme Court of the State of New York, County of Washington (Index No. 4417E). We received service of this complaint on April 2, 2003. The complaint alleges claims against us for conspiracy to defraud and breach of contract arising out of our court-approved purchase of the assets of Decora Industries, Inc. and Decora, Incorporated. Plaintiffs’ complaint seeks compensatory and punitive damages and a declaratory judgment nullifying severance agreements for lack of consideration and economic duress. We intend to resist the plaintiffs’ claims vigorously. We do not believe this proceeding will have a material adverse affect on our financial condition or results of operations.

We are involved in other litigation matters from time to time in the ordinary course of our business. In our opinion, none of such litigation is material to our financial condition or results of operations.

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Management

Certain information about our executive officers and directors is presented in the table below. Pursuant to the stockholders’ agreement among us, the holders of our common stock and the holders of warrants to purchase our common stock, our board of directors currently consists of seven members, four of whom are designated by our institutional common stockholders and warrantholders, two of whom are designated by the The Christena Karen H. Durham Trust, or the Trust, and one of whom is appointed by our board of directors and must be a member of our senior management.

Name	Age	Position
Jack E. Knott II	49	Chief Executive Officer and Director
Brian E. Johnson	48	Executive Vice President and Chief Financial Officer
Stanley B. Bikulege	39	Executive Vice President and President, Pliant U.S.
Elise H. Scroggs	41	Executive Vice President and President, Pliant International
Len Azzaro	53	Executive Vice President and President, Flexible Packaging
Douglas W. Bengtson	55	Executive Vice President, Procurement and Strategic Sourcing
Timothy J. Walsh	40	Chairman of the Board and Director
Richard P. Durham	39	Director
Donald J. Hofmann, Jr.	45	Director
John M. B. O’Connor	49	Director
Edward A. Lapekas.	60	Director
Albert (Pat) MacMillan.	59	Director

Jack E. Knott II became our Chief Executive Officer in June 2002 and was our President from March 2001 through June 2002. Mr. Knott also served as our Chief Operating Officer from September 1, 1997 through June 2002. From September 1997 through March 2001, Mr. Knott also served as an Executive Vice President. Prior to joining us, Mr. Knott was a member of the board of directors of Rexene Corporation and held the positions of Executive Vice President of Rexene Corporation and President of Rexene Products. Mr. Knott served in various capacities at Rexene from 1985 to 1997, including Executive Vice President and President, Rexene Products, and Executive Vice President and President of CT Film, a division of Rexene Corporation. Prior to joining Rexene Corporation, Mr. Knott worked for American National Can. Mr. Knott received a B.S. degree in Chemical Engineering and an M.B.A. degree from the University of Wisconsin. Mr. Knott is currently chairman of the Flexible Packaging Association. Pursuant to the stockholders’ agreement, Mr. Knott is the board of directors’ appointee to the board from our senior management.

Brian E. Johnson became our Executive Vice President and Chief Financial Officer on July 17, 2001. Mr. Johnson joined Pliant in April 2001 as Senior Vice President and Chief Financial Officer. Prior to joining us, Mr. Johnson was Vice President and Chief Financial Officer of Geneer Corporation. His former positions include Executive Vice President at Lawson Mardon Packaging and Vice President and General Manager of Sengewald USA Inc. Mr. Johnson received a B.S. degree in Finance from the University of Illinois and an M.B.A. degree from the Kellogg School of Management at Northwestern University.

Stanley B. Bikulege became Executive Vice President and President, Pliant U.S. in June 2002. Mr. Bikulege served as Executive Vice President Operations from July 2001 through June 2002. Mr.

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Bikulege’s prior positions with Pliant include Senior Vice President and General Manager, Industrial Films Division; Vice President, Stretch Films; General Manager-Castflex; Managing Director-Europe; Managing Director PVC Films-Europe; Director of Manufacturing; and Plant Manager. Prior to joining us in 1992, Mr. Bikulege held numerous positions in Goodyear Tire and Rubber Company’s Films Division. Mr. Bikulege received a B.S. degree in Chemical Engineering from Youngstown State University and an M.B.A. degree from Georgia State University.

Elise H. Scroggs became Executive Vice President and President, Pliant International in June 2002. Ms. Scroggs served as Senior Vice President of International Operations from December 2001 through June 2002. Ms. Scroggs’ prior positions with Pliant include numerous management positions overseeing transportation, customer service, purchasing, operations and administration. Prior to joining us in 1997, Ms. Scroggs held sales management positions with Rexene Corporation. Ms. Scroggs received a B.S. degree in Textile Chemistry from Auburn University.

Len Azzaro became Executive Vice President and President, Flexible Packaging on February 3, 2003. Prior to joining Pliant, Mr. Azzaro spent 30 years in global sales, marketing and general management at Dow Chemical. Most recently he served as leader of Dow’s global polyethylene business. Mr. Azzaro holds a B.S. degree from Youngstown State University and an M.B.A. degree from the Kellogg School of Management at Northwestern University.

Douglas W. Bengtson became our Executive Vice President, Procurement and Strategic Sourcing in June 2002. Mr. Bengtson served as Executive Vice President of Sales from July 2001 through June 2002. Mr. Bengtson joined Pliant in September 1997 as Senior Vice President and General Manager, Performance Films Division. Prior to joining us, Mr. Bengtson was Vice President of Sales and Marketing for Food Packaging at American National Can. His former positions include Vice President, Sales and Marketing at CT Film, a division of Rexene Corporation, and Vice President, Sales and Marketing, of the Polymer division of Rexene Corporation. Mr. Bengtson received a B.S. degree in Business/Marketing from Colorado State University.

Timothy J. Walsh became one of our directors on May 31, 2000 and the chairman of the board of directors, a non-executive position, in June 2002. Mr. Walsh is an executive officer of JPMP Capital Corp., which is the general partner of JPMP Master Fund Manager, L.P., which is the general partner of J.P. Morgan Partners (BHCA), L.P., which is our principal stockholder. Since 1999, Mr. Walsh has been a Partner of J.P. Morgan Partners, LLC (formerly, Chase Capital Partners), a global private equity organization with over $25 billion of direct private equity under management. J.P. Morgan Partners, LLC has closed over 1,000 individual transactions since its inception in 1984 and has more than 150 investment professionals in eight offices throughout the world. From 1993 to 1999, Mr. Walsh held various positions with J.P. Morgan Partners, LLC in Europe and North America. Prior to 1993, he was a Vice President of J.P. Morgan Chase & Co. (formerly, The Chase Manhattan Corporation). Mr. Walsh is also a director of Better Minerals & Aggregates Company, Klockner Pentaplast S.A. and Metokote Corporation. Mr. Walsh received a B.S. degree from Trinity College and an M.B.A. degree from the University of Chicago. Pursuant to the stockholders’ agreement, Mr. Walsh is one of the designees to the board by our institutional common stockholders and warrantholders.

Richard P. Durham became one of our directors on May 31, 2000. Mr. Durham also served as our President, from March 1997 through March 2001, and as our Chief Executive Officer, from March 1997 through June 2002. He was also the chairman of our board of directors from May 31, 2000 to June 2002. Mr. Durham has been with various Huntsman Corporation affiliates since 1987. Prior to becoming our President, Mr. Durham served as Co-President and Chief Financial Officer of Huntsman Corporation. Mr. Durham is also a director of Huntsman Corporation. Mr. Durham is a graduate of The Wharton School of Business at the University of Pennsylvania. Pursuant to the stockholders’ agreement, Mr. Durham is one of the Trust’s designees to the board.

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Donald J. Hofmann, Jr. became one of our directors on May 31, 2000. Since January 2003, Mr. Hofmann has been a Senior Advisor of J.P. Morgan Partners, LLC (formerly, Chase Capital Partners), a global private equity organization with over $25 billion of direct private equity under management. J.P. Morgan Partners, LLC has closed over 1,000 individual transactions since its inception in 1984 and has more than 150 investment professionals in eight offices throughout the world. From 1992 until January 2003, Mr. Hofmann was a partner of J.P. Morgan Partners, LLC. Mr. Hofmann received a B.A. degree from Hofstra University and an M.B.A. degree from the Harvard Business School. Pursuant to the stockholders’ agreement, Mr. Hofmann is one of the designees to the board by our institutional common stockholders and warrantholders.

John M. B. O’Connor became one of our directors on May 31, 2000. Mr. O’Connor is an executive officer of JPMP Capital Corp., which is the general partner of JPMP Master Fund Manager, L.P., which is the general partner of J.P. Morgan Partners (BHCA), L.P., which is our principal stockholder. Mr. O’Connor joined J.P. Morgan Partners, LLC (formerly, Chase Capital Partners) in 1995 and is an Executive Partner. J.P. Morgan Partners, LLC is a global private equity organization with over $25 billion of direct private equity under management. J.P. Morgan Partners, LLC has closed over 1,000 individual transactions since its inception in 1984 and has more than 150 investment professionals in eight offices throughout the world. From 1993 to 1999, Mr. O’Connor held various positions with J.P. Morgan Partners, LLC in Europe and North America. Mr. O’Connor is also on the boards of directors of TK Aluminum Ltd., AdvisorTech Corporation and FHC Value Options. Mr. O’Connor is an appointee of New York City’s Mayor Bloomberg to the Board of the Center for Animal Care and Control, a Director of The Fund for the City of New York and a Director of the American Society for the Prevention of Cruelty to Animals. Mr. O’Connor received his B.A. degree from Tulane University and an M.B.A. degree from the Columbia University Graduate School of Business. Pursuant to the stockholders’ agreement, Mr. O’Connor is one of the designees to the board by our institutional common stockholders and warrantholders.

Edward A. Lapekas became one of our directors on December 19, 2001. From November 2002 until March 2003, Mr. Lapekas served as Chairman and Chief Executive Officer of NexPak Corporation, a media packaging company. Prior to that, Mr. Lapekas was Executive Chairman of Packtion Corporation, an e-commerce venture, from October 2000 until June 2001. From May 1996 until July 2000, Mr. Lapekas was employed by American National Can Group, Inc., last serving as Chairman and Chief Executive officer. Prior to that, Mr. Lapekas served as Deputy Chairman and Chief Operating Officer of Schmalbach-Lubeca AG. From 1971 until 1991, Mr. Lapekas was employed by Continental Can Company, where he served in various strategy, planning, operating and marketing capacities. Mr. Lapekas is also a director of Silgan Corp. He received a B.A. degree from Albion College and an M.B.A. degree from Wayne State University. Pursuant to the stockholders’ agreement, Mr. Lapekas is one of the Trust’s designees to the board.

Albert (Pat) MacMillan became one of our directors on December 19, 2001. Mr. MacMillan is the founder and CEO of Team Resources, a consulting firm with offices in the United States, Venezuela, Peru, Chile, and Mexico. Founded in 1980, Team Resources provides client services in the areas of strategy, building team-based organizations, and designing leadership development strategies. He also serves on the boards of directors of Unum/Provident and Metokote Corporation, as well as several foundations and non-profit organizations. He received a B.A. degree in Business and an M.B.A. degree from the University of Washington. Pursuant to the stockholders’ agreement, Mr. MacMillan is one of the designees to the board by our institutional common stockholders and warrantholders.

Executive compensation

The following summary compensation table sets forth information about compensation earned in the fiscal years ended December 31, 2002, 2001 and 2000 by each person serving as chief executive officer

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during 2002 and the five other most highly compensated executive officers of Pliant (as of the end of the last fiscal year) (collectively, the “Named Executive Officers”).

Summary compensation table

Name And Principal Position	Year	Annual Compensation(1)		Long Term Compensation(2)		All Other Compen- sation ($)
		Salary ($)	Bonus ($)	Securities Underlying Options/ SARs (#)	LTIP Payouts ($)
Jack E. Knott II Chief Executive Officer	2002 2001 2000	375,000 337,500 316,667	163,659 163,428 104,274	—   —   —	—   —   —	5,700 5,100 1,037,271	(3) (4) (5)
Richard P. Durham Chairman and Chief Executive Officer Until June 10, 2002(12)	2002 2001 2000	250,000 500,000 500,000	185,800 381,024 245,568	—   —   —	—   —   —	273,208 5,100 136,350	(6) (4) (7)
Brian E. Johnson Executive Vice President And Chief Financial Officer(13)	2002 2001 2000	265,200 179,333 —	41,928 44,370 —	—   5,000 —	—   —   —	5,700 5,100 —	(3) (4)
Stanley B. Bikulege Executive Vice President, President, Pliant USA	2002 2001 2000	247,083 203,125 182,250	47,093 66,245 60,304	2,720 250 1,030	—   —   298,521	5,700 56,931 52,600	(3) (8) (9)
Elise H. Scroggs Executive Vice President, President, Pliant International	2002 2001 2000	205,417 151,917 115,916	32,972 46,207 15,984	2,200 425 375	—   —   62,394	5,700 3,184 35,100	(3) (10) (11)
Douglas W. Bengtson Executive Vice President, Procurement and Strategic Sourcing	2002 2001 2000	222,500 204,583 190,000	35,147 66,245 121,293	720 250 1,030	—   —   517,122	5,700 5,100 52,600	(3) (4) (9)
Ronald A. Artzer Senior Vice President, President, Pliant Solutions Corporation(14)	2002 2001 2000	223,846 —   —	39,216 —   —	1,500 —   —	—   —   —	5,700 —   —	(3)

(1) Perquisites and other personal benefits, securities or property, in the aggregate, are less than either $50,000 or 10% of the total annual salary and bonus reported for the applicable Named Executive Officer.

(2) At December 31, 2002, the number of shares of restricted stock held by Messrs. Durham and Knott were 4,833 and 7,750, respectively. The value of such shares of restricted stock at December 31, 2002 has not been reported as compensation because it did not exceed the consideration paid by the applicable Named Executive Officer.

(3) Consists of $5,700 for employer’s 401(k) contributions.

(4) Consists of $5,100 for employer’s 401(k) contributions.

(5) Consists of (a) $836,785 gross-up payment of taxes payable for the exercise of options in connection with the recapitalization, (b) relocation expense reimbursement of $114,136, (c) a $81,250 retention bonus and (d) employer’s 401(k) contributions of $5,100.

(6) Consists of (a) a $250,008 severance payment, (b) a $15,000 director’s fee for the period subsequent to Mr. Durham’s resignation as Chief Executive Officer, (c) a $2,500 committee meeting fee for the period subsequent to Mr. Durham’s resignation as Chief Executive Officer and (d) $5,700 for employer’s 401(k) contributions.

(7) Consists of (a) a $125,000 retention bonus, (b) employer’s 401(k) contributions of $5,100 and (c) a $6,250 director’s fee.

(8) Consists of employer’s 401(k) contributions of $5,100 and relocation expense reimbursement of $51,831.

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(9) Consists of a $47,500 retention bonus and employer’s 401(k) contributions of $5,100.

(10) Consists of $3,184 for employer’s 401(k) contributions.

(11) Consists of (a) a $30,000 retention bonus and (b) employer’s 401(k) contributions of $5,100.

(12) Mr. Durham resigned as Chairman and Chief Executive Officer on June 10, 2002 and Jack E. Knott II was appointed Chief Executive Officer.

(13) Mr. Johnson joined Pliant in April 2001.

(14) Mr. Artzer joined Pliant in May 2002 and left his position as Senior Vice President and President, Pliant Solutions Corporation on April 21, 2003.

Stock options and restricted stock

Pursuant to the recapitalization, options covering a total of 8,902 common shares were rolled over from a previous plan. In addition, we adopted our 2000 Stock Incentive Plan. The 2000 plan became effective as of the consummation of the recapitalization and authorizes grants of nonqualified stock options or restricted stock to employees, officers, directors, managers or advisors of Pliant or any of its subsidiaries. As amended, a total of 65,600 shares are authorized for issuance under the 2000 plan. As of December 31, 2002, we had outstanding grants of restricted stock covering 13,208 shares of common stock and options to acquire 42,440 shares of common stock under the 2000 plan. Shares of restricted stock that are forfeited, and unissued shares reserved for issuance pursuant to options that terminate, expire or are cancelled without having been fully exercised, become available to be issued pursuant to new grants under the 2000 Plan.

In August 2002, we adopted our 2002 Stock Incentive Plan. The 2002 plan authorizes grants of incentive stock options, nonqualified stock options and stock bonuses, as well as the sale of shares of common stock, to our and any of our subsidiaries’ employees, officers, directors and consultants. A total of 4,793 shares are authorized for issuance under the 2002 plan. As of December 31, 2002, no options or shares had been granted or sold under the 2002 plan.

The following table provides information related to options to purchase shares of our common stock granted to the Named Executive Officers during the last fiscal year pursuant to the 2000 Plan. We have never granted any freestanding stock appreciation rights.

Option/SAR grants in last fiscal year

Individual Grants							Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Terms(1)(3)(4)
Name	Number of Securities Underlying Options/SARs Granted (#)	% of Total Options/SARs Granted to Employees in Fiscal Year		Exercise or Base Price(1) ($/Sh)		Expiration Date(2)	5%($)	10%($)
Stanley B. Bikulege	1,720 1,000	8 5	% %	$ $	483.13 483.13	5/31/12 11/25/12	522,601 303,838	1,324,374 769,985
Elise H. Scroggs	1,200 1,000	6 5	% %	$ $	483.13 483.13	5/31/12 11/25/12	364,605 303,838	923,982 769,985
Ronald A. Artzer	500 1,000	2 5	% %	$ $	483.13 483.13	5/31/12 11/1/12	151,919 303,838	384,992 769,985
Douglas W. Bengtson	720	4	%	$	483.13	5/31/12	218,763	554,389

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(1) The exercise price was greater than or equal to fair market value on date of grant. There is no established trading market for our common stock and, therefore, the aggregate market value of our shares cannot be determined by reference to recent sales or bid and asked prices. The fair market value was assumed to be equal to the price per share paid in the recapitalization.

(2) Subject to earlier termination under certain circumstances.

(3) Potential realizable value is calculated based on an assumption that the price of our common stock appreciates at the annual rates shown (5% and 10%), compounded annually, from the date of grant of the option until the end of the option term. The value is net of the exercise price but is not adjusted for the taxes that would be due upon exercise. The 5% and 10% assumed rates of appreciation are mandated by the rules of the Securities and Exchange Commission and do not represent our estimate or projection of future stock values. Actual gains, if any, upon future exercise of any of these options will depend upon the actual value of our common stock.

(4) All of the options granted to the Named Executive Officers during 2002 are subject to vesting requirements. All of the options granted to each Named Executive Officer vest in increments upon the achievement of a specified market value of equity applicable to such increment. Such market value of equity is determined pursuant to a formula based upon our adjusted earnings.

The following table provides information as to the options held by each of the Named Executive Officers at the end of 2002. There is no established trading market for our common stock and, therefore, the aggregate market value of our shares cannot be determined by reference to recent sales or bid and asked prices. The value of unexercised in-the-money options was assumed to be equal to the price per share paid in the recapitalization ($483.13 per share). None of the Named Executive Officers exercised any options during the last fiscal year.

Aggregated option/SAR exercises in last fiscal year

and FY-end option/SAR values

Name	Shares Acquired On Exercised	Value Realized	Number Of Securities Underlying Unexercised Options/SARs At FY-End (#) Exercisable/Unexercisable	Value Of Unexercised In- The-Money Options/SARs At FY-End ($) Exercisable/Unexercisable
Jack E. Knott II	—	—	8,902/0	$ 3,410,623/0
Brian E. Johnson	—	—	1,000/4,000	0/0
Stanley B. Bikulege	—	—	393/3,607	0/0
Elise H. Scroggs	—	—	210/2,790	0/0
Ronald A. Artzer	—	—	0/1,500	0/0
Douglas W. Bengtson	—	—	393/1,607	0/0

The options or restricted common stock granted prior to January 1, 2001 pursuant to the 2000 plan, as amended, provide for vesting as follows: (1) one-sixth are “time-vested” options or shares, which vested on January 1, 2001, so long as the recipient was still our employee on such date, and (2) the remainder are “performance-vested” options or shares, which vest in increments upon the achievement of performance targets as follows: (a) vesting in full, if 100% or more of the applicable performance target is achieved as of the end of any calendar quarter during the option term and (b) partial vesting if more than 90% of the applicable performance target is achieved as of the end of any calendar quarter during the option term. Moreover, all performance-vested options or shares not previously vested in accordance with the preceding sentence will vest automatically in full on December 31, 2009 so long as the recipient is still our employee on such date. Options granted pursuant to the 2000 plan subsequent to January 1, 2001 vest

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similarly, except that all of the options are “performance-vested” options, which vest in increments upon the achievement of performance targets.

Pension plans

The following table shows the estimated annual benefits payable under our tax-qualified defined benefit pension plan in specified final average earnings and years of service classifications.

Pliant Corporation pension plan table

	Years of Benefit Service at Retirement
Final Average Compensation	10		15		20		25		30		35		40
$100,000	$	16,000	$	24,000	$	32,000	$	40,000	$	48,000	$	56,000	$	64,000
125,000		20,000		30,000		40,000		50,000		60,000		70,000		80,000
150,000		24,000		36,000		48,000		60,000		72,000		84,000		96,000
175,000		28,000		42,000		56,000		70,000		84,000		98,000		112,000
200,000		32,000		48,000		64,000		80,000		96,000		112,000		128,000

Our current pension plan benefit is based on the following formula: 1.6% of final average compensation multiplied by years of credited service, minus 1.5% of estimated Social Security benefits multiplied by years of credited service (with a maximum of 50% of Social Security benefits). Final average compensation is based on the highest average of three consecutive years of compensation. In certain circumstances, covered compensation for purposes of the pension plan includes compensation earned with our former affiliates. The Named Executive Officers (excluding Ronald A. Artzer) were participants in the pension plan in 2002. The final average compensation for purposes of the pension plan in 2002 for each of the Named Executive Officers is $200,000, which is the maximum that can be considered for the 2002 plan year under federal regulations. Federal regulations also provide that the maximum annual benefit paid from a qualified defined benefit plan cannot exceed $160,000 as of January 1, 2002. Benefits are calculated on a straight life annuity basis. The benefit amounts under the pension plan are offset for Social Security as described above.

The number of completed years of credited service as of December 31, 2002 under our pension plan for the Named Executive Officers participating in the plan were as follows:

Name	Years of Credited Service
Richard P. Durham(1)	17
Jack E. Knott II(1)	17
Brian E. Johnson	1
Stanley B. Bikulege	10
Douglas W. Bengtson(2)	5
Elise H. Scroggs	9

(1) The years of credited service under the pension plan include 12 years of service credited with the predecessor to Pliant for Mr. Durham and 12 years of service credited with affiliates of Pliant for Mr. Knott. The benefit calculation upon retirement under our pension plan is calculated by multiplying years of credited service by a fraction representing that part of total credited service for which services were provided to us.

(2) In addition to the 5 years of credited service with Pliant, Mr. Bengtson has a frozen benefit as a result of his service with Rexene Corporation, which was purchased by the predecessor to Huntsman Packaging and Pliant. By agreement, Mr. Bengtson will be provided a pay update on the calculation of the Rexene formula. This payment is a non-qualified payment which will be paid out of our general assets as a lump sum.

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Employment agreements

On May 31, 2000, we entered into a five-year employment agreement with Jack E. Knott II, our Chief Executive Officer. The employment agreement provides for the payment of a base salary, plus a bonus, at least four weeks paid vacation per year, participation in our leased car program and participation in our other employee benefit programs, including our management incentive program, and includes non-disclosure of confidential information provisions and a non-compete provision for one year following termination of employment with us (unless termination is due to the term expiring). Mr. Knott agreed in his employment agreement that any inventions, improvements, technical or software developments, trademarks, patents and similar information relating to us or our business, products or services conceived, developed or made by him while employed by us belong to us. In addition, if Mr. Knott’s employment with us terminates for any reason, we will have the right under the employment agreement to repurchase the shares of our common stock owned by him at a purchase price equal to their fair market value. Similarly, we will also be required to repurchase all of the shares of common stock owned by Mr. Knott at his option if his employment is terminated because of death, disability, retirement or resignation for good reason, so long as we are permitted to do so at the time under the covenants contained in our financing agreements.

We also entered into a five-year employment agreement with Richard P. Durham, our former Chief Executive Officer, on May 31, 2000. The terms of Mr. Durham’s employment agreement were substantially similar to Mr. Knott’s employment agreement. On February 1, 2001, however, we amended the employment agreement with Mr. Durham to, among other things, specify the duties he would perform as our Chairman and Chief Executive Officer and eliminate our right to repurchase his shares upon termination of employment. We also agreed to repurchase all of the shares of common stock owned by Mr. Durham at his option if Mr. Durham’s employment with us was terminated without cause. In addition, pursuant to the employment agreement amendment, we agreed to modify the terms of Mr. Durham’s secured and unsecured notes with us.

On June 10, 2002, we entered into a separation agreement with Richard P. Durham. As of the date of the separation agreement, Mr. Durham owned 28,289 shares of common stock, 12,083 performance-vested shares, 2,417 time-vested shares, warrants to purchase 1,250.48 shares of common stock and 1,232 shares of preferred stock of Pliant. All of Mr. Durham’s time-vested shares and 2,416 of Mr. Durham’s performance-vested shares had vested as of the date of the separation agreement. Pursuant to the separation agreement, Mr. Durham agreed to convert an outstanding promissory note issued as payment for a portion of his shares into two promissory notes. The first note (the “Vested Secured Note”), in the principal amount of $2,430,798, relates to Mr. Durham’s time-vested shares and the vested portion of his performance-vested shares. The second note (the “Non-Vested Secured Note”), in the principal amount of $4,862,099, related to the 9,667 performance-vested shares which had not vested as of the date of the separation agreement. In addition to these notes, Mr. Durham had an additional outstanding promissory note (the “Additional Note”), with an outstanding balance of $1,637,974 at the date of his resignation, relating to a portion of the shares of common stock held by Mr. Durham. In accordance with the separation agreement, we repurchased and cancelled Mr. Durham’s 9,667 unvested shares in exchange for cancellation of the Non-Vested Secured Note on October 3, 2002.

The separation agreement preserved a put option established by Mr. Durham’s employment agreement with respect to his shares. For purposes of this put option, the separation agreement provides that the price per share to be paid by us is $483.13 with respect to common stock, $483.13 less any exercise price with respect to warrants, and the liquidation preference with respect to preferred stock. On July 9, 2002, Mr. Durham exercised his put option with respect to 28,289 shares of common stock, 1,232 shares of preferred stock and warrants to purchase 1,250.48 shares of common stock. Mr. Durham’s put option is subject to any financing or other restrictive covenants to which we are subject at the time of the proposed repurchase. Restrictive covenants under our credit facilities limit the number of shares we can currently repurchase from Mr. Durham. On October 3, 2002, as permitted by the covenants contained in our credit

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facilities, we purchased 8,204 shares from Mr. Durham for a purchase price of $3,963,599 less the outstanding amount of the Additional Note, which was cancelled. In December 2002 we purchased an additional 1,885 shares of common stock from Mr. Durham for an aggregate purchase price of approximately $910,700. As of December 31, 2002, our total remaining purchase obligation to Mr. Durham was approximately $10,623,097, excluding accrued preferred dividends. We are limited by our credit facilities to a maximum purchase from Mr. Durham of $5,000,000 of shares in 2003, which purchase may only be made if we meet certain leverage ratios. In connection with Mr. Durham’s resignation as Chairman and Chief Executive Officer, Jack E. Knott II was appointed our Chief Executive Officer. Mr. Timothy J. Walsh, a director since May 31, 2000, and a Partner of J.P. Morgan Partners, LLC, was appointed as the non-executive Chairman of the Board of Directors. Mr. Durham continues to serve as a member of our Board of Directors as a designee of The Christena Karen H. Durham Trust, which holds 158,917 shares, or approximately 27.5%, of our outstanding common stock.

On March 30, 2001, we entered into a five year employment agreement with Brian E. Johnson, our Executive Vice President and Chief Financial Officer. The employment agreement provides for the payment of a base salary, a grant of a stock option to purchase 5,000 shares of our common stock, at least three weeks paid vacation per year, participation in our leased car program, payment of Mr. Johnson’s present country club membership dues and participation in our other employee benefit programs, including our management incentive program, and includes non-disclosure of confidential information provisions and a non-compete provision for one year following termination of employment with us (unless termination is due to the term expiring). Mr. Johnson has agreed in his employment agreement that any inventions, improvements, technical or software developments, trademarks, patents and similar information relating to us or our business, products or services conceived, developed or made by him while employed by us belong to us. If Mr. Johnson’s employment is terminated without cause or he resigns for good reason, he will be entitled to receive severance payments and continue to participate in our medical and dental plans for one year. In addition, if Mr. Johnson’s employment with us terminates for any reason, we will have the right under the employment agreement to repurchase the shares of our common stock owned by him at a purchase price equal to their fair market value. Similarly, we will also be required to repurchase all of the shares of common stock owned by Mr. Johnson at his option if his employment is terminated because of death, disability, retirement or resignation for good reason, so long as we are permitted to do so at the time under the covenants contained in our financing agreements.

Committees of the board of directors

Our board of directors has an audit committee. The audit committee maintains oversight responsibilities with respect to our accounting, auditing, financial reporting and internal control processes generally. The members of the audit committee are John M. B. O’Connor and Edward A. Lapekas. Our board of directors previously had an executive committee, a compensation committee and an environmental health and safety committee. However, our board of directors decided to dissolve these committees as they felt the activities of those committees could be sufficiently handled by the entire board of directors.

Compensation of directors

Each director who is not an employee of ours or a partner or senior advisor of J.P. Morgan Partners, LLC is entitled to receive an annual fee of $30,000, plus $10,000 per year per committee. Currently there are three directors of ours who receive director fees.

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Security ownership of certain beneficial

owners and management

The following table sets forth information with respect to the ownership of our common stock as of March 31, 2003 by:

• each person known to own beneficially more than 5% of our common stock,

• each of our directors,

• each of our Named Executive Officers, and

• all of our executive officers and directors as a group.

The amounts set forth in the table and footnotes below do not include shares of restricted common stock issued under the 2000 plan that remain subject to performance vesting requirements that have not been met as of March 31, 2003.

Notwithstanding the beneficial ownership of common stock presented below, the stockholders’ agreement governs the stockholders’ exercise of their voting rights with respect to election of directors and certain other material events. The parties to the stockholders’ agreement have agreed to vote their shares to elect the board of directors as set forth therein. See “Certain relationships and related transactions.”

The amounts and percentages of shares beneficially owned are reported on the basis of SEC regulations governing the determination of beneficial ownership of securities. Under SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.

Except as otherwise indicated in these footnotes, each of the beneficial owners listed has, to our knowledge, sole voting and investment power with respect to the indicated shares of common stock.

Name of Beneficial Owner	Number of Shares of Common Stock Beneficially Owned	Percent of Class
JPMP Capital Corp.(1)	406,191	61.0	%
The Christena Karen H. Durham Trust(2)	158,917	27.6	%
Perry Acquisition Partners L.P.(3).	34,527	5.9	%
Richard P. Durham (4)	24,283	4.2	%
Jack E. Knott II(5)	11,717	2.0	%
Donald J. Hofmann, Jr.	—	*
Timothy J. Walsh(6)	—	*
John M. B. O’Connor(6)	—	*
Edward A. Lapekas	207	*
Albert (Pat) MacMillan	—	*
Brian E. Johnson	1,018	*
Stanley B. Bikulege	609	*
Elise H. Scroggs	318	*
Ronald A. Artzer	—	*
Douglas W. Bengtson	646	*
All directors and executive officers as a group (13 persons)	38,798	6.6	%

* Less than 1%.

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(1) Includes (i) 317,306 shares of common stock held by Southwest Industrial Films, LLC, which is controlled by J.P. Morgan Partners (BHCA), L.P., as managing member, (ii) 43,962 shares of common stock which are issuable upon exercise of preferred stock warrants held by Southwest Industrial Films II, LLC, which is controlled by J.P. Morgan (BHCA), L.P., as managing member, (iii) 44,816 shares of common stock which are issuable upon exercise of preferred stock warrants held by Southwest Industrial Films, LLC, which is controlled by J.P. Morgan Partners (BHCA) L.P., as managing member, and (iv) 107 shares of common stock which are issuable upon exercise of the 1,264 note warrants held by Southwest Industrial Films, LLC, which is controlled by J.P. Morgan Partners (BHCA), L.P., as managing member. JPMP Capital Corp. is the indirect general partner of J.P. Morgan Partners (BHCA), L.P., and a wholly-owned subsidiary of J.P. Morgan Chase & Co., a publicly traded company. JPMP Capital Corp. and each of the foregoing entities is an affiliate of J.P. Morgan Partners, LLC and has an address c/o J.P. Morgan Partners, LLC, 1221 Avenue of the Americas, 39^th Floor, New York, New York 10020.

(2) The address of The Christena Karen H. Durham Trust is P.O. Box 17600, Salt Lake City, Utah 84117. The trustee of the Trust is Richard P. Durham. The Trust was established for the benefit of Christena H. Durham and her children. Christena H. Durham is the wife of Richard P. Durham.

(3) Includes 4,060 shares of common stock which are issuable upon exercise of preferred stock warrants held by an affiliate. The address of Perry Acquisition Partners, L.P. is 599 Lexington Avenue, New York, New York 10022.

(4) Includes 1,250 shares of common stock issuable upon exercise of preferred stock warrants. As trustee of The Christena Karen H. Durham Trust and the spouse of Christena H. Durham, who is a beneficiary of the Trust, Richard P. Durham may be deemed the beneficial owner of the shares of common stock owned by the Trust. Richard P. Durham disclaims beneficial ownership of the shares of common stock owned by the Trust.

(5) Includes 8,902 shares of common stock issuable upon exercise of 1998 options that are immediately exercisable. Does not include 5,167 shares of restricted common stock issued under the 2000 plan that do not vest until the performance conditions discussed in “Management—Stock options and restricted stock” are met.

(6) Each of Messrs. Walsh and O’Connor may be deemed the beneficial owner of the shares of common stock and warrants owned by each of Southwest Industrial Films, LLC and Southwest Industrial Films II, LLC, respectively, due to their positions with JPMP Capital Corp. and J.P. Morgan Partners, LLC, which are affiliates of J.P. Morgan Partners (BHCA), L.P., which in turn controls each of Southwest Industrial Films, LLC and Southwest Industrial Films II, LLC, as managing member.

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Certain relationships and related transactions

Transactions with Huntsman Corporation

Prior to the recapitalization and related transactions, we were party to a services agreement with Huntsman Corporation, our former affiliate, pursuant to which Huntsman Corporation provided us with most of our insurance coverage, administered our employee benefit plans, rented to us corporate headquarters space and provided other services to us. Under that services agreement, we paid Huntsman Corporation $1.2 million in 2000. In addition to the amount paid for services provided under the services agreement, we also reimbursed Huntsman Corporation for insurance premiums and certain other expenses incurred on our behalf. Following the recapitalization and related transactions, all of the services provided under the services agreement were discontinued.

Transactions with management

Prior to the recapitalization, we sold shares of Class C common stock to certain members of management for cash. We also issued shares of Class C common stock to certain members of our senior management in exchange for promissory notes. Approximately one-half of these shares were purchased and approximately one-half were “rolled over” as common stock in the recapitalization. In connection with the recapitalization, we issued additional shares of restricted stock to each of our executive officers serving at that time in exchange for promissory notes. The original promissory notes of our executive officers were amended during 2000 and 2001 in connection with the recapitalization, certain severance arrangements and other events relating to the transition to a new management team. The terms of these promissory notes and the related transactions are described below for each person who served as an executive officer during 2000, 2001 or 2002.

Jack E. Knott II

In connection with our May 31, 2000 recapitalization, we issued 1,292 time-vested shares and 6,458 performance-vested shares to Mr. Knott in exchange for a promissory note of $3,744,260. Interest on Mr. Knott’s promissory note accrued at the rate of 7% per annum through December 31, 2000. On April 21, 2001, we amended the terms of Mr. Knott’s promissory note so that no interest would accrue after December 31, 2000 and our sole recourse against Mr. Knott with respect to his obligations under the promissory note would be the 7,750 shares of restricted stock pledged as collateral. Unless satisfied by returning the restricted stock to us, the interest accrued on Mr. Knott’s promissory note through December 31, 2000, in the amount of $153,672, is payable in three annual installments of $51,224, beginning May 31, 2006, and the principal balance of $3,744,260 is payable on May 31, 2008.

Richard P. Durham

Mr. Durham served as our Chairman and Chief Executive Officer until June 2002. Prior to his resignation, we issued common stock to Mr. Durham in exchange for promissory notes on three separate occasions. In connection with our split-off from Huntsman Corporation in 1997, we issued 5,000 shares of our Class A common stock and 2,000 shares of our Class B common stock to Mr. Durham in exchange for a $700,000 promissory note which bore interest at the rate of 7% per annum. This note was repaid in full by Mr. Durham during 2001. On February 22, 1999, we sold 15,734 shares of Class C common stock to Mr. Durham in exchange for a $1,573,400 promissory note. On May 31, 2000, we issued 2,417 time-vested shares and 12,083 performance-vested shares in exchange for a $7,005,389 promissory note. In connection with an amendment to Mr. Durham’s employment agreement in February 2001, we amended the $1,573,400 promissory note and the $7,005,389 promissory note, which originally bore interest at the rate of 7% per annum, to provide that no interest would accrue on these notes after December 31, 2000. We also amended the $7,005,389 promissory note to provide that our sole recourse against Mr. Durham with respect to the obligation under this promissory note would be the 14,500 shares of restricted stock

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pledged as collateral. At the time of Mr. Durham’s resignation, the balances of his two outstanding promissory notes, including accrued interest, were $7,292,897 and $1,637,974.

On June 10, 2002, we entered into a separation agreement with Mr. Durham. As of the date of the separation agreement, Mr. Durham owned 28,289 shares of common stock, 12,083 performance-vested shares, 2,417 time-vested shares, warrants to purchase 1,250.48 shares of common stock and 1,232 shares of preferred stock of Pliant. All of Mr. Durham’s time-vested shares and 2,416 of Mr. Durham’s performance-vested shares had vested as of the date of the separation agreement. Pursuant to the separation agreement, Mr. Durham agreed to convert the outstanding promissory note issued as payment for his time-vested and performance-vested shares into two promissory notes. The first note (the “Vested Secured Note”), in the principal amount of $2,430,798, related to Mr. Durham’s time-vested shares and the vested portion of his performance-vested shares. The second note (the “Non-Vested Secured Note”), in the principal amount of $4,862,099, related to the 9,667 performance-vested shares which had not vested as of the date of the separation agreement. Mr. Durham’s other note (the “Additional Note”) with an outstanding balance of $1,637,974 at the date of his resignation was not amended by the separation agreement. In accordance with the separation agreement, we repurchased and cancelled Mr. Durham’s 9,667 unvested shares in exchange for cancellation of the Non-Vested Secured Note on October 3, 2002.

The separation agreement preserved a put option established by Mr. Durham’s employment agreement with respect to his shares. For purposes of this put option, the separation agreement provides that the price per share to be paid by Pliant is $483.13 with respect to common stock, $483.13 less any exercise price with respect to warrants, and the liquidation preference with respect to preferred stock. On July 9, 2002, Mr. Durham exercised his put option with respect to 28,289 shares of common stock, 1,232 shares of preferred stock and warrants to purchase 1,250.48 shares of common stock. Mr. Durham’s put option is subject to any financing or other restrictive covenants to which we are subject at the time of the proposed repurchase. Restrictive covenants under our credit facilities limit the number of shares we can currently repurchase from Mr. Durham. On October 3, 2002, as permitted by the covenants contained in our credit facilities, we purchased 8,204 shares from Mr. Durham for a purchase price of $3,963,599 less the outstanding amount of the Additional Note, which was cancelled. In December 2002, we purchased an additional 1,885 shares of common stock from Mr. Durham for an aggregate purchase price of approximately $910,700. As of December 31, 2002, our total remaining purchase obligation to Mr. Durham was approximately $10,623,097, excluding accrued preferred dividends. We are limited by our credit facilities to a maximum purchase from Mr. Durham of $5,000,000 of shares in 2003, which purchase may only be made if we meet certain leverage ratios. The principal balance of Mr. Durham’s Vested Secured Note, which is still outstanding, is payable on May 31, 2008.

Scott K. Sorensen

Mr. Sorensen served as our Executive Vice President and Chief Financial Officer until February 2001. Prior to his resignation, we issued common stock to Mr. Sorensen in exchange for promissory notes on two separate occasions. On February 22, 1999, we sold 7,867 shares of Class C common stock to Mr. Sorensen in exchange for a $786,700 promissory note. On May 31, 2000, we issued 1,125 time-vested shares and 5,625 performance-vested shares in exchange for a $3,261,129 promissory note. Each of Mr. Sorensen’s promissory notes originally bore interest at the rate of 7% per annum. As part of our severance arrangements with Mr. Sorensen in February 2001, we cancelled all interest, in the amount of approximately $132,000, accrued under Mr. Sorensen’s $3,261,129 promissory note. We also redeemed all 6,750 of Mr. Sorensen’s time-vested and performance-vested shares in exchange for cancellation of this promissory note. In addition, we amended Mr. Sorensen’s $786,700 promissory note to provide that no interest would accrue after February 28, 2001. As of December 31, 2002, the amount outstanding under Mr. Sorensen’s remaining promissory note, including accrued interest, was $896,838. This amount is payable in three annual installments beginning on May 31, 2006.

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Ronald G. Moffitt

Mr. Moffitt served as our Senior Vice President and General Counsel until February 2001. Prior to his resignation, we issued common stock to Mr. Moffitt in exchange for promissory notes on two separate occasions. On February 22, 1999, we sold 2,622 shares of Class C common stock to Mr. Moffitt in exchange for a $262,200 promissory note. On May 31, 2000, we issued 625 time-vested shares and 3,125 performance-vested shares in exchange for a $1,811,739 promissory note. Each of Mr. Moffitt’s promissory notes originally bore interest at the rate of 7% per annum. As part of our severance arrangements with Mr. Moffitt in February 2001, we cancelled all interest, in the amount of approximately $85,500, accrued under Mr. Moffitt’s $1,811,739 promissory note. We also redeemed all 3,125 of Mr. Moffitt’s performance-vested shares for an aggregate purchase price of $1,509,781, which was set-off against this promissory note. In addition, we amended Mr. Moffitt’s $262,200 promissory note to provide that no interest would accrue after February 28, 2001. As of December 31, 2002, the amounts outstanding under Mr. Moffitt’s two promissory notes, including accrued interest, were $301,956 and $275,877. Pursuant to the terms of the notes, each of these amounts is payable in three annual installments beginning on May 31, 2006. Mr. Moffitt’s severance agreement preserved a put option established by his employment agreement with respect to his shares. On March 28, 2003, Mr. Moffitt exercised his put option with respect to all 3,457 shares of common stock beneficially owned by him. We are currently evaluating our obligation with respect to the exercise of this put option.

Transactions between us and new stockholders

Common stock registration rights agreement

Pursuant to a registration rights agreement entered into on May 31, 2000, as amended, we granted to our institutional common stockholders and warrantholders certain “demand” and “piggyback” registration rights for the registration under the Securities Act of the shares of common stock owned by them. Under the registration rights agreement, upon request of holders holding in excess of 50% of the shares of common stock held by our institutional investors and their transferees and affiliates (the “Requisite Investor Stockholders”), we are required to use our best efforts to register the shares. The Requisite Investor Stockholders will be entitled to request two demand registrations. Also, if we are not a public company or sold to a third party prior to May 31, 2005, the Trust and its transferees and affiliates will be entitled to request one demand registration. Further, at any time 60 days after our initial public offering, holders holding in excess of 60% of the shares of common stock underlying the preferred stock warrants and holders holding in excess of 60% of the shares of common stock underlying the note warrants will each be entitled to exercise one demand registration. At any time after we have qualified for use of Form S-3, all parties to the registration rights agreement will have the right to request that we effect a registration under the Securities Act of their shares of common stock, subject to customary “blackout” and “cutback” provisions. The stockholders and holders of the preferred stock warrants and note warrants party to the registration rights agreement also may request that we use our best efforts to register shares of common stock held by them in other registrations initiated by us on our own behalf or on behalf of any other stockholder. We must pay all reasonable out-of-pocket costs and expenses, other than underwriting discounts and commissions, of any registration under the registration rights agreement. The registration rights agreement also contains customary provisions with respect to registration procedures, underwritten offerings and indemnification and contribution rights in connection with the registration of common stock on behalf of the stockholders, holders of the preferred stock warrants and holders of the note warrants party to the registration rights agreement.

The stockholders’ agreement

The stockholders’ agreement entered into on May 31, 2000, as amended, governs the exercise of voting rights by our stockholders, including holders of our preferred stock warrants who exercise their warrants for common stock, with respect to the election of directors and certain other material events. The parties to the stockholders’ agreement agreed initially to vote their shares of common stock to elect (i) four

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directors designated by the Requisite Investor Stockholders, (ii) two directors designated by the Trust and (iii) one director appointed by our board of directors, who must be a member of our senior management. At the request of the Requisite Investor Stockholders, the size of our board of directors may be increased from seven to nine. If so increased, one of the two additional directors will be designated by the Requisite Investor Stockholders and the other will be our chief executive officer.

The provisions of the stockholders’ agreement also govern:

• restrictions on the transfer of shares of common stock and the preferred stock warrants;

• preemptive rights for holders of our common stock and preferred stock warrants to purchase certain equity securities to be issued by us in the amounts required to maintain their percentage ownership;

• stockholder or company rights of first refusal to purchase certain shares of our common stock to be sold by other stockholders;

• agreement by stockholders and holders of the preferred stock warrants to consent to the sale of all of, or a controlling interest in, us to a third party, if such sale is approved by our board of directors, and to sell their shares of common stock and preferred stock warrants if so required;

• rights of stockholders and holders of the preferred stock warrants to participate in certain sales of the shares of our common stock by other stockholders; and

• rights of holders of our common stock and preferred stock warrants to receive certain financial and other information.

Credit facilities and note offerings

JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank) is the syndication agent and is a lender under our credit facilities. JPMorgan Chase Bank receives customary fees under our credit facilities for acting in such capacities. J.P. Morgan Securities Inc. served as the arranger for the May 2003 amendment to our credit facilities and received a customary fee in such capacity.

J.P. Morgan Securities Inc. was one of the initial purchasers in our May 2000 offering of 13% Senior Subordinated Notes due 2010 and was also the dealer manager for the debt tender offer and consent solicitation relating to our 9 ¹/8% senior subordinated notes due 2007. J.P. Morgan Securities Inc. received fees of approximately $8.7 million for acting in such capacities. J.P. Morgan Securities Inc. was also one of the initial purchasers in our April 2002 offering of 13% Senior Subordinated Notes due 2010 and received fees of approximately $1.9 million for acting in such capacity. We used approximately $93.3 million of the net proceeds from the April 2002 offering to repay indebtedness under our credit facilities. Further, J.P. Morgan Securities Inc. was an initial purchaser in our May 2003 offering of the 2003 Notes and received fees of approximately $4.4 million for acting in such capacity. We used approximately $240 million of the net proceeds from the May 2003 offering to repay indebtedness under our credit facilities. In addition, when we amended our credit facilities, we paid fees of approximately $0.6 million in September 2000, approximately $0.5 million in July 2001, approximately $0.6 million in April 2002, approximately $0.6 million in October 2002, approximately $0.5 million in March 2003 and approximately $0.3 million in May 2003, to JPMorgan Chase Bank.

Each of JPMorgan Chase Bank, J.P. Morgan Chase & Co. and J.P. Morgan Securities Inc. is an affiliate of Southwest Industrial Films, LLC, which owns approximately 55% of our outstanding common stock and currently has the right under the stockholders’ agreement to appoint four of our directors, and of Flexible Films, LLC, which, together with affiliates, owns approximately 59% of our outstanding preferred stock, subject to certain preemptive rights with respect to 10,000 shares of preferred stock issued on March 25, 2003. Southwest Industrial Films, LLC and Flexible Films, LLC are subsidiaries of J.P. Morgan Partners (BHCA), L.P. During 2002, Donald J. Hofmann, Jr., Timothy J. Walsh and John

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M.B. O’Connor, who serve as our directors, were partners of J.P. Morgan Partners, LLC, which serves as investment advisor to J.P. Morgan Partners (BHCA), L.P. and JPMP Capital Corp. JPMP Capital Corp. is a subsidiary of J.P. Morgan Chase & Co. and is the general partner JPMP Master Fund Manager, L.P., which is the general partner of J.P. Morgan Partners (BHCA), L.P. Messrs. Walsh and O’Connor are executive officers of JPMP Capital Corp. and limited partners of JPMP Master Fund Manager, L.P.

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Description of credit facilities and other indebtedness

The following is a summary of the material terms of our credit facilities, as amended, with J.P. Morgan Securities Inc., as sole and exclusive advisor, lead arranger and lead book manager, JPMorgan Chase Bank, as sole and exclusive syndication agent, Deutsche Bank Trust Company Americas, as administrative agent and collateral agent, The Bank of Nova Scotia, as documentation agent, and a syndicate of banking and financial institutions who became parties thereto and our 11 ¹/8% Senior Secured Notes due 2009 (the “2003 Notes”). The following summary of all of the material provisions is less complete than the actual documentation for our credit facilities and the 2003 Notes and is qualified in its entirety by reference to all of the provisions of the definitive documentation for our credit facilities and the 2003 Notes, copies of which have been filed or incorporated by reference as exhibits to the registration statement of which this prospectus forms a part.

The credit facilities

Structure

The credit facilities consist of:

• tranche A term loans in an aggregate principal amount of $9.6 million outstanding as of May 31, 2003;

• Mexico term loans in an aggregate principal amount of $24.2 million outstanding as of May 31, 2003;

• tranche B term loans in an aggregate principal amount of $185.8 million outstanding as of May 31, 2003; and

• revolving credit facility in an aggregate principal amount of up to $100.0 million.

• Up to $30.0 million (plus an additional amount up to $40.0 million to support certain borrowings by our principal Mexican subsidiary) of the revolving credit facility is available in the form of letters of credit.

Availability

Amounts borrowed under the term loan facilities that are repaid or prepaid may not be reborrowed. Loans and letters of credit under the revolving credit facility are available on and after May 31, 2000 and at any time prior to the final maturity of the revolving credit facility in specified minimum principal amounts. Amounts repaid under the revolving credit facility may be reborrowed.

Interest

The interest rates under the revolving credit facility, the tranche A facility and the Mexico facility are, at our option, Adjusted LIBOR or ABR, plus a spread determined by reference to our leverage ratio. The spread will not exceed 4.00% for Adjusted LIBOR or 3.00% for ABR. Adjusted LIBOR is the London inter-bank offered rate adjusted for statutory reserves. ABR is the alternate base rate, which is the higher of the lender’s prime rate or the federal funds effective rate plus 1/2 of 1%. The interest rates under the tranche B facility are, at our option, Adjusted LIBOR or ABR, plus a spread determined by reference to our leverage ratio. The spread will not exceed 4.75% for Adjusted LIBOR or 3.75% for ABR. We may elect interest periods of one, two, three or six months for Adjusted LIBOR borrowings. The calculation of interest is on the basis of actual days elapsed in a year of 360 days (or 365 or 366 days, as the case may be, in the case of ABR loans based on the Prime Rate) and interest is payable at the end of each interest period and, in any event, at least every three months.

Fees

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We pay certain fees with respect to our credit facilities, including (a) 0.750% per annum on the undrawn portion of the revolving credit facility commitments in respect of our credit facilities, which began to accrue on May 31, 2000 and is payable quarterly in arrears after May 31, 2000, subject to certain adjustments, and (b) a fee at a per annum rate equal to the spread over Adjusted LIBOR under the revolving credit facility accruing on the aggregate face amount of outstanding letters of credit under the revolving credit facility, which is payable in arrears at the end of each quarter and upon the termination of the revolving credit facility, in each case for the actual number of days elapsed over a 360-day year. The fees referred to in (b) are distributed to the lenders participating in the revolving credit facility pro rata in accordance with the amount of each such lender’s revolving credit facility commitment. In addition, we pay to the issuing bank, for its own account, (i) a per annum fronting fee on the aggregate face amount of outstanding letters of credit, payable in arrears at the end of each quarter and upon the termination of the revolving credit facility, in each case for the actual number of days elapsed over a 360-day year, and (ii) customary issuance and administration fees. We also pay the administrative agent a customary annual administration fee.

Guarantees; security

Our obligations under our credit facilities, under the related security documentation and under any interest protection or other hedging arrangements entered into by us with a lender (or any affiliate thereof) and up to $10 million of our obligations under our domestic overdraft facilities are unconditionally guaranteed by each of our existing and subsequently acquired or organized domestic (and, to the extent no adverse tax consequences would result therefrom, foreign) restricted subsidiaries.

These obligations are secured by substantially all of our assets (subject to customary exceptions) and by the assets of each of our existing and subsequently acquired or organized domestic (and, to the extent no adverse tax consequences would result therefrom, foreign) restricted subsidiaries, including but not limited to:

• a first-priority pledge of all capital stock and other equity interests held by us or any other of our domestic (and, subject to the foregoing limitation, foreign) restricted subsidiaries and held by subsequently acquired or organized domestic (and, subject to the foregoing limitation, foreign) restricted subsidiaries of ours (which pledge, in the case of any foreign subsidiaries, is limited to 65% of the capital stock and other equity interests of such foreign subsidiary to the extent the pledge of any greater percentage would result in adverse tax consequences to us); and

• a perfected first-priority security interest in and, in some cases, mortgage on, substantially all of our tangible and intangible assets and on those of each of our existing or subsequently acquired or organized domestic (and, subject to the foregoing limitation, foreign) restricted subsidiaries (subject to certain exceptions, including for accounts receivable sold in certain qualified receivables financings), including but not limited to accounts receivable, inventory, real property, equipment, trademarks, other intellectual property, licensing agreements, cash and proceeds of the foregoing.

Commitment reductions and repayments

The tranche A facility and the Mexico facility mature on May 31, 2006, and amortize on a quarterly basis beginning June 30, 2004. The tranche B facility matures on May 31, 2008 and amortizes on a quarterly basis for the period beginning June 30, 2007 and ending on the final maturity date. The revolving credit facility matures on May 31, 2006.

In addition, we are required to make the following mandatory prepayments of the loans under our credit facilities:

• Within ninety days following the end of each year, we are required to prepay the term loan facilities in an amount equal to the amount by which 100% of excess cash flow for such year (or

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50% of excess cash flow if our leverage ratio at the end of such year is less than or equal to 4.0:1.0) exceeds the aggregate amount of voluntary prepayments made since the last excess cash flow payment, subject to certain other adjustments.

• We are required to prepay the term loan facilities in an amount equal to 100% of the net cash proceeds of equity (other than as described below) and debt issuances (other than debt permitted under our credit facilities, except as described below) by us or any of our restricted subsidiaries, subject to certain other exceptions.

• We are required to prepay the term loan facilities in an amount equal to 100% of the net cash proceeds of asset sales or other dispositions of property by us or any of our restricted subsidiaries, subject to certain other exceptions.

• We were required to apply the net proceeds of the issuance of the 2003 Notes, first, to prepay the revolving credit facility (without reducing the commitments under the revolving credit facility) until $75.0 million (or, if less, all) of the revolving credit facility was repaid, and second, to prepay the tranche A term loan facility in an amount equal to 50% of the portion of such net proceeds not applied to the revolving credit facility and to prepay the tranche B term loan facility in an amount equal to 50% of the portion of such net proceeds not applied to the revolving credit facility (subject to the right of the tranche B term lenders to reject such prepayment, to the extent tranche A term loans remain, in which case such rejected prepayments were instead applied to the tranche A term loans).

• We are required to issue, and J.P. Morgan Partners (BHCA), L.P. is required to purchase (the “Equity Commitment”), up to $25.0 million (subject to adjustment for purchases by third parties) of our equity securities to the extent necessary to enable us to meet our (a) leverage ratio and the target senior debt leverage ratio specified in our credit facilities for the fiscal quarter ending on March 31, 2003; (b) first lien leverage ratio specified in our credit facilities for any fiscal quarter ending on or after June 30, 2003, and on or prior to December 31, 2003, and (c) first lien leverage ratio and leverage ratio specified in our credit facilities for any fiscal quarter ending after December 31, 2003 and on or prior to December 31, 2004. Generally, if we are required to issue any portion of such $25 million of equity securities with respect to any fiscal quarter in 2003, we must use 50% of the net proceeds to prepay the term loan facilities and 50% to prepay the revolving credit facility. If we are required to issue any such equity securities with respect to any fiscal quarter in 2004, we must use 100% of the net proceeds to prepay the term loan facilities.

• We are required to prepay amounts outstanding under our revolving credit facility, if any (without reducing the commitments under the revolving credit facility), to the extent our estimate of our available cash and cash equivalents and marketable securities on any day not held by our foreign subsidiaries (reduced by amounts required by us to make payments on that day) exceeds $5 million.

Affirmative covenants

The credit facilities contain a number of affirmative covenants including, among others, covenants relating to:

• delivery of financial statements and other information;

• notices of material events;

• information regarding collateral;

• existence;

• conduct of business;

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• payment of obligations;

• maintenance of properties;

• insurance;

• casualty and condemnation;

• maintenance of books and records;

• inspection and audit rights;

• compliance with laws;

• use of proceeds and letters of credit;

• additional subsidiaries;

• further assurances;

• interest rate hedging, and

• raising proceeds through the issuance of equity securities to meet certain leverage ratios.

Negative covenants

The credit facilities contain a number of negative covenants including, among others, prohibitions or limitations on:

• indebtedness;

• liens;

• fundamental changes;

• investments, loans, advances, guarantees and acquisitions, subject to exceptions for certain permitted acquisitions;

• certain equity securities;

• asset sales;

• sale and lease-back transactions;

• hedging agreements;

• restricted payments;

• certain payments of indebtedness;

• transactions with affiliates;

• agreements that restrict the ability of our subsidiaries to pay dividends or make loans to us or to guarantee our debt;

• capital expenditures;

• amendment of material documents;

• designated senior debt; and

• cash held by foreign subsidiaries.

Financial covenants

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Our credit facilities, as amended, contain the following financial covenants:

• We must maintain a ratio of period-end consolidated debt to Consolidated EBITDA of no more than 6.60 to 1.00 for the twelve month period ending on March 31, 2003, 6.60:1.00 for the twelve month period ending on March 31, 2004, 6.40:1.00 for the twelve month period ending on June 30, 2004, 6.30:1.00 for the twelve month period ending on September 30, 2004, 6.00:1.00 for the twelve month period ending on December 31, 2004, 5.50:1.00 for the twelve month periods ending on March 31, June 30, September 30 and December 31, 2005, 5.00:1.00 for the twelve month periods ending on March 31, June 30, September 30 and December 31, 2006, 4.50:1.00 for the twelve month periods ending on March 31, June 30, September 30 and December 31, 2007, and 4.00:1.00 for the twelve month periods ending on March 31, June 30, September 30 and December 31, 2008.

• We must maintain a ratio of Consolidated EBITDA to consolidated cash interest expense of at least 1.40:1.00 for the three month period ending on March 31, 2003, 1.25:1.00 for the twelve month period ending on June 30, 2003, 1.25:1.00 for the twelve month period ending on September 30, 2003, 1.30:1.00 for the twelve month period ending on December 31, 2003, 1.35:1.00 for the twelve month period ending on March 31, 2004, 1.35:1.00 for the twelve month period ending on June 30, 2004, 1.40:1.00 for the twelve month period ending on September 30, 2004, 1:45:1.00 for the twelve month period ending on December 31, 2004, 1.60:1.00 for the twelve month periods ending on March 31, June 30, September 30 and December 31, 2005, 1.75:1.00 for the twelve month periods ending, on March 31, June 30, September 30 and December 31, 2006, 1.85:1.00 for the twelve month periods ending on March 31, June 30, September 30 and December 31, 2007, and 2.00:1.00 for the twelve month periods ending on March 31, June 30, September 30 and December 31, 2008.

• We must maintain a ratio of period-end consolidated debt accounted for by indebtedness under our credit facilities and securitization obligations to Consolidated EBITDA of no more than 2.25:1.00 for the twelve month period ending on June 30, 2003, 2.25:1.00 for the twelve month period ending on September 30, 2003, and 2.25:1.00 for the twelve month period ending on December 31, 2003.

Under our credit facilities, as amended, our Consolidated EBITDA is calculated as follows, after giving pro forma effect to any permitted acquisitions or asset sales outside of the ordinary course of business:

• our consolidated net income, plus

• the amount of consolidated interest expense, plus

• the amount of income tax expense, plus

• the amount of letter of credit fees paid, plus

• the amount of all amortization and depreciation and other non-cash charges and losses, plus

• the amount of all extraordinary charges and losses, plus

• the amount of all nonrecurring charges incurred relating to restructurings, plant closings or similar actions in connection with our facilities in Birmingham, AL; Dalton, GA; Harrington, DE; Shelbyville, IN; and Toronto, Canada; other similar charges, the cash portion of which may not exceed $8 million in connection with similar actions occurring prior to November 30, 2001; for purposes of calculating the financial covenants for any of our four fiscal quarters ending on or after June 30, 2001, and on or prior to June 30, 2003, non-recurring charges incurred relating to restructurings, plant closings, or similar actions in connection with our acquisition of Uniplast, the cash portion of which may not exceed the lesser of $15 million and the amount accrued prior to April 2, 2002; and for purposes of calculating the financial covenants for any of our four fiscal

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quarters ending on or after March 31, 2002, and on or prior to September 30, 2003, other similar charges, which may not exceed $20 million (excluding non-recurring charges incurred relating to our acquisition of Uniplast) and the cash portion of which (excluding non-recurring charges incurred relating to our acquisition of Uniplast) may not exceed $15 million during any four consecutive fiscal quarters, plus

• the amount of all non recurring charges incurred pursuant to the agreement with A.T. Kearney for a company-wide supply chain cost initiative, plus

• the amount of all non-cash expenses resulting from the grant of equity-related incentives to any director, officer or employee, plus

• the amount of all compensation expense relating to long-term incentive plans, bonuses and severance payments incurred as a result of the recapitalization and related transactions, plus

• the amount of all nonrecurring transaction and finance expenses incurred as a result of the recapitalization and related transactions and permitted acquisitions, minus

• the amount of all extraordinary gains.

In addition, for purposes of calculating financial covenants (but not the leverage ratio used to determine the interest rate applicable to the tranche A term loans, the tranche B term loans, the Mexico term loans and/or the revolving loans), Consolidated EBITDA also excludes the effect of a limited amount of certain other nonrecurring charges relating to restructurings, plant closings, early termination and modification of leases and similar actions. The definition of Consolidated EBITDA contained in our credit facilities is different from the definition of EBITDA contained in our indentures. Further, the definitions of EBITDA contained in our credit facilities and our indentures are significantly different from the presentation of EBITDA for all other purposes in this prospectus, including under “Summary—Summary financial data” and “Selected financial data.”

Events of default

The credit facilities contain customary events of default, including non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross default to certain other indebtedness, bankruptcy events, ERISA events, material judgments and liabilities, actual or asserted invalidity of security interests and change of control. In addition, the invalidity or unenforceability of the Equity Commitment and the failure of any party thereto to comply with the provisions of the Equity Commitment are events of default under our credit facilities.

2003 Notes

We issued $250 million aggregate principal amount of the 2003 Notes in May 2003 to repay a portion of our indebtedness under our credit facilities. The 2003 Notes will mature on September 1, 2009. We are required to pay interest on the 2003 Notes semiannually on March 1 and September 1 of each year, commencing September 1, 2003. The 2003 Notes were issued under an indenture dated as of May 30, 2003, by and among us, the subsidiary guarantors party thereto and Wilmington Trust Company, as trustee.

Guarantees; security

The 2003 Notes are guaranteed on a senior secured basis by each of our existing and future domestic restricted subsidiaries and, to the extent that they also guarantee any debt (other than a foreign subsidiary that guarantees the debt of another foreign subsidiary), by each of our existing and future foreign restricted subsidiaries.

Our obligations and the obligations of the note guarantors under the 2003 Notes and guarantees thereof are secured, on a second-priority lien basis, by:

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• all of the capital stock or other equity interests of our existing and future domestic subsidiaries and 65% of the capital stock or other equity interests of our existing and future first-tier foreign subsidiaries owned directly by us or our domestic subsidiaries but, in each case, only to the extent that the aggregate principal amount, par value, book value as carried by us or market value (which ever is greatest), or any capital stock, equity interests or other securities of any such subsidiary is not greater than 19.99% of the aggregate principal amount of the 2003 Notes outstanding; and

• substantially all of the other assets held by us or any of the guarantors, but only to the extent that any of our or any such guarantor’s obligations under our credit facilities, certain interest rate protection and other hedging agreements and certain cash management arrangements or any designated future indebtedness are secured by a first-priority lien thereon.

Pursuant to an intercreditor agreement, the liens securing the 2003 Notes will be expressly second in priority to all liens that secure

• obligations under our senior bank facilities,

• any other future indebtedness permitted to be incurred under the indenture governing the 2003 Notes that we designate as first-priority lien indebtedness and

• certain obligations under interest rate protection and other hedging agreements and certain cash management obligations.

The second-priority liens securing the 2003 Notes may not be enforced at any time when obligations secured by the first-priority liens are outstanding, except for certain limited exceptions. A release of, or an amendment of the collateral documents relating to, the first-priority liens may adversely affect the status of the second-priority liens securing the 2003 Notes.

In addition to the additional indebtedness that may be secured by the first-priority liens as described above, any future indebtedness permitted to be incurred under the indenture governing the 2003 Notes may be secured by liens upon any or all of the collateral securing the 2003 Notes on an equal and ratable basis with the second-priority liens securing the same.

Ranking

The 2003 Notes rank equally with our existing and future senior debt, including our obligations under the credit facilities, and rank senior to our existing and future subordinated indebtedness, including the Notes. Because the 2003 Notes are secured on a second- priority lien basis, the 2003 Notes effectively rank junior to

• our obligations under our credit facilities and any other existing and future obligations secured by a first-priority lien on the collateral securing the 2003 Notes to the extent of the value of such collateral, and

• our obligations under our credit facilities and any other existing and future obligations that are secured by a lien on assets that are not part of the collateral securing the 2003 Notes, to the extent of the value of such assets.

Optional redemption

Prior to June 1, 2006, we may, on one or more occasions, redeem up to a maximum of 35% of the original aggregate principal amount of the 2003 Notes with the net cash proceeds of certain equity offerings by us at a redemption price equal to 111.125% of the principal amount thereof, plus accrued interest, provided, however, that after giving effect to such redemption

• at least 65% of the original aggregate amount of the 2003 Notes remains outstanding and

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• any such redemption by us is made within 120 days of such equity offering.

Otherwise, we may not redeem the 2003 Notes prior to June 1, 2007. On or after that date, we may redeem the 2003 Notes in whole or in part, on not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as percentages of the principal amount), plus accrued and unpaid interest (including additional interest, if any), to the redemption date (subject to the right of holders of record of the 2003 Notes on the relevant record date to receive interest (including additional interest, if any) due on the relevant interest payment date) if redeemed during the twelve-month period commencing on June 1 of the years set forth below:

Year	Redemption Price
2007	105.563	%
2008	102.781	%
2009	100.000	%

Change of control

If we experience a change of control, we may be required to repurchase all or a portion of the then outstanding 2003 Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest (including additional interest, if any), to the date or repurchase (subject to the right of holders of record of the 2003 Notes on the relevant record date to receive interest (including additional interest, if any) due on the relevant interest payment date).

Covenants

The indenture governing the 2003 Notes contains covenants that restrict our ability and the ability of our restricted subsidiaries to:

• incur more indebtedness, including guarantees;

• create liens;

• pay dividends and make distributions in respect of our capital stock;

• enter into agreements that restrict our subsidiaries’ ability to pay dividends or make distributions;

• redeem or repurchase our capital stock or subordinated debt;

• make investments;

• sell assets;

• sell capital stock of restricted subsidiaries;

• enter into transactions with affiliates; and

• merge or consolidate.

These covenants are subject to a number of important exceptions.

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Description of the notes

Definitions of certain terms used in this Description of the Notes may be found under the heading “—Certain definitions.” For the purposes of this section, the term “Company” refers only to Pliant Corporation and not any of its subsidiaries. Certain of the Company’s Subsidiaries guarantee the Notes. In addition, certain of the Company’s Subsidiaries formed or acquired in the future, if any, will be required to guarantee the Notes and therefore will be subject to many of the provisions contained in this Description of the Notes. Each company which guarantees the Notes is referred to in this section as a “Note Guarantor.” Each such guarantee is termed a “Note Guarantee.”

The Company issued $320 million aggregate principal amount of its 13% Senior Subordinated Notes due 2010 under two separate indentures. The Company issued $100 million aggregate principal amount of the 2002 Notes under the 2002 Indenture, and issued $220 million aggregate principal amount of the 2000 Notes under the 2000 Indenture. In this section, the 2002 Notes and the 2000 Notes are referred to collectively as the “Notes,” and the 2002 Indenture and the 2000 Indenture are referred to collectively as the “Indentures.” We have combined the discussion of the Indentures in this section because the covenants and other material provisions of the Indentures are substantially identical. However, the 2000 Notes are governed by the 2000 Indenture and the 2002 Notes are governed by the 2002 Indenture. The Indentures are filed or incorporated by reference as exhibits to the registration statement of which this prospectus forms a part.

The Indentures contain provisions which define your rights under the Notes. In addition, the Indentures govern the obligations of the Company and of each Note Guarantor under the Notes. The terms of the Notes include those stated in the Indentures and those made a part of the Indentures by reference to the TIA.

The following description is meant to be only a summary of certain provisions of the Indentures. It does not restate the terms of the Indentures in their entirety. We urge that you carefully read the Indentures as they, and not this description, govern your rights as Holders.

Overview of the notes and the note guarantees

The notes

The Notes are:

• general unsecured obligations of the Company;

• subordinated in right of payment to all existing and any future Senior Indebtedness of the Company;

• pari passu in right of payment with all existing and any future Senior Subordinated Indebtedness of the Company;

• senior in right of payment to any future Subordinated Obligations of the Company;

• effectively subordinated to any Secured Indebtedness of the Company and its Subsidiaries to the extent of the value of the assets securing such Indebtedness; and

• effectively subordinated to all liabilities (including trade payables) and Preferred Stock of each Subsidiary of the Company which is not guaranteeing the Notes, and any other future Subsidiaries which do not guarantee the Notes.

The note guarantors

The Notes are guaranteed by each of the following domestic Restricted Subsidiaries of the Company:

• Pliant Corporation International;

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• Pliant Film Products of Mexico, Inc.;

• Pliant Solutions Corporation;

• Pliant Packaging of Canada, LLC;

• Uniplast Holdings, Inc.;

• Uniplast U.S., Inc.;

• Turex, Inc.;

• Pierson Industries, Inc.; and

• Uniplast Midwest, Inc.

The Notes are not guaranteed by Restricted Subsidiaries which also do not guarantee any Senior Indebtedness, currently consisting of the following:

• Aspen Industrial S.A. de C.V.;

• Pliant Corporation of Canada Ltd.;

• Pliant Film Products GmbH;

• Pliant Corporation Pty, Ltd.;

• Pliant Film Products, UK, Limited;

• Pliant Corporation Asia & Pacific Rim Pte Ltd.;

• Jacinto Mexico, S.A. de C.V.;

• Nepsa de Mexico S.A. de C.V.;

• Uniplast Industries Co.;

• Uniplast Films, Inc.; and

• 1292789 Ontario Inc.

The Notes are not guaranteed by Pliant Investment Inc., which is an Unrestricted Subsidiary. Pliant Investment Inc. has a 50% interest in Alliant Company LLC, a joint venture with a European plastics manufacturer.

The Restricted Subsidiaries that are not Note Guarantors generated 15.4% of the Company’s net sales for the year ended December 31, 2002, and accounted for 12.2% of the assets of the Company and its Subsidiaries on a consolidated basis as of December 31, 2002.

The note guarantees

The Note Guarantee of each Note Guarantor and all Note Guarantees, if any, made by future Restricted Subsidiaries of the Company are:

• general unsecured obligations of the applicable Note Guarantor;

• subordinated in right of payment to all existing and future Senior Indebtedness of such Note Guarantor;

• pari passu in right of payment with all existing and future Senior Subordinated Indebtedness of such Note Guarantor;

• senior in right of payment to any future Subordinated Obligations of such Note Guarantor; and

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• effectively subordinated to any Secured Indebtedness of such Note Guarantor and its Subsidiaries to the extent of the value of the assets securing such Indebtedness.

Principal, maturity and interest

We issued the Notes in an aggregate principal amount of $320 million under two separate indentures, relating to $220 million aggregate principal amount of 2000 Notes and $100 million aggregate principal amount of 2002 Notes, respectively. The Notes will mature on June 1, 2010. The Notes are in fully registered form, without coupons, in denominations of $1,000 and any integral multiple of $1,000. Each Note bears interest at a rate of 13% per annum from the most recent date to which interest has been paid or provided for. We pay interest semiannually on June 1 and December 1 of each year to Holders of record at the close of business on May 15 or November 15 immediately preceding the interest payment date. We will pay interest on overdue principal at the rate borne by the Notes and, to the extent lawful, overdue installments of interest at such rate.

Paying agent and registrar

We will pay the principal of, premium, if any, interest and liquidated damages, if any, on the Notes at any office of ours or any agency designated by us which is located in the Borough of Manhattan, The City of New York. We have initially designated the corporate trust office of the Trustee to act as our agent in such matters. The location of the corporate trust office is 15 Broad Street, New York, New York 10007. We, however, reserve the right to pay interest to Holders by check mailed directly to Holders at their registered addresses. Holders may exchange or transfer their Notes at the same location given above. No service charge will be made for any registration of transfer or exchange of Notes.

We, however, may require Holders to pay any transfer tax or other similar governmental charge payable in connection with any such transfer or exchange.

Optional redemption

Except as set forth in the following paragraph, the Company may not redeem the Notes prior to June 1, 2005. On or after that date, the Company may redeem the Notes, in whole or in part, on not less than 30 nor more than 60 days’ prior notice, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest and liquidated damages thereon, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest and liquidated damages, if any, due on the relevant interest payment date), if redeemed during the 12-month period commencing on June 1 of the years set forth below:

Year	Redemption Price
2005	106.500	%
2006	104.333	%
2007	102.167	%
2008 and thereafter	100.000	%

Prior to June 1, 2003, the Company may, on one or more occasions, also redeem up to a maximum of 35% of the original aggregate principal amount of the Notes issued under the applicable Indenture with the Net Cash Proceeds of one or more Equity Offerings by the Company at a redemption price equal to 113% of the principal amount thereof, plus accrued and unpaid interest and liquidated damages thereon, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that after giving effect to any such redemption:

(1) at least 65% of the original aggregate principal amount of the Notes issued under the applicable Indenture remains outstanding; and

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(2) any such redemption by the Company must be made within 120 days of such Equity Offering and must be made in accordance with certain procedures set forth in the Indentures.

Selection

If we partially redeem Notes under the applicable Indenture, the Trustee will select the Notes to be redeemed under that Indenture on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, although no Note of $1,000 in original principal amount will be redeemed in part. If we redeem any Note in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancelation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption so long as we have deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest and liquidated damages, if any, on, the Notes to be redeemed.

Ranking

The Notes are unsecured Senior Subordinated Indebtedness of the Company, subordinated in right of payment to all existing and future Senior Indebtedness of the Company, pari passu in right of payment with all existing and future Senior Subordinated Indebtedness of the Company and senior in right of payment to all future Subordinated Obligations of the Company. The Notes also are effectively subordinated to any Secured Indebtedness of the Company and its Subsidiaries to the extent of the value of the assets securing such Indebtedness. However, payment from the money or the proceeds of U.S. Government Obligations held in any defeasance trust described below under the caption “—Defeasance” will not be subordinated to any Senior Indebtedness or subject to the restrictions described herein.

The Company currently conducts certain of its operations through its Subsidiaries. To the extent any existing or future Subsidiary does not Guarantee the Notes, creditors of such Subsidiaries, including trade creditors and preferred stockholders (if any), generally will have priority with respect to the assets and earnings of such Subsidiaries over the claims of the Company’s creditors, including Holders. The Notes, therefore, are effectively subordinated to claims of creditors, including trade creditors, and preferred stockholders (if any) of Subsidiaries of the Company, including those formed or acquired in the future, that do not Guarantee the Notes. As of December 31, 2002, the Subsidiaries of the Company, other than those Subsidiaries that are Note Guarantors, had total liabilities, including trade payables, of approximately $57.1 million (excluding liabilities owed to the Company). As of December 31, 2002, there were outstanding:

(1) approximately $424.7 million of Senior Indebtedness of the Company, all of which was Secured Indebtedness (exclusive of unused commitments of $67.6 million under the Revolving Credit Facility);

(2) in addition to the Senior Subordinated Indebtedness of the Company represented by the Notes, no indebtedness of the Company that is subordinate or junior in right of payment to the Notes;

(3) no Senior Indebtedness of the Note Guarantors (other than the guarantees of Indebtedness under the Credit Agreement); and

(4) in addition to the Senior Subordinated Indebtedness of the Note Guarantors represented by the Note Guarantees, no Indebtedness of the Note Guarantors that is subordinate or junior in right of payment to the Note Guarantees.

Subject to certain conditions, the Indentures permit us to incur substantial amounts of additional Indebtedness. Such Indebtedness may be Senior Indebtedness. See “—Certain covenants—Limitation on Indebtedness” below.

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“Senior Indebtedness” of the Company or any Note Guarantor, as the case may be, means the principal of, premium (if any) and accrued and unpaid interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization of the Company or any Note Guarantor, as applicable, regardless of whether or not a claim for post-filing interest is allowed in such proceedings), and fees and all other amounts owing in respect of, Bank Indebtedness and all other Indebtedness of the Company or any Note Guarantor, as applicable, whether outstanding on the 2000 Notes Closing Date or thereafter Incurred, unless in the instrument creating or evidencing the same or pursuant to which the same is outstanding it is provided that such obligations are not superior in right of payment to the Notes or such Note Guarantor’s Note Guarantee; provided, however, that Senior Indebtedness shall not include:

(1) any obligation of the Company to any Subsidiary of the Company or of any Note Guarantor to the Company or any other Subsidiary of the Company;

(2) any liability for Federal, state, local or other taxes owed or owing by the Company or any Note Guarantor;

(3) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities);

(4) any Indebtedness or obligation of the Company or any Note Guarantor (and any accrued and unpaid interest in respect thereof) that by its terms is subordinate or junior in right of payment to any other Indebtedness or obligation of the Company or such Note Guarantor, as applicable, including any Senior Subordinated Indebtedness and any Subordinated Obligations;

(5) any obligations with respect to any Capital Stock; or

(6) any Indebtedness Incurred in violation of the Indentures, unless such Indebtedness was Incurred based on an Officers’ Certificate of the Company (delivered in good faith after reasonable investigation) to the effect that the Incurrence of such Indebtedness did not violate the provisions of the Indentures.

Only Indebtedness of the Company that is Senior Indebtedness will rank senior to the Notes. The Notes will rank pari passu in all respects with all other Senior Subordinated Indebtedness of the Company. The Company has agreed in the Indentures that it will not Incur, directly or indirectly, any Indebtedness which is subordinate or junior in right of payment to Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness merely because it is unsecured.

The Company may not pay principal of, premium (if any) or interest on the Notes, or make any deposit pursuant to the provisions described under “— Defeasance” below, and may not otherwise repurchase, redeem or otherwise retire any Notes (collectively, “pay the Notes”) if:

(1) any principal of, interest on, unpaid drawings for letters of credit in respect of, or regularly accruing fees with respect to any, Designated Senior Indebtedness of the Company is not paid when due, or

(2) any other default on Designated Senior Indebtedness of the Company occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms unless, in either case,

(x) the default has been cured or waived and any such acceleration has been rescinded, or

(y) such amounts due under Designated Senior Indebtedness have been paid in full;

provided, however, that the Company may pay the Notes without regard to the foregoing if the Company and the Trustee receive written notice approving such payment from the Representative of the Designated Senior Indebtedness with respect to which either of the events set forth in clause (1) or (2) above has occurred and is continuing.

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During the continuance of any default (other than a default described in clause (1) or (2) above) with respect to any Designated Senior Indebtedness of the Company pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, we may not pay the Notes for a period (a “Payment Blockage Period”) commencing upon the receipt by the Trustee (with a copy to us) of written notice, specified as a “Notice of Default” and describing with particularity the default under such Designated Senior Indebtedness (a “Blockage Notice”), of such default from the Representative of such Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days thereafter (or earlier if such Payment Blockage Period is terminated:

(1) by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice,

(2) by repayment in full of such Designated Senior Indebtedness, or

(3) because the default giving rise to such Blockage Notice is no longer continuing).

Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in the second preceding sentence and in the immediately succeeding paragraph), unless the holders of such Designated Senior Indebtedness or the Representative of such holders have accelerated the maturity of such Designated Senior Indebtedness, the Company may resume payments on the Notes after the end of such Payment Blockage Period, including any missed payments.

Not more than one Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period. However, if any Blockage Notice within such 360-day period is given by or on behalf of any holders of Designated Senior Indebtedness other than the Bank Indebtedness, the Representative of the Bank Indebtedness may give another Blockage Notice within such period. In no event, however, may the total number of days during which any Payment Blockage Period or Periods is in effect exceed 179 days in the aggregate during any 360 consecutive day period. For purposes of this paragraph, no default or event of default that existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Payment Blockage Period shall be, or be made, the basis of the commencement of a subsequent Payment Blockage Period by the Representative of such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such default or event of default shall have been cured or waived for a period of not less than 90 consecutive days.

Upon any payment or distribution of the assets of the Company to creditors upon a total or partial liquidation or a total or partial dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property:

(1) the holders of Senior Indebtedness of the Company will be entitled to receive payment in full of such Senior Indebtedness before the Holders of the Notes are entitled to receive any payment of principal of or interest on the Notes; and

(2) until such Senior Indebtedness is paid in full, any payment or distribution to which Holders would be entitled but for the subordination provisions of the Indentures will be made to holders of such Senior Indebtedness as their interests may appear, except that Holders of the Notes may receive:

(i) Capital Stock; and

(ii) debt securities that are subordinated to such Senior Indebtedness to at least the same extent as the Notes.

If a payment or distribution is made to Holders of the Notes that due to the subordination provisions of the Indentures should not have been made to them, such Holders will be required to hold it in trust for the

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benefit of the holders of Senior Indebtedness of the Company and pay it over to them as their interests may appear.

If payment of the Notes is accelerated because of an Event of Default, the Company or the Trustee shall promptly notify the holders of the Designated Senior Indebtedness of the Company (or their Representative) of the acceleration. If any such Designated Senior Indebtedness is outstanding, the Company may not pay the Notes until five Business Days after such holders or the Representative of such Designated Senior Indebtedness receive notice of such acceleration and, thereafter, may pay the Notes only if the subordination provisions of the Indentures otherwise permit payment at that time.

By reason of the subordination provisions of the Indentures, in the event of insolvency, creditors of the Company who are holders of Senior Indebtedness of the Company may recover more, ratably, than the Holders of the Notes, and creditors of the Company who are not holders of Senior Indebtedness of the Company or Senior Subordinated Indebtedness of the Company (including the Notes) may recover less, ratably, than holders of Senior Indebtedness and may recover more, ratably, than the holders of the Notes.

Note guarantees

The Note Guarantors and certain future Subsidiaries of the Company (as described below), as primary obligors and not merely as sureties, have jointly and severally unconditionally Guaranteed, or, in the case of future Subsidiaries, will jointly and severally unconditionally Guarantee, on an unsecured senior subordinated basis the performance and full and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all obligations of the Company under the Indentures (including obligations to the Trustee) and the Notes, whether for payment of principal of or interest on or liquidated damages in respect of the Notes, expenses, indemnification or otherwise (all such obligations guaranteed by such Note Guarantors being herein called the “Guaranteed Obligations”). Such Note Guarantors have agreed, or, in the case of future Subsidiaries, will agree, to pay, in addition to the amount stated above, any and all costs and expenses (including reasonable counsel fees and expenses) incurred by the Trustee or the Holders in enforcing any rights under the Note Guarantees. Each Note Guarantee is, or, in the case of future Subsidiaries, will be, limited to an amount not to exceed the maximum amount that can be Guaranteed by the applicable Note Guarantor without rendering the Note Guarantee, as it relates to such Note Guarantor, void or voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. The Company will cause each Domestic Subsidiary and any other Restricted Subsidiary that guarantees any Senior Indebtedness (other than a Foreign Subsidiary that guarantees Senior Indebtedness Incurred by another Foreign Subsidiary) to execute and deliver to the Trustee a supplemental indenture pursuant to which such Restricted Subsidiary will Guarantee payment of the Notes. See “—Certain covenants—Future Note Guarantors” below.

The obligations of a Note Guarantor under its Note Guarantee are senior subordinated obligations. As such, the rights of Holders to receive payment by a Note Guarantor pursuant to its Note Guarantee will be subordinated in right of payment to the rights of holders of Senior Indebtedness of such Note Guarantor. The terms of the subordination provisions described above with respect to the Company’s obligations under the Notes apply equally to a Note Guarantor and the obligations of such Note Guarantor under its Note Guarantee.

Each Note Guarantee is a continuing guarantee and shall (a) remain in full force and effect until payment in full of all the Guaranteed Obligations or such Note Guarantee is released upon the merger or the sale of all the Capital Stock or assets of the Note Guarantor in compliance with the conditions set forth in the Indentures under “—Merger and consolidation” or “—Certain covenants—Limitation on Sales of Assets and Subsidiary Stock,” (b) be binding upon each Note Guarantor and its successors and (c) inure to the benefit of, and be enforceable by, the Trustee, the Holders and their successors, transferees and assigns.

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Change of control

Upon the occurrence of any of the following events (each a “Change of Control”), each Holder will have the right to require the Company to repurchase all or any part of such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest and liquidated damages, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest and liquidated damages, if any, due on the relevant interest payment date); provided, however, that notwithstanding the occurrence of a Change of Control, the Company shall not be obligated to repurchase the Notes under the applicable Indenture pursuant to this section in the event that it has exercised its right to redeem all the Notes outstanding under that Indenture under the terms of the section titled “Optional redemption:”

(1) prior to the first public offering of common stock of the Company, the Permitted Holders cease to be the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a majority in the aggregate of the total voting power of the Voting Stock of the Company, whether as a result of issuance of securities of the Company, any merger, consolidation, liquidation or dissolution of the Company, any direct or indirect transfer of securities by any Permitted Holder or otherwise (for purposes of this clause (1) and clause (2) below, the Permitted Holders shall be deemed to beneficially own any Voting Stock of an entity (the “specified entity”) held by any other entity (the “parent entity”) so long as the Permitted Holders beneficially own (as so defined), directly or indirectly, in the aggregate a majority of the voting power of the Voting Stock of the parent entity);

(2) (A) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, including any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than one or more Permitted Holders, is or becomes the beneficial owner (as defined in clause (1) above, except that for purposes of this clause (2) a person (including a Permitted Holder) shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately, only after the passage of time, upon the happening of any event or otherwise), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company and (B) the Permitted Holders “beneficially own” (as defined in clause (1) above), directly or indirectly, in the aggregate a lesser percentage of the total voting power of the Voting Stock of the Company than such other person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of the Company (for the purposes of this clause (2), such other person shall be deemed to beneficially own any Voting Stock of a specified entity held by a parent entity, if such other person is the beneficial owner (as defined in this clause (2)), directly or indirectly, of more than 50% of the voting power of the Voting Stock of such parent entity and the Permitted Holders “beneficially own” (as defined in clause (1) above), directly or indirectly, in the aggregate a lesser percentage of the voting power of the Voting Stock of such parent entity and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of such parent entity);

(3) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors (A) selected in accordance with the Stockholders Agreement so long as such agreement is in effect or otherwise nominated by the Permitted Holders or (B) whose election by the Board of Directors of the Company or whose nomination for election by the stockholders of the Company was approved by a vote of at least a majority of the members of the Board of Directors of the Company, then still in office, who were either directors at the beginning of such period or whose election or nomination for election was previously so approved by the Board of Directors or in accordance with the Stockholders Agreement or otherwise by the Permitted Holders) cease for any reason to constitute a majority of the Board of Directors of the Company then in office;

(4) the adoption of a plan relating to the liquidation or dissolution of the Company; or

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(5) the merger or consolidation of the Company with or into another Person or the merger of another Person with or into the Company, or the sale of all or substantially all the assets of the Company to another Person (other than a Person that is controlled by the Permitted Holders), and, in the case of any such merger or consolidation, the securities of the Company that are outstanding immediately prior to such transaction and which represent 100% of the aggregate voting power of the Voting Stock of the Company are changed into or exchanged for cash, securities or property, unless pursuant to such transaction such securities are changed into or exchanged for, in addition to any other consideration, securities of the surviving Person or transferee that represent immediately after such transaction, at least a majority of the aggregate voting power of the Voting Stock of the surviving Person or transferee.

In the event that at the time of such Change of Control the terms of any agreement governing Bank Indebtedness of the Company or its Subsidiaries restrict or prohibit the repurchase of Notes pursuant to this covenant, then prior to the mailing of the notice to Holders provided for in the immediately following paragraph but in any event within 30 days following any Change of Control, the Company shall:

(1) repay in full all such Bank Indebtedness or offer to repay in full all such Bank Indebtedness and repay the Indebtedness of each lender who has accepted such offer, or

(2) obtain the requisite consent of the lenders under such agreements to permit the repurchase of the Notes as provided for below.

If the Company does not obtain such consents or repay such Bank Indebtedness, the Company will remain prohibited from repurchasing the Notes pursuant to this covenant. In such event the Company’s failure to make an offer to purchase Notes pursuant to this covenant would constitute an Event of Default under the Indentures which in turn would constitute a default under the Credit Agreement. In such circumstances, the subordination provisions of the Indentures would likely prohibit payments to Holders of the Notes.

Within 30 days following any Change of Control, the Company shall mail a notice to each Holder with a copy to the Trustee (the “Change of Control Offer”) stating:

(1) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase all or a portion (in integral multiples of $1,000) of such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest and liquidated damages, if any, to the date of repurchase (subject to the right of Holders of record on the relevant record date to receive interest and liquidated damages, if any, on the relevant interest payment date);

(2) the circumstances and relevant facts and financial information regarding such Change of Control;

(3) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and

(4) the instructions determined by the Company, consistent with this covenant, that a Holder must follow in order to have its Notes purchased.

The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indentures applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof.

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The Change of Control purchase feature is a result of negotiations between the Company and the initial purchasers of the Notes. Management has no present intention to engage in a transaction involving a Change of Control, although it is possible that the Company would decide to do so in the future. Subject to the limitations discussed below, the Company could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the Indentures, but that could increase the amount of indebtedness outstanding at such time or otherwise affect the Company’s capital structure or credit ratings. Restrictions on the ability of the Company to incur additional Indebtedness are contained in the covenants described under “—Certain covenants—Limitation on Indebtedness.” Such restrictions can only be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding. Except for the limitations contained in such covenants, however, the Indentures do not contain any covenants or provisions that may afford Holders protection in the event of a highly leveraged transaction.

The occurrence of certain of the events which would constitute a Change of Control would constitute a default under the Credit Agreement. Future Senior Indebtedness of the Company may contain prohibitions of certain events which would constitute a Change of Control or require such Senior Indebtedness to be repurchased upon a Change of Control. Moreover, the exercise by the Holders of their right to require the Company to repurchase the Notes could cause a default under such Senior Indebtedness, even if the Change of Control itself does not, due to the financial effect of such repurchase on the Company. Finally, the Company’s ability to pay cash to the Holders upon a repurchase may be limited by the Company’s then existing financial resources. There can be no assurance that the Company will have sufficient funds available when necessary to make any required repurchases. The provisions under the applicable Indenture relative to the Company’s obligation to make an offer to repurchase the Notes outstanding under that Indenture as a result of a Change of Control may be waived or modified with the written consent of the Holders of a majority in principal amount of the Notes outstanding under that Indenture.

Certain covenants

The Indentures contain covenants including, among others, the following:

Limitation on Indebtedness. (a) The Company will not, and will not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness; provided, however, that the Company or any Restricted Subsidiary that is a Note Guarantor may Incur Indebtedness if on the date of such Incurrence and after giving effect thereto the Consolidated Coverage Ratio would be greater than 2.00:1.00 if such Indebtedness is Incurred on or prior to December 31, 2002 and 2.25:1.00 if such Indebtedness is Incurred thereafter.

(b) Notwithstanding the foregoing paragraph (a), the Company and its Restricted Subsidiaries may Incur the following Indebtedness:

(1) Indebtedness Incurred pursuant to the Credit Agreement in an aggregate principal amount not to exceed $580.0 million at any one time outstanding less the aggregate amount of all repayments of principal of such Indebtedness pursuant to the covenant described under “—Limitation on Sales of Assets and Subsidiary Stock;”

(2) Indebtedness of the Company owed to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by the Company or any Restricted Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Capital Stock or any other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the issuer thereof, (B) if the Company is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes, (C) if a Restricted Subsidiary is the obligor on such Indebtedness,

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such Indebtedness is made pursuant to an intercompany note and (D) if a Note Guarantor is the obligor on such Indebtedness and the Company is not the obligee, such Indebtedness is subordinated in right of payment to the Note Guarantee of such Note Guarantor;

(3) Indebtedness (A) represented by the Notes and the Note Guarantees, (B) outstanding on the 2000 Notes Closing Date (other than the Indebtedness described in clauses (1) and (2) above) or Incurred pursuant to Section 4.03(a) of the 2000 Notes Indenture prior to the Closing Date, (C) consisting of Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (3) (including Refinancing Indebtedness) or the foregoing paragraph (a) and (D) consisting of Guarantees of any Indebtedness otherwise permitted by the terms of the Indentures;

(4) (A) Indebtedness Incurred pursuant to Section 4.03(b)(iv) of the 2000 Notes Indenture, (B) Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Subsidiary of or was otherwise acquired by the Company) and (C) Refinancing Indebtedness Incurred by a Restricted Subsidiary in respect of Indebtedness Incurred by such Restricted Subsidiary pursuant to this clause (4);

(5) Indebtedness of the Company or a Restricted Subsidiary (A) in respect of performance bonds, bankers’ acceptances, letters of credit and surety or appeal bonds provided by the Company and its Restricted Subsidiaries in the ordinary course of their business, and (B) under Commodity Agreements, Interest Rate Agreements and Currency Agreements entered into for bona fide hedging purposes of the Company or any Restricted Subsidiary in the ordinary course of business; provided, however, that such Interest Rate Agreements or Currency Agreements do not increase the principal amount of Indebtedness of the Company and its Restricted Subsidiaries outstanding at any time other than as a result of fluctuations in interest rates or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;

(6) (A) Indebtedness Incurred pursuant to Section 4.03(b)(vi) of the 2000 Notes Indenture and (B) Indebtedness (including Capitalized Lease Obligations and Attributable Debt) Incurred by the Company or any of its Restricted Subsidiaries to finance the purchase, lease or improvement of property (real or personal), equipment or other assets (in each case whether through the direct purchase of assets or the Capital Stock of any Person owning such assets); provided that the aggregate principal amount of all Indebtedness Incurred pursuant to subclauses (A) and (B) of this clause (6) and all Refinancing Indebtedness Incurred to refund, refinance or replace any Indebtedness Incurred pursuant to subclauses (A) and (B) of this clause (6), at any time outstanding, does not exceed the greater of (x) 5.0% of Tangible Assets and (y) $30.0 million;

(7) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course, provided that such Indebtedness is extinguished within five Business Days of Incurrence;

(8) Indebtedness of the Company and its Restricted Subsidiaries arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case incurred or assumed in connection with the disposition of any business, assets or a Subsidiary of the Company in accordance with the terms of the Indentures, other than Guarantees by the Company or any Restricted Subsidiary of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary of the Company for the purpose of financing such acquisition; provided, however, that the maximum aggregate liability in respect of all such Indebtedness shall not exceed the gross proceeds, including the fair market value as determined in good faith by a majority of the Board of Directors of noncash proceeds (the fair market value of such noncash proceeds being measured at the time it is received and without giving effect to any subsequent changes in

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value), actually received by the Company and its Restricted Subsidiaries in connection with such disposition;

(9) the Incurrence by a Securitization Entity of Indebtedness in a Qualified Securitization Transaction that is not recourse to the Company or any Restricted Subsidiary of the Company (except for Standard Securitization Undertakings);

(10) (A) Indebtedness incurred pursuant to Section 4.03(b)(x) of the 2000 Notes Indenture and (B) Indebtedness of Foreign Subsidiaries; provided that the aggregate outstanding amount of Indebtedness incurred by such Foreign Subsidiaries under subclauses (A) and (B) of this clause (10) does not exceed at any one time an amount equal to the sum of (A) 80% of the consolidated book value of the accounts receivable of all Foreign Subsidiaries and (B) 60% of the consolidated book value of the inventory of all Foreign Subsidiaries;

(11) Indebtedness under any Domestic Overdraft Facility; or

(12) (A) Indebtedness incurred pursuant to Section 4.03(b)(xii) of the 2000 Notes Indenture and (B) Indebtedness of the Company and its Restricted Subsidiaries (in addition to Indebtedness permitted to be Incurred pursuant to the foregoing paragraph (a) or any other clause of this paragraph (b)); provided that the aggregate principal amount on the date of Incurrence, when added to all other Indebtedness Incurred pursuant to subclauses (A) and (B) of this clause (12) and then outstanding, will not exceed $20.0 million.

(c) Notwithstanding the foregoing, the Company may not Incur any Indebtedness pursuant to paragraph (b) above if the proceeds thereof are used, directly or indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any Subordinated Obligations unless such Indebtedness will be subordinated to the Notes to at least the same extent as such Subordinated Obligations. The Company may not Incur any Indebtedness pursuant to paragraphs (a) or (b) above if such Indebtedness is subordinate or junior in right of payment to any Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is expressly subordinated in right of payment to Senior Subordinated Indebtedness. In addition, the Company may not Incur any Secured Indebtedness which is not Senior Indebtedness unless contemporaneously therewith effective provision is made to secure the Notes equally and ratably with (or on a senior basis to, in the case of Indebtedness subordinated in right of payment to the Notes) such Secured Indebtedness for so long as such Secured Indebtedness is secured by a Lien, except for Senior Subordinated Indebtedness and Subordinated Obligations secured by Liens on the assets of any entity existing at the time such entity is acquired by, and becomes a Restricted Subsidiary of, the Company, whether by merger, consolidation, purchase of assets or otherwise, provided that such Liens (x) are not created, incurred or assumed in connection with, or in contemplation of such entity being acquired by the Company and (y) do not extend to any other assets of the Company or any of its other Subsidiaries. A Note Guarantor may not Incur any Indebtedness if such Indebtedness is by its terms expressly subordinate or junior in right of payment to any Senior Indebtedness of such Note Guarantor unless such Indebtedness is Senior Subordinated Indebtedness of such Note Guarantor or is expressly subordinated in right of payment to Senior Subordinated Indebtedness of such Note Guarantor. In addition, a Note Guarantor may not Incur any Secured Indebtedness that is not Senior Indebtedness of such Note Guarantor unless contemporaneously therewith effective provision is made to secure the Note Guarantee of such Note Guarantor equally and ratably with (or on a senior basis to, in the case of Indebtedness subordinated in right of payment to such Note Guarantee) such Secured Indebtedness for as long as such Secured Indebtedness is secured by a Lien, except for Senior Subordinated Indebtedness and Subordinated Obligations of such Note Guarantor secured by Liens on the assets of any entity existing at the time such entity is acquired by such Note Guarantor, whether by merger, consolidation, purchase of assets or otherwise, provided that such Liens (x) are not created, incurred or assumed in connection with or in contemplation of such assets being acquired by such Note Guarantor and (y) do not extend to any other assets of the Company or any of its other Subsidiaries.

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(d) Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rates of currencies. For purposes of determining the outstanding principal amount of any particular Indebtedness Incurred pursuant to this covenant:

(1) Indebtedness Incurred pursuant to the Credit Agreement prior to or on the 2000 Notes Closing Date shall be treated as Incurred pursuant to clause (1) of paragraph (b) above,

(2) Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included,

(3) If obligations in respect of letters of credit are Incurred pursuant to the Credit Agreement and are being treated as Incurred pursuant to clause (1) of paragraph (b) above and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included,

(4) The principal amount of any Disqualified Stock of the Company or a Restricted Subsidiary or Preferred Stock of a Restricted Subsidiary that is not a Note Guarantor will be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the maximum liquidation preference,

(5) The principal amount of Indebtedness, Disqualified Stock of the Company or a Restricted Subsidiary or Preferred Stock of a Restricted Subsidiary that is not a Note Guarantor issued at a price less than the principal amount thereof, the maximum fixed redemption or repurchase price thereof or liquidation preference thereof, as applicable, will be equal to the amount of the liability or obligation in respect thereof determined in accordance with GAAP,

(6) If such Indebtedness is denominated in a currency other than U.S. dollars, the U.S. dollar equivalent principal amount thereof will be calculated based on the relevant currency exchange rates in effect on the date such Indebtedness was Incurred,

(7) The accrual of interest, accrual of dividends, the accretion of accreted value, the payment of interest in the form of additional Indebtedness and the payment of dividends or distributions in the form of additional Capital Stock will not be deemed an Incurrence of Indebtedness for purposes of this covenant,

(8) Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness, and

(9) In the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in this covenant (including references to Indebtedness incurred pursuant to certain sections of the 2000 Notes Indenture), the Company, in its sole discretion, will classify (or later reclassify) such Indebtedness and only be required to include the amount of such Indebtedness in one of such clauses.

Limitation on Restricted Payments. (a) The Company will not, and will not permit any Restricted Subsidiary, directly or indirectly, to:

(1) declare or pay any dividend or make any distribution of any kind on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company) or similar payment to the holders (solely in their capacities as such) of its Capital Stock except dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock) and except dividends or distributions payable to the Company or another Restricted Subsidiary (and, if such Restricted Subsidiary has shareholders other than the Company or other Restricted Subsidiaries, to its other shareholders on a pro rata basis),

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(2) purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company or any Restricted Subsidiary held by Persons other than the Company or another Restricted Subsidiary,

(3) purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment any Subordinated Obligations (other than (A) the purchase, repurchase or other acquisition of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of acquisition and (B) Indebtedness described in clause (2) of paragraph (b) of the covenant described under “—Limitation on Indebtedness”), or

(4) make any Investment (other than a Permitted Investment) in any Person (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Investment being herein referred to as a “Restricted Payment”) if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:

(A) a Default will have occurred and be continuing (or would result therefrom);

(B) the Company could not Incur at least $1.00 of additional Indebtedness under paragraph (a) of the covenant described under “—Limitation on Indebtedness;” or

(C) the aggregate amount of such Restricted Payment and all other Restricted Payments (the amount so expended, if other than in cash, to be determined in good faith by the Board of Directors, whose determination will be conclusive and evidenced by a resolution of the Board of Directors) declared or made subsequent to the 2000 Notes Closing Date would exceed the sum, without duplication, of:

(i) 50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter immediately following the fiscal quarter during which the 2000 Notes Closing Date occurred to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which consolidated financial statements of the Company are publicly available (or, in case such Consolidated Net Income will be a deficit, minus 100% of such deficit);

(ii) 100% of the aggregate Net Cash Proceeds (other than in respect of an Excluded Contribution) received by the Company (x) as capital contributions to the Company after the 2000 Notes Closing Date or (y) from the issue or sale of its Capital Stock (other than Disqualified Stock) subsequent to the 2000 Notes Closing Date (other than a capital contribution from or an issuance or sale to (a) a Subsidiary of the Company or (b) an employee equity ownership or participation plan or other trust established by the Company or any of its Subsidiaries);

(iii) 100% of the fair market value (as determined in good faith by the Board of Directors of the Company) of shares of Qualified Stock of the Company or any Restricted Subsidiary issued after the 2000 Notes Closing Date to acquire assets from a third party;

(iv) the amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company’s balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the 2000 Notes Closing Date of any Indebtedness of the Company or its Restricted Subsidiaries issued after the 2000 Notes Closing which is convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash or the fair market value of other property distributed by the Company or any Restricted Subsidiary upon such conversion or exchange);

(v) 100% of the aggregate amount received by the Company or any Restricted Subsidiary in cash from the sale or other disposition (other than to (x) the Company or a Subsidiary of the Company or (y) an employee equity ownership or participation plan or other trust established by the Company or any of its Subsidiaries) of Restricted Investments made by the Company or any Restricted Subsidiary after the 2000 Notes Closing Date and from repurchases and redemptions of such Restricted

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Investments from the Company or any Restricted Subsidiary by any Person (other than (x) the Company or any of its Subsidiaries or (y) an employee equity ownership or participation plan or other trust established by the Company or any of its Restricted Subsidiaries) and from repayments of loans or advances which constituted Restricted Investments;

(vi) the amount equal to the net reduction in Investments in Unrestricted Subsidiaries since the 2000 Notes Closing Date, resulting from (x) payments of dividends, repayments of the principal of loans or advances or other transfers of assets to the Company or any Restricted Subsidiary from Unrestricted Subsidiaries or (y) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of “Investment”) not to exceed, in the case of any Unrestricted Subsidiary, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Unrestricted Subsidiary, which amount was included in the calculation of the amount of Restricted Payments; and

(vii) $5.0 million.

(b) The provisions of the foregoing paragraph (a) will not prohibit:

(1) any purchase, repurchase, retirement or other acquisition or retirement for value of, or other distribution in respect of, Capital Stock of the Company made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company or capital contributions to the Company after the 2000 Notes Closing Date (other than Disqualified Stock and other than Capital Stock issued or sold to, or capital contributions from, a Subsidiary of the Company or an employee equity ownership or participation plan or other trust established by the Company or any of its Subsidiaries); provided, however, that:

(A) such Restricted Payment will be excluded in the calculation of the amount of Restricted Payments, and

(B) the Net Cash Proceeds from such sale or capital contribution applied in the manner set forth in this clause (1) will be excluded from the calculation of amounts under clause (4)(C)(ii) of paragraph (a) above;

(2) any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations of the Company or a Restricted Subsidiary made by exchange for, or out of the proceeds of the substantially concurrent sale of, (x) Capital Stock of the Company or a Restricted Subsidiary or (y) Subordinated Obligations of the Company or a Restricted Subsidiary that are permitted to be Incurred pursuant to the covenant described under “—Limitation on Indebtedness;” provided, however, that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value will be excluded in the calculation of the amount of Restricted Payments;

(3) any purchase or redemption of Subordinated Obligations from Net Available Cash to the extent permitted by the covenant described under “—Limitation on Sales of Assets and Subsidiary Stock;” provided, however, that such purchase or redemption will be excluded in the calculation of the amount of Restricted Payments;

(4) Investments that are made with Excluded Contributions; provided, however, that such Investments shall be excluded in the calculation of the amount of Restricted Payments;

(5) dividends or other distributions paid to holders of, or redemptions from holders of, Capital Stock within 60 days after the date of declaration thereof, or the giving of formal notice of redemption, if at such date of declaration such dividends or other distributions or redemptions would have complied with this covenant; provided, however, that such dividends, distributions or redemptions will be included in the calculation of the amount of Restricted Payments;

(6) any repurchase of Capital Stock owned by former officers, directors, consultants or employees of the Company or its Subsidiaries or their assigns, estates and heirs or entities controlled by them,

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provided, however, that the amount of such repurchases since the 2000 Notes Closing Date shall not, in the aggregate, exceed the sum of (A) $10.0 million (which amount shall be increased by the amount of any Net Cash Proceeds to the Company from (i) sales of Capital Stock of the Company to management, other employees or Permitted Holders subsequent to the 2000 Notes Closing Date to the extent such amounts are not included under clause 4(C)(ii) of paragraph (a) above and (ii) any “key-man” life insurance policies which are used to make such repurchases) and (B) $2.0 million per fiscal year of the Company commencing with fiscal year 2000 (which amount may be used in a subsequent fiscal year to the extent not used during a fiscal year); provided further, however, that the cancelation of Indebtedness owing to the Company from such former officers, directors, consultants or employees of the Company or any of its Restricted Subsidiaries in connection with a repurchase of Capital Stock of the Company will not be deemed to constitute a Restricted Payment under the Indentures, provided further, however, that such repurchase will be included in the calculation of the amount of Restricted Payments;

(7) any of the transactions pursuant to the Recapitalization Agreement; provided, however, that such amounts will be excluded in the calculation of the amount of Restricted Payments;

(8) repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price thereof; provided, however, that such repurchases will be excluded in the calculation of the amount of Restricted Payments; or

(9) so long as no Default or Event of Default shall have occurred and be continuing, payments not to exceed $500,000 in the aggregate since the 2000 Notes Closing Date to enable the Company to make payments to holders of its Capital Stock in lieu of the issuance of fractional shares of its Capital Stock; provided, however, that such payments will be excluded in the calculation of the amount of Restricted Payments.

Limitation on Restrictions on Distributions from Restricted Subsidiaries. The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Capital Stock or pay any Indebtedness or other obligations owed to the Company or any of its Restricted Subsidiaries (it being understood that the priority of any preferred stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock);

(2) make any loans or advances to the Company (it being understood that the subordination of loans or advances made to the Company to other Indebtedness Incurred by the Company shall not be deemed a restriction on the ability to make loans or advances); or

(3) transfer any of its property or assets to the Company, except:

(A) any encumbrance or restriction pursuant to applicable law or any applicable rule, regulation or order, or an agreement in effect at or entered into on the 2000 Notes Closing Date (including the Credit Agreement);

(B) any encumbrance or restriction with respect to a Restricted Subsidiary pursuant to an agreement relating to any Capital Stock or Indebtedness of such Restricted Subsidiary, in each case Incurred by such Restricted Subsidiary prior to the date on which such Restricted Subsidiary was acquired by the Company (other than Capital Stock or Indebtedness Incurred as consideration in, in contemplation of, or to provide all or any portion of the funds or credit support utilized to consummate the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by the Company) and outstanding on such date;

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(C) any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (A) or (B) of this covenant or this clause (C) or contained in any amendment to an agreement referred to in clause (A) or (B) of this covenant or this clause (C); provided, however, that the encumbrances and restrictions contained in any such Refinancing agreement or amendment are no more restrictive, taken as a whole, than the encumbrances and restrictions contained in such predecessor agreements;

(D) in the case of clause (3), any encumbrance or restriction

(i) that restricts in a customary manner the assignment of any lease, license or similar contract or the subletting, assignment or transfer of any property or asset that is subject to a lease, license or similar contract,

(ii) that is or was created by virtue of any transfer of, agreement to transfer or option or right with respect to any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by the Indentures,

(iii) contained in security agreements securing Indebtedness of a Restricted Subsidiary to the extent such encumbrance or restriction restricts the transfer of the property subject to such security agreements, or

(iv) encumbrances or restrictions relating to Indebtedness permitted to be Incurred pursuant to clause (b)(6) of the covenant described under “—Limitation on Indebtedness” for property acquired in the ordinary course of business that only imposes encumbrances or restrictions on the property so acquired (it being agreed that any such encumbrance or restriction may also secure other Indebtedness permitted to be Incurred by the Company and provided by the same financing source providing the Indebtedness Incurred pursuant to such clause (b)(6));

(E) with respect to a Restricted Subsidiary, any restriction imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;

(F) customary provisions in joint venture agreements and other similar agreements entered into in the ordinary course of business;

(G) Indebtedness or other contractual requirements of a Securitization Entity in connection with a Qualified Securitization Transaction; provided, that such restrictions apply only to such Securitization Entity;

(H) net worth provisions in leases and other agreements entered into by the Company or any Restricted Subsidiary in the ordinary course of business; and

(I) any agreement or instrument governing Indebtedness (whether or not outstanding) of Foreign Subsidiaries of the Company permitted to be Incurred pursuant to clause (a) or (b)(10) under the caption “—Limitation on Indebtedness.”

Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will not, and will not permit any Restricted Subsidiary to, make any Asset Disposition unless:

(1) the Company or such Restricted Subsidiary receives consideration (including by way of relief from, or by any other Person assuming sole responsibility for, any liabilities, contingent or otherwise) at the time of such Asset Disposition at least equal to the fair market value of the Capital Stock and assets subject to such Asset Disposition,

(2) at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of (A) cash or Temporary Cash Investments, (B) properties and assets to be owned by the Company or any Restricted Subsidiary and used in a Permitted Business or (C) Capital

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Stock in one or more Persons engaged in a Permitted Business that are or thereby become Restricted Subsidiaries of the Company, and

(3) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be)

(A) first, (i) to the extent the Company elects (or is required by the terms of any Indebtedness), to prepay, repay, redeem or purchase (x) Bank Indebtedness or (y) other Senior Indebtedness of the Company or Indebtedness (other than any Disqualified Stock) of a Restricted Subsidiary (in the case of clause (y), other than Indebtedness owed to the Company or an Affiliate of the Company and other than Preferred Stock of a Restricted Subsidiary that is not a Note Guarantor) or (ii) to the extent the Company or such Restricted Subsidiary elects, to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary or the application by the Company of the Net Available Cash received by a Restricted Subsidiary of the Company), in each case within 365 days (or, in the case of Foreign Subsidiary Asset Dispositions, 545 days) from the later of such Asset Disposition or the receipt of such Net Available Cash, provided that pending the final application of any such Net Available Cash, the Company and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Available Cash in any manner not prohibited by the Indentures;

(B) second, within 365 days from the later of such Asset Disposition or the receipt of such Net Available Cash (or, in the case of Foreign Subsidiary Asset Dispositions, 545 days), to the extent of the balance of such Net Available Cash after such application in accordance with clause (A), to make an Offer (as defined below) to purchase Notes pursuant to and subject to the conditions set forth in section (b) of this covenant; provided, however, that if the Company elects (or is required by the terms of any Senior Subordinated Indebtedness), such Offer may be made ratably to purchase the Notes and other Senior Subordinated Indebtedness of the Company; and

(C) third, to the extent of the balance of such Net Available Cash after application in accordance with clauses (A) (other than the proviso thereof) and (B), for any general corporate purpose not restricted by the terms of the Indentures;

provided, however that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (A) or (B) above, the Company or such Restricted Subsidiary will retire such Indebtedness and will cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased.

Notwithstanding the foregoing provisions of this covenant, the Company and the Restricted Subsidiaries will not be required to apply any Net Available Cash in accordance with this covenant except to the extent that the aggregate Net Available Cash from all Asset Dispositions since the 2000 Notes Closing Date that is not applied in accordance with this covenant or Section 4.06 of the 2000 Notes Indenture exceeds $10.0 million since the 2000 Notes Closing Date.

For the purposes of this covenant, the following are deemed to be cash:

• the assumption of any liabilities of the Company (other than Disqualified Stock of the Company) or any Restricted Subsidiary and the release of the Company or such Restricted Subsidiary from all liability on such liabilities in connection with such Asset Disposition, and

• securities received by the Company or any Restricted Subsidiary from the transferee that are promptly converted by the Company or such Restricted Subsidiary into cash.

(b) In the event of an Asset Disposition that requires the purchase of Notes (and other Senior Subordinated Indebtedness) pursuant to clause (a)(3)(B) of this covenant, the Company will be required to purchase Notes (and other Senior Subordinated Indebtedness) tendered pursuant to an offer by the Company for the Notes (and other Senior Subordinated Indebtedness) (the “Offer”) at a purchase price of

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100% of their principal amount plus accrued and unpaid interest and liquidated damages thereon, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date) in accordance with the procedures (including prorating in the event of oversubscription), set forth in the Indentures. If the aggregate purchase price of Notes (and other Senior Subordinated Indebtedness) tendered pursuant to the Offer is less than the Net Available Cash allotted to the purchase of the Notes (and other Senior Subordinated Indebtedness), the Company may apply the remaining Net Available Cash for any general corporate purpose not restricted by the terms of the Indentures. The Company will not be required to make an Offer for Notes (and other Senior Subordinated Indebtedness) pursuant to this covenant if the Net Available Cash available therefor (after application of the proceeds as provided in clause (a)(3)(A)) is less than $10.0 million for any particular Asset Disposition since the 2000 Notes Closing Date (which lesser amount will be carried forward for purposes of determining whether an Offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). Upon completion of the Offer, the amount of Net Available Cash shall be reduced to zero.

(c) The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this covenant. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this covenant by virtue thereof. The provisions under the applicable Indenture relative to the Company’s obligation to make an offer to repurchase the Notes outstanding under that Indenture as a result of an Asset Disposition may be waived or modified with the written consent of the Holders of a majority in principal amount of the Notes outstanding under that Indenture.

Limitation on Transactions with Affiliates. (a) The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an “Affiliate Transaction”) unless such transaction is on terms:

(1) that are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained at the time of such transaction in arm’s-length dealings with a Person who is not such an Affiliate,

(2) that, in the event such Affiliate Transaction involves an aggregate amount in excess of $5.0 million,

(A) are set forth in writing, and

(B) except as provided in clause (a)(3) below, have been approved by a majority of the members of the Board of Directors having no personal stake in such Affiliate Transaction (if any such members exist), and

(3) that, in the event (i) such Affiliate Transaction involves an amount in excess of $10.0 million, or (ii) if there are no members of the Board of Directors having no personal stake in such Affiliate Transaction and such Affiliate Transaction involves an aggregate amount in excess of $5.0 million, have been determined by a nationally recognized appraisal, accounting or investment banking firm to be fair, from a financial standpoint, to the Company and its Restricted Subsidiaries.

(b) The provisions of the foregoing paragraph (a) will not prohibit:

(1) any Restricted Payment permitted to be paid pursuant to the covenant described under “—Limitation on Restricted Payments,”

(2) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, options to purchase Capital Stock of the

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Company and equity ownership, restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefits plans approved by the Board of Directors,

(3) the grant of options (and the exercise thereof) to purchase Capital Stock of the Company or similar rights to employees and directors of the Company pursuant to plans approved by the Board of Directors,

(4) loans or advances to officers, directors or employees in the ordinary course of business, but in any event not to exceed $2.0 million in the aggregate outstanding at any one time with respect to all loans or advances made since the 2000 Notes Closing Date,

(5) the payment of reasonable fees to directors of the Company and its Subsidiaries who are not employees of the Company or its Subsidiaries and other reasonable fees, compensation, benefits and indemnities paid or entered into by the Company or its Restricted Subsidiaries in the ordinary course of business to or with the officers, directors or employees of the Company and its Restricted Subsidiaries,

(6) any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries,

(7) the provision by Persons who may be deemed Affiliates or stockholders of the Company (other than J.P. Morgan Partners, LLC and Persons directly or indirectly controlled by J.P. Morgan Partners, LLC) of investment banking, commercial banking, trust, lending or financing, investment, underwriting, placement agent, financial advisory or similar services to the Company or its Subsidiaries performed after the 2000 Notes Closing Date,

(8) sales of Capital Stock to Permitted Holders approved by a majority of the members of the Board of Directors who do not have a material direct or indirect financial interest in or with respect to the transaction being considered, or

(9) the existence or performance by the Company or any Restricted Subsidiary under any agreement as in effect as of the 2000 Notes Closing Date (including the Recapitalization Agreement and the agreements to be entered into pursuant thereto or any amendment thereto) or replacement agreement therefor or any transaction contemplated thereby (including pursuant to any amendment thereto or replacement agreement therefor) so long as such amendment or replacement is not more disadvantageous to the Holders of the Notes in any material respect than the original agreement as in effect on the 2000 Notes Closing Date.

SEC Reports. Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will file with the SEC (if permitted by SEC practice and applicable law and regulations) and provide the Trustee and Holders and prospective Holders (upon request) within 15 days after it files them with the SEC (or if not permitted, within 15 days after it would have otherwise been required to file them with the SEC), copies of the Company’s annual report and the information, documents and other reports that are specified in Sections 13 and 15(d) of the Exchange Act. In addition, following the existence of a Public Market, the Company will furnish to the Trustee and the Holders, promptly upon their becoming available, copies of the annual report to shareholders and any other information provided by the Company to its shareholders generally. The Company also will comply with the other provisions of Section 314(a) of the TIA.

Future Note Guarantors. The Company will cause each Domestic Subsidiary and any other Restricted Subsidiary that guarantees any Senior Indebtedness (other than a Foreign Subsidiary that guarantees Senior Indebtedness Incurred by another Foreign Subsidiary) to become a Note Guarantor, and, if applicable, execute and deliver to the Trustee a supplemental indenture in the form set forth in the Indentures pursuant to which such Domestic or other Restricted Subsidiary will Guarantee payment of the Notes. Each Note Guarantee will be limited to an amount not to exceed the maximum amount that can be Guaranteed by that Domestic or other Restricted Subsidiary without rendering the Note Guarantee, as it

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relates to such Domestic or other Restricted Subsidiary, void or voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

Limitation on Lines of Business. The Company will not, and will not permit any Restricted Subsidiary to, engage in any business, other than a Permitted Business, except that the Company and any of its Restricted Subsidiaries may engage in a new business so long as the Company and its Restricted Subsidiaries, taken as a whole, remain substantially engaged in a Permitted Business.

Merger and consolidation

The Company will not consolidate with or merge with or into, or convey, transfer or lease all or substantially all its assets to, any Person, unless:

(1) the resulting, surviving or transferee Person (the “Successor Company”) will be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) will expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Notes and the Indentures;

(2) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing;

(3) immediately after giving effect to such transaction, the Successor Company would be able to Incur an additional $1.00 of Indebtedness under paragraph (a) of the covenant described under “—Certain covenants—Limitation on Indebtedness;” and

(4) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indentures.

The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Company under the Indentures, but the predecessor Company in the case of a conveyance, transfer or lease of all or substantially all its assets will not be released from the obligation to pay the principal of and interest on the Notes.

In addition, the Company will not permit any Note Guarantor to consolidate with or merge with or into any Person unless either

(1) (A) the resulting, surviving or transferee Person will be a corporation, partnership or limited liability company organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and such Person (if not such Note Guarantor) will expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of such Note Guarantor under its Note Guarantee; (B) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the resulting, surviving or transferee Person or any Restricted Subsidiary as a result of such transaction as having been Incurred by such Person or such Restricted Subsidiary at the time of such transaction), no Default shall have occurred and be continuing; and (C) the Company will have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indentures; or

(2) such transaction results in the Company receiving cash or other property (other than Capital Stock representing a controlling interest in the successor entity), and the transaction is made in compliance with the covenant described under “—Certain covenants—Limitation on Sales of Assets and Subsidiary Stock.”

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Notwithstanding any of the foregoing:

(1) any Restricted Subsidiary may consolidate with, merge into or transfer or lease all or part of its properties and assets to the Company or a Subsidiary that is a Note Guarantor, and

(2) the Company may merge with an Affiliate incorporated solely for (i) the purpose of incorporating the Company or (ii) organizing the Company in another jurisdiction to realize tax or other benefits.

Defaults

Each of the following is an Event of Default:

(1) a default in any payment of interest or liquidated damages on any Note when due and payable, whether or not prohibited by the provisions described under “—Ranking” above, continued for 30 days,

(2) a default in the payment of principal of any Note when due and payable at its Stated Maturity, upon required redemption or repurchase, upon declaration or otherwise, whether or not such payment is prohibited by the provisions described under “—Ranking” above,

(3) the failure by the Company or any Note Guarantor to comply with its obligations under the covenant described under “—Merger and consolidation” above,

(4) the failure by the Company or any Restricted Subsidiary to comply for 45 days after written notice (specifying the default and demanding that the same be remedied) with any of its obligations under the covenants described under “—Change of control” or “—Certain covenants” above (in each case, other than a failure to purchase Notes),

(5) the failure by the Company or any Restricted Subsidiary to comply for 60 days after written notice (specifying the default and demanding that the same be remedied) with its other agreements contained in the Notes or the Indentures,

(6) the failure by the Company or any Restricted Subsidiary of the Company to pay the principal amount of any Indebtedness within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default if the aggregate principal amount of such Indebtedness unpaid or accelerated exceeds $10.0 million or its foreign currency equivalent (the “cross acceleration provision”) and such failure continues for 30 days after receipt of the notice specified in the Indentures,

(7) certain events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary (the “bankruptcy provisions”),

(8) the rendering of any judgment or decree for the payment of money in excess of $10.0 million (net of any amounts with respect to which a reputable and creditworthy insurance company has acknowledged liability in writing) or its foreign currency equivalent against the Company, or a Restricted Subsidiary of the Company if such judgment or decree becomes final and nonappealable and remains outstanding for a period of 60 days following such judgment and is not discharged, waived or stayed (the “judgment default provision”) or

(9) any Note Guarantee of a Material Subsidiary ceases to be in full force and effect (except as contemplated by the terms thereof) or any Note Guarantor or Person acting by or on behalf of such Note Guarantor denies or disaffirms such Note Guarantor’s obligations under the Indentures or any Note Guarantee and such Default continues for 10 days after receipt of the notice specified in the Indentures.

The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

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However, a default under clauses (4), (5), (6) or (9) will not constitute an Event of Default under the applicable Indenture until the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes under that Indenture notify the Company of the default and the Company or the Note Guarantor, as applicable, does not cure such default within the time specified in clauses (4), (5), (6) or (9) hereof after receipt of such notice.

If an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing under the applicable Indenture, the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes under that Indenture by written notice to the Company and the Trustee specifying the Event of Default and that it is a “notice of acceleration” may declare the principal of and accrued but unpaid interest and liquidated damages on all the Notes to be due and payable. Upon such a declaration, such principal and interest and liquidated damages will be due and payable immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs under the applicable Indenture, the principal of and interest and liquidated damages on all the Notes outstanding under that Indenture will become immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. Under certain circumstances, the Holders of a majority in principal amount of the outstanding Notes under the applicable Indenture may rescind any such acceleration with respect to the Notes outstanding under that Indenture and its consequences.

Subject to the provisions of the applicable Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the applicable Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security reasonably satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to the applicable Indenture or the Notes unless:

(1) such Holder has previously given the Trustee notice that an Event of Default is continuing,

(2) Holders of at least 25% in principal amount of the outstanding Notes under the applicable Indenture have requested the Trustee in writing to pursue the remedy,

(3) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense,

(4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity and

(5) the Holders of a majority in principal amount of the outstanding Notes under the applicable Indenture have not given the Trustee a direction inconsistent with such request within such 60-day period.

Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Notes under the applicable Indenture will be given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indentures or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indentures, the Trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

If a Default occurs and is continuing under the applicable Indenture and is known to the Trustee, the Trustee must mail to each Holder of Notes outstanding under that Indenture notice of the Default within the earlier of 90 days after it occurs or 30 days after it is actually known to a Trust Officer or written notice of it is received by the Trustee. Except in the case of a Default in the payment of principal of,

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premium (if any) or interest on any Note (including payments pursuant to the redemption provisions of such Note), the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the Holders under that Indenture. In addition, the Company will be required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Company will also be required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any event which would constitute certain Events of Default, their status and what action the Company is taking or proposes to take in respect thereof.

Amendments and waivers

Subject to certain exceptions, the applicable Indenture or the Notes under that Indenture may be amended with the written consent of the Holders of a majority in principal amount of the Notes then outstanding under that Indenture and any past default or compliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the Notes then outstanding under that Indenture. However, without the consent of each Holder of an outstanding Note affected under the applicable Indenture, no amendment may, among other things:

(1) reduce the amount of Notes whose Holders must consent to an amendment,

(2) reduce the rate of or extend the time for payment of interest or any liquidated damages on any Note,

(3) reduce the principal of or extend the Stated Maturity of any Note,

(4) reduce the premium payable upon the redemption of any Note or change the time at which any Note may be redeemed as described under “— Optional redemption” above,

(5) make any Note payable in money other than that stated in the Note,

(6) make any change to the subordination provisions of the applicable Indenture that adversely affects the rights of any Holder,

(7) impair the right of any Holder to receive payment of principal of, and interest or any liquidated damages on, such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes,

(8) make any change in the amendment provisions which require each Holder’s consent or in the waiver provisions or

(9) modify the Note Guarantees in any manner adverse to the Holders.

Without the consent of any Holder, the Company, the Note Guarantors and the Trustee may amend the Indentures to:

• cure any ambiguity, omission, defect or inconsistency,

• provide for the assumption by a successor corporation of the obligations of the Company under the Indentures,

• provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code),

• make any change in the subordination provisions of the Indentures that would limit or terminate the benefits available to any holder of Senior Indebtedness of the Company or a Note Guarantor (or any representative thereof) under such subordination provisions,

• add additional Guarantees with respect to the Notes,

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• secure the Notes,

• add to the covenants of the Company for the benefit of the Holders or to surrender any right or power conferred upon the Company,

• make any change that does not materially and adversely affect the rights of any Holder, or

• comply with any requirement of the SEC in connection with the qualification of the Indentures under the TIA.

The consent of the Holders will not be necessary to approve the particular form of any proposed amendment. It will be sufficient if such consent approves the substance of the proposed amendment.

After an amendment becomes effective, the Company is required to mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of the amendment.

Transfer and exchange

Subject to compliance with the restrictions on transfer and exchange set forth in the Indentures, a Holder will be able to transfer or exchange Notes. Upon any transfer or exchange, the registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes required by law or permitted by the Indentures. The Company will not be required to transfer or exchange any Note selected for redemption or to transfer or exchange any Note for a period of 15 days prior to a selection of Notes to be redeemed. The Notes will be issued in registered form and the Holder will be treated as the owner of such Note for all purposes.

Defeasance

The Company may at any time terminate all its obligations under the Notes and the Indentures (“legal defeasance”), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the Notes, to replace mutilated, destroyed, lost or stolen Notes and to maintain a registrar and paying agent in respect of the Notes. In addition, the Company may at any time terminate:

(1) its obligations under the covenants described under “—Change of control” and “—Certain covenants,”

(2) the operation of the cross acceleration provision, the bankruptcy provisions with respect to Significant Subsidiaries, the judgment default provision and the Note Guarantee provision described under “—Defaults” above and the limitations contained in clause (3) under the first paragraph of “—Merger and consolidation” above (“covenant defeasance”).

In the event that the Company exercises its legal defeasance option or its covenant defeasance option, each Note Guarantor will be released from all of its obligations with respect to its Note Guarantee.

The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in clause (4), (5), (6), (7) (with respect to Significant Subsidiaries only), (8) or (9) under “—Defaults” above or because of the failure of the Company to comply with clause (3) under the first paragraph of “—Merger and consolidation” above.

In order to exercise either defeasance option, the Company must irrevocably deposit in trust (the “defeasance trust”) with the Trustee money or U.S. Government Obligations for the payment of principal, premium (if any) and interest on and liquidated damages (if any) in respect of the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the

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Trustee of an Opinion of Counsel to the effect that Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or other change in applicable Federal income tax law).

Concerning the trustee

The Bank of New York is the Trustee under each of the Indentures and has been appointed by the Company as Registrar and Paying Agent with regard to the Notes.

Governing law

The Indentures and the Notes are governed by and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby.

Certain definitions

“2000 Note Guarantee” means each Guarantee of the obligations with respect to the 2000 Notes issued by a Person pursuant to the 2000 Notes Indenture.

“2000 Notes” means the $220,000,000 aggregate principal amount of the Company’s 13% Senior Subordinated Notes due 2010 issued under the 2000 Notes Indenture.

“2000 Notes Closing Date” means May 31, 2000.

“2000 Notes Indenture” means the indenture dated as of May 31, 2000, among the Company, the subsidiary guarantors party thereto and The Bank of New York, as trustee, under which the 2000 Notes were issued, as amended, modified or supplemented from time to time.

“2002 Notes” means the $100,000,000 aggregate principal amount of the Company’s 13% Senior Subordinated Notes due 2010 issued under the 2002 Notes Indenture.

“2002 Notes Indenture” means the indenture dated as of April 10, 2002, among the Company, the subsidiary guarantors party thereto and The Bank of New York, as trustee, under which the 2002 Notes were issued, as amended, modified or supplemented from time to time.

“Additional Assets” means:

(1) any property or assets (other than Indebtedness and Capital Stock) to be used by the Company or a Restricted Subsidiary in a Permitted Business or any improvement to any property or assets that are used by the Company or a Restricted Subsidiary in a Permitted Business;

(2) Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or

(3) Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary; provided, however, that any such Restricted Subsidiary described in clauses (2) or (3) above is primarily engaged in a Permitted Business.

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. For purposes of the provisions described under “—Certain covenants—Limitation on Transactions with Affiliates” and “—Certain covenants—Limitation on Sales of Assets and Subsidiary

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Stock” only, “Affiliate” shall also mean any beneficial owner of shares representing 10% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof.

“Asset Disposition” means any sale, lease (other than an operating lease entered into in the ordinary course of business), transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation, or similar transaction (each referred to for the purposes of this definition as a “disposition”), of:

(1) any shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Subsidiary),

(2) all or substantially all the assets of any division or line of business of the Company or any Restricted Subsidiary or

(3) any other assets of the Company or any Restricted Subsidiary outside of the ordinary course of business of the Company or such Restricted Subsidiary other than, in the case of (1), (2) and (3) above,

(A) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary,

(B) for purposes of the provisions described under “—Certain covenants—Limitation on Sales of Assets and Subsidiary Stock” only, the making of a Permitted Investment or a disposition subject to the covenant described under “—Certain covenants—Limitation on Restricted Payments,”

(C) sales of accounts receivable and related assets (including contract rights) of the type specified in the definition of “Qualified Securitization Transaction” to a Securitization Entity for the fair market value thereof,

(D) a disposition of obsolete or worn out property or equipment or property or equipment that is no longer used or useful in the conduct of business of the Company and its Restricted Subsidiaries,

(E) any other disposition of assets with a fair market value, as conclusively determined by senior management of the Company in good faith, of less than $1.0 million,

(F) sales or grants of licenses to use the Company’s or any Restricted Subsidiary’s patents, trade secrets, know-how and technology to the extent that such license does not prohibit the licensor from using the patent, trade secret, know-how or technology or require the licensor to pay any fees for such use,

(G) the disposition of all or substantially all of the assets of the Company in compliance with the covenant described under the heading “—Merger and consolidation,” and

(H) the disposition of any Capital Stock or other ownership interest in or assets or property of an Unrestricted Subsidiary.

“Attributable Debt” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, 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).

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing:

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(1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or scheduled redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by

(2) the sum of all such payments.

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

“Board of Directors” means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of the Board of Directors of the Company.

“Business Day” means each day which is not a Legal Holiday.

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.

“Capitalized Lease Obligations” means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

“Closing Date” means April 10, 2002.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commodity Agreement” means any commodity futures contract, commodity option or other similar agreement or arrangement entered into by the Company or any of its Subsidiaries designed to protect the Company or any of its Subsidiaries against fluctuations in the price of commodities actually at the time used in the ordinary course of business of the Company or its Subsidiaries.

“Consolidated Coverage Ratio” as of any date of determination means the ratio of:

(1) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters for which financial statements are publicly available ending prior to the date of such determination to

(2) Consolidated Interest Expense for such four fiscal quarters; provided, however, that:

(A) if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period,

(B) if the Company or any Restricted Subsidiary has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of such period or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged (in each case other than Indebtedness Incurred

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under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) on the date of the transaction giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall be calculated on a pro forma basis as if such discharge had occurred on the first day of such period and as if the Company or such Restricted Subsidiary has not earned the interest income actually earned during such period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness,

(C) if since the beginning of such period the Company or any Restricted Subsidiary shall have made any Asset Disposition in excess of $10.0 million, which constitutes all or substantially all of an operating unit of a business, the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets that are the subject of such Asset Disposition for such period or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale),

(D) if since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary or is merged with and into the Company) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period, and

(E) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (C) or (D) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition of assets occurred on the first day of such period.

For purposes of this definition, whenever pro forma effect is to be given to an Investment or acquisition of assets, 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 Company. Any such pro forma calculations may include operating expense reductions for such period resulting from the acquisition 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 Company’s chief financial officer and another Officer which states (i) the amount of such adjustment or adjustments, (ii) that such adjustment or adjustments are based on the reasonable good faith beliefs of the

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officers executing such Officers’ Certificate at the time of such execution and (iii) that any related Incurrence of Indebtedness is permitted pursuant to the Indentures.

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).

“Consolidated Interest Expense” means, for any period, the total interest expense of the Company and its Consolidated Restricted Subsidiaries plus, to the extent Incurred by the Company and its Restricted Subsidiaries in such period but not included in such interest expense:

(1) interest expense attributable to Capitalized Lease Obligations and the interest expense attributable to operating leases constituting part of a Sale/Leaseback Transaction,

(2) amortization of debt discount and debt issuance costs,

(3) capitalized interest,

(4) non-cash interest expense,

(5) commissions, discounts and other fees and charges attributable to letters of credit and bankers’ acceptance financing,

(6) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by the Company or any Restricted Subsidiary,

(7) 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,

(8) dividends and distributions declared in respect of all Disqualified Stock of the Company and dividends and distributions declared and paid in respect of all Preferred Stock of any of the Subsidiaries of the Company that is not a Note Guarantor, to the extent held by Persons other than the Company or a Wholly Owned Subsidiary,

(9) interest Incurred in connection with investments in discontinued operations and

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

(1) any net income (loss) of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that:

(A) subject to the limitations contained in clauses (4), (5) and (6) below, the Company’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

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Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution made to a Restricted Subsidiary, to the limitations contained in clause (3) below) and

(B) the Company’s equity in a net loss of 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 Company or a Restricted Subsidiary;

(2) other than for purposes of clauses (D) and (E) of the definition of Consolidated Coverage Ratio, any net income (or loss) of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition;

(3) any net income (or loss) of any Restricted Subsidiary if such Restricted 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 Restricted Subsidiary, directly or indirectly, to the Company, except that:

(A) subject to the limitations contained in clauses (4), (5) and (6) below, the Company’s equity in the net income of any such Restricted 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 Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend, distribution, loan or advance (subject, in the case of a dividend, distribution, loan or advance made to another Restricted Subsidiary, to the limitation contained in this clause) and

(B) the Company’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income;

(4) any gain (loss) realized upon the sale or other disposition of any asset of the Company or its Consolidated 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;

(5) any extraordinary gain or loss; and

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

Notwithstanding the foregoing, for the purpose of the covenant described under “—Certain covenants—Limitation on Restricted Payments” only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under such covenant pursuant to clause (a)(4)(C)(vi) thereof.

“Consolidation” means the consolidation of the amounts of each of the Restricted Subsidiaries with those of the Company in accordance with GAAP consistently applied; provided, however, that “Consolidation” will not include consolidation of the accounts of any Unrestricted Subsidiary, but the interest of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary will be accounted for as an investment. The term “Consolidated” has a correlative meaning.

“Credit Agreement” means the credit agreement dated as of the 2000 Notes Closing Date among the Company, the lenders named therein, Bankers Trust Company, as administrative agent and collateral agent, The Bank of Nova Scotia, as documentation agent, and JPMorgan Chase Bank, as syndication agent, together with related documents thereto including any guarantee agreements and security documents, as amended, modified, supplemented, restated, renewed, refunded, replaced, restructured, repaid or refinanced from time to time (including any agreement extending the maturity thereof or increasing the amount of available borrowings thereunder or adding Restricted Subsidiaries of the Company as additional borrowers or guarantors thereunder) whether with the original agents and lenders or otherwise and whether provided under the original credit agreement or other credit agreements or otherwise.

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“Currency Agreement” means with respect to any Person any foreign exchange contract, currency swap agreements or other similar agreement or arrangement to which such Person is a party or of which it is a beneficiary.

“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

“Designated Senior Indebtedness” of the Company means

(1) the Bank Indebtedness and

(2) any other Senior Indebtedness of the Company that, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to at least $15.0 million and is specifically designated by the Company in the instrument evidencing or governing such Senior Indebtedness as “Designated Senior Indebtedness” for purposes of the Indentures. “Designated Senior Indebtedness” of a Note Guarantor has a correlative meaning.

“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:

(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,

(2) is convertible or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary, provided, that any such conversion or exchange shall be deemed an issuance of Indebtedness or an issuance of Disqualified Stock, as applicable) or

(3) is redeemable at the option of the holder thereof, in whole or in part, in each case on or prior to 91 days after the Stated Maturity of the Notes; 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; provided, further, that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” shall not constitute Disqualified Stock if the “asset sale” or “change of control” provisions applicable to such Capital Stock provide that such Person may not repurchase or redeem such Capital Stock pursuant to such provisions unless such Person has first complied with the provisions described under “—Change of control” and the provisions of the covenant described under “—Certain covenants—Limitation on Sales of Assets and Subsidiary Stock,” as applicable; 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 Indebtedness, 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.

“Domestic Overdraft Facility” means an overdraft line of credit in a maximum principal amount of $10.0 million at any time outstanding.

“Domestic Subsidiary” means any Restricted Subsidiary of the Company other than a Foreign Subsidiary.

“EBITDA” for any period means the Consolidated Net Income for such period, excluding the following to the extent included in calculating such Consolidated Net Income:

(1) income tax expense of the Company and its Consolidated Restricted Subsidiaries,

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(2) Consolidated Interest Expense,

(3) depreciation expense of the Company and its Consolidated Restricted Subsidiaries,

(4) amortization expense of the Company and its Consolidated Restricted Subsidiaries (but excluding amortization expense attributable to a prepaid cash item that was paid in a prior period),

(5) other noncash charges of the Company and its Consolidated Restricted Subsidiaries (excluding any such noncash charge to the extent it represents an accrual of or reserve for cash expenditures in any future period),

(6) income or loss from discontinued operations,

(7) plant closing costs (as defined by GAAP), and

(8) 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 Restricted Subsidiary of the Company 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 Restricted Subsidiary was included in calculating Consolidated Net Income and only if a corresponding amount would be permitted at the date of determination to be dividended, loaned or advanced to the Company by such Restricted Subsidiary without prior approval of Persons other than the Board of Directors or holders of the Company’s Capital 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 Restricted Subsidiary or its stockholders.

“Equity Offering” means any public or private sale of the common stock of the Company, other than any public offering with respect to the Company’s common stock registered on Form S-8 or other issuances upon exercise of options by employees of the Company or any of its Restricted Subsidiaries.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Contribution” means net cash proceeds received by the Company from (a) contributions to its common equity capital and (b) the sale (other than to a Subsidiary of the Company or to any Company or Subsidiary management equity plan or stock option plan or any other management or employee benefit plan or agreement) of Capital Stock (other than Disqualified Stock) of the Company, in each case designated as Excluded Contributions pursuant to an Officers’ Certificate executed on the date such capital contributions are made or the date such Capital Stock is sold, as the case may be, which are excluded from the calculation set forth in clause (a)(4)(C) under “—Certain covenants—Limitation on Restricted Payments.”

“Existing Management Stockholders” means each of Richard P. Durham, Jack E. Knott, Scott K. Sorensen and Ronald G. Moffitt.

“Foreign Subsidiary” means any Restricted Subsidiary of the Company organized and conducting its principal operations outside the United States.

“Foreign Subsidiary Asset Disposition” means any direct or indirect sale, issuance, conveyance, transfer, lease, assignment or other transfer for value by the Company or any of its Restricted Subsidiaries (including any Sale/Leaseback Transaction) to any Person other than the Company or a Restricted Subsidiary of the Company of the Capital Stock of any Foreign Subsidiary or any of the property or assets of any Foreign Subsidiary.

“GAAP” means generally accepted accounting principles in the United States of America as in effect as of May 31, 2000, including those set forth in:

(1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants,

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(2) statements and pronouncements of the Financial Accounting Standards Board,

(3) such other statements by such other entities as are approved by a significant segment of the accounting profession, and

(4) 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.

All ratios and computations based on GAAP contained in the Indentures shall be computed in conformity with GAAP.

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or

(2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning. The term “Guarantor” shall mean any Person Guaranteeing any obligation.

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Commodity Agreement, Interest Rate Agreement or Currency Agreement.

“Holder” means the Person in whose name a Note is registered on the Registrar’s books.

“Incur” means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary. The term “Incurrence” when used as a noun shall have a correlative meaning.

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

(1) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money;

(2) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto);

(4) all obligations of such Person 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;

(5) all Capitalized Lease Obligations and all Attributable Debt of such Person;

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(6) 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 that is not a Note Guarantor, any Preferred Stock (but excluding, in each case, any accrued dividends);

(7) 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:

(A) the fair market value of such asset at such date of determination and

(B) the amount of such Indebtedness of such other Persons;

(8) to the extent not otherwise included in this definition, the net obligations under Hedging Obligations of such Person;

(9) to the extent not otherwise included, the amount then outstanding (i.e., advanced, and received by, and available for use by, such Person) under any receivables financing (as set forth in the books and records of such Person and confirmed by the agent, trustee or other representative of the institution or group providing such receivables financing); and

(10) all obligations of the type referred to in clauses (1) through (9) 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.

Notwithstanding the foregoing, “Indebtedness” shall not include unsecured indebtedness of the Company and its Restricted Subsidiaries Incurred to finance insurance premiums in a principal amount not in excess of the insurance premiums to be paid by the Company and its Restricted Subsidiaries for a three-year period beginning on the date of Incurrence of any such Indebtedness.

The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date.

“Intangible Assets” means goodwill, patents, trademarks and other intangibles as determined in accordance with GAAP.

“Interest Rate Agreement” means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary.

“Investment” in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extension of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property (excluding Capital Stock of the Company) to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. For purposes of the definition of “Unrestricted Subsidiary” and the covenant described under “—Certain covenants—Limitation on Restricted Payments”:

(1) “Investment” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to:

(A) the Company’s “Investment” in such Subsidiary at the time of such redesignation less

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(B) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation;

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by (i) the senior management of the Company if the amount thereof is less than $2.0 million and (ii) the Board of Directors if in excess thereof; and

(3) the amount of any Investment shall be the original cost as of the date of determination of such Investment plus the cost of all additional Investments by the Company or any of its Restricted Subsidiaries, without any adjustments for increases or decreases in value or writeups, write-downs or write-offs with respect to such Investments.

“Legal Holiday” means a Saturday, Sunday or other day on which banking institutions in New York State are authorized or required by law to close.

“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).

“Material Subsidiary” means, at any date of determination, any Subsidiary of the Company that, together with its Subsidiaries, (i) for the most recent fiscal year of the Company accounted for more than 10.0% of the consolidated revenues of the Company or (ii) as of the end of such fiscal year, was the owner of 10.0% of the consolidated assets of the Company, all as set forth on the most recently available consolidated financial statement of the Company and its consolidated Subsidiaries for such fiscal year prepared in conformity with GAAP.

“Net Available Cash” from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case net of:

(1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition,

(2) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition,

(3) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition,

(4) the decrease in proceeds from Qualified Securitization Transactions which results from such Asset Disposition, and

(5) appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition.

“Net Cash Proceeds,” with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees and expenses actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.

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“Note Guarantee” means each Guarantee of the obligations with respect to the Notes issued by a Person pursuant to the terms of the Indentures.

“Note Guarantor” means any Person that has issued a Note Guarantee.

“Officer” means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer, the Secretary or any Assistant Secretary of the Company.

“Officers’ Certificate” means a certificate signed by two Officers.

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.

“Permitted Business” means the design, manufacture and/or marketing of films and flexible packaging products for food, personal care, medical, retail, agricultural, industrial and other applications or any businesses that are reasonably related, ancillary or complementary thereto.

“Permitted Holders” means each of (i) JP Morgan Partners, LLC and its Affiliates, (ii) Southwest Industrial Films, LLC and its Affiliates, (iii) the Christena Karen H. Durham Trust, (iv) the Existing Management Stockholders and their Related Parties and (v) any Person acting in the capacity of an underwriter in connection with a public or private offering of the Company’s Capital Stock.

“Permitted Investment” means an Investment by the Company or any Restricted Subsidiary in:

(1) the Company, a Restricted Subsidiary or a Person that will, upon the making of such Investment, become a Restricted Subsidiary; provided, however, that after giving effect to such Investment the Company is still in compliance with the covenant under the heading “—Certain covenants—Limitation of Lines of Business;”

(2) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that after giving effect to such Investment the Company is still in compliance with the covenant under the heading “—Certain covenants—Limitation of Lines of Business;”

(3) Temporary Cash Investments;

(4) receivables owing to the Company or any Restricted Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;

(5) payroll, travel and similar advances or loans to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(6) loans or advances to officers, directors, consultants or employees made (a) in the ordinary course of business and not exceeding $3.0 million in any year or (b) to fund purchases of stock under the Company’s 2000 Stock Incentive Plan and any similar plans or employment arrangements;

(7) Capital Stock, obligations or other securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor;

(8) any Person to the extent such Investment represents the non-cash portion of the consideration received for an Asset Disposition that was made pursuant to and in compliance with the covenant described under “—Certain covenants—Limitation on Sale of Assets and Subsidiary Stock;”

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(9) any Investment by the Company or a Restricted Subsidiary in a Securitization Entity or any Investment by a Securitization Entity in any other Person in connection with a Qualified Securitization Transaction; provided that any Investment in a Securitization Entity is in the form of a purchase money note or an equity interest;

(10) Hedging Obligations entered into in the ordinary course of business;

(11) endorsements of negotiable instruments and documents in the ordinary course of business;

(12) assets or securities of a Person acquired by the Company or a Restricted Subsidiary to the extent the consideration for such acquisition consists of Capital Stock (other than Disqualified Stock) of the Company;

(13) Investments in existence on the 2000 Notes Closing Date;

(14) Investments of a Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of the Company or at the time such Person merges or consolidates with the Company or any of its Restricted Subsidiaries, in either case in compliance with the Indentures, provided that such Investments were not made by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the Company or such merger or consolidation;

(15) Investments in Unrestricted Subsidiaries or joint ventures not to exceed $30.0 million since the 2000 Notes Closing Date, plus (A) the aggregate net after-tax amount returned since the 2000 Notes Closing Date to the Company or any Restricted Subsidiary in cash on or with respect to any Investments made since the 2000 Notes Closing Date in Unrestricted Subsidiaries and joint ventures whether through interest payments, principal payments, dividends or other distributions or payments (including such dividends, distributions or payments made concurrently with such Investment), (B) the net after-tax cash proceeds received since the 2000 Notes Closing Date by the Company or any Restricted Subsidiary from the disposition of all or any portion of such Investments (other than to the Company or a Subsidiary of the Company) and (C) upon redesignation since the 2000 Notes Closing Date of an Unrestricted Subsidiary as a Restricted Subsidiary, the fair market value of such Subsidiary; and

(16) additional Investments since the 2000 Notes Closing Date in an aggregate amount not to exceed $15.0 million.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“Preferred Stock,” as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over Capital Stock of any other class of such Person.

“Principal” of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time.

“Public Market” means any time after:

(1) an Equity Offering has been consummated and

(2) at least 15% of the total issued and outstanding common stock of the Company has been distributed by means of an effective registration statement under the Securities Act.

“Qualified Securitization Transaction” means any transaction or series of transactions that may be entered into by the Company or any of its Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell, convey or otherwise transfer pursuant to customary terms to (a) a Securitization Entity (in the

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case of a transfer by the Company or any of its Subsidiaries) and (b) any other Person (in the case of transfer by a Securitization Entity), or may grant a security interest in any accounts receivable (whether now existing or arising or acquired in the future) of the Company or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such accounts receivable, all contracts and contract rights and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets (including contract rights) which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable.

“Qualified Stock” means any Capital Stock that is not Disqualified Stock.

“Recapitalization Agreement” means the Recapitalization Agreement dated as of March 31, 2000, between the Company, the selling stockholders listed therein and Chase Domestic Investments, L.L.C., as amended to and in effect at the 2000 Notes Closing Date.

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue other Indebtedness exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

“Refinancing Indebtedness” means Indebtedness that is Incurred to Refinance any Indebtedness of the Company or any Restricted Subsidiary existing on the 2000 Notes Closing Date or Incurred in compliance with the 2000 Notes Indenture (if incurred prior to the Closing Date) or, if incurred on or after the Closing Date, the Indenture (including Indebtedness of the Company or a Restricted Subsidiary that Refinances Refinancing Indebtedness); provided, however, that:

(1) the Refinancing Indebtedness (if Refinancing any Indebtedness existing on the 2000 Notes Closing Date) has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced,

(2) the Refinancing Indebtedness (if Refinancing any Indebtedness existing on the 2000 Notes Closing Date) has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced,

(3) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) (whether in U.S. dollars or a foreign currency) that is equal to or less than the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) (in U.S. dollars or such foreign currency, as applicable) then outstanding (plus, without duplication, accrued interest, premium and defeasance costs required to be paid under the terms of the Indebtedness being Refinanced and the fees, expenses, discounts, commissions and other issuance costs incurred in connection with the Refinancing Indebtedness) of the Indebtedness being Refinanced and

(4) if the Indebtedness being Refinanced is subordinated in right of payment to the Notes or a Note Guarantee of a Note Guarantor, such Refinancing Indebtedness is subordinated in right of payment to the Notes or the Note Guarantee at least to the same extent as the Indebtedness being Refinanced;

provided further, however, that Refinancing Indebtedness shall not include:

(A) Indebtedness of a Restricted Subsidiary that is not a Note Guarantor that Refinances Indebtedness of the Company or

(B) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.

“Related Parties” means with respect to a Person (a) that is a natural person (1) any spouse, parent or lineal descendant (including adopted children) of such Person or (2) the estate of such Person during any period in which such estate holds Capital Stock of the Company for the benefit of any person referred to

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in clause (a)(1) and (b) any trust, corporation, partnership, limited liability company or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially owning an interest of more than 50% of which consist of such Person and/or such other Persons referred to in the immediately preceding clause (a).

“Representative” means the trustee, agent or representative (if any) for an issue of Senior Indebtedness.

“Restricted Investment” means any Investment other than a Permitted Investment.

“Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted Subsidiary.

“Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or such Restricted Subsidiary leases it from such Person, other than (a) leases between the Company and a Wholly Owned Subsidiary or between Wholly Owned Subsidiaries or (b) any arrangement whereby the transfer involves fixed or capital assets and is consummated within 120 days after the date the Company or a Restricted Subsidiary acquires or finishes construction of such fixed or capital assets.

“SEC” means the Securities and Exchange Commission.

“Secured Indebtedness” means any Indebtedness of the Company secured by a Lien. “Secured Indebtedness” of a Note Guarantor has a correlative meaning.

“Securitization Entity” means a Wholly Owned Subsidiary of the Company (or another Person in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable or equipment and which is designated by the Board of Directors of the Company (as provided below) as a Securitization Entity (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any Subsidiary of the Company (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Company or any Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings or (iii) subjects any property or asset of the Company or any Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (b) with which neither the Company nor any Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms no less favorable to the Company or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company, other than fees payable in the ordinary course of business in connection with servicing receivables of such entity and (c) to which neither the Company nor any Subsidiary of the Company has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results. Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee, by filing with the Trustee a certified copy of the resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions.

“Senior Subordinated Indebtedness” of the Company means the Notes, the 2000 Notes, the 2002 Notes and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank pari passu with the Notes in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the Company which is not Senior Indebtedness. “Senior Subordinated Indebtedness” of a Note Guarantor has a correlative meaning.

“Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

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“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by the Company or any Subsidiary of the Company which are reasonably customary in an accounts receivable securitization transaction.

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred).

“Stockholders Agreement” means the Stockholders Agreement among the Company and the holders of the Company’s Capital Stock party thereto, as in effect at the 2000 Notes Closing Date as amended from time to time, so long as the Permitted Holders own a majority of the Capital Stock subject to such agreement.

“Subordinated Obligation” means any Indebtedness of the Company (whether outstanding on the Closing Date or thereafter Incurred) that is subordinate or junior in right of payment to the Notes pursuant to a written agreement. “Subordinated Obligation” of a Note Guarantor has a correlative meaning.

“Subsidiary” of any Person means 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 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 controlled, directly or indirectly, by:

(1) such Person,

(2) such Person and one or more Subsidiaries of such Person or

(3) one or more Subsidiaries of such Person.

“Tangible Assets” means Total Assets less Intangible Assets.

“Temporary Cash Investments” means any of the following:

(1) any investment in direct obligations of the United States of America or any agency or instrumentality thereof or obligations Guaranteed or insured by the United States of America or any agency or instrumentality thereof,

(2) investments in checking accounts, savings accounts, time deposit accounts, certificates of deposit, bankers’ acceptances and money market deposits maturing within 360 days of the date of acquisition thereof issued by a bank or trust company that is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America having capital, surplus and undivided profits aggregating in excess of $250,000,000 (or the foreign currency equivalent thereof) and whose long-term debt is rated “A” (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act),

(3) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above entered into with a bank meeting the qualifications described in clause (2) above,

(4) investments in commercial paper, maturing not more than 270 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of “P-1” (or higher) according to Moody’s Investors Service, Inc. or “A-1” (or higher) according to Standard and Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc. (“S&P”),

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(5) investments in securities with maturities of six months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least “A” by S&P or “A” by Moody’s Investors Service, Inc., and

(6) investments in money market funds that invest substantially all of their assets in securities of the types described in clauses (1) through (5) above.

“TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the Closing Date.

“Total Assets” means the total consolidated assets of the Company and its Restricted Subsidiaries, as shown on the most recent balance sheet of the Company.

“Trade Payables” means, with respect to any Person, any accounts payable or any indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person arising in the ordinary course of business in connection with the acquisition of goods or services.

“Trustee” means the party named as such in the Indentures until a successor replaces it and, thereafter, means the successor.

“Trust Officer” means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters.

“Unrestricted Subsidiary” means:

(1) Pliant Investment, Inc. and any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below and

(2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company), to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital Stock in or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that either:

(A) the Subsidiary to be so designated at the time of designation has total Consolidated assets of $1,000 or less or

(B) if such Subsidiary has Consolidated assets greater than $1,000, then such designation would be permitted under the covenant entitled “—Certain covenants—Limitation on Restricted Payments.”

The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation:

(x) the Company could Incur $1.00 of additional Indebtedness under paragraph (a) of the covenant described under “—Certain covenants—Limitation on Indebtedness” and

(y) no Default shall have occurred and be continuing.

Any such designation of a Subsidiary as a Restricted Subsidiary or Unrestricted Subsidiary by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.

“U.S. Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality

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thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer’s option.

“Voting Stock” of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

“Wholly Owned Subsidiary” means a Restricted Subsidiary of the Company all the Capital Stock of which (other than directors’ qualifying Capital Stock) is owned by the Company or another Wholly Owned Subsidiary.

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Book-entry; delivery and form

The Notes are represented by one or more permanent global notes in definitive, fully registered book-entry form, without interest coupons, that have been deposited with, or on behalf of, DTC and registered in the name of DTC or its nominee, on behalf of the acquirers of Notes represented thereby for credit to the respective accounts of the acquirers, or to such other accounts as they may direct, at DTC.

Except as set forth below, the global notes may be transferred, in whole and not in part, solely to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the global notes may not be exchanged for Notes in physical, certificated form except in the limited circumstances described below.

All interests in the global notes may be subject to the procedures and requirements of DTC.

Certain book-entry procedures for the global notes

The descriptions of the operations and procedures of DTC set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of DTC and are subject to change by DTC from time to time. We will take no responsibility for these operations or procedures, and investors are urged to contact DTC or its participants directly to discuss these matters.

DTC has advised us that it is

(1) a limited purpose trust company organized under the laws of the State of New York,

(2) a “banking organization” within the meaning of the New York Banking Law,

(3) a member of the Federal Reserve System,

(4) a “clearing corporation” within the meaning of the Uniform Commercial Code, as amended, and

(5) a “clearing agency” registered pursuant to Section 17A of the Exchange Act.

DTC was created to hold securities for its participants and facilitates the clearance and settlement of securities transactions between participants through electronic book-entry changes to the accounts of its participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC’s participants include securities brokers and dealers, banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Investors who are not participants may beneficially own securities held by or on behalf of DTC only through participants or indirect participants.

We expect that pursuant to procedures established by DTC ownership of the Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of participants) and the records of participants and the indirect participants (with respect to the interests of persons other than participants).

The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Accordingly, the ability to transfer interests in the Notes represented by a global note to such persons may be limited. In addition, because DTC can act only on behalf of its participants, who in turn act on behalf of persons who hold interests through participants, the ability of a person having an interest in Notes represented by a global note to pledge or transfer such interest to persons or entities that do not participate in DTC’s system, or to otherwise take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest.

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So long as DTC or its nominee is the registered owner of a global note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by the global note for all purposes under the indentures. Except as provided below, owners of beneficial interests in a global note

• will not be entitled to have Notes represented by such global note registered in their names,

• will not receive or be entitled to receive physical delivery of certificated Notes, and

• will not be considered the owners or holders thereof under the indentures for any purpose, including with respect to the giving of any direction, instruction or approval to the trustee thereunder.

Accordingly, each holder owning a beneficial interest in a global note must rely on the procedures of DTC and, if such holder is not a participant or an indirect participant, on the procedures of the participant through which such holder owns its interest, to exercise any rights of a holder of Notes under the indentures or such global note. We understand that under existing industry practice, in the event that we request any action of holders of Notes, or a holder that is an owner of a beneficial interest in a global note desires to take any action that DTC, as the holder of such global note, is entitled to take, DTC would authorize the participants to take such action and the participants would authorize holders owning through such participants to take such action or would otherwise act upon the instruction of such holders. Neither we nor the trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of Notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such Notes.

Payments with respect to the principal of, and premium, if any, and interest on, any Notes represented by a global note registered in the name of DTC or its nominee on the applicable record date will be payable by the trustee to or at the direction of DTC or its nominee in its capacity as the registered holder of the global note representing the Notes under the indentures. Under the terms of the indentures, we and the trustee may treat the persons in whose names the Notes, including the global notes, are registered as the owners thereof for the purpose of receiving payment thereon and for any and all other purposes whatsoever. Accordingly, neither we nor the trustee has or will have any responsibility or liability for the payment of such amounts to owners of beneficial interests in a global note (including principal, premium, if any, liquidated damages, if any, and interest). Payments by the participants and the indirect participants to the owners of beneficial interests in a global note will be governed by standing instructions and customary industry practice and will be the responsibility of the participants or the indirect participants and DTC.

Transfers between participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds.

Certificated notes

If,

• we notify the trustee in writing that DTC is no longer willing or able to act as a depositary or DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days of such notice or cessation,

• we, at our option, notify the trustee in writing that we elect to cause the issuance of Notes in definitive form under the indentures or

• upon the occurrence of certain other events as provided in the indentures,

then, upon surrender by DTC of the global notes, certificated notes will be issued to each person that DTC identifies as the beneficial owner of the notes represented by the global notes. Upon any such issuance, the trustee is required to register such certificated notes in the name of such person or persons (or the nominee of any thereof) and cause the same to be delivered thereto.

123

Neither we nor the trustee shall be liable for any delay by DTC or any participant or indirect participant in identifying the beneficial owners of the related Notes and each such person may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes.

124

Plan of distribution

This prospectus has been prepared for use by J.P. Morgan Securities Inc. in connection with offers and sales of the Notes in market-making transactions effected from time to time. J.P. Morgan Securities Inc. may act as a principal or agent in these transactions and may receive compensation in the form of discounts and commissions. These sales will be made at prices related to prevailing market prices at the time of sale. We will not receive any of the proceeds of these sales. We have agreed to indemnify J.P. Morgan Securities Inc. against certain liabilities, including liabilities under the Securities Act, and to contribute payments which J.P. Morgan Securities Inc. might be required to make in respect thereof.

As of May 31, 2003, affiliates of J.P. Morgan Securities Inc., beneficially owned approximately 55% of our outstanding common stock, 75% of our preferred stock warrants to purchase common stock and 59% of our outstanding preferred stock, subject to certain preemptive rights with respect to 10,000 shares of preferred stock issued on March 25, 2003. In addition, certain of our directors are employed by an affiliate of J.P. Morgan Securities Inc. See “Security ownership of certain beneficial owners and management” and “Certain relationships and related transactions — Transactions between us and new stockholders — Credit facilities and note offerings.”

We have been advised by J.P. Morgan Securities Inc. that, subject to applicable laws and regulations, J.P. Morgan Securities Inc. currently intends to continue to make a market in the Notes. However, J.P. Morgan Securities Inc. is not obligated to do so and any such market-making may be interrupted or discontinued at any time without notice. In addition, such market-making activity will be subject to the limits imposed by the Securities Act and the Exchange Act. There can be no assurance that an active trading market will develop or be sustained. See “Risk factors.”

Legal matters

The validity of the Notes and the Note Guarantees has been passed upon for us by O’Melveny & Myers LLP (formerly, O’Sullivan LLP), New York, New York.

Experts

The consolidated financial statements and financial statement schedule of Pliant Corporation as of and for the year ended December 31, 2002 and the consolidated financial statements of Decora Industries, Inc. as of and for the year ended March 31, 2002 appearing in this prospectus have been audited by Ernst & Young LLP, independent public accountants, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

The consolidated financial statements and financial statement schedule of Pliant Corporation included in this prospectus as of December 31, 2001 and for the two years then ended have been audited by Arthur Andersen LLP, independent public accountants, as set forth in its report with respect thereto appearing herein, and are included herein in reliance upon the authority of said firm as experts in giving said report.

After completing its audit and issuing its report, Arthur Andersen was convicted of obstruction of justice for activities relating to its previous work for Enron Corp. In May 2002 both our audit committee and our board of directors approved the appointment of Ernst & Young LLP as our independent public accountants to audit our financial statements for fiscal year 2002. Ernst & Young replaced Arthur Andersen, which had served as our independent auditors since 1997. We had no disagreements required to be disclosed pursuant to Item 304 of Regulation S-K with Arthur Andersen on any matter of accounting principle or practice, financial statement disclosure or auditing scope or procedure.

We have not been able to obtain, after reasonable efforts, the written consent of Arthur Andersen to the inclusion in this prospectus of its report with respect to the consolidated financial statements and financial statement schedule of Pliant Corporation included in this prospectus as of December 31, 2001 and for the

125

two years then ended, as required by Section 7 of the Securities Act of 1933. Accordingly, we have dispensed with the requirement to file such consent in reliance upon Rule 437a of the Securities Act. Because Arthur Andersen has not consented to the inclusion of its report in this prospectus, you may have no effective remedy against Arthur Andersen under Section 11 of the Securities Act for any untrue statements of a material fact contained in the financial statements audited by Arthur Andersen, or any omissions to state a material fact required to be stated therein.

Arthur Andersen has stopped conducting business before the SEC and has limited assets available to satisfy the claims of creditors. As a result, you may be limited in your ability to recover damages from Arthur Andersen under federal or state law if it is later determined that there are false statements contained in this prospectus relating to or contained in financial data audited by Arthur Andersen.

The consolidated financial statements of Decora Industries, Inc. as of March 31, 2001 and for the two years then ended included in this Prospectus have been so included in reliance on the reports (which contain an explanatory paragraph relating to the ability of Decora Industries, Inc. to continue as a going concern as described in Note 1 to the financial statements of Decora Industries, Inc.) of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

Where you can find more information

We file annual, quarterly and current reports and other information with the Securities and Exchange Commission (the “SEC” or the “Commission”). You can inspect and copy these materials at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of these materials can also be obtained by mail at prescribed rates from the SEC’s Public Reference Room at the above address. You can obtain information about the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of the SEC’s Internet site is http://www.sec.gov.

We provide copies to the holders of the Notes of the annual, quarterly and current reports that we file with the SEC. The annual reports contain financial information that has been examined and reported on, with an opinion expressed, by an independent public accountant.

We have filed a Registration Statement on Form S-1 to register with the Commission offers and sales of the Notes made by J.P. Morgan Securities Inc. in market-making transactions effected from time to time. This prospectus is part of that Registration Statement. As allowed by the Commission’s rules, this prospectus does not contain all of the information you can find in the Registration Statement or the exhibits to the Registration Statement.

We have not authorized anyone to give you any information or to make any representations about us or the transactions we discuss in this prospectus other than those contained in this prospectus. If you are given any information or representations about these matters that is not discussed in this prospectus, you must not rely on that information. This prospectus is not an offer to sell or a solicitation of an offer to buy securities anywhere or to anyone where or to whom we are not permitted to offer or sell securities under applicable law. Subject to our obligation to amend or supplement this prospectus as required by law and the rules and regulations of the Commission, the information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus.

126

INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

Pliant Corporation and Subsidiaries Financial Statements and Financial Statement Schedule:
As of December 31, 2002 and 2001 and for the three years ended December 31, 2002, 2001 and 2000:
Report of Independent Public Accountants	F-3
Report of Independent Public Accountants	F-4
Consolidated Balance Sheets as of December 31, 2002 and 2001	F-5
Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000	F-6
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2002, 2001 and 2000	F-7
Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000	F-9
Notes to Consolidated Financial Statements	F-11
Schedule II – Valuation and Qualifying Accounts	F-44
As of March 31, 2003 and December 31, 2002 and for the three months ended March 31, 2003 and 2002 (unaudited):
Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002	F-45
Condensed Consolidated Statements of Operations for the three months ended March 31, 2003 and 2002	F-46
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002	F-47
Condensed Consolidated Statement of Stockholders’ Deficit for the three months ended March 31, 2003	F-48
Notes to Unaudited Condensed Consolidated Financial Statements	F-49
Decora Industries, Inc. and Subsidiaries Financial Statements:
As of and for the year ended March 31, 2002:
Report of Independent Auditors	F-60
Consolidated Balance Sheet as of March 31, 2002	F-61
Consolidated Statement of Operations for the year ended March 31, 2002	F-62
Consolidated Statement of Shareholders’ Deficit for the year ended March 31, 2002	F-63
Consolidated Statement of Cash Flows for the year ended March 31, 2002	F-64
Notes to Consolidated Financial Statements	F-65
As of and for the year ended March 31, 2001:
Report of Independent Accountants	F-77

F-1

Consolidated Balance Sheet as of March 31, 2001	F-78
Consolidated Statement of Operations for the year ended March 31, 2001	F-79
Consolidated Statement of Changes in Shareholders’ Deficit for the year ended March 31, 2001	F-80
Consolidated Statement of Cash Flows for the year ended March 31, 2001	F-81
Notes to Financial Statements	F-82
For the year ended March 31, 2000:
Report of Independent Accountants	F-92
Consolidated Statement of Income for the year ended March 31, 2000	F-93
Consolidated Statement of Cash Flows for the year ended March 31, 2000	F-94
Notes to Consolidated Financial Statements	F-95
Pliant Corporation Unaudited Pro Forma Consolidated Financial Statement:
For the year ended December 31, 2002:
Introduction to Unaudited Pro Forma Consolidated Financial Statement	F-106
Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2002	F-107
Notes to Unaudited Pro Forma Consolidated Financial Statement	F-108

F-2

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of

Pliant Corporation

We have audited the accompanying consolidated balance sheet of Pliant Corporation as of December 31, 2002, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the year then ended. Our audit also included the financial statement schedule for the year ended December 31, 2002 listed in the Index at page F-1. These consolidated financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audit. The financial statements and schedule of Pliant Corporation as of December 31, 2001 and for the two years then ended were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those statements and schedule in their report dated January 28, 2002, before the restatement and inclusion of additional disclosures referred to in the last paragraph of this report.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements and schedule referred to above present fairly, in all material respects, the consolidated financial position of Pliant Corporation as of December 31, 2002, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

As discussed in Notes 1 and 5 to the financial statements, in the year ended December 31, 2002 the Company changed its method of accounting for goodwill.

As discussed above, the financial statements of Pliant Corporation as of December 31, 2001 and for the two years in the period then ended were audited by other auditors who have ceased operations. As described in Note 5, these financial statements have been revised to include the transitional disclosures required by Statement of Financial Accounting Standards No. 142, (SFAS 142) Goodwill and Other Intangible Assets, which was adopted by the Company as of January 1, 2002. Our audit procedures with respect to the disclosures in Note 5 with respect to 2001 and 2000 included (a) agreeing the previously reported net income (loss) to the previously issued financial statements and the adjustments to reported net income (loss) representing amortization expense (including any related tax effects) recognized in those periods related to goodwill to the Company’s underlying records obtained from management, and (b) testing the mathematical accuracy of the reconciliation of adjusted net income (loss) to reported net income (loss). In our opinion the disclosures relating to adjusted net income (loss) for 2001 and 2000 in Note 5 are appropriate. Also, as described in Note 14, the Company changed the composition of its reportable segments in 2003, and the amounts in the 2001 and 2000 financial statements relating to reportable segments have been restated to conform to the 2003 composition of reportable segments. We audited the adjustments that were applied to restate the disclosures for reportable segments reflected in the 2001 and 2000 financial statements. Our procedures included (a) agreeing the adjusted amounts of segment net sales, segment profit (loss), segment depreciation and amortization, segment interest expense, segment capital expenditures and segment total assets to the Company’s underlying records obtained from management, and (b) testing the mathematical accuracy of the reconciliations of segment amounts to the consolidated financial statements. In our opinion, such adjustments are appropriate and have been properly applied. However, we were not engaged to audit, review or apply any procedures to the 2001 or 2000 financial statements of the Company other than with respect to such SFAS 142 transition disclosures and segment adjustments, accordingly, we do not express an opinion or any other form of assurance on the 2001 or 2000 financial statements taken as a whole.

/s/ Ernst & Young LLP

Chicago, Illinois

February 28, 2003, except for Note 6, as to

  which the date is March 25, 2003, and

  Notes 5 and 14, as to which the date is May 7, 2003

F-3

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Pliant Corporation:

We have audited the accompanying consolidated balance sheets of Pliant Corporation and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2001. These financial statements and schedule referred to below are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Pliant Corporation and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedule II is presented for purposes of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

/s/ Arthur Andersen LLP

Chicago, Illinois

January 28, 2002

This report is a copy of the previously issued report covering 2000 and 2001. The predecessor auditor has ceased operations and has not reissued their report.

F-4

PLIANT CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31, 2002 and 2001 (Dollars in Thousands, Except per Share Data)

	2002			2001
ASSETS
CURRENT ASSETS :
Cash and cash equivalents	$	1,635		$	4,818
Receivables:
Trade accounts, net of allowances of $5,583 and $2,438, respectively		104,157			111,768
Other		14,866			13,668
Inventories		98,022			83,948
Prepaid expenses and other		4,149			3,026
Income taxes receivable		2,368			985
Deferred income taxes		8,182			2,563
Total current assets		233,379			220,776
PLANT AND EQUIPMENT, net:		350,479			369,324
GOODWILL		203,997			204,426
OTHER INTANGIBLE ASSETS, net:		27,034			26,773
OTHER ASSETS		38,314			30,384
Total assets	$	853,203		$	851,683
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
CURRENT LIABILITIES:
Trade accounts payable	$	113,988		$	101,508
Accrued liabilities:
Interest payable		16,175			10,392
Customer rebates		10,439			7,571
Other		32,263			25,134
Current portion of long-term debt		14,745			17,767
Total current liabilities		187,610			162,372
LONG-TERM DEBT, net of current portion		721,636			695,556
OTHER LIABILITIES		26,977			18,944
DEFERRED INCOME TAXES		23,836			26,156
Total liabilities		960,059			903,028
MINORITY INTEREST		192			271
COMMITMENTS AND CONTINGENCIES (Notes 7 and 12)		—			—
REDEEMABLE STOCK:
Preferred stock – 200,000 shares authorized, 130,973 shares outstanding as of December 31, 2002, and 2001 and designated as Series A, no par value with a redemption and liquidation value of $1,000 per share plus accumulated dividends		150,816			126,149
Common stock – 60,000 shares authorized, no par value; 34,240 shares outstanding as of December 31, 2002 and 53,996 outstanding as of December 31, 2001 net of related stockholders’ notes receivable of $6,754 at December 31, 2002 and $12,720 at December 31, 2001		13,008			16,778
Total redeemable stock		163,824			142,927
STOCKHOLDERS’ DEFICIT:
Common stock – no par value; 10,000,000 shares authorized, 542,638 and 542,571 shares outstanding as of December 31, 2002 and December 31, 2001, respectively		103,376			103,362
Warrants to purchase common stock		38,676			38,715
Accumulated deficit		(394,420	)		(326,356	)
Stockholders’ notes receivable		(660	)		(616	)
Accumulated other comprehensive loss		(17,844	)		(9,648	)
Total stockholders’ deficit		(270,872	)		(194,543	)
Total liabilities and stockholders’ deficit	$	853,203		$	851,683

See notes to consolidated financial statements.

F-5

PLIANT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2002, 2001 and 2000 (Dollars in Thousands)

	2002			2001			2000
NET SALES	$	879,197		$	840,360		$	843,797
COST OF SALES		714,463			665,092			696,716
Gross profit		164,734			175,268			147,081
OPERATING EXPENSES:
Selling, general and administrative		85,351			88,821			93,937
Research and development		8,124			9,821			8,596
Stock-based compensation related to administrative employees		—			7,033			—
Compensation and transaction costs related to recapitalization		—			—			10,754
Restructuring and other costs		43,143			(4,588	)		19,368
Total operating expenses		136,618			101,087			132,655
OPERATING INCOME		28,116			74,181			14,426
INTEREST EXPENSE		(75,284	)		(75,988	)		(68,534	)
LOSS ON EXTINGUISHMENT OF DEBT		—			—			(18,750	)
OTHER INCOME, net		2,276			6,525			332
INCOME (LOSS) BEFORE INCOME TAXES		(44,892	)		4,718			(72,526	)
INCOME TAX EXPENSE (BENEFIT):
Current		3,980			4,204			4,144
Deferred		(5,442	)		2,582			(25,887	)
Total income tax expense (benefit)		(1,462	)		6,786			(21,743	)
NET INCOME (LOSS)	$	(43,430	)	$	(2,068	)	$	(50,783	)

See notes to consolidated financial statements.

F-6

PLIANT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCK HOLDERS’ EQUITY (DEFICIT)

For the Years Ended December 31, 2002, 2001 and 2000 (In Thousands)

	Total			Class A Common Stock					Class B Common Stock					Common Stock					Warrants to Purchase Common Stock		Accumulated Deficit			Stockholders’ Notes Receivable			Accumulated Other Comprehensive Income/(Loss)
				Shares		Amount			Shares		Amount			Shares		Amount
Balance, December 31, 1999	$	90,662		1,000		$	63,161		7		$	515									$	32,042		$	(299	)	$	(4,757	)
Comprehensive income:
Net loss		(50,783	)																			(50,783	)
Foreign currency translation adjustment		(2,504	)																									(2,504	)
Comprehensive loss		(53,287	)
Recapitalization transaction		(231,762	)	(1,000	)		(63,161	)	(7	)		(515	)	508			86,932			18,550		(272,979	)		(589	)
Issuance of warrants to purchase common stock with senior notes		7,950																		7,950
Preferred stock dividends and accretion		(8,771	)																			(8,771	)
Increase to redemption value of redeemable common stock		(11,923	)																			(11,923	)
Issuance of stock to management in exchange for promissory notes														7			3,261								(3,261	)
Discount on stockholder note receivable		323																							323
Issuance of stock to management		797												2			797
Repurchase of common stock from management and cancellation of note														(6	)		(3,001	)							3,001
Balance, December 31, 2000		(206,011	)	—			—		—			—		511			87,989			26,500		(312,414	)		(825	)		(7,261	)
Comprehensive income:
Net loss		(2,068	)																			(2,068	)
Fair value change in interest rate derivatives classified as cash flow hedges		(2,944	)																									(2,944	)
Foreign currency translation adjustment		557																										557
Comprehensive loss		(4,455	)
Stock-based compensation related to administrative employees		7,033																				7,033
Preferred stock dividend and accretion		(18,907	)																			(18,907	)
Issuance of stock as a result of Uniplast acquisition		15,735												33			15,735
Issuance of warrants with preferred stock		12,215																		12,215
Repurchase of common stock and cancellation of notes from management		(111	)											(1	)		(362	)							251
Amortization of discount on Stockholder’s note receivable		(42	)																						(42	)
Balance, December 31, 2001	$	(194,543	)	—		$	—		—		$	—		543		$	103,362		$	38,715	$	(326,356	)	$	(616	)	$	(9,648	)

See notes to consolidated financial statements.

F-7

PLIANT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

For the Years Ended December 31, 2002, 2001 and 2000 (In Thousands)

Balance, December 31, 2001	$	(194,543	)								543	$	103,362		$	38,715		$	(326,356	)	$	(616	)	$	(9,648	)
Comprehensive income:
Net loss		(43,430	)																(43,430	)
Minimum pension liability, net of taxes		(937	)																						(937	)
Fair value change in interest rate derivatives classified as cash flow hedges, net of taxes		(2,453	)																						(2,453	)
Foreign currency translation adjustment		(4,806	)																						(4,806	)
Comprehensive loss		(51,626	)
Issuance of common stock to management for warrants		—											39			(39	)
Preferred stock dividend and accretion		(24,634	)																(24,634	)
Purchase of stock by directors		63											63
Repurchase of stock from management		(88	)										(88	)
Amortization of discount on stockholder’s note receivable		(44	)																			(44	)
Balance, December 31, 2002	$	(270,872	)	—	$	—	—	$	—	$	543	$	103,376		$	38,676		$	(394,420	)	$	(660	)	$	(17,844	)

See notes to consolidated financial statements.

F-8

PLIANT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2002, 2001 and 2000 (Dollars in Thousands)

	2002			2001			2000
Cash flows from operating activities:
Net income (loss)	$	(43,430	)	$	(2,068	)	$	(50,783	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		46,912			47,017			39,546
Amortization of deferred financing costs		3,707			—			—
Deferred income taxes		(5,442	)		2,980			(25,877	)
Change in provision for losses on accounts receivable		2,635			272			(156	)
Non-cash compensation expense related to stock options		—			7,033			2,641
Discount on stockholder note receivable		—			—			323
Non-cash plant closing costs		14,204			(7,615	)		14,801
Write down of impaired goodwill		8,600			—			—
(Gain) or loss on disposal of assets		381			(433	)		514
Loss on extinguishment of debt		—			—			18,750
Minority Interest		(79	)		271			—
Changes in operating assets and liabilities – net of effects of acquisitions:
Trade accounts receivable		12,135			(182	)		4,886
Other receivables		(1,565	)		(2,857	)		2,055
Inventories		(8,505	)		2,249			(952	)
Prepaid expenses and other		(950	)		(651	)		661
Intangible assets and other assets		(4,704	)		1,090			1,930
Trade accounts payable		5,180			(15,023	)		48,962
Accrued liabilities		9,129			(2,988	)		4,355
Due to affiliates		—			—			(4,715	)
Income taxes payable/receivable		145			1,733			(67	)
Other liabilities		5,243			(484	)		3,402
Net cash provided by operating activities		43,596			30,344			60,266
Cash flows from investing activities:
Capital expenditures for plant and equipment		(49,194	)		(56,418	)		(65,644	)
Acquisitions, net of cash acquired		(23,164	)		(38,778	)		—
Proceeds from sale of assets		17,122			7,914			—
Net cash used in investing activities		(55,236	)		(87,282	)		(65,644	)
Cash flows from financing activities:
Payment of capitalized loan fees		(7,439	)		(1,932	)		(22,303	)
Payment of fees for tender offer		—			—			(10,055	)
Redemption of common stock		—			—			(314,034	)
Net proceeds (net of repurchases) from issuance of common and preferred stock		(3,227	)		30,991			161,820
(Payments)/Borrowings on long-term debt		—			25,930			(507,002	)
Payments received from stockholder on note receivable		—			—			165
Proceeds from issuance of senior subordinated notes		103,752			—			691,684
Repayments of debt under credit facilities		(80,694	)		—			—
Net cash provided by financing activities	$	12,392		$	54,989		$	275

See notes to consolidated financial statements.

F-9

PLIANT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

For the Years Ended December 31, 2002, 2001 and 2000 (Dollars in Thousands)

	2002			2001			2000
Effect of exchange rate changes on cash and cash equivalents	$	(3,935	)	$	3,707		$	(934	)
Net increase (decrease) in cash and cash equivalents		(3,183	)		1,758			(6,037	)
Cash and cash equivalents, beginning of the year		4,818			3,060			9,097
Cash and cash equivalents, end of the year	$	1,635		$	4,818		$	3,060
Supplemental disclosures of cash flow information:
Cash paid (received) during the year for:
Interest	$	69,207		$	69,503		$	62,781
Income taxes	$	4,884		$	(1,594	)	$	(4,160	)

Supplemental schedule of non-cash investing and financing activities:

On July 16, 2001, certain assets were acquired and certain liabilities were assumed of Uniplast Films Corporation for an initial purchase price of approximately $56,000. The purchase price was paid through a cash payment of approximately $40,300 to discharge pre-acquisition debt and the issuance of Pliant common stock of approximately $15,700 to the shareholders of Uniplast. See Note 13 to the Consolidated Financial Statements.

In 2002 we repurchased $6.5 million of redeemable common stock in exchange for the cancellation of $6.5 million of notes receivable.

See notes to consolidated financial statements.

F-10

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Nature of operations—Pliant Corporation and its subsidiaries (collectively “Pliant”) produce polymer-based (plastic), value-added films for flexible packaging, personal care, medical, agricultural and industrial applications. Our manufacturing facilities are located in North America, Latin America, Germany and Australia.

Recapitalization—On May 31, 2000, we consummated a recapitalization pursuant to an agreement dated March 31, 2000 (the “Recapitalization Agreement”) among us, our then existing stockholders and an affiliate of J.P. Morgan Partners, LLC, whereby J.P. Morgan Partners, LLC acquired majority control of our common stock. Pursuant to the Recapitalization Agreement, we redeemed all of the shares of our common stock held by Jon M. Huntsman, our founder, then majority stockholder and then Chairman of the Board (the “Equity Redemption”) for approximately $314.0 million. An affiliate of J.P. Morgan Partners, LLC purchased approximately one-half of the shares of our common stock held collectively by The Christena Karen H. Durham Trust (the “Trust”) and by members of our current and former senior management (the “Management Investors”) for approximately $101.8 million. An affiliate of J.P. Morgan Partners, LLC and certain other institutional investors also purchased (the “Investor Common Equity Contribution”) shares of common stock directly from us for approximately $63.5 million ($62.6 million net of offering costs). The Trust and the Management Investors retained approximately one-half of the shares of our common stock collectively owned by them prior to the recapitalization. In addition, we issued to another affiliate of J.P. Morgan Partners, LLC and to certain other institutional investors a new series of senior cumulative exchangeable redeemable preferred stock (the “Preferred Stock”) and detachable warrants for our common stock (the “Preferred Stock Warrants”) for net consideration of approximately $98.5 million. The foregoing transactions are collectively referred to as the “Recapitalization.” The total consideration paid in the Recapitalization was approximately $1.1 billion, including transaction costs.

Immediately following the Recapitalization, approximately 55.5% of our total common stock was owned by an affiliate of J.P. Morgan Partners, LLC, approximately 4.3% of our total common stock was owned by certain other institutional investors, and approximately 40.2% of our total common stock was owned collectively by the Trust and the Management Investors. J.P. Morgan Partners, LLC owns our common stock through its Southwest Industrial Films, LLC subsidiary and owns our preferred stock through Flexible Films, LLC.

The accounting for the Recapitalization did not result in changes to the historical cost presentation of our assets and liabilities.

Principles of Consolidation—The consolidated financial statements include the accounts of Pliant Corporation and its subsidaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition—Sales revenue is recognized when title transfers, the risks and rewards of ownership have been transferred to the customer, the price is fixed and determinable and collection of the related receivable is probable, which is generally at the time of shipment. Revenue is reduced by rebates made to customers based on an estimate of the amount of the rebate at the time the sale is recorded.

Accounts Receivable—Accounts receivable consist primarily of amounts due to us from our normal business activities. Accounts receivable amounts are determined to be past due when the amount is overdue based on contractual terms. We maintain an allowance for doubtful accounts to reflect the expected uncollectibility of accounts receivable based on past collection history and specific risks identified among uncollected amounts. Accounts receivable are charged off against the allowance for doubtful accounts when we have determined that the receivable will not be collected. One customer represented approximately 5% and 9% of consolidated receivables at December 31, 2002 and 2001, respectively.

Inventories—Inventories consist principally of finished film and packaging products and the raw materials necessary to produce them. Inventories are carried at the lower of cost (on a first-in, first-out basis) or market value. Resin costs comprise the majority of our total manufacturing costs. Resin shortages or significant increases in the price of resin could have a significant adverse effect on our business.

F-11

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Plant and Equipment—Plant and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated economic useful lives of the assets as follows:

Land improvements	20 years
Buildings and improvements	20 years
Computer Equipment and Software	3-7 years
Machinery and equipment	7-15 years
Furniture, fixtures and vehicles	3-7 years
Leasehold improvements	10-20 years

Maintenance and repairs are charged to expense as incurred and costs of improvements and betterments are capitalized. Upon disposal, related costs and accumulated depreciation are removed from the accounts and resulting gains or losses are reflected in operations.

Costs incurred in connection with the construction or major rebuild of equipment are capitalized as construction in progress. No depreciation is recognized on these assets until placed in service.

Goodwill and Other Intangible Assets—Intangible assets are stated at cost. Generally, effective January 1, 2002, goodwill and other indefinite life intangible assets are no longer amortized but are subject to an annual impairment test. Amortization of other intangible assets is computed using the straight-line method over the estimated economic useful lives of 2-15 years.

Impairment of Long-Lived Assets—When events or conditions indicate a potential impairment, we evaluate the carrying value of long-lived assets, including intangible assets, based upon current and expected undiscounted cash flows, and recognize an impairment when the estimated cash flows are less than the carrying value of the asset. Measurement of the amount of impairment, if any, is based upon the difference between the asset’s carrying value and fair value.

Other Assets—Other assets consist primarily of deferred debt issuance costs, deposits, spare parts and the cash surrender values of key-person life insurance policies. Deferred debt issuance costs are amortized using a straight line method which approximates the effective yield method. Major spare parts are depreciated from the purchase date using the straight-line method over the useful lives of the related machinery and equipment.

Cash and Cash Equivalents—For the purpose of the consolidated statements of cash flows, we consider short-term highly liquid investments with maturity when purchased of three months or less to be cash equivalents. Cash generated outside of the United States is generally subject to taxation if repatriated.

Income Taxes—Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial and tax reporting purposes.

Derivative Financial Instruments—Our borrowings under the credit facilities are at variable rates of interest and expose us to interest rate risk. The Company has entered into several interest rate derivative contracts in order to comply with the requirements of the agreements to the credit facilities and to reduce the effect of interest rate increases. (See Note 6).

Foreign Currency Translation—The accounts of our foreign subsidiaries are translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and an average exchange rate for each month for revenues, expenses, gains and losses. Transactions are translated using the exchange rate at each transaction date. Where the local currency is the functional currency, translation adjustments are recorded as a separate component of stockholders’ equity (deficit). Where the U.S. dollar is the functional currency, translation adjustments are recorded in other income within current operations.

Accounting For Stock-Based Compensation Plans—We apply Accounting Principles Board Opinion No. 25 and related interpretations in accounting for stock-based compensation plans as they relate to employees and directors. For the years ended December 31, 2001, and 2000, the Company recorded compensation expense of $7.0 million and $2.6 million, respectively, related to these plans. The Company did not have compensation expense for the year ended December 31, 2002. Had compensation cost for all the outstanding options been determined in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation,” our net loss for the years ended December 31, 2002, 2001 and 2000 would have been the following pro forma amounts (in thousands):

F-12

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	2002			2001			2000
As reported	$	(43,430	)	$	(2,068	)	$	(50,783	)
Stock compensation expense		—			7,033			2,641
Pro forma stock compensation expense		(707	)		442			(322	)
Pro forma	$	(44,137	)	$	5,407		$	(48,464	)

The fair market value of each option is estimated on the date of grant using the minimum value option-pricing model based on the following assumptions for 2002, 2001 and 2000 grants, respectively: risk free rate of return of 6.02% to 6.75%; expected life of 7 years to 10 years; dividend yield of 0% and 0%; and volatility of 0% and 0%. The weighted average fair value of the options as determined by the minimum value option-pricing model was $202 per share for 2002, 2001 and 2000 grants.

Reclassifications—Certain reclassifications have been made to the consolidated financial statements for comparative purposes.

2. Inventories

Inventory Balances—Inventories consisted of the following at December 31 (in thousands):

	2002		2001
Finished goods	$	60,758	$	50,738
Raw materials and other		28,045		27,499
Work-in-process		9,219		5,711
Total	$	98,022	$	83,948

3. Restructuring and Other Costs

Restructuring and other costs include plant closing costs (including costs related to relocation of manufacturing equipment), office closing costs and other costs related to workforce reductions.

The following table summarizes Restructuring and Other costs for the years ended December 31 (in thousands):

	2002		2001			2000
Plant closing costs
Severance	$	4,281	$	—		$	4,991
Reversal of Harrington		—		(7,615	)		—
Relocation of production lines		2,955		3,027			—
Other		6,498		—			797
Fixed asset impairment		13,906					13,580
Office closing costs		—		—			—
Severance		6,551		—			—
Other		352		—			—
Goodwill impairment		8,600		—			—
	$	43,143	$	(4,588	)	$	19,368

The $43.1 million incurred in 2002 consists of $21.5 million related to our 2002 plant exit plan, $3.9 million of Uniplast relocation costs, $2.2 million related to our 2001 and 2000 plant exit plans, $6.9 million of 2002 office closing costs, and $8.6 million of goodwill impairment. Each of these items is discussed in more detail below.

Plant Closing Costs:

2002—In September 2002, we approved a plan to close our production facility in Merced, California and relocate its production lines to our plants in Toronto, Canada and Danville, Kentucky. As of December 31, 2002, we accrued $1.6 million as part

F-13

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of plant closing costs for the severance expenses related to the closure of the Merced facility. The cost of relocating the production lines will be expensed to plant closing costs as incurred. In October 2002, we approved a plan to close our production facility in Shelbyville, Indiana and consolidate its production lines with our Alliant joint venture. As of December 31, 2002, we accrued $0.4 million as part of plant closing costs for severance expenses. Other costs will be expensed to plant closing costs as incurred. The Shelbyville closure and the Merced closure were completed in the first quarter of 2003. We expect to utilize the remaining reserves related to these closures of $1.9 million by December 2003.

In addition, we have commenced a process to consolidate our two plants in Mexico. The cost of relocating the production lines will be expensed to plant closing costs as incurred. We also incurred $2.3 million in plant closure costs in connection with the closing of our Fort Edward, New York facility (acquired as a part of the Decora acquisition) and moving production to our facilities in Mexico and Danville, Kentucky. We also made certain production rationalizations at our Toronto, Canada plant and Calhoun, Georgia plant.

The following is a summary of the key elements of the 2002 exit plan (dollars in thousands):

	Merced		Shelbyville		Toronto		Decora		Total
Number of employees to be terminated		54		12		18		145		229
Asset Impairment Costs	$	678	$	12,185	$	0	$	0	$	12,863
Severance Costs		1,647		386		132		2,116		4,281
Other Closure Costs		1,332		591		108		2,303		4,334
Total Closure Costs	$	3,657	$	13,162	$	240	$	4,419	$	21,478

Utilization of the reserves during 2002 is summarized below (dollars in thousands):

	Accural during 2002		Utilized				Balance 12/31/2002
			Non-Cash		Cash
Property and equipment reserves	$	12,863	$	12,863			$	0
Severance costs		4,281				1,014		3,267
Other costs		4,334		0		3,954		380
Total	$	21,478	$	12,863	$	4,968	$	3,647

Of the $3.6 million balance remaining as of December 31, 2002, $1.7 million related to the Decora severance and other closure costs.

As a part of the 2001 Uniplast acquisition the Company approved a plan to close three Uniplast production facilities and reduce the sales and administrative personnel. As of December 31, 2002 the closure of the production plants and reduction of sales and administrative personnel were complete. Severance costs associated with this plan of $3.0 million were accrued as a part of the cost of the acquisition. The cost of relocating production lines to existing Company locations was expensed to plant closing costs as incurred. The Company incurred approximately $3.9 million for these relocation costs in 2002. There is no accrual remaining at December 31, 2002.

2000–2001—During 2000, we approved and announced a strategic initiative to cease operations at our Dallas, Texas; Birmingham, Alabama; and Harrington, Delaware facilities. These facilities represent a portion of our Pliant U.S. segment. The intent of this initiative was to maximize the capacity of other company owned facilities by moving the production from these locations to plants that were not operating at capacity. As a result of this strategic initiative, we recorded a pre-tax charge of $19.4 million which is included as part of plant closing costs in the consolidated statement of operations for the year ended December 31, 2000. Of the $19.4 million, $13.6 million represented a reserve for impaired plant and equipment, $5.0 million represented a charge for severance costs and $0.8 million represented a charge for other closure costs and inventory write-offs. The major actions relating to the exit of these facilities include closing each of the respective facilities, disposal of the related equipment of each facility and termination of the employees of the respective facilities. As of December 31, 2000, we had completed our closure of our Dallas facility. In addition, we completed the closure of our Birmingham facility during the second quarter of 2001.

During the third quarter of 2001, we analyzed the economics of closing our Harrington facility in light of changes in customer demand and our 2001 acquisition of Uniplast. These changes together with the movement of a production line from our Birmingham plant significantly improved the profitability of the Harrington plant. As a result, we revised our plans to close that facility. During the first six months of 2001, $1.1 million was incurred to downsize the Harrington facility. The remaining balance of the plant closure costs of $7.6 million accrued in 2000 was credited to plant closing costs in the consolidated statement of operations for the year ended December 31, 2001. In addition, we incurred $3.0 million related to the relocation of the production lines acquired

F-14

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

as part of the Uniplast acquisition during the year ended December 31, 2001, bringing the total net plant closing costs to a $4.6 million credit.

The following is a summary of the key elements of the 2000 exit plan, excluding Harrington as management revised their closure plans for that facility in 2001 (dollars in thousands):

	Dallas		Birmingham		Total
Number of employees to be terminated		68		105		173
Book value of property and equipment to be   disposed of	$	1,593	$	8,913	$	10,506
Estimated proceeds from disposal		1,200		1,749		2,949
Net write-off from disposal		393		7,164		7,557
Severance costs		588		2,271		2,859
Other closure costs		302		225		527
Total closure costs	$	1,283	$	9,660	$	10,943

In 2002 we accrued an additional amount for the write-off of assets and other plant closure costs at our Harrington and Birmingham facilities related to the length of time it has taken us to resolve issues related to these closures and vacate these facilities. Utilization of the reserves during 2002 is summarized below in thousands:

	Balance 12/31/00		Utilized				Reversal		Balance 12/31/01		Additional Accrual		Utilized				Balance 12/31/02
			Non-Cash		Cash								Non-Cash		Cash
Property and equipment reserves	$	13,801	$	5,001	$	—	$	6,244	$	2,556	$	1,043	$	3,599	$	—	$	—
Severance costs		4,371		—		3,170		1,201		—		—		—		—		—
Other costs		585		—		182		170		233		1,170		—		1,403		—
Leases		1,623		—		603		—		1,020		—		—		379		641
Total		20,380	$	5,001	$	3,955	$	7,615	$	3,809	$	2,213	$	3,599	$	1,782	$	641

As of December 31, 2002, all of the expected employee terminations had been completed at our Dallas, Birmingham, and Harrington facilities. We do not anticipate loss of substantial revenue or income from the closure of the facilities due to the fact that their sales volumes were largely transferred to other facilities.

Office Closing and Workforce Reduction Costs

2002—During the year ended December 31, 2002, we implemented four workforce reduction programs. During the year ended December 31, 2002, 111 employees were terminated, resulting in an estimated annual cost saving, including benefits, of $10.1 million. Total severance cost, including benefits, for these terminations was $6.9 million. The accrual remaining at December 31, 2002 was $3.5 million and the accrual is expected to be fully utilized by the end of 2003.

Total plant closing costs and severance and related costs resulting from the 2002 workforce reductions discussed above have been included as part of restructuring and other costs in the consolidated statement of operations for the year ended December 31, 2002.

2000–2001—During the fourth quarter of 2000, we approved and announced a cost saving initiative resulting in a company-wide workforce reduction, relocation of the corporate office from Salt Lake City, Utah to the Chicago, Illinois area and closure of the Dallas, Texas divisional office. As a result of this initiative we recorded a pre-tax charge of $7.1 million, which is included as part of selling, general and administrative expenses in the accompanying consolidated statements of operations for the year ended December 31, 2000. The major actions relating to this initiative included a reduction in workforce due to consolidation of duties, and closing the offices in Dallas, Texas and Salt Lake City, Utah.

The following is a summary of the key elements of this plan (dollars in thousands):

	Workforce Reduction		Relocation of Corporate Office		Closure of Dallas Office		Total
Number of employees		52		36		2		90
Leasehold improvements		—	$	1,000		—	$	1,000
Severance cost	$	2,940		2,352	$	21		5,313
Other costs related to leases		—		721		82		803
Total cost	$	2,940	$	4,073	$	103	$	7,116

F-15

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In the fourth quarter of 2001 an additional $0.9 million was accrued to revise the estimate of future non-cancelable lease costs in excess of income from subleasing. As of December 31, 2002, the remaining reserves related to severance costs and other costs related to leases expected to continue through May, 2004. These reserves are included in other accrued liabilities in the accompanying consolidated balance sheets, while the reserve for impairment related to leasehold improvements has been recorded as a reduction of the net property and equipment balance. Utilization of these reserves during the period ended December 31, 2002 is summarized below (in thousands):

	Balance 12/31/00		Utilized				Additional Accrual		Balance 12/31/01		Utilized				Balance 12/31/02
			Non-Cash		Cash						Non-Cash		Cash
Leasehold improvements	$	1,000	$	1,000	$	—	$	—	$	—	$	—	$	—	$	—
Severance cost		3,254		210	$	2,916		—		128		—	$	78		50
Other costs related to leases		803		—		545		878		1,136		—		706		430
Total cost	$	5,057	$	1,210	$	3,461	$	878	$	1,264	$	—	$	884	$	480

As of December 31, 2002, all of the expected employee terminations had been completed in connection with the workforce reduction, closure of the Salt Lake City and the closure of the Dallas offices.

Goodwill Impairment

See Note 5 for a discussion of the impairment of goodwill of our international segment of $8.6 million for the year ended December 31, 2002.

4. Plant and Equipment

The cost and the related accumulated depreciation at December 31 is as follows (in thousands ) :

	2002			2001
Land and improvements	$	7,504		$	8,136
Buildings and improvements		65,004			66,960
Machinery and equipment		396,868			378,513
Computer equipment and software		33,970			30,018
Furniture, fixtures and vehicles		8,413			6,204
Leasehold improvements		4,198			2,201
Construction in progress		9,004			12,955
		524,961			504,987
Less accumulated depreciation and amortization		(174,482	)		(135,663	)
Plant and equipment, net	$	350,479		$	369,324

The depreciation expense for the years ended December 31, 2002, 2001 and 2000 was $43.4 million, $37.3 million and $30.3 million, respectively.

5. Goodwill and Intangible Assets

In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and Other Intangible Assets”. SFAS No. 142, which was effective for fiscal years beginning after December 15, 2001, requires that ratable amortization of goodwill be replaced with periodic tests of goodwill impairment and that intangible assets, other than goodwill, which have determinable useful lives, be amortized over their useful lives. As required by SFAS 142, the Company stopped amortizing goodwill effective January 1, 2002. The Company has evaluated any possible impairment of goodwill under SFAS 142 guidelines. The Company performed its initial impairment test upon the adoption of SFAS 142 on January 1, 2002. The Company’s annual impairment test is conducted on October 1 of each year. The Company revised its reportable operating segments in the third quarter of 2002, and as a result completed an evaluation of the fair values of the new segments. Based on this evaluation the Company has determined that the goodwill in our international segment was impaired, and the $8.6 million of goodwill was written down in the fourth quarter. The recorded impairment is based on methodology including prices of comparable businesses and discounted cash flows.

F-16

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We have four reporting segments, all of which have goodwill. During the third quarter of 2002, a portion of goodwill related to the Decora acquisition was allocated to intangible assets as a trademark in connection with the finalization of the purchase price allocation. The changes in the carrying value of goodwill for the year ended December 31, 2002 were as follows (in thousands):

	Pliant U.S.		Pliant Flexible Packaging		Pliant International			Pliant Solutions		Corporate/ Other		Total
Balance as of December 31, 2001	$	160,499	$	15,565	$	28,362		$	—	$	—	$	204,426
Goodwill recorded in acquisitions		2,393		—		1,984			3,794		—		8,171
Goodwill impaired		—		—		(8,600	)		—		—		(8,600	)
Balance as of December 31, 2002	$	162,892	$	15,565	$	21,746		$	3,794	$	—	$	203,997

The changes to goodwill in the year ended December 31, 2002 relate to the Decora acquisition, the Roll-O-Sheets acquisition, adjustments related to the opening balance sheet of the Uniplast acquisition, and impairment of international goodwill.

Following is a reconciliation of net income/(loss) between the amounts reported in the 2001 and 2000 statements of operations and the pro forma adjusted amount reflecting these new accounting rules under SFAS 142 (in thousands):

	Year Ended December 31
	2001			2000
Net income (loss):
Reported net income (loss)	$	(2,068	)	$	(50,783	)
Goodwill amortization (net of income taxes)		7,023			6,759
Adjusted net income (loss)	$	4,955		$	(44,024	)

Other intangible assets that are amortized over their useful lives under SFAS 142, are as follows as of December 31 (in thousands):

	2002					2001
	Gross Carrying Value		Accumulated Amortization			Gross Carrying Value		Accumulated Amortization
Amortized other intangible assets:
Customer lists	$	25,500	$	(6,334	)	$	25,500	$	(4,264	)
Trademark		5,000		—			—		—
Other		19,209		(16,341	)		22,332		(16,795	)
Total	$	49,709	$	(22,675	)	$	47,832	$	(21,059	)

F-17

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The estimated amortization for each of the next five years on the other intangible assets included above is as follows (in thousands):

Year Ending December 31
2003	$	2,866
2004		2,487
2005		2,477
2006		2,405
2007		2,237

Amortization expense for other intangible assets was approximately $3.5 million, $2.6 million, and $2.1 million for the years ended December 31, 2002, 2001 and 2000, respectively.

F-18

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

6. Long-Term Debt

Long-term debt as of December 31, consists of the following (in thousands):

	2002			2001
Credit Facilities:
Revolver, variable interest, 5.1% as of December 31, 2002	$	28,404		$	39,511
Tranche A and B term loans, variable interest at a weighted average rate of 5.4 % as of December 31, 2002		394,575			463,800
Senior subordinated notes, interest at 13.0% (net of unamortized issue discount, premium and discount related to warrants of $8,312 and $12,747 at 2002 and 2001, respectively)		311,688			207,253
Obligations under capital leases (see Note 7)		1,039			2,090
Insurance financing, interest at 3.21% as of December 31, 2002		675			588
Other financing		—			81
Total		736,381			713,323
Less current portion		(14,745	)		(17,767	)
Long-term portion	$	721,636		$	695,556

The scheduled maturities of long-term debt by year as of December 31, 2002 are as follows (in thousands):

Year Ending December 31,
2003	$	14,745
2004		46,075
2005		58,127
2006		31,590
2007		145,748
Thereafter		440,096
Total	$	736,381

Credit Facilities

As amended, our credit facilities consist of:

• tranche A term loans in an aggregate principal amount of $117.9 million outstanding as of December 31, 2002;

• Mexico term loans in an aggregate principal amount of $24.8 million outstanding as of December 31, 2002;

• tranche B term loans in an aggregate principal amount of $251.9 million outstanding as of December 31, 2002; and

• revolving credit facility in an aggregate principal amount of up to $100 million.

• Up to $30.0 million (plus an additional amount up to $40.0 million to support certain borrowings by our principal Mexican subsidiary) of the revolving credit facility is available in the form of letters of credit.

The interest rates under the revolving credit facility, the tranche A facility and the Mexico facility are, at our option, Adjusted LIBOR or ABR, plus a spread determined by reference to our leverage ratio. In accordance with the March 24, 2003 amendment to our credit facilities, the spread will not exceed 4.0% for Adjusted LIBOR or 3.0% for ABR. Adjusted LIBOR is the London inter-bank offered rate adjusted for statutory reserves. ABR is the alternate base rate, which is the higher of the lender’s prime rate or the federal funds effective rate plus 1/2 of 1%. The interest rates under the tranche B facility are, at our option, Adjusted LIBOR or ABR, plus a spread determined by reference to our leverage ratio. As amended, our credit facilities provide that the spread will not exceed

F-19

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

4.75% for Adjusted LIBOR or 3.75% for ABR. We may elect interest periods of one, two, three or six months for Adjusted LIBOR borrowings. The calculation of interest is on the basis of actual days elapsed in a year of 360 days (or 365 or 366 days, as the case may be, in the case of ABR loans based on the Prime Rate) and interest is payable at the end of each interest period and, in any event, at least every three months.

Our credit facilities require us to maintain certain key financial ratios on a quarterly basis. These key ratios include a leverage ratio and an interest coverage ratio. Effective March 24, 2003, we entered into an amendment (the “Amendment”) of our credit facilities to, among other things, permit us to issue up to $50 million of our common stock, qualified preferred stock, warrants to acquire our common stock or qualified preferred stock, or any combination of our common stock, qualified preferred stock or warrants, or other capital contributions with respect to our common stock or qualified preferred stock. The Amendment also adjusted certain financial covenants, including the leverage and interest coverage ratios. As a condition to the effectiveness of the Amendment, we agreed to issue 10,000 shares of our Series A preferred stock and warrants to purchase 43,962 shares of our common stock to J.P. Morgan Partners (BHCA), L.P. (“J.P. Morgan Partners”) and J.P. Morgan Partners agreed to purchase such shares and warrants for $10 million. We completed this sale on March 25, 2003. All of the proceeds of this sale were used to reduce our term debt. In addition, the Amendment allows us to issue an additional $40 million of equity securities between March 25, 2003 and March 31, 2005 in order to obtain cash to reduce the revolving borrowings and/or term borrowings under our credit facilities. J.P. Morgan Partners is required to purchase up to $25 million of such additional equity securities to the extent necessary to enable us to meet our leverage ratio or the target senior debt leverage ratio specified in the Amendment at the end of any calendar quarter or fiscal year ending on or before December 31, 2004. Our obligations to issue, and J.P. Morgan Partners’ obligation to purchase, such equity securities are set forth in a Securities Purchase Agreement dated as of March 25, 2003. Generally, if we are required to issue any portion of such $25 million of equity securities under the Amendment with respect to any fiscal quarter in 2003, we must use 50% of the net proceeds from the issuance of any such equity securities to reduce our revolving borrowings, and 50% to reduce our term borrowings. If we are required to issue any such equity securities under the Amendment with respect to any fiscal quarter in 2004, we must use 100% of the net proceeds to reduce our term borrowings. The issuance of the remaining $15 million of equity securities is voluntary on our part, and neither J.P. Morgan Partners nor any other person is required to purchase such equity securities. We incurred an amendment fee of $2.2 million in connection with the amendment. We also incurred approximately $0.5 million of legal and administrative expenses in connection with negotiating the Amendment.

We are required to make annual mandatory prepayments of the term loans under the credit facilities within 90 days following the end of each year in an amount equal to the amount by which 100% of excess cash flow for such year (or 50% of excess cash flow if our leverage ratio at the end of such year is less than or equal to 4.0 to 1.0) exceeds the aggregate amount of voluntary prepayments made since the last excess cash flow payment, subject to certain adjustments. In addition, the term loan facilities are subject to mandatory prepayments in an amount equal to (a) 100% of the net cash proceeds of equity and debt issuances by us or any of our subsidiaries, and (b) 100% of the net cash proceeds of asset sales or other dispositions of property by us or any of our subsidiaries, in each case subject to certain exceptions.

We currently pay a quarterly commitment fee on the unused amount of the Revolver at an annual rate of 0.75%. The commitment fee is subject to reduction if we achieve certain financial ratios. As of December 31, 2002, we had outstanding letters of credit of approximately $4.0 million.

Indebtedness under the Credit Facilities is secured by substantially all of our assets, including our real and personal property, inventory, accounts receivable, intellectual property, and other intangibles. Our obligations under the Credit Facilities are guaranteed by substantially all of our domestic subsidiaries and secured by substantially all of our domestic assets. The Credit Facilities are also secured by a pledge of 65% of the capital stock of each of our foreign subsidiaries.

Senior Subordinated Notes

In 2000, we issued $220 million aggregate principal amount of 13% Senior Subordinated Notes due 2010 including 18,532 warrants (the “Note Warrants”) to purchase common stock at an exercise price of $0.01 per share. In 2002, we issued an additional $100 million of 13% Senior Subordinated Notes due 2010. The Notes mature on June 1, 2010, and interest on the Notes is payable on June 1 and December 1 of each year. The Notes are subordinated to all of our existing and future senior debt, rank equally with any future senior subordinated debt, and rank senior to any future subordinated debt. The Notes are guaranteed by some of our subsidiaries. The Notes are unsecured. Prior to June 1, 2003, the Company may, on one or more occasions, redeem up to a maximum of 35% of the original aggregate principal amount of the Notes with the net cash proceeds of one or more equity offerings by the Company at a redemption price equal to 113% of the principal amount thereof, plus accrued and unpaid interest. Otherwise, the Company may not redeem the Notes prior to June 1, 2005. On or after that date, the Company may redeem the Notes, in whole or in part, at a redemption price (expressed as percentages of principal amount), (plus accrued and unpaid interest) multiplied by the following percentages: 106.5% if redeemed prior to June 1, 2006; 104.333% if redeemed prior to June 1, 2007; 102.167% if redeemed prior to June 1, 2008. The Note Warrants became exercisable on August 29, 2000, and expire on June 1, 2010.

F-20

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Credit Facilities and the indentures relating to the Senior Subordinated Notes impose certain restrictions on us, including restrictions on our ability to incur indebtedness, pay dividends, make investments, grant liens, sell our assets and engage in certain other activities.

Interest Rate Risk and Derivative Instruments

Certain of our borrowings, including borrowings under our Credit Facilities, are at variable rates of interest, exposing us to the risk of increased interest rates. Our leveraged position and the covenants contained in our debt instruments may also limit our flexibility to adjust to changing market conditions and our ability to withstand competitive pressures, thus putting us at a competitive disadvantage. We may be vulnerable to a downturn in general economic conditions or in our business or be unable to carry out capital spending that is important to our growth and productivity improvement programs.

Effective January 1, 2001, we adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended by SFAS No. 137 and SFAS No. 138. In accordance with the statements, we recognize the fair value of derivatives as either assets or liabilities in the balance sheet. To the extent that the derivatives qualify as a hedge, gains or losses associated with the effective portion are recorded as a component of other comprehensive income while the ineffective portion is recognized in income.

At the adoption of this pronouncement, we had one interest rate cap agreement, which had been entered into during the fourth quarter of 2000. As a result, the initial adoption of this pronouncement did not result in a material effect to our financial statements.

We have entered into six interest rate derivative agreements with financial institutions. We use our interest rate derivatives to manage interest rate risk associated with future interest payments on variable rate borrowings under our Credit Facilities. Our interest rate derivative agreements are considered cash flow hedges and consisted of the following as of December 31, 2002 (dollars in millions):

Type	Notional Amount		Variable Rate*	Fixed Rate **	Maturity Dates
Interest rate cap	$	128.0	LIBOR	10.00%	12/31/2003
Interest rate cap		30.0	LIBOR	7.25%	02/09/2004
Interest rate collar		40.0	LIBOR	4.15%-7.25%	02/13/2004
Interest rate swap		60.0	LIBOR	5.40%	02/13/2004
Interest rate swap		50.0	LIBOR	4.32%	12/24/2004
Interest rate swap		50.0	LIBOR	3.90%	01/18/2005

* Three-month LIBOR, as defined; 1.38% as of December 31, 2002

** Strike for caps; floor and strike for collar; fixed LIBOR for swap agreements.

The fair value of our interest rate derivative agreements is reported on our consolidated balance sheet at December 31, 2002 and 2001 in other liabilities of approximately $9.1 million and $3.0 million, respectively and in other assets of approximately $0.1 million in each of 2002 and 2001. The effective portion of the changes in fair value of these instruments is reported in other comprehensive income. As the hedged contract matures, the gain or loss is recorded as interest expense in the consolidated statement of operations. We monitor the effectiveness of these contracts each quarter. Any changes in fair value of the ineffective portion of the instruments is reported as interest expense in the consolidated statement of operations. The ineffective portion for the years ended December 31, 2002 and 2001 was not material.

The change in accumulated derivative loss included as a part of accumulated other comprehensive loss as of December 31, is as follows (in thousands):

	2002			2001
Beginning accumulated derivative loss	$	2,944		$	—
Change associated with current period hedge transactions		2,674			2,961
Amount reclassified into earnings		(221	)		(17	)
Ending accumulated derivative loss, net of taxes	$	5,397		$	2,944

F-21

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

We are exposed to credit losses in the event of nonperformance by the counter-party to the financial instrument. We anticipate, however, that the counter-party will be able to fully satisfy its obligations under the contract. Market risk arises from changes in interest rates.

Our loss in 2000 for the extinguishment of debt consisted of a $6.0 million charge for the payment made pursuant to a tender offer for our previously issued senior subordinated notes and a $5.25 million charge for the write-off of capitalized loan fees associated with the early retirement of various debt facilities.

7. Leases

Capital Leases—We have acquired certain land, building, machinery and equipment under capital lease arrangements that expire at various dates through 2008. At December 31, the gross amounts of plant and equipment and related accumulated amortization recorded under capital leases were as follows (in thousands):

	2002			2001
Land and building	$	442		$	442
Machinery and equipment		829			2,375
Total assets held under capital leases		1,271			2,817
Less: accumulated amortization		(276	)		(381	)
	$	995		$	2,436

The amortization expense is included in depreciation expense.

Operating Leases—We have non-cancelable operating leases, primarily for vehicles, equipment, warehouse, and office space that expire through 2014, as well as month-to-month leases. The total expense recorded under all operating lease agreements in the accompanying consolidated statements of operations is approximately $10.5 million, $7.8 million and $6.7 million for the years ended December 31, 2002, 2001 and 2000, respectively. Future minimum lease payments under operating leases and the present value of future minimum capital lease payments (with interest rates between 7.5% and 10.25%) as of December 31, 2002 are as follows (in thousands):

	Operating Leases		Capital Leases
Year Ending December 31,
2003	$	13,595	$	277
2004		12,103		287
2005		11,043		238
2006		10,262		243
2007		7,142		228
Thereafter		15,162		62
Total minimum lease payments	$	69,307	$	1,335
Amounts representing interest				(296	)
Present value of net minimum capital lease payments			$	1,039

During the year ended December 31, 2001 the Company entered into a transaction in which production lines were sold for approximately $7.9 million and leased back to the Company under an operating lease agreement. The production lines were sold for their carrying values, thus no gain or loss was recorded on the transactions.

During the year ended December 31, 2002, the Company entered into a transaction in which production lines were sold for approximately $15 million ($5 million of which was retained by the lessor as a required security deposit) and leased back to the Company under an operating lease agreement. These production lines were sold for their carrying values, thus no gain or loss was recorded on the transactions.

F-22

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

8. Income Taxes

The components of income (loss) before income taxes and extraordinary loss for the years ended December 31 are as follows (in thousands):

	2002			2001			2000
United States	$	(46,477	)	$	(5,341	)	$	(81,278	)
Foreign		1,585			10,059			8,752
Total	$	(44,892	)	$	4,718		$	(72,526	)

The following is a summary of domestic and foreign provisions for current and deferred income taxes and a reconciliation of the U.S. statutory income tax rate to the effective income tax rate.

The provisions (benefits) for income taxes for the years ended December 31, are as follows (in thousands):

	2002			2001		2000
Current:
Federal	$	—		$	23	$	(112	)
State		261			111		266
Foreign		3,719			4,070		3,990
Total current		3,980			4,204		4,144
Deferred:
Federal		(5,887	)		2,021		(25,901	)
State		(1,848	)		179		18
Foreign		2,293			382		(4	)
Total deferred		(5,442	)		2,582		(25,887	)
Total income tax expense (benefit)	$	(1,462	)	$	6,786	$	(21,743	)

The effective income tax rate reconciliations for the years ended December 31, are as follows (in thousands):

	2002			2001			2000
Income (loss) before income taxes	$	(44,892	)	$	4,718		$	(72,526	)
Expected income tax provision (benefit) at U.S. statutory rate of 35%		(15,712	)	$	1,652		$	(25,384	)
Increase (decrease) resulting from:
Goodwill		—			1,726			1,636
State taxes		(1,092	)		188			184
Change in valuation allowance		8,907			1,078			(174	)
Foreign rate difference and other, net		6,435			2,142			1,099
Costs related to recapitalization		—			—			896
Total income tax expense (benefit)	$	(1,462	)	$	6,786		$	(21,743	)
Effective income tax rate		3.3	%		143.8	%		30.0	%

F-23

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Components of net deferred income tax assets and liabilities as of December 31, are as follows (in thousands):

	2002			2001
Deferred income tax assets:
Net operating loss carryforwards	$	46,157		$	30,627
AMT and foreign tax credit carryforwards		8,237			4,346
Accrued pension costs		10,531			4,893
Accrued employee benefits		3,374			6,114
Accrued plant closing costs		4,804			834
Allowance for doubtful trade accounts receivable		659			103
Inventory related costs		1,326			642
Other		4,017			350
		79,105			47,909
Valuation Allowance		(10,775	)		(1,868	)
Total deferred income tax assets		68,330			46,041
Deferred income tax liabilities:
Tax depreciation in excess of book depreciation		(70,419	)		(62,595	)
Amortization of intangibles		(11,002	)		(5,123	)
Other		(2,563	)		(1,916	)
Total deferred income tax liabilities		(83,984	)		(69,634	)
Net deferred income tax liability	$	(15,654	)	$	(23,593	)
As reported on consolidated balance sheets:
Net current deferred income tax asset	$	8,182		$	2,563
Net non-current deferred income tax liability		(23,836	)		(26,156	)
Net deferred income tax liability	$	(15,654	)	$	(23,593	)

The net operating loss carryforwards for federal tax purposes are approximately $118.4 million. These losses expire in 2020 through 2022. Due to uncertainty regarding realization, a valuation allowance of approximately $3.8 million has been recorded in 2002 to offset the deferred tax asset related to the net operating losses.

The foreign tax credit carryforwards for federal tax purposes are approximately $4.4 million expiring in 2005 through 2007, and $2.6 million with no set expiration date. Due to uncertainty regarding realization, valuation allowances of approximately $5.2 million and $1.8 million in 2002 and 2001, respectively have been recorded to offset the deferred tax asset related to the foreign tax credits.

9. Employee Benefit Plans

Defined Contribution Plan—We sponsor a salary deferral plan covering substantially all of our non-union domestic employees. Plan participants may elect to make voluntary contributions to this plan up to 15% of their compensation. We contribute up to 1% of the participants’ compensation based on our profits and also match employee contributions up to 2% of the participants’ compensation. We expensed approximately $2.4 million, $2.6 million and $2.6 million as our contribution to this plan for the years ended December 31, 2002, 2001 and 2000, respectively.

Defined Benefit Plans—We sponsor three noncontributory defined benefit pension plans (the “United States Plans”) covering domestic employees with 1,000 or more hours of service. We fund our plans in amounts to fulfill the funding requirements of the Employee Retirement Income Security Act of 1974. Contributions are intended to not only provide for benefits attributed to service to date but also for those expected to be earned in the future. We also sponsor a defined benefit plan in Germany (the “Germany Plan”). The consolidated accrued net pension expense for the years ended December 31, 2002, 2001 and 2000 includes the following components (in thousands):

F-24

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

United States Plans	2002			2001			2000
Service cost – benefits earned during the period	$	3,845		$	3,707		$	4,098
Interest cost on projected benefit obligation		4,582			4,101			4,192
Expected return on assets		(3,698	)		(4,183	)		(4,348	)
Other		160			(273	)		(185	)
Total accrued pension expense	$	4,889		$	3,352		$	3,757
Germany Plan
Service cost—benefits earned during the period	$	82		$	66		$	62
Interest cost on projected benefit obligation		80			61			62
Total accrued pension expense	$	162		$	127		$	124

The following table sets forth the funded status of the United States Plans and the Germany Plan as of December 31, 2002, 2001 and 2000 and the amounts recognized in the consolidated balance sheets at those dates (in thousands):

United States Plans	2002			2001			2000
Change in benefit obligation:
Obligation at January 1	$	60,706		$	58,036		$	50,405
Service cost		3,845			3,707			4,098
Interest cost		4,582			4,101			4,192
Plan amendments		593			544			219
Transfer of liability from Huntsman Corporation plan		—			—			138
Actuarial (gain) loss		5,388			(3,602	)		942
Other		152			—			—
Benefits paid		(2,263	)		(2,080	)		(1,958	)
Obligation at December 31	$	73,003		$	60,706		$	58,036
Change in plan assets:
Fair value of assets at January 1	$	41,872		$	46,964		$	49,290
Actual return on plan assets		(3,260	)		(4,378	)		(505	)
Transfer of assets from Huntsman Corporation plan		—			—			138
Employer contributions		569			1,367			—
Other		153			—			—
Benefit payments		(2,263	)		(2,081	)		(1,958	)
Fair value of plan assets at December 31	$	37,071		$	41,872		$	46,965
Underfunded status at December 31	$	35,932		$	18,833		$	11,071
Unrecognized net actuarial (gain)loss		(12,661	)		(333	)		5,011
Unrecognized prior service cost		(2,469	)		(2,017	)		(1,584	)
Accrued long-term pension liability included in other liabilities	$	20,802		$	16,483		$	14,498

Amounts recognized in the balance sheet consist of:

	2002			2001
Accrued benefit cost	$	(20,802	)	$	(16,483	)
Additional minimum liability		(2,211	)		—
Intangible asset		699			—
Accumulated other comprehensive income		1,512			—
Accumulated pension liability	$	(20,802	)	$	(16,483	)

F-25

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For the above calculations, increases in future compensation ranging from 4.0% to 4.5% were used for the non-union plan. The benefit payments under the two union plans are not based on future compensation. For the 2002 calculations, the discount rate was 6.75% and expected rates of return on plan assets of 9.0% were used for all plans. For the 2001 calculations, the discount rates range from 7.25% to 7.5% and expected rates of return on plan assets of 9.0% were used for all plans. For the 2000 calculations, the discount rates range from 7.5% to 7.75% and expected rates of return on plan assets of 9.0% were used for all plans.

Germany Plan	2002			2001
Change in benefit obligation:
Obligation at January 1	$	1,142		$	1,168
Service cost		82			66
Interest cost		80			61
Benefits paid		(16	)		(11	)
Change due to exchange rate		303			(142	)
Obligation at December 31	$	1,591		$	1,142
Fair value of plan assets at December 31		None			None
Underfunded status at December 31	$	1,591		$	1,142
Unrecognized net actuarial loss (gain)		(96	)		85
Accrued long-term pension liability included in other liabilities	$	1,495		$	1,227

Increases in future compensation ranging from 2.0% to 3.5% and discount rates ranging from 6.0% to 7.0% were used in determining the actuarially computed present value of the projected benefit obligation of the Germany Plan. The cash surrender value of life insurance policies for Germany Plan participants included in other assets in the consolidated balance sheets is approximately $0.5 million as of December 31, 2002 and 2001.

Effective January 1, 2003 we revised the United States Plans to exclude the participation of new non-union employees in such plans.

Foreign Plans Other Than Germany—Employees in other foreign countries are covered by various post employment arrangements consistent with local practices and regulations. Such obligations are not significant and are included in the consolidated financial statements in other liabilities.

Other Plans—As part of the acquisition of Blessings Corporation in 1998, we assumed two supplemental retirement plans covering certain former employees of Blessings Corporation. The liability for these plans included in other liabilities at December 31, 2002 was approximately $2.0 million. This liability was frozen at the time of the acquisition.

10. Redeemable Stock

Common Stock—Prior to the Recapitalization, we sold 50,611 shares of Class C nonvoting common stock to employees. As consideration, we received cash of approximately $2.5 million and secured promissory notes for approximately $2.6 million. We redeemed 1,100 of these shares prior to the Recapitalization. An additional 17,967 shares were redeemed in connection with the Recapitalization, and the remaining 31,544 shares were exchanged for the same number of common shares.

As part of the Recapitalization, we entered into employment agreements with our executive officers serving at that time: Richard P. Durham, Jack E. Knott II, Scott K. Sorensen and Ronald G. Moffitt. The employment agreements established repurchase rights and put options for shares held by these executive officers following the Recapitalization. These repurchase rights allow us to repurchase these shares from the employee in the event of termination for any reason. The put options allow the employees to require us to purchase all of the shares held by the employee in the event of resignation for good reason, death, disability or retirement, subject to the restrictive provisions of our credit facilities or any other agreements. The purchase price under the repurchase rights and the put options is the fair market value of the common stock, as determined in good faith by our board of directors.

The $2.6 million of notes receivable we originally received as partial consideration for the shares sold prior to the Recapitalization related to shares purchased by Mr. Durham, Mr. Sorensen and Mr. Moffitt. These secured promissory notes bore interest at 7% per annum. These notes were amended in connection with the Recapitalization and were further amended in connection

F-26

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

with certain severance arrangements and other events relating to the transition to a new management team. Pursuant to these amendments, interest ceased to accrue on Mr. Sorensen’s note as of December 31, 2000, and interest ceased to accrue on Mr. Durham’s note and Mr. Moffitt’s note as of February 28, 2001. Interest accrued prior to these dates is payable in three annual installments beginning on May 31, 2006 and the principal is due May 31, 2008.

In connection with the Recapitalization in May 2000, we sold an aggregate of 32,750 shares of additional restricted common stock to Messrs. Durham, Knott, Sorensen and Moffitt for $483.13 per share, the estimated fair market value. We received, as consideration, notes receivable totaling $15.8 million. Under the May 2000 restricted stock purchase agreements related to the restricted common stock, we have repurchase rights, which allow us to repurchase unvested shares from these individuals, if the individuals cease to be employees for any reason. The repurchase rights lapsed with respect to one-sixth of these shares on January 1, 2001. The repurchase rights lapsed with respect to an additional one-sixth of these shares in January 2002 based on the financial results for the year ended December 31, 2001. Vesting for the remainder of the shares is reviewed at the end of each calendar quarter as follows: (a) vesting in full if 100% or more of the applicable target market value of equity is achieved as of the end of the applicable calendar quarter and (b) partial vesting if more than 90% of the applicable target market of equity is achieved as of the end of the applicable calendar quarter. If the applicable targets are below 90% each year, vesting will automatically occur in full on December 31, 2009. The repurchase rights also terminate in the event of certain acceleration events as defined in the agreement. The repurchase price per share is the original price paid by the employee plus interest compounded annually at 7% commencing on the 181^st day after the date of termination of the employee through the date on which the shares are actually repurchased. The foregoing repurchase rights with respect to the restricted stock apply only to unvested restricted shares. As discussed above, however, our employment agreements with Messrs. Durham, Knott, Sorensen and Moffitt established additional repurchase rights and put options applicable to all other shares held by these individuals.

The $15.8 million of secured promissory notes received as consideration for the 32,750 shares of restricted common stock bore interest at 7% per annum. These notes were also modified in connection with the severance arrangements and other events relating to the transition to a new management team. These modifications are described below.

On December 27, 2000, we entered into a severance agreement with Mr. Sorensen. Under the agreement, we cancelled approximately $133,000 of accrued interest on a note receivable. We repurchased 6,211 shares of restricted stock for $483.13 per share and offset the purchase price against $3.0 million of note principal. In addition, we agreed on January 2, 2001, to repurchase an additional 539 shares of restricted stock for $483.13 per share and offset the purchase price against $260,000 of note principal. The Company’s repurchase rights were changed on the remaining 7,423 shares of common stock owned by Mr. Sorensen, whereby the Company agreed not to repurchase the shares until February 28, 2003 at a repurchase price of the greater of the fair market value or the balance on the note receivable. Interest ceased to accrue on the remaining $787,000 balance of the note related to Mr. Sorensen’s purchase of stock in 1999. Further, the put option was cancelled. As a result of these modifications, a $323,000 discount on the note receivable balance was recorded as compensation expense. The discount will be amortized to interest income over the remaining term of the note. In the event we determine to repurchase the stock from Mr. Sorensen at an amount that is: (1) greater than the fair value of the stock (i.e. the note balance is greater than the fair value) or (2) greater than the note balance as a result of future increases in fair value of the stock, we will record additional expense.

On January 22, 2001, we entered into a severance agreement with Mr. Moffitt. Under this agreement, we cancelled approximately $85,000 of accrued interest on a note receivable. We repurchased 3,125 shares of restricted stock for $483.13 per share and offset the purchase price against $1.5 million of note principal. We further agreed to cease charging interest on the remaining $302,000 principal balance of the note receivable related to 625 shares and to cease charging interest on the $262,000 principal balance related to Mr. Moffitt’s purchase of stock in 1999. As a result of these interest modifications, a $208,000 discount on the note receivable balance was recorded as compensation expense in the first quarter of 2001. The discount will be amortized to interest income over the remaining term of the note. In addition, the Company’s repurchase rights and Mr. Moffitt’s put option were changed on the remaining 3,457 shares of common stock held by him. We agreed not to repurchase and Mr. Moffitt agreed not to exercise the put option on the shares until February 28, 2003. The repurchase price and the put option price were changed to be the greater of the fair value of the stock or the balance on the note receivable. Because the fair value of these shares was $483.13 per share on January 22, 2001, compensation expense of $1.0 million was recorded in the first quarter of 2001, which represents the difference between the carrying amount and the fair value of the 2,622 shares of common stock that are subject to the note receivable.

On February 1, 2001, we amended Mr. Durham’s promissory notes that were issued in connection with his purchases of stock in 1999 and 2000. Under the amended notes receivable, interest ceased to accrue, effective December 31, 2000, on one note with a principal balance of $1.6 million and another note with a principal balance of $7.0 million. Further, the notes were modified to remove the full recourse provisions and modify the related pledge agreement. As a result of these modifications, Mr. Durham’s purchase of stock for promissory notes will now be accounted for as stock options and will be subject to variable accounting. Accordingly, changes in the fair value of the common stock in excess of the note balance will be recorded as compensation expense

F-27

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

until the note is paid in full. In addition, interest income will not be recorded on these notes. As a result of these modifications, a compensation expense of $6.0 million was recorded in the first quarter of 2001.

On April 21, 2001, we amended the terms of Mr. Knott’s promissory note issued in connection with his purchase of stock in 2000. Further, Mr. Knott’s note was modified to remove the full recourse provisions and modify the related pledge agreement. As a result of these modifications and the modifications to the other officer’s notes in the first quarter of 2001, Mr. Knott’s purchase of stock for a promissory note in 2000 will be accounted for as stock options, subject to variable accounting. In addition, interest income will not be recorded on this note with a principal balance of $3.7 million.

On June 10, 2002, we entered into a separation agreement with Mr. Durham. As of the date of the separation agreement, Mr. Durham owned 28,289 shares of common stock, 12,083 performance-vested shares, 2,417 time-vested shares, warrants to purchase 1,250.48 shares of common stock and 1,232 shares of preferred stock of Pliant. All of Mr. Durham’s time-vested shares and 2,416 of Mr. Durham’s performance-vested shares had vested as of the date of the separation agreement. Pursuant to the separation agreement, Mr. Durham agreed to convert one of his outstanding promissory notes issued as payment for a portion of his shares into two promissory notes. The first note (the “Vested Secured Note”), in the principal amount of $2,430,798, relates to Mr. Durham’s time-vested shares and the vested portion of his performance-vested shares. The second note (the “Non-Vested Secured Note”), in the principal amount of $4,862,099, related to the 9,667 performance-vested shares which had not vested as of the date of the separation agreement. In addition to these notes, Mr. Durham had an additional outstanding promissory note (the “Additional Note”), with a principal amount of $1,637,974, relating to a portion of the shares of common stock held by Mr. Durham. In accordance with the separation agreement, we repurchased and cancelled Mr. Durham’s 9,667 unvested shares in exchange for cancellation of the Non-Vested Secured Note on October 3, 2002.

The separation agreement preserved the put option established by Mr. Durham’s employment agreement with respect to his shares. For purposes of this put option, the separation agreement provides that the price per share to be paid by us is $483.13 with respect to common stock, $483.13 less any exercise price with respect to warrants, and the liquidation preference with respect to preferred stock. On July 9, 2002, Mr. Durham exercised his put option with respect to 28,289 shares of common stock, 1,232 shares of preferred stock and warrants to purchase 1,250.48 shares of common stock. Mr. Durham’s put option is subject to any financing or other restrictive covenants to which we are subject at the time of the proposed repurchase. Restrictive covenants under our credit facilities limit the number of shares we can currently repurchase from Mr. Durham. On October 3, 2002, as permitted by the covenants contained in our credit facilities, we purchased 8,204 shares from Mr. Durham for a purchase price of $3,963,599 less the outstanding amount of the Additional Note, which was cancelled. In December 2002 we purchased an additional 1,885 shares of common stock from Mr. Durham for an aggregate purchase price of approximately $910,700. As of December 31, 2002, our total remaining purchase obligation to Mr. Durham was approximately $10,623,097, excluding accrued preferred dividends. We are limited to a maximum purchase from Mr. Durham of $5,000,000 of shares in 2003, which purchase may only be made if we meet certain leverage ratios.

As of December 31, 2002, there were a total of 34,240 outstanding common shares subject to put options as described above, of which 12,765 shares were acquired by the employees for cash from 1997 through 1999. As a result of the put options, the carrying value of all shares subject to put options will be adjusted to fair value at each reporting period with a corresponding offset to shareholders’ equity for amounts related to the 12,765 shares and compensation expense for amounts related to the remaining shares until the notes receivable are paid in full.

Preferred Stock—We are authorized to issue up to 200,000 shares of preferred stock. As of December 31, 2002, 130,973 shares were issued and designated as Series A Cumulative Exchangeable Redeemable Preferred Stock (the “Preferred Stock”). In connection with the Recapitalization, we sold 100,000 shares of Preferred Stock and detachable warrants to purchase 43,242 shares of common stock for net consideration of $98.5 million, net of issuance costs of $1.5 million. We allocated approximately $80.0 million to Preferred Stock and $18.5 million to the warrants based on the relative fair values of the instruments. In connection with the Uniplast acquisition we issued 30,983 shares of Preferred Stock (including 1,983 shares to employees) and detachable warrants to purchase shares of common stock for a consideration of $31.0 million, net of issue costs. We allocated $18.6 million to Preferred Stock, and $12.4 million to the warrants based on the relative fair values of the instruments. The common stock warrants have an exercise price of $0.01 per share and expire on May 31, 2011.

Dividends on Preferred Stock accrue at an annual rate of 14%. We have the option to pay dividends in cash or to have the dividends accrue and compound quarterly. After May 31, 2005, however, the annual dividend rate increases to 16% unless we pay dividends in cash. The annual dividend rate also increases to 16% if we fail to comply with certain of our obligations or upon certain events of bankruptcy.

The Preferred Stock is our most senior class of capital stock. We may, at our option, exchange the Preferred Stock for 14% senior subordinated exchange notes so long as such exchange and the associated debt incurrence is permitted by our existing debt

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PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

instruments. We must redeem the Preferred Stock at a price equal to its liquidation preference of $1,000 per share, plus accumulated dividends, on May 31, 2011. On or after May 31, 2003, we may redeem the Preferred Stock at our option, in whole or in part, at a redemption price equal to the sum of the liquidation preference plus accrued and unpaid dividends multiplied by the following percentages: 107% if redeemed prior to May 31, 2004; 103% if redeemed on or after May 31, 2004 and prior to May 31, 2005; and 100% if redeemed at any time on or after May 31, 2005.

As a result of the mandatory redemption features, as of December 31, 2002, the carrying value of the Preferred Stock has been increased by $2.7 million to reflect accretion towards the $131.0 million redemption value at May 31, 2011. In addition, the preferred stock balance as of December 31, 2002 includes $49.6 million for accrued dividends.

11. Stock Option Plans

Pursuant to the Recapitalization, we adopted a 2000 stock incentive plan, which, as amended, allows us to grant to employees nonqualified options to purchase up to 65,600 shares of common stock. The option price must be no less than fair market value on the date of grant. Unvested options are forfeited upon the employee’s termination of employment. Vested options are forfeited, if not exercised 90 days after the employee’s termination of employment. The plan is administered by the board of directors who determines the quantity, terms and conditions of an award, including any vesting conditions. The plan expires on either May 31, 2010 or a date which the board of directors, in its sole discretion, determines that the plan will terminate.

In August 2002, we adopted our 2002 Stock Incentive Plan. The 2002 plan authorizes grants of incentive stock options, nonqualified stock options and stock bonuses, as well as the sale of shares of common stock, to our employees, officers, directors and consultants of Pliant or any of its subsidiaries. A total of 4,793 shares are authorized for issuance under the 2002 plan. As of December 31, 2002, no options or shares had been granted or sold under the 2002 plan.

A summary of stock option activity under the 2000 plan is as follows:

	Option Shares		Weighted Average Exercise Price
Outstanding at December 31, 1999	10,489		$	100.00
Granted	15,435			483.13
Exercised	(1,587	)		100.00
Forfeited or cancelled	(1,635	)		483.13
Outstanding at December 31, 2000	22,702			332.90
Granted	12,865			483.13
Exercised	—			—
Forfeited or cancelled	(730	)		483.13
Outstanding at December 31, 2001	34,837			385.22
Granted	20,425			483.13
Exercised	—			—
Forfeited or cancelled	(3,920	)		483.13
Outstanding at December 31, 2002	51,342			416.70
Exercisable at December 31, 2002	15,149		$	258.00

The weighted average remaining contractual life of the options is 7.8 years at December 31, 2002. The options granted prior to January 1, 2001 pursuant to the 2000 plan, as amended, provide for vesting as follows: (1) one-sixth are “time-vested” options or shares, which vested on January 1, 2001, so long as the recipient was still our employee on such date, and (2) the remainder are “performance-vested” options or shares, which vest in increments upon the achievement of performance targets as follows: (a) vesting in full, if 100% or more of the applicable performance target is achieved as of the end of any calendar quarter during the option term and (b) partial vesting if more than 90% of the applicable performance target is achieved as of the end of any calendar quarter during the option term. Moreover, all performance-vested options or shares not previously vested in accordance with the preceding sentence will vest automatically in full on December 31, 2009 so long as the recipient is still our employee on such date. Options granted pursuant to the 2000 plan subsequent to January 1, 2001 vest similarly, except that all of the options are “performance-vested” options, which vest in increments upon the achievement of performance targets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Subsequent to December 31, 2002, unvested options to purchase 116 shares were forfeited as a result of employee terminations and vested options to purchase 260 shares were forfeited. Additional vested options to purchase 24 shares will be forfeited if not exercised within 90 days from the termination date.

12. Commitments and Contingencies

Environmental Contingencies—Our operations are subject to extensive environmental laws and regulations concerning emissions to the air, discharges to surface and subsurface waters, and the generation, handling, storage, transportation, treatment, and disposal of waste materials, as adopted by various governmental authorities in the jurisdictions in which we operate. We make every reasonable effort to remain in full compliance with existing governmental laws and regulations concerning the environment.

Royalty Agreements—We have entered into royalty agreements (the “Agreements”) for the right to use certain patents in the production of our Winwrap stretch film. The Agreements require us to pay the patent holder a fee of $.05 for each pound of Winwrap produced and $.10 per pound for each pound of coreless Winwrap produced. The Agreements terminate upon the expiration of the related patents in 2009. During the years ended December 31, 2002, 2001 and 2000, we paid royalties of $1.5 million, $1.6 million and $1.1 million, respectively, under the Agreements.

Litigation—On November 19, 2001, S.C. Johnson & Son, Inc. and S.C. Johnson Home Storage, Inc. (collectively, “S.C. Johnson”) filed a complaint against us in the U.S. District Court for the District of Michigan, Northern Division (Case No. 01-CV-10343-BC). The complaint alleges misappropriation of proprietary trade secret information relating to certain componentry used in the manufacture of reclosable “slider” bags. We counterclaimed alleging that S.C. Johnson misappropriated certain of our trade secrets relating to the extrusion of flange zipper and unitizing robotics. Both the S.C. Johnson complaint and our counterclaim seek damages and injunctive and declaratory relief. Discovery in this proceeding is currently set to close on April 30, 2003. We intend to resist S.C. Johnson’s claims and to pursue our counterclaim vigorously. We do not believe this proceeding will have a material adverse affect on our financial condition or results of operations.

We are subject to other litigation matters and claims arising in the ordinary course of business. We believe, after consultation with legal counsel, that any liabilities arising from such litigation and claims will not have a material adverse effect on our financial position or results of operations.

13. Acquisitions

In May 2002, we acquired substantially all of the assets and assumed certain liabilities of Decora Industries, Inc. and its operating subsidiary, Decora Incorporated (collectively, “Decora”), a New York based manufacturer and reseller of printed, plastic films, including plastic films and other consumer products sold under the Con-Tact^® brand name. Our purchase of Decora’s assets was approved by the United States Bankruptcy Court. The purchase price was approximately $18 million. The purchase price was negotiated with the creditors committee and was paid in cash using borrowings from our existing revolving credit facility. The assets purchased consisted of one plant in Fort Edward, New York, and related equipment used by Decora primarily to print, laminate and convert films into adhesive shelf liner. We have commenced the process of closing the Decora plant in Fort Edward, New York and have moved the production to our facilities in Mexico and Danville, Kentucky. This purchase expands our product base to a new market. In addition, we expect to realize synergies from lower costs and administrative expenses. In addition to the purchase price of $18 million, we have accrued $5.2 million of liabilities, of which $4.4 million was for severance payments related to restructuring of the plant and is discussed in Footnote 3, “Restructuring and Other Costs”; the remaining $.8 million balance related to acquisition costs and was fully utilized in 2002. We sold our Fort Edward, New York plant on September 30, 2002 for $2.1 million and leased it back for $1 for up to twelve months. Results of operations from the date of acquisition are included in the consolidated statement of operations.

The aggregate purchase price of $23.2 million, including accrued liabilities related to acquisition costs and severance payments, has been allocated to assets and liabilities. The allocation is as follows (dollars in thousands):

Current Assets	$	15,805
Property Plant and Equipment		4,961
Goodwill		3,794
Intangible Assets – Trademark		5,000
Current Liabilities		(6,312	)
Total Purchase Price	$	23,248

Since the intangible assets have an indefinite life there is no amortization. The amortization of goodwill is deductible for tax purposes.

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PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The pro forma results of operations for the years ended December 31, (assuming the Decora acquisition had occurred on January 1, 2002 and January 1, 2001, respectively) are as follows (dollars in thousands):

Year Ended December 31	2002			2001
Net sales	$	894,505		$	889,411
Net loss	$	(45,059	)	$	(14,592	)

The pro forma results reflect certain non-recurring items. The net loss for the year ended December 31, 2001 include results from a division that was sold by Decora in 2001. The net loss reflects the write down of goodwill and long-lived assets and reorganization costs related to the bankruptcy that are considered non-recurring. The reorganization items were $0.6 million and $2.3 million for the years ended December 31, 2002 and 2001, respectively. The effective income tax rate for pre-acquisition results of operations of Decora was 0% due to the net operating losses and valuation allowances.

On August 15, 2002, we purchased substantially all of the assets and assumed certain liabilities of the business of Roll-O-Sheets Canada Limited (“Roll-O-Sheets”). The Roll-O-Sheets business consists of one plant in Barrie, Canada primarily engaged in the conversion and sale of PVC and polyethylene film for the food industry. In addition, the business includes the distribution of polyester film and polypropylene food trays and other food service products. Detailed financial information and pro forma results are not presented as they are not material to our consolidated financial statements.

Uniplast Holdings—On July 16, 2001, we acquired 100% of the outstanding stock of Uniplast Holdings, Inc. (“Uniplast”) for an initial purchase price of approximately $56.0 million, consisting of the assumption of approximately $40.3 million of debt and the issuance of shares of our common stock valued at approximately $15.7 million to the selling shareholders of Uniplast. We believe that this acquisition resulted in significant synergies to the combined operations and increased the market share in a number of our market segments. At the closing of the acquisition, we refinanced approximately $37.0 million of assumed debt with the proceeds from a private placement of 29,000 shares of preferred stock at $1,000 per share and borrowings under our revolving credit facility. In connection with the Uniplast acquisition, we entered into an amendment of our credit facilities and incurred amendment fees of $1.4 million. In addition, we also issued 1,983 shares of our preferred stock at $1,000 per share, together with warrants to purchase 2,013 shares of common stock, to certain employees of the Company. We also incurred $0.9 million of legal and administrative expenses. We recorded $14.4 million as intangible assets and $21.9 million as goodwill as a result of this acquisition. The intangible assets are being amortized over 15 years while the goodwill is not being amortized. The operating results for Uniplast from July 16, 2001 are included in the statement of operations for the year ended December 31, 2001.

During 2002 we made adjustments to the carrying value of Uniplast assets and the initial purchase price totaling $3.3 million. The final purchase price including adjustments made during 2002 to the initial purchase price of $56.0 million has been allocated to assets and liabilities as follows:

	(in millions)
Current Assets	$	19.3
Property Plant and Equipment		20.6
Intangible Assets		14.4
Goodwill		21.9
Current Liabilities		(13.1	)
Long-term Liabilities		(3.8	)
Total Purchase Price	$	59.3

Our pro forma results of operations for the year ended December 31, 2001 (assuming the Uniplast acquisition had occurred as of January 1, 2001) are as follows (in thousands):

	2001
Revenues	$	882,860
Net income (loss)		(424	)

F-31

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

14. Operating Segments

Operating segments are components of our business for which separate financial information is available that is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and in assessing performance. This information is reported on the basis that it is used internally for evaluating segment performance.

During the first quarter of 2003, we reorganized our operations under four operating segments. On May 7, 2003 we filed our quarterly report on Form 10-Q for the period ended March 31, 2003 reflecting four operating segments: Pliant U.S., Pliant Flexible Packaging, Pliant International and Pliant Solutions. Segment information in this report with respect to 2002, 2001 and 2000 has been restated to reflect the operating segments as of March 31, 2003 for comparative purposes. In April 2003, we combined our Pliant U.S. and Pliant Solutions segments into a single segment. Therefore, beginning with the second quarter of 2003 our operating segments for financial reporting purposes will be Pliant U.S. (including our current Pliant Solutions segments), Pliant Flexible packaging and Pliant International.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. Sales and transfers between our segments are eliminated in consolidation. We evaluate the performance of our operating segments based on net sales (excluding intercompany sales) and segment profit. The segment profit reflects income before discontinued operations, extraordinary items, interest expense, income taxes, depreciation, amortization, restructuring and other costs and other non-cash charges. Our reportable segments are managed separately with separate management teams, because each segment has differing products, customer requirements, technology and marketing strategies.

Segment profit and segment assets as of and for the years ended December 31, 2002, 2001 and 2000 are presented in the following table (in thousands). Certain reclassifications have been made to the prior year amounts to be consistent with the 2002 presentation.

	Pliant U.S.		Pliant Flexible Packaging			Pliant International		Pliant Solutions		Corporate/ Other			Total
2002
Net sales to customers	$	535,636	$	207,008		$	108,263	$	28,290		—		$	879,197
Intersegment sales		20,877		4,639			1,104		—		(26,620	)		—
Total net sales		556,513		211,647			109,367		28,290		(26,620	)		879,197
Depreciation and amortization		18,624		8,126			6,246		1,195		13,081			46,912
Interest expense		25		100			2,122		23		73,014			75,284
Segment profit		85,504		32,485			15,591		2,768		(14,731	)		121,617
Segment total assets		508,387		151,370			103,971		27,625		61,850			853,203
Capital expenditures		24,680		9,828			9,004		43		5,639			49,194
2001
Net sales to customers	$	530,730	$	205,337		$	104,293	$	—	$	—		$	840,360
Intersegment sales		14,461		4,769			101		—		(19,331	)		—
Total net sales		545,191		210,106			104,394		—		(19,331	)		840,360
Depreciation and amortization		16,799		9,199			6,043		—		14,976			47,017
Interest expense		39		20			3,302		—		72,627			75,988
Segment profit		97,915		38,582			19,359		—		(14,024	)		141,832
Segment total assets		528,277		156,705			113,417		—		53,284			851,683
Capital expenditures		33,767		14,782			2,684		—		5,185			56,418
2000
Net sales to customers	$	532,406	$	220,810		$	90,581	$	—	$	—		$	843,797
Intersegment sales		12,870		4,536			—		—		(17,406	)		—
Total net sales		545,276		225,346			90,581		—		(17,406	)		843,797
Depreciation and amortization		15,086		8,046			6,037		—		10,377			39,546
Interest expense		305		(2	)		3,618		—		64,613			68,534
Segment profit		82,851		27,586			17,072		—		(19,922	)		107,587
Segment total assets		461,175		165,405			90,650		—		67,804			785,034
Capital expenditures		27,978		18,182			6,443		—		13,041			65,644

F-32

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

A reconciliation of the totals reported for the operating segments to the totals reported in the consolidated financial statements is as follows (in thousands):

	2002			2001			2000
Profit or Loss
Total segment profit	$	121,617		$	141,832		$	107,587
Depreciation and amortization		(46,912	)		(47,017	)		(39,546	)
Restructuring and other costs		(43,143	)		4,588			(19,368	)
Interest expense		(75,284	)		(75,988	)		(68,534	)
Other expenses and adjustments for non-cash charges and certain adjustments defined by our credit agreement		(1,170	)		(18,697	)		(33,915	)
Income (loss) from continuing operations before taxes	$	(44,892	)	$	4,718		$	(53,776	)
Assets
Total assets for reportable segments	$	791,353		$	798,399		$	717,230
Other unallocated assets	$	61,850			53,284			67,804
Total consolidated assets	$	853,203		$	851,683		$	785,034

Our sales to a single customer and its affiliates represented approximately 13% and 12% of consolidated net sales in 2001 and 2000, respectively.

15. Warrants Outstanding

The following warrants were issued and outstanding as of December 31:

	2002	2001
Issued with the senior subordinated notes	18,532	18,532
Issued in connection with recapitalization transaction	43,242	43,242
Issued in connection with Uniplast acquisition	31,003	31,003
Total outstanding	92,777	92,777

As of December 31, 2002, 92,777 warrants were exercisable at an exercise price of $0.01 per share. The Company has reserved up to 92,777 shares of common stock for issuance upon the exercise of issued and outstanding warrants.

16. Estimated Fair Value of Financial Instruments

The estimated fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. In the case of cash and cash equivalents, accounts receivable and accounts payable, the carrying amount is considered a reasonable estimate of fair value. The fair value of fixed and floating rate debt in 2002 and 2001 was obtained from market quotes. Fair value estimates are made at a specific point in time. Because no market exists for a significant portion of our financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments, interest rate levels, and other factors. These estimates are subjective in nature and involve uncertainties and matters of judgment and therefore cannot be determined or relied on with any degree of certainty. Changes in assumptions could significantly affect the estimates.

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PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Below is a summary of our financial instruments’ carrying amounts and estimated fair values as of December 31, (in thousands):

	2002				2001
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	1,635	$	1,635	$	4,818	$	4,818
Accounts receivable		104,157		104,157		111,768		111,768
Total financial assets	$	105,792	$	105,792	$	116,586	$	116,586
Financial liabilities:
Floating rate debt	$	422,979	$	422,979	$	503,311	$	503,311
Fixed rate debt		313,402		288,000		210,012		228,800
Accounts payable		113,988		113,988		101,508		101,508
Total financial liabilities	$	850,369	$	824,967	$	814,831	$	833,619

17. Related-Party Transactions

The accompanying consolidated financial statements for the year ended December 31, 2000 includes the following transactions with companies affiliated with Jon M. Huntsman, our majority stockholder prior to our Recapitalization (in thousands). All related-party transactions have been recorded at estimated fair market values for the related products and services.

	2000
With Huntsman Corporation and affiliates (HC)
Inventory purchases	$	20,363
Rent expense under operating lease		377
Administrative expenses		796

Insurance Coverage—Prior to the Recapitalization, we obtained most of our insurance coverage under policies of HC. Reimbursement payments to HC were based on premium allocations, which were determined in cooperation with an independent insurance broker and are not included in the above amounts.

Administrative Expenses—Administrative expenses were allocated to us under a cancelable services agreement which was cancelled upon completion of the Recapitalization.

Rent Expense—We were obligated to pay rent calculated as a pro rata portion (based on our percentage occupancy) of the mortgage principal and interest payments related to the HC headquarters facility. In November 2000, we relocated and paid no further rent payments.

Stockholders’ Notes Receivable—Notes receivable were issued to various employees in connection with the sale of stock (see Note 10).

J.P. Morgan Partner and Affiliates—JPMorgan Chase Bank is the syndication agent, and its affiliate, J.P. Morgan Chase & Co., is a lender under our credit facilities. Both JPMorgan Chase Bank and J.P. Morgan Chase & Co. receive customary fees under the credit facilities for acting in such capacities including approximately $1.2 million in 2002. JPMorgan Chase Bank was also a lender under our prior credit facility, and as a result, received a portion of the proceeds from the financing for the recapitalization and related transactions. Chase Securities Inc. was one of the initial purchasers in the offering of the $220.0 million aggregate principal amount of 13% senior subordinated notes due 2010, and was also the dealer manager for the debt tender offer and consent solicitation relating to our 9 ¹/8% senior subordinated notes due 2007 and received customary fees for acting in such capacities. Each of JPMorgan Chase Bank, J.P. Morgan Chase & Co. and Chase Securities Inc. are affiliates of Southwest Industrial Films, LLC, which owns approximately 55% of our outstanding common stock and currently has the right under the stockholders’ agreement to appoint four of

F-34

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

our directors, and of Flexible Films, LLC, which, together with affiliates, owns approximately 59% of our Preferred Stock, subject to certain preemptive rights with respect to 10,000 shares of Preferred Stock issued on March 25, 2003.

18. Accumulated Other Comprehensive Income/(Loss)

The components of accumulated other comprehensive income/(loss) as of December 31, were as follows (in thousands):

	2002			2001
Minimum pension liability, net of taxes of $575	$	(937	)	$	—
Fair value change in interest rate derivatives classified as cash flow hedges, net of taxes of $3,450		(5,397	)		(2,944	)
Foreign currency translation adjustments		(11,510	)		(6,704	)
Accumulated other comprehensive income/(loss)	$	(17,844	)	$	(9,648	)

19. Condensed Consolidating Financial Statements

The following condensed consolidating financial statements present, in separate columns, financial information for (i) Pliant Corporation (on a parent only basis) with its investment in its subsidiaries recorded under the equity method, (ii) guarantor subsidiaries (as specified in the Indenture dated May 31, 2000 (the “2000 Indenture”) relating to Pliant Corporation’s $220 million senior subordinated notes due 2010 (the “2000 Notes”) and the Indenture, dated April 10, 2002 (the “2002 Indenture” and, together with the 2000 Indenture, the “Indentures”), relating to Pliant’s $100 million senior subordinated notes due 2010 (the “2002 Notes” and, together with the 2000 Notes, the “Notes”) on a combined basis, with any investments in non-guarantor subsidiaries specified in the Indentures recorded under the equity method, (iii) direct and indirect non-guarantor subsidiaries on a combined basis, (iv) the eliminations necessary to arrive at the information for Pliant Corporation and its subsidiaries on a consolidated basis, and (v) Pliant Corporation on a consolidated basis, in each case as of December 31, 2002 and 2001 and for the years ended December 31, 2002, 2001 and 2000. The Notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary and each guarantor subsidiary is 100% owned, directly or indirectly, by Pliant Corporation within the meaning of Rule 3-10(h)(1) of Regulation S-X. There are no contractual restrictions limiting transfers of cash from guarantor and non-guarantor subsidiaries to Pliant Corporation except from our Alliant joint venture. The condensed consolidating financial statements are presented herein, rather than separate financial statements for each of the guarantor subsidiaries, because management believes that separate financial statements relating to the guarantor subsidiaries are not material to investors.

In 2001, our Blessings subsidiary was merged with and into Pliant. Accordingly, this former guarantor subsidiary company is now included as part of the “Pliant Corporation Parent Only” column for all periods presented.

F-35

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2002 (In Thousands)

	Pliant Corporation Parent Only			Combined Guarantors			Combined Non- Guarantors			Eliminations			Consolidated Pliant Corporation
Assets
Current assets:
Cash and cash equivalents	$	—		$	—		$	1,635		$	—		$	1,635
Receivables		82,421			13,444			23,158			—			119,023
Inventories		71,586			15,832			10,604			—			98,022
Prepaid expenses and other		2,842			899			408			—			4,149
Income taxes receivable		1,145			4			1,219			—			2,368
Deferred income taxes		6,909			1,522			(249	)		—			8,182
Total current assets		164,903			31,701			36,775			—			233,379
Plant and equipment, net		283,638			17,919			48,922			—			350,479
Goodwill		189,106			—			14,891			—			203,997
Intangible assets, net		26,964			—			70			—			27,034
Investment in subsidiaries		52,813			—			—			(52,813	)		—
Other assets		34,871			17			3,426			—			38,314
Total assets	$	752,295		$	49,637		$	104,084		$	(52,813	)	$	853,203
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Trade accounts payable	$	83,918		$	8,675		$	21,395		$	—		$	113,988
Accrued liabilities		48,091			4,818			5,968			—			58,877
Current portion of long-term debt		14,117			—			628			—			14,745
Due to (from) affiliates		(28,373	)		15,316			13,057			—			—
Total current liabilities		117,753			28,809			41,048			—			187,610
Long-term debt, net of current portion		697,472			—			24,164			—			721,636
Other liabilities		25,101			—			1,876			—			26,977
Deferred income taxes		19,017			1,751			3,068			—			23,836
Total liabilities		859,343			30,560			70,156			—			960,059
Minority interest		—			—			192			—			192
Redeemable stock:
Preferred stock		150,816			—			—			—			150,816
Common stock		13,008			—			—			—			13,008
Total redeemable stock		163,824			—			—			—			163,824
Stockholders’ (deficit):
Common stock		103,376			14,020			29,240			(43,260	)		103,376
Warrants to purchase common stock		38,676			—			—			—			38,676
Retained earnings (deficit)		(394,420	)		5,067			14,489			(19,556	)		(394,420	)
Stockholders’ notes receivable		(660	)		—			—			—			(660	)
Accumulated other comprehensive loss		(17,844	)		(10	)		(9,993	)		10,003			(17,844	)
Total stockholders’ (deficit)		(270,872	)		19,077			33,736			(52,813	)		(270,872	)
Total liabilities and stockholders’ (deficit)	$	752,295		$	49,637		$	104,084		$	(52,813	)	$	853,203

F-36

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Year Ended December 31, 2002 (In Thousands)

	Pliant Corporation Parent Only			Combined Guarantors			Combined Non- Guarantors			Eliminations			Consolidated Pliant Corporation
Net sales	$	695,002		$	75,360		$	135,455		$	(26,620	)	$	879,197
Cost of sales		567,702			61,809			111,572			(26,620	)		714,463
Gross profit		127,300			13,551			23,883			—			164,734
Total operating expenses		108,307			6,264			22,047			—			136,618
Operating income		18,993			7,287			1,836			—			28,116
Interest expense		(73,033	)		(23	)		(2,228	)		—			(75,284	)
Equity in earnings of subsidiaries		(5,159	)		—			—			5,159			—
Other income (expense), net		10,715			(5,697	)		(2,742	)					2,276
Income (loss) before income taxes		(48,484	)		1,567			(3,134	)		5,159			(44,892	)
Income tax expense		(5,054	)		—			3,592			—			(1,462	)
Net income (loss)	$	(43,430	)	$	1,567		$	(6,726	)	$	5,159		$	(43,430	)

F-37

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2002 (In Thousands)

	Pliant Corporation Parent Only			Combined Guarantors			Combined Non- Guarantors			Eliminations		Consolidated Pliant Corporation
Cash flows from operating activities:	$	10,186		$	9,013		$	24,397		$	—	$	43,596
Cash flows from investing activities:
Capital expenditures for plant and equipment		(35,181	)		(4,764	)		(9,249	)		—		(49,194	)
Decora acquisition, net of cash acquired		(8,794	)		(14,370	)		—			—		(23,164	)
Asset transfer		(9,116	)		9,762			(646	)		—		—
Proceeds from sale of assets		15,033			3,589			(1,500	)		—		17,122
Net cash used in investing activities		(38,058	)		(5,783	)		(11,395	)		—		(55,236	)
Cash flows from financing activities:
Payment of capitalized fees		(7,439	)		—			—			—		(7,439	)
Net proceeds from issuance of common and preferred stock		(3,227	)		—			—			—		(3,227	)
Borrowings/(payments) on long-term debt		31,266			—			(8,208	)		—		23,058
Net cash provided by (used in) financing activities		20,600			—			(8,208	)		—		12,392
Effect of exchange rate changes on cash and cash equivalents		7,272			(4,197	)		(7,010	)		—		(3,935	)
Net (decrease)/increase in cash and cash equivalents		—			(967	)		(2,216	)		—		(3,183	)
Cash and cash equivalents at beginning of the year		—			967			3,851			—		4,818
Cash and cash equivalents at end of the year	$	—		$	—		$	1,635		$	—	$	1,635

F-38

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2001 (In Thousands)

	Pliant Corporation Parent Only			Combined Guarantors			Combined Non- Guarantors			Eliminations			Consolidated Pliant Corporation
Assets
Current assets:
Cash and cash equivalents	$	—		$	967		$	3,851		$	—		$	4,818
Receivables		94,163			7,321			23,952			—			125,436
Inventories		65,135			9,087			9,726			—			83,948
Prepaid expenses and other		1,856			398			772			—			3,026
Income taxes receivable		361			7			617			—			985
Deferred income taxes		4,670			(314	)		(1,793	)		—			2,563
Total current assets		166,185			17,466			37,125			—			220,776
Plant and equipment, net		293,628			26,386			49,310			—			369,324
Goodwill, net		185,808			2,122			16,496			—			204,426
Intangible assets, net		25,138			1,506			129			—			26,773
Investment in subsidiaries		62,837			—			—			(62,837	)		—
Other assets		27,188			182			3,014			—			30,384
Total assets	$	760,784		$	47,662		$	106,074		$	(62,837	)	$	851,683
Liabilities and stockholders’ equity(deficit)
Current liabilities:
Trade accounts payable	$	81,099		$	4,678		$	15,731		$	—		$	101,508
Accrued liabilities		36,541			1,703			4,853			—			43,097
Current portion of long-term debt		17,767			—			—			—			17,767
Due to (from) affiliates		(24,978	)		22,147			2,831			—			—
Total current liabilities		110,429			28,528			23,415			—			162,372
Long-term debt, net of current portion		662,556			—			33,000			—			695,556
Other liabilities		17,411			—			1,533			—			18,944
Deferred income taxes		22,108			1,625			2,423			—			26,156
Total liabilities		812,504			30,153			60,371			—			903,028
Minority interest		(104	)		—			375			—			271
Redeemable stock:
Preferred stock		126,149			—			—			—			126,149
Common stock		16,778			—			—			—			16,778
Redeemable stock		142,927			—			—			—			142,927
Stockholders’ (deficit):
Common stock		103,362			14,020			29,616			(43,636	)		103,362
Warrants to purchase common stock		38,715			—			—			—			38,715
Retained earnings (deficit)		(326,356	)		3,500			21,215			(24,715	)		(326,356	)
Stockholders’ notes receivable		(616	)		—			—			—			(616	)
Accumulated other comprehensive loss		(9,648	)		(11	)		(5,503	)		5,514			(9,648	)
Total stockholders’ (deficit)		(194,543	)		17,509			45,328			(62,837	)		(194,543	)
Total liabilities and stockholders’ (deficit)	$	760,784		$	47,662		$	106,074		$	(62,837	)	$	851,683

F-39

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Year Ended December 31, 2001 (In Thousands)

	Pliant Corporation Parent Only			Combined Guarantors			Combined Non- Guarantors			Eliminations			Consolidated Pliant Corporation
Net sales	$	687,349		$	45,088		$	127,254		$	(19,331	)	$	840,360
Cost of sales		546,541			38,423			99,459			(19,331	)		665,092
Gross profit		140,808			6,665			27,795			—			175,268
Total operating expenses		89,117			690			11,280			—			101,087
Operating income		51,691			5,975			16,515			—			74,181
Interest expense		(72,563	)		(82	)		(3,343	)		—			(75,988	)
Equity in earnings of subsidiaries		12,756			—			—			(12,756	)		—
Other income (expense), net		8,382			1,464			(3,321	)		—			6,525
Income (loss) before income taxes and extraordinary loss		266			7,357			9,851			(12,756	)		4,718
Income tax expense		2,334			—			4,452			—			6,786
Net income (loss)	$	(2,068	)	$	7,357		$	5,399		$	(12,756	)	$	(2,068	)

F-40

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2001 (In Thousands)

	Pliant Corporation Parent Only			Combined Guarantors			Combined Non- Guarantors			Eliminations	Consolidated Pliant Corporation
Cash flows from operating activities:	$	3,574		$	13,290		$	13,480		—	$	30,344
Cash flows from investing activities:
Proceeds from sale of assets		2,966			4,948			—		—		7,914
Uniplast acquisition, net of cash acquired		(14,945	)		(14,020	)		(9,813	)	—		(38,778	)
Capital expenditures for plant and equipment		(49,640	)		(3,490	)		(3,288	)	—		(56,418	)
Net cash used in investing activities		(61,619	)		(12,562	)		(13,101	)	—		(87,282	)
Cash flows from financing activities:
Payment of capitalized fees		(1,932	)		—			—		—		(1,932	)
(Payment) receipt of dividends		150			—			(150	)	—		—
Net proceeds from issuance of common and preferred stock		30,991			—			—		—		30,991
Borrowings / (payments) on long-term debt		29,035			—			(3,105	)	—		25,930
Net cash provided by (used in) financing activities		58,244			—			(3,255	)	—		54,989
Effect of exchange rate changes on cash and cash equivalents		(658	)		229			4,136		—		3,707
Net (decrease)/ increase in cash and cash equivalents		(459	)		957			1,260		—		1,758
Cash and cash equivalents at beginning of the year		459			10			2,591		—		3,060
Cash and cash equivalents at end of the year	$	—		$	967		$	3,851		—	$	4,818

F-41

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Year Ended December 31, 2000 (In Thousands)

	Pliant Corporation Parent Only			Combined Guarantors			Combined Non- Guarantors			Eliminations			Consolidated Pliant Corporation
Net sales	$	707,218		$	40,670		$	113,315		$	(17,406	)	$	843,797
Cost of sales		587,281			39,628			87,213			(17,406	)		696,716
Gross profit		119,937			1,042			26,102			—			147,081
Total operating expenses		108,386			9,489			14,780			—			132,655
Operating income (loss)		11,551			(8,447	)		11,322			—			14,426
Interest expense		(64,638	)		27			(3,923	)		—			(68,534	)
Equity in earnings of subsidiaries		1,209			—			—			(1,209	)
Loss on extinguishment of debt		(18,750	)		—			—			—			(18,750	)
Other income (expense), net		(6,601	)		5,580			1,353			—			332
Income (loss) before income taxes		(77,229	)		(2,840	)		8,752			(1,209	)		(72,526	)
Income tax expense (benefit)		(26,446	)		718			3,985						(21,743	)
Net income (loss)	$	(50,783	)	$	(3,558	)	$	4,767		$	(1,209	)	$	(50,783	)

F-42

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2000 (In Thousands)

	Pliant Corporation Parent Only			Combined Guarantors			Combined Non- Guarantors			Eliminations	Consolidated Pliant Corporation
Cash flows from operating activities:	$	38,398		$	4,895		$	16,973		—	$	60,266
Cash flows from investing activities:
Capital expenditures for plant and equipment		(52,042	)		(6,506	)		(7,096	)	—		(65,644	)
Net cash used in investing activities		(52,042	)		(6,506	)		(7,096	)	—		(65,644	)
Cash flows from financing activities:
Payment of capitalized loan fees		(22,303	)		—			—		—		(22,303	)
Payment of fees for tender offer		(10,055	)		—			—		—		(10,055	)
Proceeds from issuance of stock		161,820			—			—		—		161,820
(Payment) receipt of dividends		750			—			(750	)	—
Redemption of common stock		(314,034	)		—			—		—		(314,034	)
Payments received from stockholder on note receivable		165			—			—		—		165
Proceeds from long-term debt		691,684			—			—		—		691,684
Principal payments on long-term debt		(497,296	)		—			(9,706	)	—		(507,002	)
Net cash provided by (used in) financing activities		10,731			—			(10,456	)	—		275
Effect of exchange rate changes on cash and cash equivalents		2,141			1,104			(4,179	)	—		(934	)
Net decrease in cash and cash equivalents		(772	)		(507	)		(4,758	)	—		(6,037	)
Cash and cash equivalents at beginning of the year		1,231			517			7,349		—		9,097
Cash and cash equivalents at end of the year	$	459		$	10		$	2,591		—	$	3,060

20. OTHER INCOME

Other income for the year ended December 31, 2002 includes a cash settlement with a customer of $0.7 million and $1.6 of other less significant items. Other income for the year ended December 31, 2001 includes the proceeds and assets received from a settlement with a potential new customer and other less significant items. The amount of the settlement was $4.7 million, consisting of $1.2 million in cash and $3.5 million of manufactured products, manufacturing equipment, raw materials and scrap materials.

F-43

PLIANT CORPORATION AND SUBSIDIARIES

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

For the Years Ended December 31, 2002, 2001 and 2000

(In Thousands)

Description	Balance at Beginning of Year		Additions Charged to Costs and Expenses		Other			Balance at End of Year
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
2002	$	2,438	$	2,635	$	510	(1)	$	5,583
2001		2,166		155		117	(2)(3)		2,438
2000		2,115				51	(2)		2,166

(1) Represents allowance acquired in the Decora acquisition.

(2) Represents the net of accounts written off against the allowance and recoveries of previous write-offs.

(3) Represents an allowance acquired in the Uniplast acquisition.

F-44

PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2003 AND DECEMBER 31, 2002 (DOLLARS IN THOUSANDS) (UNAUDITED)

	March 31, 2003			December 31, 2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	4,479		$	1,635
Receivables, net of allowances of $5,104 and $5,583, respectively		134,919			119,023
Inventories		103,766			98,022
Prepaid expenses and other		4,803			4,149
Income taxes receivable		1,227			2,368
Deferred income taxes		8,425			8,182
Total current assets		257,619			233,379
PLANT AND EQUIPMENT, net		342,763			350,479
GOODWILL		204,052			203,997
INTANGIBLE ASSETS, net		26,361			27,034
OTHER ASSETS		39,250			38,314
TOTAL ASSETS	$	870,045		$	853,203
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Trade accounts payable	$	118,795		$	113,988
Accrued liabilities		67,711			58,877
Current portion of long-term debt		14,445			14,745
Total current liabilities		200,951			187,610
LONG-TERM DEBT, net of current portion		721,853			721,636
OTHER LIABILITIES		28,305			26,977
DEFERRED INCOME TAXES		23,422			23,836
Total liabilities		974,531			960,059
Minority Interest		46			192
REDEEMABLE PREFERRED STOCK – 200,000 shares authorized, designated as Series A, no par value, with a redemption and liquidation value of $1,000 per share; 140,973 shares outstanding at March 31, 2003 and 130,973 shares outstanding at December 31, 2002		167,046			150,816
REDEEMABLE COMMON STOCK – no par value; 60,000 shares authorized; 34,240 shares outstanding as of March 31, 2003 and December 31, 2002, net of related stockholders’ notes receivable of $6,754 at March 31, 2003 and December 31, 2002		13,008			13,008
		180,054			163,824
STOCKHOLDERS’ DEFICIT:
Common stock – no par value; 10,000,000 shares authorized, 542,638 shares outstanding at March 31, 2003 and December 31, 2002		103,376			103,376
Warrants to purchase common stock		39,133			38,676
Accumulated deficit		(408,450	)		(394,420	)
Stockholders’ notes receivable		(671	)		(660	)
Accumulated other comprehensive income (loss)		(17,974	)		(17,844	)
Total stockholders’ deficit		(284,586	)		(270,872	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	870,045		$	853,203

See notes to condensed consolidated financial statements.

F-45

PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (IN THOUSANDS) (UNAUDITED)

	2003			2002
NET SALES	$	240,511		$	210,083
COST OF SALES		197,714			164,432
Gross profit		42,797			45,651
OPERATING EXPENSES:
Sales, General and Administrative		21,316			19,290
Research and Development		1,377			2,110
Restructuring and Other Costs		6,064			3,330
Total operating expenses		28,757			24,730
OPERATING INCOME		14,040			20,921
INTEREST EXPENSE		(19,856	)		(16,855	)
OTHER INCOME – Net		496			452
INCOME (LOSS) BEFORE INCOME TAXES		(5,320	)		4,518
INCOME TAX EXPENSE (BENEFIT)		2,023			1,942
NET INCOME (LOSS)	$	(7,343	)	$	2,576

See notes to condensed consolidated financial statements.

F-46

PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (IN THOUSANDS) (UNAUDITED)

	2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(7,343	)	$	2,576
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		11,156			11,343
Deferred income taxes		(657	)		88
Change in provision for losses on accounts receivable
Non-cash plant closing costs		3,260			—
Gain or loss on disposal of assets		96			(63	)
Changes in assets and liabilities:
Receivables		(15,896	)		(9,100	)
Inventories		(5,744	)		180
Prepaid expenses and other		(654	)		(207	)
Income taxes payable/receivable		1,141			(147	)
Other assets		1,149			83
Trade accounts payable		4,807			5,369
Accrued liabilities		5,982			746
Other liabilities		1,329			1,081
Other		(146	)		(36	)
Net cash (used in) / provided by operating activities		(1,520	)		11,913
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for plant and equipment		(3,622	)		(10,475	)
Net cash used in investing activities		(3,622	)		(10,475	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of preferred stock		9,988			—
Change in stockholders’ notes receivables		—			(34	)
Payment of financing fees		(2,200	)
Principal payments on long-term debt		(10,000	)		(5,761	)
Proceeds from revolving debt		9,917			3,109
Net cash provided by (used in) financing activities		7,705			(2,686	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		281			635
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		2,844			(613	)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD		1,635			4,818
CASH AND CASH EQUIVALENTS, END OF THE PERIOD	$	4,479		$	4,205
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest	$	6,401		$	8,968
Income taxes		1,802			318
Other non-cash disclosure:
Preferred Stock dividends accrued but not paid	$	6,321		$	5,581

See notes to condensed consolidated financial statements.

F-47

PLIANT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2003 (IN THOUSANDS) (UNAUDITED)

	Common Stock			Warrants To Purchase Common Stock		Accumulated Deficit			Stockholders’ Notes Receivable			Accumulated Other Comprehensive Income (Loss)			Total
	Shares	Amount
BALANCE, DECEMBER 31, 2002	543	$	103,376	$	38,676	$	(394,420	)	$	(660	)	$	(17,844	)	$	(270,872	)
Net loss	—		—		—		(7,343	)		—			—			(7,343	)
Fair value change in interest rate derivatives classified as cash flow hedges	—		—		—		—			—			408			408
Preferred stock dividend and accretion	—		—		—		(6,687	)		—			—			(6,687	)
Issuance of warrants					457											457
Amortization of discount on stockholder’s note receivable	—		—		—		—			(11	)		—			(11	)
Foreign currency translation adjustment	—		—		—		—			—			(538	)		(538	)
BALANCE, MARCH 31, 2003	543	$	103,376	$	39,133	$	(408,450	)	$	(671	)	$	(17,974	)	$	(284,586	)

See notes to condensed consolidated financial statements.

F-48

PLIANT CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared, without audit, in accordance with U.S. generally accepted accounting principles and pursuant to the rules and regulations of the Securities and Exchange Commission. The information reflects all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the financial position, results of operations and cash flows of Pliant Corporation and its subsidiaries (“Pliant,” the “Company” or “we”) as of the dates and for the periods presented. Results of operations for the period ended March 31, 2003 are not necessarily indicative of results of operations to be expected for the full fiscal year.

Certain information in footnote disclosures normally included in financial statements presented in accordance with U.S. generally accepted accounting principles has been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission. These statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 and the Company’s Registration Statement on Form S-4 (File No. 333-86532). Certain reclassifications have been made to the condensed consolidated financial statements for the quarter ended March 31, 2002 for comparative purposes.

2. INVENTORIES

Inventories are valued at the lower of cost (using the first-in, first-out method) or market value. Inventories as of March 31, 2003 and December 31, 2002 consisted of the following (in thousands):

	March 31, 2003		December 31, 2002
Finished goods	$	58,180	$	60,758
Raw materials		36,153		28,045
Work-in-process		9,433		9,219
Total	$	103,766	$	98,022

3. RESTRUCTURING AND OTHER COSTS

Restructuring and other costs include plant closing costs (including costs related to relocation of manufacturing equipment), office closing costs and other costs related to workforce reductions.

The following table summarizes restructuring and other costs for the three months ended March 31 (in thousands):

	2003		2002
Plant closing costs:
Severance	$	300	$	186
Relocation of production lines		1,294		1,484
Other plant closure costs		1,200		780
Leases		1,903		—
		4,697		2,450
Office closing and workforce reduction costs:
Severance		10		880
Leases		1,357		—
		1,367		880
	$	6,064	$	3,330

F-49

The following table summarizes the roll-forward of the reserve from December 31, 2002 to March 31, 2003:

				Accruals for the Quarter Ended March 31, 2003
	12/31/2002																		3/31/2003
	# Employees	Accrual Balance		Additional Employees	Severance		Relocated Production Lines		Leases		Other Plant Closure Costs		Total			Payments			# Employees	Accrual Balance
Plant Closing Costs:
Merced	54	$	1,527				$	443			$	516	$	959		($	1,262	)	54	$	1,224
Shelbyville	12	$	327		$	92	$	9			$	208	$	309		($	378	)	12	$	258
Toronto	18	$	124		$	126					$	3	$	129		($	161	)	18	$	92
Decora	145	$	1,727	20	$	82	$	842			$	473	$	1,397		($	1,947	)	165	$	1,164
Leases		$	641							1,903		1,903		(155	)						2,389
	229	$	4,346	20	$	300	$	1,294	$	1,903	$	1,200	$	4,697		($	3,903	)	249	$	5,127
Office Closing and Workforce Reduction Costs:
Leases		$	430						$	1,357			$	1,357		($	175	)	—	$	1,612
Severance	111	$	3,580	1	$	10							$	10		($	1,471	)	112	$	2,119
	111	$	4,010	1	$	10	$	0	$	1,357	$	0	$	1,357		($	1,768	)	112	$	3,731
TOTAL	340	$	8,356	21	$	310	$	1,294	$	3,260	$	1,200	$	6,064		($	5,671	)	361	$	8,858

All of the employee terminations have been completed as of March 31, 2003.

Plant Closing Costs

2003 accruals—During the first quarter of 2003, we continued to incur costs related to the closure of our facilities in Merced, California and Shelbyville, Indiana; production rationalizations in Toronto, Canada; and the relocation of certain lines from our Merced plant and Fort Edward plant to our other facilities.

Office Closing and Workforce Reduction Costs

2003 accruals—During the first quarter of 2003, we accrued the present value of future lease payments on two buildings that we do not currently occupy. In connection with the 2001 restructuring plan, we vacated and subleased these facilities in 2001. During the first quarter of 2003, the sublessees defaulted on the subleases.

4. STOCK OPTION PLANS

During the three months ended March 31, 2003, options to purchase 4,750 shares of our common stock were granted and options to purchase 487 shares of our common stock were cancelled in connection with employee terminations.

We apply Accounting Principles Board Opinion No. 25 and related interpretations in accounting for stock-based compensation plans as they relate to employees and directors. We did not have compensation expense related to stock options for the three month periods ended March 31, 2003 and March 31, 2002. Had the compensation cost for all the outstanding options been determined in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation,” our net income (loss) for the quarters ended March 31, 2003 and 2002 would have been the following pro forma amounts (in thousands):

	2003			2002
As reported	$	(7,343	)	$	2,576
Pro forma stock compensation expense		(188	)		(177	)
Pro forma	$	(7,531	)	$	2,399

F-50

5. INCOME TAXES

For the three months ended March 31, 2003, our income tax expense was $2.0 million, on pretax losses of $5.3 million as compared to an income tax expense of $1.9 million, or 43.0%, on pretax income of $4.5 million for three months ended March 31, 2002. The significant variance in the effective income tax rate is principally due to the increase in the valuation allowance which offset the United States tax benefit accrued for the 2003 net operating loss. In addition, income taxes are accrued for foreign operations since the pretax losses are principally related to operations in the United States. The effective rate for foreign income taxes is substantially higher than the effective rate for income taxes in the United States.

6. COMPREHENSIVE INCOME/(LOSS)

Other comprehensive income (loss) for the three months ended March 31, 2003 and 2002 were $7.5 million of losses and $5.4 million of income, respectively. The components of other comprehensive income/(loss) are net income, the change in cumulative unrealized losses on derivatives recorded in accordance with Statement of Financial Accounting Standards No. 133 and foreign currency translation.

7. AMENDMENT TO CREDIT FACILITIES AND ISSUANCE OF PREFERRED SHARES

Our credit facilities require us to maintain certain key financial ratios on a quarterly basis. These key ratios include a leverage ratio and an interest coverage ratio. Effective March 24, 2003, we entered into an amendment (the “Amendment”) of our credit facilities to, among other things, permit us to issue up to $50 million of our common stock, qualified preferred stock, warrants to acquire our common stock or qualified preferred stock, or any combination of our common stock, qualified preferred stock or warrants, or other capital contributions with respect to our common stock or qualified preferred stock. The Amendment also adjusted certain financial covenants, including the leverage and interest coverage ratios. As a condition to the effectiveness of the Amendment, we agreed to issue 10,000 shares of our Series A preferred stock and warrants to purchase 43,962 shares of our common stock to J.P. Morgan Partners (BHCA), L.P. (“J.P. Morgan Partners”), and J.P. Morgan Partners agreed to purchase such shares and warrants for $10 million. We completed this sale on March 25, 2003. All of the proceeds of this sale were used to reduce our term debt. In addition, the Amendment allows us to issue an additional $40 million of equity securities between March 25, 2003 and March 31, 2005 in order to obtain cash to reduce the revolving borrowings and/or term borrowings under our credit facilities. J.P. Morgan Partners is required to purchase up to $25 million of such additional equity securities to the extent necessary to enable us to meet our leverage ratio or the target senior debt leverage ratio specified in the Amendment at the end of any calendar quarter or fiscal year ending on or before December 31, 2004. Any such additional issuance of Series A preferred stock to J.P. Morgan Partners will also include warrants to purchase 4.3962 shares of our common stock for every $1,000 face amount of preferred stock issued. Our obligations to issue and J.P. Morgan Partners’ obligation to purchase such equity securities are set forth in a Securities Purchase Agreement dated as of March 25, 2003. Generally, if we are required to issue any portion of such $25 million of equity securities under the Amendment with respect to any fiscal quarter in 2003, we must use 50% of the net proceeds from the issuance of any such equity securities to reduce our revolving borrowings, and 50% to reduce our term borrowings. If we are required to issue any such equity securities under the Amendment with respect to any fiscal quarter in 2004, we must use 100% of the net proceeds to reduce our term borrowings. The issuance of the remaining $15 million of equity securities is voluntary on our part, and neither J.P. Morgan Partners nor any other person is required to purchase such equity securities. We incurred an amendment fee of $2.2 million in connection with the Amendment. We also incurred approximately $0.5 million of legal and administrative expenses in connection with negotiating the Amendment and the issuance of 10,000 shares of Series A preferred stock and related warrants.

8. OPERATING SEGMENTS

Operating segments are components of our business for which separate financial information is available that is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and in assessing performance. This information is reported on the basis that it is used internally for evaluating segment performance.

We have four operating segments: Pliant U.S., Pliant Flexible Packaging, Pliant International and Pliant Solutions. In previous reporting periods we had three operating segments. During the first quarter of 2003, we reorganized our old

F-51

Pliant U.S. segment into two new separate segments, Pliant U.S. and Pliant Flexible Packaging. Segment information in this report with respect to 2002 has been restated for comparative purposes.

Sales and transfers between our segments are eliminated in consolidation. We evaluate the performance of our operating segments based on net sales (excluding intercompany sales) and segment profit. The segment profit reflects income before discontinued operations, extraordinary items, interest expense, income taxes, depreciation, amortization, restructuring costs and other non-cash charges and net adjustments for certain unusual items. Our reportable segments are managed separately with separate management teams, because each segment has differing products, customer requirements, technology and marketing strategies.

Segment profit and segment assets as of and for the periods ended March 31, 2003 and 2002 are presented in the following table (in thousands). Certain reclassifications have been made to the prior year amounts to be consistent with the 2003 presentation.

	Pliant U.S.			Pliant Flexible Packaging		Pliant International		Pliant Solutions			Corporate/ Other			Total
2003
Net sales to customers	$	151,929		$	51,757	$	28,036	$	8,789		$	0		$	240,511
Intersegment sales		3,155			881		2,771		0			(6,807	)		0
Total net sales		155,084			52,638		30,807		8,789			(6,807	)		240,511
Depreciation and amortization		6,557			1,977		1,739		305			578			11,156
Interest expense		(2	)		13		577		5			19,263			19,856
Segment profit		26,761			7,675		2,880		(901	)		(4,356	)		32,059
Segment total assets		517,473			153,922		99,695		33,860			65,095			870,045
Capital expenditures		1,129			703		1,406		0			384			3,622
2002
Net sales to customers	$	132,963		$	48,646	$	28,474	$	0		$	0		$	210,083
Intersegment sales		3,945			682		76		0			(4,703	)		0
Total net sales		136,908			49,328		28,550		0			(4,703	)		210,083
Depreciation and amortization		4,627			2,004		1,561		0			3,151			11,343
Interest expense		(4	)		36		591		0			16,232			16,855
Segment profit		26,695			8,242		5,507		0			(4,443	)		36,001
Segment total assets		539,497			160,371		108,977		0			52,283			861,128
Capital expenditures		6,698			1,965		670		0			1,142			10,475

The business operated by our Pliant Solutions segment was acquired in May 2002.

A reconciliation of the totals reported for the operating segments to the totals reported in the consolidated financial statements as of and for the three months ended March 31 is as follows (in thousands):

	2003			2002
Profit or Loss
Total segment profit	$	32,059		$	36,001
Depreciation and amortization		(11,156	)		(11,343	)
Restructuring and other costs		(6,064	)		(3,330	)
Interest expense		(19,856	)		(16,855	)
Other expenses and adjustments for non-cash charges and certain adjustments defined by our credit agreement		(303	)		45
Income (loss) before taxes	$	(5,320	)	$	4,518
Assets
Total assets for reportable segments	$	804,950		$	808,845
Other unallocated assets		65,095			52,283
Total consolidated assets	$	870,045		$	861,128

In April 2003, we combined our Pliant U.S. and Pliant Solutions segments into a single segment. Therefore, beginning with the second quarter of 2003 our operating segments for financial reporting purposes will be Pliant U.S. (including our current Pliant Solutions segment), Pliant Flexible Packaging and Pliant International.

F-52

9. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

The following condensed consolidating financial statements present, in separate columns, financial information for (i) Pliant Corporation (on a parent only basis) with its investment in its subsidiaries recorded under the equity method, (ii) guarantor subsidiaries (as specified in the Indenture dated May 31, 2000 (the “2000 Indenture”) relating to Pliant Corporation’s $220 million senior subordinated notes due 2010 (the “2000 Notes”) and the Indenture dated April 10, 2002 (the “2002 Indenture” and, together with the 2000 Indenture, the “Indentures”) relating to Pliant’s $100 million senior subordinated notes due 2010 (the “2002 Notes” and, together with the 2000 Notes, the “Notes”) on a combined basis, with any investments in non-guarantor subsidiaries specified in the Indentures recorded under the equity method, (iii) direct and indirect non-guarantor subsidiaries on a combined basis, (iv) the eliminations necessary to arrive at the information for Pliant Corporation and its subsidiaries on a consolidated basis, and (v) Pliant Corporation on a consolidated basis, in each case as of March 31, 2003 and December 31, 2002 and for the three months ended March 31, 2003 and 2002. The Notes are fully and unconditionally guaranteed on a joint and several basis by each guarantor subsidiary and each guarantor subsidiary is 100% owned, directly or indirectly, by Pliant Corporation within the meaning of Rule 3-10(h)(1) of Regulation S-X. There are no contractual restrictions limiting transfers of cash from guarantor and non-guarantor subsidiaries to Pliant Corporation except from our Alliant joint venture. Alliant is a joint venture between us and Supreme Plastics Ltd., a company based in the United Kingdom. We own a fifty-percent interest in Alliant. The limited liability company agreement governing the joint venture prohibits distributions to the members of the joint venture before July 27, 2004, other than annual distributions sufficient to pay taxes imposed upon the members as a result of the attribution to the members of income of the joint venture. The condensed consolidating financial statements are presented herein, rather than separate financial statements for each of the guarantor subsidiaries, because management believes that separate financial statements relating to the guarantor subsidiaries are not material to investors.

F-53

PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF MARCH 31, 2003 (IN THOUSANDS) (UNAUDITED)

	Pliant Corporation (Parent Only)			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated Pliant Corporation
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	3,206		$	431		$	842		$	—		$	4,479
Receivables – net		95,865			15,462			23,592			—			134,919
Inventories		71,192			19,393			13,181			—			103,766
Prepaid expenses and other		2,767			1,532			504			—			4,803
Income taxes receivable		565			4			658			—			1,227
Deferred income taxes		8,003			1,522			(1,100	)		—			8,425
Total current assets		181,598			38,344			37,677			—			257,619
PLANT AND EQUIPMENT – Net		276,303			18,815			47,645			—			342,763
INTANGIBLE ASSETS – Net		215,421			—			14,992			—			230,413
INVESTMENT IN SUBSIDIARIES		53,635			—			—			(53,635	)		—
OTHER ASSETS		35,730			—			3,520			—			39,250
TOTAL ASSETS	$	762,687		$	57,159		$	103,834		$	(53,635	)	$	870,045
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current portion of long-term debt	$	13,817		$	—		$	628		$	—		$	14,445
Trade accounts payable		87,568			9,766			21,461			—			118,795
Accrued liabilities		57,817			4,950			4,944			—			67,711
Due to (from) affiliates		(36,357	)		21,491			14,866			—			—
Total current liabilities		122,845			36,207			41,899			—			200,951
LONG-TERM DEBT – Net of current portion		698,318			—			23,535			—			721,853
OTHER LIABILITIES		26,306			—			1,999			—			28,305
DEFERRED INCOME TAXES		19,750			1,751			1,921			—			23,422
Total liabilities		867,219			37,958			69,354			—			974,531
MINORITY INTEREST		—			—			46			—			46
REDEEMABLE STOCK:
Preferred Stock		167,046			—			—			—			167,046
Common Stock		13,008			—			—			—			13,008
REDEEMABLE STOCK		180,054			—			—			—			180,054
STOCKHOLDERS’ EQUITY (DEFICIT):
Common stock		103,376			—			9,650			(9,650	)		103,376
Additional paid-in capital		—			14,020			19,590			(33,610	)		—
Warrants		39,133			—			—			—			39,133
Retained earnings accumulated (deficit)		(408,450	)		5,192			15,427			(20,619	)		(408,450	)
Stockholders’ note receivable		(671	)		—			—			—			(671	)
Accumulated other comprehensive loss		(17,974	)		(11	)		(10,233	)		10,244			(17,974	)
Total stockholders’ equity (deficit)		(284,586	)		19,201			34,434			(53,635	)		(284,586	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	762,687		$	57,159		$	103,834		$	(53,635	)	$	870,045

F-54

PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2002 (IN THOUSANDS) (UNAUDITED)

	Pliant Corporation Parent Only			Combined Guarantors			Combined Non-Guarantors			Eliminations			Consolidated Pliant Corporation
Assets
Current assets:
Cash and cash equivalents	$	—		$	—		$	1,635		$	—		$	1,635
Receivables		82,421			13,444			23,158			—			119,023
Inventories		71,586			15,832			10,604			—			98,022
Prepaid expenses and other		2,842			899			408			—			4,149
Income taxes receivable		1,145			4			1,219			—			2,368
Deferred income taxes		6,909			1,522			(249	)		—			8,182
Total current assets		164,903			31,701			36,775			—			233,379
Plant and equipment, net		283,638			17,919			48,922			—			350,479
Goodwill		189,106			—			14,891			—			203,997
Intangible assets, net		26,964			—			70			—			27,034
Investment in subsidiaries		52,813			—			—			(52,813	)		—
Other assets		34,871			17			3,426			—			38,314
Total assets	$	752,295		$	49,637		$	104,084		$	(52,813	)	$	853,203
Liabilities and stockholders’ equity(deficit)
Current liabilities:
Trade accounts payable	$	83,918		$	8,675		$	21,395		$	—		$	113,988
Accrued liabilities		48,091			4,818			5,968			—			58,877
Current portion of long-term debt		14,117			—			628			—			14,745
Due to (from) affiliates		(28,373	)		15,316			13,057			—			—
Total current liabilities		117,753			28,809			41,048			—			187,610
Long-term debt, net of current portion		697,472			—			24,164			—			721,636
Other liabilities		25,101			—			1,876			—			26,977
Deferred income taxes		19,017			1,751			3,068			—			23,836
Total liabilities		859,343			30,560			70,156			—			960,059
Minority interest		—			—			192			—			192
Redeemable stock:
Preferred stock		150,816			—			—			—			150,816
Common stock		13,008			—			—			—			13,008
Total redeemable stock		163,824			—			—			—			163,824
Stockholders’ (deficit):
Common stock		103,376			14,020			29,240			(43,260	)		103,376
Warrants to purchase common stock		38,676			—			—			—			38,676
Retained earnings (deficit)		(394,420	)		5,067			14,489			(19,556	)		(394,420	)
Stockholders’ notes receivable		(660	)		—			—			—			(660	)
Accumulated other comprehensive loss		(17,844	)		(10	)		(9,993	)		10,003			(17,844	)
Total stockholders’ (deficit)		(270,872	)		19,077			33,736			(52,813	)		(270,872	)
Total liabilities and stockholders’ (deficit)	$	752,295		$	49,637		$	104,084		$	(52,813	)	$	853,203

F-55

PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING INCOME STATEMENT

FOR THE THREE MONTHS ENDED MARCH 31, 2003 (IN THOUSANDS) (UNAUDITED)

	Pliant Corporation (Parent Only)			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated Pliant Corporation
SALES, Net	$	190,855		$	19,885		$	36,578		$	(6,807	)	$	240,511
COST OF SALES		155,514			17,691			31,316			(6,807	)		197,714
GROSS PROFIT		35,341			2,194			5,262			—			42,797
OPERATING EXPENSES		23,561			2,028			3,168			—			28,757
OPERATING INCOME		11,780			166			2,094			—			14,040
INTEREST EXPENSE		(19,269	)		(5	)		(582	)		—			(19,856	)
EQUITY IN EARNINGS OF SUBSIDIARIES		1,063			—			—			(1,063	)		—
OTHER INCOME (EXPENSE), Net		(129	)		(36	)		661			—			496
INCOME (LOSS) BEFORE INCOME TAXES		(6,555	)		125			2,173			(1,063	)		(5,320	)
INCOME TAX PROVISION (BENEFIT)		788			—			1,235			—			2,023
NET INCOME (LOSS)	$	(7,343	)	$	125		$	938		$	(1,063	)	$	(7,343	)

F-56

PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING INCOME STATEMENT

FOR THE THREE MONTHS ENDED MARCH 31, 2002 (IN THOUSANDS) (UNAUDITED)

	Pliant Corporation (Parent Only)			Combined Guarantor Subsidiaries		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated Pliant Corporation
SALES, Net	$	170,037		$	10,739	$	34,010		$	(4,703	)	$	210,083
COST OF SALES		133,264			9,502		26,369			(4,703	)		164,432
GROSS PROFIT		36,773			1,237		7,641			—			45,651
OPERATING EXPENSES		21,266			84		3,380			—			24,730
OPERATING INCOME		15,507			1,153		4,261			—			20,921
INTEREST EXPENSE		(16,237	)		—		(618	)		—			(16,855	)
EQUITY IN EARNINGS OF SUBSIDIARIES		3,748			—		—			(3,748	)		—
OTHER INCOME (EXPENSE), Net		14			3		435			—			452
INCOME (LOSS) BEFORE INCOME TAXES		3,032			1,156		4,078			(3,748	)		4,518
INCOME TAX PROVISION (BENEFIT)		456			—		1,486			—			1,942
NET INCOME (LOSS)	$	2,576		$	1,156	$	2,592		$	(3,748	)	$	2,576

F-57

PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2003 (IN THOUSANDS) (UNAUDITED)

	Pliant Corporation (Parent Only)			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations		Consolidated Pliant Corporation
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	(4,225	)	$	2,024		$	681			—	$	(1,520	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Asset transfers		—			—			—			—		—
Capital expenditures for plant and equipment		(1,333	)		(374	)		(1,915	)		—		(3,622	)
Net cash used in investing activities		(1,333	)		(374	)		(1,915	)		—		(3,622	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of preferred stock		9,988			—			—			—		9,988
Payment of financing fees		(2,200	)		—			—			—		(2,200	)
Principal payments on long-term debt, net		546			—			(629	)		—		(83	)
Net cash used in financing activities		8,334			—			(629	)		—		7,705
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		430			(1,219	)		1,070			—		281
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		3,206			431			(793	)		—		2,844
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD		—			—			1,635			—		1,635
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$	3,206		$	431		$	842		$	—	$	4,479

F-58

PLIANT CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2002 (IN THOUSANDS) (UNAUDITED)

	Pliant Corporation (Parent Only)			Combined Guarantor Subsidiaries			Combined Non-Guarantor Subsidiaries			Eliminations		Consolidated Pliant Corporation
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	14,991		$	(3,745	)	$	667			—	$	11,913
CASH FLOWS FROM INVESTING ACTIVITIES:
Asset transfers		(4,805	)		4,805			—			—		—
Capital expenditures for plant and equipment		(8,442	)		(1,328	)		(705	)		—		(10,475	)
Net cash provided by investing activities		(13,247	)		3,477			(705	)		—		(10,475	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock and net change in related stockholders’ notes receivables		(34	)		—			—			—		(34	)
Principal payments on long-term debt		(1,652	)		—			(1,000	)		—		(2,652	)
Net cash used in financing Activities		(1,686	)		—			(1,000	)		—		(2,686	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		(58	)		266			427			—		635
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		—			(2	)		(611	)		—		(613	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD		—			967			3,851			—		4,818
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	$	—		$	965		$	3,240		$	—	$	4,205

10. COMMITMENTS AND CONTINGENCIES

On February 26, 2003, former employees of our Fort Edward, New York manufacturing facility, which we acquired as part of the Decora acquisition, named us as defendants in a complaint filed in the Supreme Court of the State of New York, County of Washington (Index No. 4417E). We received service of this complaint on April 2, 2003. The complaint alleges claims against us for conspiracy to defraud and breach of contract arising out of our court-approved purchase of the assets of Decora Industries, Inc. and Decora, Incorporated. Plaintiffs’ complaint seeks compensatory and punitive damages and a declaratory judgment nullifying severance agreements for lack of consideration and economic duress. We intend to resist the plaintiffs’ claims vigorously. We do not believe this proceeding will have a material adverse effect on our financial condition or results of operations.

We are subject to other litigation matters and claims arising in the ordinary course of business. We believe, after consultation with legal counsel, that any liabilities arising from such litigation and claims will not have a material adverse effect on our financial position or results of operations.

F-59

Report of Independent Auditors

To the Board of Directors of

    Decora Industries, Inc.

We have audited the accompanying consolidated balance sheet of Decora Industries, Inc. and its subsidiaries as of March 31, 2002 and the related consolidated statements of operations, shareholders’ deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Decora Industries, Inc. and subsidiaries at March 31, 2002 and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that Decora Industries, Inc. and subsidiaries (the Company) will continue as a going concern. As more fully described in Note 1, the Company filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (“Chapter 11”). The Company is currently operating its business under the jurisdiction of Chapter 11 of the United States Bankruptcy Court in Wilmington, Delaware (the Bankruptcy Court) and continuation of the Company as a going concern is contingent upon, among other things, the ability to raise a significant amount of cash or sell the business. In addition, the Company has experienced operating losses, and is in default of its prepetition debt arrangements as well as its debtor-in-possession financing. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of these uncertainties.

/s/    ERNST & YOUNG LLP

Chicago, Illinois

July 19, 2002

F-60

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Consolidated Balance Sheet

(Dollars in Thousands)

	March 31 2002
Assets
Current assets:
Cash and cash equivalents, including restricted cash of $1,698	$	2,244
Accounts receivable, less allowance for doubtful accounts of $1,049		7,400
Inventories		8,065
Prepaid expenses and other current assets		402
Total current assets		18,111
Property, plant and equipment, net		7,292
Deferred financing costs		2,774
Other assets		1,781
Total assets	$	29,958
Liabilities and shareholders’ deficit
Current liabilities:
Accounts payable	$	5,608
Accrued liabilities		1,874
Debtor in possession financing		15,097
Total current liabilities		22,579
Liabilities subject to compromise		121,169
Total liabilities		143,748
Shareholders’ deficit:
Preferred stock, $.01 par value; 5,000,000 shares authorized, none issued		—
Common stock, $.01 par value; 20,000,000 shares authorized, 7,823,887 shares issued and outstanding		78
Additional paid-in capital		33,144
Accumulated deficit		(147,012	)
Total shareholders’ deficit		(113,790	)
Total liabilities and shareholders’ deficit	$	29,958

See accompanying notes.

F-61

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Consolidated Statement of Operations

(Dollars in Thousands)

	Year ended March 31 2002
Net sales	$	49,051
Cost of goods sold		37,789
Gross profit		11,262
Selling, general, and administrative expenses		15,601
Write-down of impaired goodwill and long-lived assets		6,612
Loss from operations		(10,951	)
Interest expense, net		2,936
Loss before reorganization items and income taxes		(13,887	)
Reorganization expense items		1,356
Loss before income taxes		(15,243	)
Income tax provision		—
Net loss	$	(15,243	)

See accompanying notes.

F-62

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Consolidated Statement of Shareholders’ Deficit

(In Thousands)

	Common	Stock		Additional Paid-In Capital		Accumulated Deficit			Total Shareholders’ Deficit
	Shares	Amount
Balance at March 31, 2001	7,824	$	78	$	33,144	$	(131,769	)	$	(98,547	)
Net loss	—		—		—		(15,243	)		(15,243	)
Balance at March 31, 2002	7,824	$	78	$	33,144	$	(147,012	)	$	(113,790	)

See accompanying notes.

F-63

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Consolidated Statement of Cash Flows

(Dollars in Thousands)

	Year ended March 31 2002
Operating activities
Net loss	$	(15,243	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		1,815
Other		65
Loss on fixed asset disposal		120
Write-down of goodwill and long-lived assets		6,612
Changes in operating assets and liabilities:
Accounts receivable		243
Inventory		3,869
Prepaid and other assets		541
Accounts payable		2,549
Accrued liabilities		598
Liabilities subject to compromise		(162	)
Net cash provided before reorganization items		1,007
Net cash used for reorganization items		(419	)
Net cash provided by operating activities		588
Investing activities
Proceeds from the sale of fixed assets		105
Purchase of equipment		(42	)
Net cash provided by investing activities		63
Financing activities
Debtor in possession financing proceeds		43,500
Debtor in possession financing payments		(42,917	)
Net cash provided by financing activities		583
Net increase in cash and cash equivalents		1,234
Cash and cash equivalents at beginning of year		1,010
Cash and cash equivalents at end of year	$	2,244
Supplemental cash flow information is as follows:
Cash paid during the year for interest	$	2,753

See accompanying notes.

F-64

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements

Year ended March 31, 2002

1. Proceedings Under Chapter 11 of the Bankruptcy Code

General

Decora Industries, Inc. and subsidiaries (the Company), debtors and debtors-in possession (collectively, the Debtors) commenced a reorganization case (the Reorganization Case) by filing a petition for relief under Chapter 11 (Chapter 11), Title 11 of the United States Code, (as amended, the Bankruptcy Code) on December 5, 2000 (the Petition Date) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court). The Reorganization Case is being jointly administered, for procedural purposes only, before the Bankruptcy Court under Case No.00-4459 (JJF). Pursuant to Sections 1107 and 1108 of the Bankruptcy Code, the Company, as debtor-in-possession, has continued to manage and operate its assets and businesses subject to the supervision and orders of the Bankruptcy Court, pending confirmation of the plan of reorganization (the Reorganization Plan) contained in the disclosure statement (the Disclosure Statement) filed with the Bankruptcy Court on December 5, 2000, pursuant to Section 1125 of the Bankruptcy Code. Because the Company is operating as debtor-in-possession under the Bankruptcy Code, the existing directors and officers of the Company continue to govern and manage the operations of the Company, respectively, subject to the supervision and orders of the Bankruptcy Court.

The Disclosure Statement filed at the inception of the bankruptcy did not provide any recovery to the Company’s equity security holders. Accordingly, management believes that current equity security holders will not receive any distribution under any reorganization plan as a result of the issuance of new equity to existing creditors. The Company needs to raise a significant amount of debt or equity in order to emerge from bankruptcy. The extent to which equity needs to be raised may result in the sale of the Company. Any such sale of the Company will require the requisite vote of impaired creditors entitled to vote under the Bankruptcy Code and confirmation of the plan by the Bankruptcy Court.

See Note 11 for subsequent sale of Company assets.

F-65

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements (continued)

1. Proceedings under Chapter 11 of the Bankruptcy Code (continued)

Basis of Financial Statement Presentation

The consolidated financial statements have been presented in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (SOP 90-7), and have been prepared in accordance with accounting principles generally accepted in the United States applicable to a going concern, which principles, except as otherwise disclosed, assume that assets will be realized and liabilities will be discharged in the ordinary course of business. As a result of the Reorganization Case and circumstances relating to this event, and default on Decora Industries’ prepetition debt, such realization of assets and liquidation of liabilities are subject to significant uncertainty. While under the protection of Chapter 11, the Company may sell or otherwise dispose of assets, and liquidate or settle liabilities for amounts other than those reflected in the financial statements. Additionally, the amounts reported on the consolidated balance sheet could materially change because of changes in business strategies and the effects of any proposed plan of reorganization.

The appropriateness of using the going concern basis is dependent upon, among other things, the ability to raise a significant amount of debt or equity, future profitable operations, the ability to comply with the terms of the debtor-in-possession financing facility (see Note 5 for additional discussion of the default on the debtor in possession financing) and the ability to generate sufficient cash from operations and financing arrangements to meet obligations.

In the Reorganization Case, substantially all unsecured liabilities as of the Petition Date are subject to compromise or other treatment under a plan of reorganization which must be confirmed by the Bankruptcy Court after submission to vote by affected parties. For financial reporting purposes, pending the outcome of the Reorganization Case, all unsecured and undersecured prepetition liabilities have been segregated and classified as liabilities subject to compromise under reorganization proceedings in the consolidated balance sheet. Generally, all actions to enforce or otherwise effect repayment of prepetition liabilities as well as all pending litigation against the Debtors are stayed while the debtors continue their business operations as debtors-in-possession. Unaudited schedules have been filed by the Debtors with the Bankruptcy Court setting forth the assets and liabilities of the debtor as of the Petition Date as reflected in the Debtors’ accounting records. The ultimate amount of and settlement terms for such liabilities are

F-66

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements (continued)

1. Proceedings under Chapter 11 of the Bankruptcy Code (continued)

subject to an approval plan of reorganization and accordingly are not presently determinable.

Under the Bankruptcy Code, the Debtors may elect to assume or reject real estate leases, employment contracts, personal property leases, service contracts and other prepetition executory contracts, subject to Bankruptcy Court approval. The debtors have not reviewed all leases for assumption or rejection but will analyze their leases and executory contracts and may assume or reject leases or contracts. Such rejections could result in additional liabilities subject to compromise.

Pursuant to SOP 90-7, revenues and expenses, realized gains and losses, and provisions for losses resulting from the reorganization of the business are reported in the consolidated statement of operations separately as reorganization items. Professional fees are expensed as incurred. Interest expense is reported only to the extent that it will be paid during the Reorganization Case or that it is probable that it will be an allowed claim. Reorganization items are also reported separately within the operating, investing and financing categories of the consolidated statement of cash flows, as applicable.

2. Description of Business and Summary of Significant Accounting Policies

Description of Business

The Company is a leading manufacturer and marketer of self-adhesive consumer decorative and surface coverings. The Company is a holding company with operations primarily conducted by its wholly owned subsidiary Decora, Inc. (Decora) based in the United States. The Company’s principal products are sold under the Con-Tact brand. The Company owns Decora Industries Deutschland GmbH (DI Deutschland), which is now a dormant operating company with no assets or operations.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.

F-67

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements (continued)

2. Description of Business and Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with maturities of three months or less when purchased. Under the terms of the Reorganization Case the Company had $1,698,000 of restricted cash at March 31, 2002.

Accounts Receivable

The Company sells to a large number of customers. Credit evaluations are ongoing, and collateral or other security is generally not required on trade accounts receivable. An allowance for doubtful accounts is maintained at a level management believes is sufficient to cover potential credit losses.

Inventories

Inventories are stated at the lower of cost (first in, first out method) or market.

Property, Plant and Equipment

Property, plant and equipment are carried at cost, less accumulated depreciation determined by the straight-line method over the estimated useful lives of the assets, generally three to thirty years.

Goodwill and Impairment

The excess of the aggregate purchase price over the fair values of the net assets of businesses and product lines acquired has been recorded as goodwill and was being amortized on a straight-line basis over forty years. Goodwill amortization was $379,000 for the year ended March 31, 2002.

In accordance with Financial Accounting Standards Board Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of (FAS 121), the Company assesses impairment losses to be recorded on long-lived assets when indications of impairment are present. As a result of the Company’s operating losses for fiscal 2002 and the filing under Chapter 11, the Company performed an impairment analysis as required under FAS 121 and concluded an impairment had to be recognized. The estimated fair value of the impaired assets (used in measuring the impairment loss) was determined by reference to the sales price in

F-68

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements (continued)

2. Description of Business and Summary of Significant Accounting Policies (continued)

the transaction that occurred subsequent to March 31, 2002 (see Note 11). The impairment resulted in the Company writing off its entire goodwill balance totaling $6,100,000 and $512,000 of its net property, plant and equipment balance.

Revenue Recognition

The Company records revenues when all of the following criteria are met: (i) terms of the sale are evidenced by a binding purchase order or on-line authorization; (ii) shipment has occurred; (iii) the price is fixed or determinable; and (iv) collection of amounts owed for goods shipped is reasonably assured.

Shipping and Handling Costs

Shipping and handling costs are classified in cost of sales in the accompanying statement of operations.

Advertising Costs

Advertising costs expensed as incurred were approximately $3,104,000 in 2002. The Company also provides in-store displays to its customers which are capitalized and amortized over 3 years. At March 31, 2002, the balance of these displays totaled $1,781,000 and is classified as “other assets” on the accompanying balance sheet and the related amortization was $1,043,000 for the year ended March 31, 2002 which is classified as selling, general and administrative expenses in the accompanying statement of operations.

Research and Development Costs

The Company expenses all research and development costs as incurred which amounted to $381,000 for the year ended March 31, 2002.

F-69

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements (continued)

2. Description of Business and Summary of Significant Accounting Policies (continued)

Income Taxes

The liability method is used to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred income tax expense is measured by the change in the deferred tax asset or liability during the year. A valuation allowance is recorded when, based upon available evidence it is more likely than not that deferred tax assets will not be realized.

Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its employee stock options rather than the alternative fair value accounting provided for under SFAS No. 123, Accounting for Stock Based Compensation. Under APB No. 25, when the exercise price of employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recorded.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

3. Inventories

Inventories at March 31, 2002, consist of the following (in thousands):

Raw materials	$	1,641
Work-in-process		1,343
Finished goods		5,081
	$	8,065

F-70

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements (continued)

4. Property, Plant and Equipment

Property, plant and equipment at March 31, 2002, consists of the following (in thousands):

Land	$	379
Buildings		2,841
Machinery and equipment		14,341
Furniture and fixtures		615
Leasehold improvements		4,665
Construction-in-progress		74
		22,915
Less: Accumulated depreciation		(15,623	)
	$	7,292

5. Debt

In Apri1 1998, the Company issued $112,750,000 of 11.0% senior secured notes (the Notes). The Notes were issued with an original issue discount of $2,664,000 with interest payable semi-annually and no principal payments required prior to maturity on May 1, 2005. The fair value of the Notes at March 31, 2002, was approximately $18,000, which was determined by the Company using market information provided by an investment banking firm as to the market value of similar debt amounts. The estimated fair value of the Notes does not necessarily reflect the amount at which the debt could be settled.

On December 5, 2000 the Company entered into an agreement with its senior secured lender to provide up to $19 million debtor in possession financing during the duration of its bankruptcy. It was subsequently reduced to $18 million. The proceeds were used to refinance a portion the term notes and revolving credit facility described above. In January 2001 the Company failed to comply with certain covenants of this financing. As with its previous financing, Decora has been able to continue to draw under the revolving facility subject to restricted availability and payment of interest at the default rate of the prime rate plus 5.5% as defined in the agreement. The outstanding balance on this facility at March 31, 2002, was $15,097,000 and is classified as a current liability.

F-71

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements (continued)

6. Liabilities Subject to Compromise

The principal categories of obligations classified as liabilities subject to compromise to unrelated parties under Reorganization Cases are identified below. The amounts below in total may vary from the stated amount of proofs of claim that will be filed with the Bankruptcy Court and may be subject to future adjustment depending on the Bankruptcy Court action, further developments with respect to potential disputed claims, determination as to the value of any collateral securing claims, or other events.

Additional claims may arise from the rejection of additional real estate leases and executory contracts by the debtors.

At March 31, 2002, liabilities subject to compromise consisted of the following (in thousands):

11.0% senior secured notes(Note 5)	$	106,398
Trade payables		7,219
Accrued interest		7,050
Other accrued expenses		502
	$	121,169

As a result of the Reorganization Case, no principal or interest payments will be made on the unsecured and undersecured prepetition debt without Bankruptcy Court approval or until a plan of reorganization providing for the repayment terms has been confirmed by the Bankruptcy Court and becomes effective. Therefore, interest on prepetition unsecured and undersecured obligations has not been accrued after the Petition Date.

7. Employee Benefit Plans

Decora and its union have executed an agreement to provide retirement benefits to qualified union employees through the Paper Industry Union—Management Pension Fund (the Fund). Based upon this agreement, Decora contributes a contractually agreed upon amount for each qualifying hour that a union employee works. Total contributions to the Fund were $295,185 for the year ended March 31, 2002 and this amount was expensed in 2002.

F-72

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements (continued)

7. Employee Benefit Plans (continued)

The Company also has a profit sharing plan and a 401(k) plan covering its U.S. salaried employees. The plan includes a contribution portion that is at a rate of 10% of the employee contribution level capped at a 6% of salary limit. No profit sharing contributions were made in fiscal year 2002. Total expense related to plan fees and company contributions equaled $15,040 for the year ended March 31, 2002.

8. Stock Options

The Company has several domestic long-term incentive plans under which shares of the Company’s common stock may be sold to directors, officers and key employees. Certain other parties have been granted stock options by the Company in connection with various transactions.

The Company adopted a Stock Option Plan in fiscal 1987 (the 1987 Plan) pursuant to which 340,000 shares of common stock were available for grant. The 1987 Plan terminated on July 8, 1997. The 1987 Plan is administered by a committee of directors of the Company who are not covered by the 1987 Plan. All options granted under the 1987 Plan terminate either five or ten years after the date of grant and vest quarterly over a three-year period subsequent to the date of the grant, unless modified by the Company.

In fiscal 2000, the shareholders of the Company approved the Decora Industries, Inc. 1999 Stock Option Plan (the 1999 Plan) pursuant to which 1,000,000 shares of common stock were available for grant. The Plan is administered by a committee of directors of the Company. All options granted under the 1999 Plan terminate five or ten years after the date of grant.

There were no options issued under either the 1987 Plan or the 1999 Plan during the year ended March 31, 2002.

F-73

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements (continued)

8. Stock Options (continued)

A summary of stock option activity under both plans for the year ended March 31, 2002, follows (in thousands except average exercise price data):

	Options	Average Exercise Price
March 31, 2001	2,270	$	6.11
Granted	—		—
Exercised	—		—
Expired	—		—
March 31, 2002	2,270	$	6.11

The following table summarized information about stock options outstanding at March 31, 2002:

	Options Outstanding				Options Exercisable
Exercise Price	Shares	Average Price		Term (Months)	Shares	Average Price
$4.50 – $4.95	50,000	$	4.63	10.20	16,667	$	4.63
$5.00 – $5.50	818,000		5.33	23.01	605,000		5.42
$5.55 – $5.95	354,800		5.64	16.55	254,800		5.60
$6.00 – $6.99	730,000		6.36	16.04	540,000		6.37
$7.00 – $7.99	177,000		7.46	7.03	54,000		7.45
$8.00 – $9.30	140,000		8.03	2.36	44,000		8.09
Total	2,269,800				1,514,467

Pro Forma information regarding net income under SFAS No.123 is not included as it is not materially different from the amounts reported.

F-74

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements (continued)

9. Income Taxes

Net deferred tax assets (liabilities) are comprised of the following at March 31, 2002 (in thousands):

Current deferred tax assets (liabilities):
Nondeductible reserves	$	1,116
Other		(12	)
		1,104
Noncurrent deferred tax assets (liabilities):
Depreciation		(268	)
Tax credits		294
Net operating loss carryforwards		31,339
Intangibles		17,195
Other, net		297
		48,857
Total deferred tax assets		49,961
Valuation allowance		(49,961	)
	$	—

The provision for (benefit from) income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pre-tax income due to nondeductible items and the valuation allowance.

Approximately $79,138,000 of the Company’s net operating loss carryforwards remain available at March 31, 2002. The net operating losses are limited to future taxable earning and may be subject to certain limitations if the Company were to experience a change in ownership. The net operating carryforwards expire over the period 2003-2022.

The Company has recorded a valuation allowance against the entire amount of net deferred tax assets as management believes that based upon available evidence, it is more likely than not that these benefits will not be realized.

F-75

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Consolidated Financial Statements (continued)

10. Commitments and Contingencies

The Company uses certain equipment under lease arrangements, all of which are accounted for as operating leases. Rent expense was approximately $574,000 for the year ended March 31, 2002. The Company has no rental commitments under long-term noncancelable operating leases. During the bankruptcy period, no leases were assumed.

11. Subsequent Event

On May 20, 2002, substantially all of the assets and certain liabilities of the Company were purchased for approximately $18 million by Pliant Solutions Corporation, a wholly-owned subsidiary of Pliant Corporation. This transaction was approved by the Bankruptcy Court on May 17, 2002.

F-76

Report of Independent Accountants

To the Board of Directors and Shareholders of Decora Industries, Inc.

In our opinion, the accompanying consolidated balance sheet and related consolidated statements of operations, shareholders’ deficit and cash flows present fairly, in all material respects, the financial position of Decora Industries, Inc. and its subsidiaries at March 31, 2001 and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company and its subsidiary Decora, Inc. filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (“Chapter 11”). The Company is currently operating its business under the jurisdiction of Chapter 11 of the United States Bankruptcy Court in Wilmington, Delaware (the “Bankruptcy Court”), and continuation of the Company as a going concern is contingent upon, among other things, the ability to formulate a plan of reorganization which will gain approval of the requisite parties under the United States Bankruptcy Court and confirmation of the Bankruptcy Court. In addition, the Company has experienced operating losses, negative operating cash flows and is currently in default of its prepetition debt arrangements as well as its debtor-in-possession financing. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

/s/ PricewaterhouseCoopers LLP

Cleveland, Ohio

June 20, 2001

F-77

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Consolidated Balance Sheet

March 31, 2001 (Amounts in thousands except share data)

	2001
Assets
Current Assets:
Cash and cash equivalents	$	1,010
Accounts receivable, less allowance for doubtful accounts of $423		7,643
Inventories		11,934
Prepaid expenses and other current assets		291
Total current assets		20,878
Property and equipment, net		9,510
Goodwill, net		6,392
Deferred financing costs, net		2,839
Other assets		2,433
Total assets	$	42,052
Liabilities and Shareholders’ Deficit
Liabilities not subject to compromise
Current liabilities:
Accounts payable	$	3,478
Accrued liabilities		1,276
Debtor in possession financing		14,514
Total current liabilities		19,268
Liabilities subject to compromise		121,331
Total liabilities		140,599
Shareholders’ deficit:
Preferred stock, $.01 par value; 5,000,000 shares authorized, none issued		—
Common stock, $.01 par value; 20,000,000 shares authorized, 7,823,887 shares issued and outstanding		78
Additional paid-in capital		33,144
Accumulated deficit		(131,769	)
Total shareholders’ deficit		(98,547	)
Total liabilities and shareholders’ deficit	$	42,052

The accompanying notes are an integral part of these financial statements.

F-78

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Consolidated Statement of Operations

For the Year Ended March 31, 2001 (Amounts in thousands except share data)

Net Sales	$	54,524
Cost of goods sold		42,942
Gross profit		11,582
Selling, general and administrative expenses		21,781
Write-down of impaired goodwill		57,000
Nonrecurring credit, net		(7,224	)
Loss from operations		(59,975	)
Loss on the disposal of German subsidiary		24,307
Interest expense, net		12,723
Loss before reorganization items, income taxes and extraordinary item		(97,005	)
Reorganization items		2,194
Loss before income taxes and extraordinary item		(99,199	)
Income tax provision		7
Loss before extraordinary item		(99,206	)
Extraordinary gain		2,790
Net loss	$	(96,416	)

The accompanying notes are an integral part of these financial statements.

F-79

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Consolidated Statement of Changes in Shareholders’ Deficit

For the Year Ended March 31, 2001

(Amounts in thousands except share data)

	Shares	Value		Additional Paid-in Capital		Accumulated Deficit			Total Shareholders’ Deficit
Balance at March 31, 2000	7,824	$	78	$	33,144	$	(35,353	)	$	(2,131	)
Net loss	—		—		—		(96,416	)		(96,416	)
Balance at March 31, 2001	7,824	$	78	$	33,144	$	(131,769	)	$	(98,547	)

The accompanying notes are an integral part of these financial statements.

F-80

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Consolidated Statement of Cash Flows

For the Year Ended March 31, 2001 (Amounts in thousands except share data)

	2001
Cash flows from operating activities:
Net loss	$	(96,416	)
Adjustments to reconcile net loss to net cash used in operating activities:
Extraordinary item, net of income taxes		(2,790	)
Depreciation and amortization		3,685
Amortization of debt discount and fees		956
Loss on the sale of German Subsidiary		24,307
Writedown of impaired goodwill		57,000
Net changes in assets and liabilities:
Accounts receivable		2,915
Inventory		2,826
Other assets		(162	)
Accounts payable		3,612
Accrued liabilities		630
Net change in amount due from Hornschuch		3,306
Net cash used in operating activities		(131	)
Cash flows from investing activities:
Proceeds from the sale of fixed assets		60
Proceeds from the sale of subsidiary		1,197
Purchase of property and equipment		(219	)
Net cash provided by investing activities		1,038
Cash flows from financing activities:
Payment of debt issue costs		(275	)
Repurchase of senior undersecured notes		(1,812	)
Issuance of long-term debt		79,186
Repayment of long-term debt		(77,529	)
Net cash used in financing activities		(430	)
Net increase in cash and cash equivalents		477
Cash and cash equivalents at beginning of year		533
Cash and cash equivalents at end of year	$	1,010
Supplemental cash flow information is as follows:
Cash paid during the year for interest	$	9,142
Cash paid during the year for reorganization items	$	1,323

The accompanying notes are an integral part of these financial statements.

F-81

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Financial Statements

1. Description of Business and Summary of Significant Accounting Policies

Decora Industries, Inc. (“DII” or the “Company”) is a leading manufacturer and marketer of self-adhesive consumer decorative and surface coverings. The Company is comprised of a holding company operating primarily through its wholly-owned subsidiary Decora, Inc. (“Decora”) based in the United States of America. The Company’s principal products are sold under the Con-Tact brand. Until February 8, 2001 the Company also owned Konrad Hornschuch AG (“Hornschuch”) a German based company 99% owned by Decora Industries Deutschland GmbH (“DI Deutschland”) which, in turn, is wholly owned by DII. On February 8, 2001 the Company sold its interest in Hornschuch for total consideration of DM 86.9 million (approximately $41.2 million). In connection with the sale the Company recorded a loss of $24.3 million. The Company continues to own DI Deutschland, which is now a dormant operating company with no assets or operations. For purposes of these consolidated financial statements the equity of DII in the earnings of Hornschuch are netted against the loss on disposal of German subsidiary and shown on the consolidated statement of operations.

DII and Decora (collectively “Decora Industries”), debtors and debtors-in possession (collectively, the “Debtors”) commenced a reorganization case (the “Reorganization Case”) by filing a petition for relief under chapter 11 (“Chapter 11”), title 11 of the United States Code, (as amended, the “Bankruptcy Code”) on December 5, 2000 (the “Petition Date”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Reorganization Case is being jointly administered, for procedural purposes only, before the Bankruptcy Court under Case No. 00-4459 (JJF). Pursuant to sections 1107 and 1108 of the Bankruptcy Code, the Company, as debtor-in-possession, has continued to manage and operate its assets and businesses subject to the supervision and orders of the Bankruptcy Court, pending confirmation of the plan of reorganization (the “Reorganization Plan”) contained in the disclosure statement (the “Disclosure Statement”) filed with the Bankruptcy Court on December 5, 2000, pursuant to Section 1125 of the Bankruptcy Code. Because the Company is operating as debtor-in-possession under the Bankruptcy Code, the existing directors and officers of the Company continue to govern and manage the operations of the Company, respectively, subject to the supervision and orders of the Bankruptcy Court.

The debtors contemplate emergence from bankruptcy in 2001; however, there can be no assurance at this time that a Reorganization Plan will be proposed by the Debtors or approved and confirmed by the Bankruptcy Court, or that the Reorganization Plan will be consummated. The Disclosure Statement filed at the inception of the bankruptcy did not provide any recovery to the Company’s equity security holders. Accordingly, management believes that current equity security holders will not receive any distribution under any reorganization plan as a result of the issuance of new equity to existing creditors. As a result of the lower than expected price obtained for the Company’s German operations which were sold on February 8, 2001, the Company needs to raise a significant amount of debt or equity in order to emerge from bankruptcy. The extent to which equity needs to be raised may result in the sale of the Company. Any such sale of the Company will require the requisite vote of impaired creditors entitled to vote under the Bankruptcy Code and confirmation of the plan by the Bankruptcy Court.

The financial statements have been presented in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (“SOP 90-7”), and have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to a going concern, which principles, except as otherwise disclosed, assume that assets will be realized and liabilities will be discharged in the ordinary course of

F-82

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Financial Statements

business. As a result of the Reorganization Case and circumstances relating to this event, default on Decora Industries’ prepetition debt and negative cash flows, such realization of assets and liquidation of liabilities are subject to significant uncertainty. While under the protection of Chapter 11, the Company may sell or otherwise dispose of assets, and liquidate or settle liabilities for amounts other than those reflected in the financial statements. Additionally, the amounts reported on the consolidated balance sheet could materially change because of changes in business strategies and the effects of any proposed plan of reorganization.

The appropriateness of using the going concern basis is dependent upon, among other things, confirmation of a plan of reorganization, future profitable operations, the ability to comply with the terms of the debtor-in-possession financing facility (see Note 7 for additional discussion of the default on the debtor in possession financing) and the ability to generate sufficient cash from operations and financing arrangements to meet obligations.

In the Reorganization Case, substantially all unsecured liabilities as of the Petition Date are subject to compromise or other treatment under a plan of reorganization which must be confirmed by the Bankruptcy Court after submission to vote by affected parties. For financial reporting purposes, pending the outcome of the Reorganization Case, all unsecured and undersecured prepetition liabilities have been segregated and classified as liabilities subject to compromise under reorganization proceedings in the balance sheet. Generally, all actions to enforce or otherwise effect repayment of prepetition liabilities as well as all pending litigation against the Debtors are stayed while the debtors continue their business operations as debtors-in-possession. Unaudited schedules have been filed by the Debtors with the Bankruptcy Court setting forth the assets and liabilities of the debtor as of the Petition Date as reflected in the Debtors’ accounting records.

Under the Bankruptcy Code, the Debtors may elect to assume or reject real estate leases, employment contracts, personal property leases, service contracts and other prepetition executory contracts, subject to Bankruptcy Court approval. The debtors have not reviewed all leases for assumption or rejection but will analyze their leases and executory contracts and may assume or reject leases or contracts. Such rejections could result in additional liabilities subject to compromise.

Pursuant to SOP 90-7, revenues and expenses, realized gains and losses, and provisions for losses resulting from the reorganization of the business are reported in the statement of operations separately as reorganization items. Professional fees are expensed as incurred. Interest expense is reported only to the extent that it will be paid during the cases or that it is probable that it will be an allowed claim.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Decora. For purposes of these consolidated financial statements Hornschuch has been deconsolidated and the equity of DII in the earnings of Hornschuch are netted against the loss on disposal of German subsidiary and shown on the consolidated statement of operations.

F-83

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Financial Statements

Fair Value of Financial Instruments

The fair values of cash, accounts receivable, accounts payable and accrued expenses approximate their carrying values. Financial instruments, when acquired, are held for purposes other than trading.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. The carrying amount of cash and cash equivalents approximates their fair values.

Revenues and Receivables

The Company records revenues when all of the following criteria are met: (i) terms of the sale are evidenced by a binding purchase order or on-line authorization; (ii) shipment has occurred; (iii) the price is fixed or determinable; and (iv) collection of amounts owed for goods shipped is reasonably assured.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or market.

Property and Equipment

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to thirty years.

Goodwill

The excess of the aggregate purchase price over the fair values of the net assets of businesses and product lines acquired has been recorded as goodwill and is being amortized on the straight-line method over forty years.

In accordance with Financial Accounting Standards Board Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of (“FAS 121”), the Company assesses impairment losses to be recorded on long-lived assets when indications of impairment are present. As a result of the Company’s operating losses for fiscal 2001 and the filing under Chapter 11, the Company performed an impairment analysis as required under FAS 121. The estimated fair value of the impaired assets was determined by comparing expected future cash flows to the combined recorded value of the net property, plant and equipment and goodwill. The impairment analysis resulted in the Company recording a charge of $57 million for fiscal 2001, relating to the write-down of goodwill.

Income Taxes

Income taxes are provided based on the liability method pursuant to SFAS No. 109, Accounting for Income Taxes. Deferred income taxes are recorded to reflect expected future tax consequences of events that have been recognized in the Company’s financial statements or its tax returns, but not both. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in the years in which the differences are expected to reverse.

F-84

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Financial Statements

Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion (“APB”) No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its employee stock options. Under APB No. 25, when the exercise price of employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recorded. The Company has adopted the disclosure only provisions of SFAS No. 123, Accounting for Stock Based Compensation (see Note 9).

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues, costs and expenses during the reporting period. Actual results may differ from those estimates.

2. Acquisitions

On April 29, 1998, DII acquired certain assets, which had constituted Rubbermaid’s Decorative Coverings Group, for an adjusted purchase price of approximately $60.5 million.

The assets acquired included inventory, manufacturing equipment, tradenames (including the ConTact trademark) and all other rights to three product lines: (i) the Con-Tact self-adhesive coverings line that was manufactured exclusively for Rubbermaid by Decora; (ii) Shelf Liner, a proprietary product line that was manufactured by Rubbermaid; and (iii) the Grip Liner non-adhesive covering line which is manufactured by a third party pursuant to the terms of an exclusive manufacturing agreement.

DII completed the Rubbermaid Acquisition pursuant to the terms of an asset purchase agreement. DII and Rubbermaid entered into a service agreement pursuant to which Rubbermaid agreed to provide certain logistics services for a nine-month transition period following the acquisition (the “Transition Services Agreement”). On or about April 1, 1999, the Company commenced a proceeding against Rubbermaid with the American Arbitration Association. The Company alleged causes of action for breach of contract, breach of fiduciary duty, fraud and deceit, conversion, breach of the covenant of good faith and fair dealing, constructive fraud, and money had and received. The Company’s claims arose from Rubbermaid’s failure to perform its obligations as set forth in the Transition Services Agreement.

On October 16, 2000, all claims against Rubbermaid were settled. As a result of this settlement the Company received an arbitration award totaling approximately $9.8 million (approximately $8 million net of related legal expenses and amounts previously recorded). This amount is included in the statement of operations as a nonrecurring credit.

F-85

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Financial Statements

3. Inventories

Inventories at March 31, 2001 consist of (000s):

Raw materials	$	1,533
Work-in-process		2,741
Finished goods		7,660
	$	11,934

4. Property and Equipment

Property and equipment at March 31, 2001 consist of (000s except useful life data):

	Useful Life
Land		$	379
Buildings	30		6,889
Machinery and equipment	8-10		12,929
Furniture and fixtures	3-8		2,919
Leasehold improvements	5		617
Construction-in-progress			85
			23,818
Less – Accumulated depreciation			(14,308	)
		$	9,510

Depreciation expense was $1,483,000 for fiscal 2001.

5. Goodwill

Goodwill at March 31, 2001 consist of the following (000s):

Goodwill	$	15,408
Less – Accumulated amortization		(9,016	)
	$	6,392

Goodwill amortization was $2,202,000 for fiscal 2001. See Note 1 for discussion of write-down of goodwill recorded during fiscal 2001.

F-86

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Financial Statements

6. Employee Benefit Plans

Decora and its union have executed an agreement to provide retirement benefits to qualified union employees through the Paper Industry Union—Management Pension Fund (the “Fund”). Based upon this agreement, Decora contributes a contractually agreed upon amount for each qualifying hour that a union employee works. Total contributions to the Fund were $289,593 in fiscal 2001.

The Company has a profit sharing plan and a 401k plan covering its U.S. salaried employees. The Company converted its plan November 2000 to include a contribution portion that is at a rate of 10% of the employee contribution level capped at a 6% of salary limit. No profit sharing contributions were made in fiscal year 2001. Total expense related to plan fees and company contributions equated to $11,516 in fiscal 2001.

7. Debt

In April 1998, in order to finance the Rubbermaid Acquisition the Company issued $112,750,000 of 11.0% senior secured notes (the “Notes”). The Notes were issued with an original issue discount of $2,664,000 with interest payable semi-annually and no principal payments required prior to maturity on May 1, 2005. The fair value of the Notes at March 31, 2001 was approximately $8 million, which was determined by the Company using market information provided by an investment banking firm as to the market value of similar debt amounts. The estimated fair value of the Notes does not necessarily reflect the amount at which the debt could be settled. During the year, the company repurchased $4.5 million face value of these notes (see note 8). The remaining notes have been classified as liabilities subject to compromise.

On November 13, 1996, Decora borrowed $2,460,000 through the issuance of Tax-Exempt Industrial Development Revenue Bonds (Decora Project), Series 1996 by the Counties of Warren and Washington, New York Industrial Development Agency. These bonds had an original maturity date of November 1, 2004. However, they were refinanced during fiscal 2001.

On May 5, 2000, Decora completed the refinancing of its existing revolving credit facility and Industrial Revenue Bonds (retired July 2001) and the implementation of a secured term financing. This financing consisted of a revolving credit agreement as well as three individual term notes. Subsequently, on June 12, 2000, Decora was informed by its new lender of an event of default under the terms of these secured financings. The new lender collected interest at the default rate during the continuation of the default. While the default permitted the lender to accelerate the maturity of these secured financings and to prohibit the borrower from drawing under the revolving facility, Decora was able to continue to draw under the revolving facility.

In September 2000, the Company borrowed $5,000,000 through DI Deutschland to be repaid upon the earlier of the sale of Hornschuch or 1 year. In conjunction with this financing, DI Deutschland repurchased $4,500,000 of the Company’s 11% senior secured notes for $1,800,000 from one of the bond holders. This resulted in the write-off of a portion of the previously established unamortized debt acquisition costs as an extraordinary gain (net of taxes) in the amount of $2,790,000.

On December 5, 2000 the Company entered into an agreement with its senior secured lender to provide up to $19 million debtor in possession financing during the duration of its bankruptcy. It was subsequently reduced to

F-87

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Financial Statements

$18 million. The proceeds were used to refinance the term notes and revolving credit facility described above. In January 2001 the Company failed to comply with certain covenants of this financing. As with its previous financing, Decora has been able to continue to draw under the revolving facility subject to restricted availability and payment of interest at the default rate as defined in the agreement. The outstanding balance on this facility at March 31, 2001 was $14,514,000 and is classified as a current liability.

8. Liabilities Subject to Compromise

The principal categories of obligations classified as liabilities subject to compromise to unrelated parties under Reorganization Cases are identified below. The amounts below in total may vary from the stated amount of proofs of claim that will be filed with the Bankruptcy Court and may be subject to future adjustment depending on the Bankruptcy Court action, further developments with respect to potential disputed claims, determination as to the value of any collateral securing claims, or other events.

Additional claims may arise from the rejection of additional real estate leases and executory contracts by the debtors.

As of March 31, 2001, liabilities subject to compromise consisted of the following (000s):

11.0% senior secured notes (Note 7)	$	106,398
Trade payables		7,382
Accrued interest		7,049
Other accrued expenses		502
	$	121,331

As a result of the Reorganization Case, no principal or interest payments will be made on the unsecured and undersecured prepetition debt without Bankruptcy Court approval or until a plan of reorganization providing for the repayment terms has been confirmed by the Bankruptcy Court and becomes effective. Therefore, interest on prepetition unsecured and undersecured obligations has not been accrued after the Petition Date.

9. Stock Options

The Company has several domestic long-term incentive plans under which shares of the Company’s common stock may be sold to directors, officers and key employees. Certain other parties have been granted stock options by the Company in connection with various transactions.

The Company adopted a Stock Option Plan in fiscal 1987 (the “1987 Plan”) pursuant to which 340,000 shares of common stock were available for grant. The 1987 Plan terminated on July 8, 1997. The 1987 Plan is administered by a committee of directors of the Company who are not covered by the 1987 Plan. All options granted under the 1987 Plan terminate either five or ten years after the date of grant and vest quarterly over a three-year period subsequent to the date of the grant, unless modified by the Company.

F-88

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Financial Statements

In fiscal 2000, the shareholders of the Company approved the Decora Industries, Inc. 1999 Stock Option Plan (the “1999 Plan”) pursuant to which 1,000,000 shares of common stock were available for grant. The Plan is administered by a committee of directors of the Company. All options granted under the 1999 Plan terminate five or ten years after the date of grant.

There were no options issued under either the 1987 Plan or the 1999 Plan during fiscal 2001.

A summary of stock option activity under both plans for the year ended March 31, 2001 follows (000 except average price data):

	Options	Average Price
March 31, 2000	2,270	$	6.11
Granted	—		—
Exercised	—		—
Expired	—		—
March 31, 2001	2,270	$	6.11

The following table summarizes information about stock options outstanding at March 31, 2001:

	Options outstanding			Options exercisable
Exercise Price	Shares	Average Price		Term (Months)	Shares	Average Price
$4.50 - $4.95	50,000	$	4.63	22.20	16,667	$	4.63
$5.00 - $5.50	818,000		5.33	35.01	605,000		5.42
$5.55 - $5.95	354,800		5.64	28.55	254,800		5.60
$6.00 - $6.99	730,000		6.36	28.04	540,000		6.37
$7.00 - $7.99	177,000		7.46	19.03	54,000		7.45
$8.00 - $9.30	140,000		8.03	14.36	44,000		8.09

10. Income Taxes

Income taxes are summarized as follows (000s):

Current provision:
United States:
Federal	$	—
State		7
	$	7

F-89

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Financial Statements

Net deferred tax assets (liabilities) are comprised of the following (000s):

March 31,
2001
Current deferred tax assets (liabilities):
Non-deductible reserves	$	909
Other		8
		917
Noncurrent deferred tax assets (liabilities):
Capital loss carryover		5,980
Depreciation		(304	)
Net operating loss carryforwards		30,986
Tax credits		294
Intangibles		16,130
Other, net		419
		53,505
Total deferred tax asset		54,422
Valuation allowance		(54,422	)
	$	—

The provision for (benefit from) income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pre-tax income as a result of the following (000s):

2001
Provision at statutory rate	$	(39,283	)
State tax expense		7
Effect of permanent items		751
Valuation allowance		38,532
Provision for income taxes	$	7

Approximately $67,900,000 and $4,100,000 of the Company’s net operating loss carryforwards remain available at March 31, 2001 in the United States and Germany, respectively. The United States net operating loss will be reduced by $17,200,000 on April 1, 2001 due to the Company’s bankruptcy status. The net operating losses are also limited to future taxable earnings in the respective countries. In the United States, the carryforwards expire over the period 2003-2021, while in Germany the carryforwards have an unlimited life.

The Company has recorded a valuation allowance against the entire amount of net deferred tax assets since management believes that based upon available evidence, it is more likely than not that these assets will not be realized.

F-90

Decora Industries, Inc.

(Debtor in Possession as of December 5, 2000)

Notes to Financial Statements

11. Nonrecurring Credit

The statement of operations for fiscal 2001 reflects a net non-recurring credit totaling $7,224,000. Of this credit $8,017,000 was income recorded in conjunction with the settlement with Rubbermaid and $793,000 related to severance costs for U.S. work force reductions.

12. Commitments and Contingencies

The Company uses certain equipment under lease arrangements, all of which are accounted for as operating leases. Rent expense was $738,000 for fiscal 2001. Rental commitments under long-term noncancelable operating leases are as follows (000s):

Fiscal 2002	$	495
Fiscal 2003		246
Fiscal 2004		66
Fiscal 2005		—
Fiscal 2006		—
Thereafter		—

F-91

Report of Independent Accountants

To the Board of Directors and Shareholders of

Decora Industries, Inc.

In our opinion, the accompanying consolidated statements of income and cash flows present fairly, in all material respects, the net income, cash flows and other data shown therein of Decora Industries, Inc., and its subsidiaries at March 31, 2000 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform an audit to obtain reasonable assurance about whether the statements of income and cash flow are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statements of income and cash flows, assessing the accounting principles used and significant estimates made by management, and evaluating the overall income statement and statement of cash flows presentation. We believe that our audit of the statements of income and cash flow provides a reasonable basis for the opinion.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company incurred a net loss of $22 million for the year ended March 31, 2000, and had a net capital deficit as of March 31, 2000 of $6 million. In addition, the Company is in default of covenants under certain of its secured financings, and has disclosed that its ability to pay interest due in November 2000 on its 11% senior secured notes is uncertain. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

PricewaterhouseCoopers LLP

Stamford, Connecticut

June 30, 2000

F-92

Decora Industries, Inc.

Consolidated Statement of Income

Year ended March 31, 2000

Amounts in 000s (except per share data)

Net sales	$	162,450
Cost of goods sold		114,912
Gross profit		47,538
Selling, general and administrative expenses		45,553
Operating income		1,985
Interest expense, net		16,011
Loss before income taxes, minority interest and extraordinary item		(14,026	)
Income tax provision		7,761
Loss before minority interest and extraordinary item		(21,787	)
Minority interest in earnings of subsidiary		259
Net loss	$	(22,046	)
Per share of common stock
Net loss
Basic	$	(2.87	)
Diluted		(2.87	)

See accompanying notes to consolidated financial statements.

F-93

Decora Industries, Inc.

Consolidated Statement of Cash Flows

Year ended March 31, 2000

Amounts in 000s

Cash flows from operating activities
Net loss	$	(22,046	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,090
Amortization of debt discount and fees		1,082
Minority interest in earnings of subsidiary		259
Deferred income tax provision		5,844
Net changes in current assets and liabilities		6,580
Other, net		(2,304	)
Net cash used in operating activities		(1,495	)
Cash flows from investing activities
Rubbermaid acquisition		(2,307	)
Acquisition of Hornschuch shares		(928	)
Acquisition of Etch Art		(350	)
Purchase of property and equipment		(5,723	)
Net cash used in investing activities		(9,308	)
Cash flows from financing activities
Issuance of long-term debt		14,021
Repayment of long-term debt		(8,284	)
Increase (decrease) in short-term borrowings		1,303
Proceeds from issuance of stock options		120
Payment of warrant exchange obligation		(1,054	)
Payment of debt penalties and fees		—
Net cash provided by financing activities		6,106
Effect of exchange rate fluctuations on cash and cash equivalents		(1,186	)
Net decrease in cash and cash equivalents		(5,883	)
Cash and cash equivalents at beginning of year		6,662
Cash and cash equivalents at end of year	$	779

See accompanying notes to consolidated financial statements.

F-94

Decora Industries, Inc.

Notes to Consolidated Financial Statements

March 31, 2000

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Decora Industries, Inc. (“DII” and, together with its subsidiaries, the “Company”) is a leading manufacturer and marketer of self-adhesive consumer decorative and surface coverings and other specialty industrial products. The Company is a holding company and operates primarily through two subsidiaries, Decora, Incorporated (“Decora”), a wholly-owned subsidiary based in the U.S., and Konrad Hornschuch AG (“Hornschuch”), which is based in Germany and 90% owned by Decora Industries Deutschland GmbH (“DI Deutchland”), which, in turn, is wholly-owned by DII. Hornschuch’s results have been included since its acquisition on October 1, 1997 (see Note 2). The Company’s principal products are sold under the Con-Tact and d-e-fix brands. The Company operates in two business segments, consumer and industrial.

GOING CONCERN MATTERS. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred a net loss of $22,046,000 for the year ended March 31, 2000 and had a net capital deficit (excess of liabilities over assets) of $6,323,000 as of March 31, 2000. In addition, as described in Note 4, the Company was in default of covenants under certain of its secured financings outstanding as of March 31, 2000. Also, as disclosed in Note 5, the Company refinanced one of the aforementioned secured financings as of May 15, 2000, but was informed of an event of default by its new lender on June 12, 2000. As further disclosed in Note 5, relying solely on the results of operations of Decora, the Company may not be able to pay the interest due on November 1, 2000 under the 11% senior secured notes. The company is reviewing Decora’s business plan with its financial advisors and lenders with the objective of seeking appropriate accommodations. The Company is also evaluating potential changes in its capital structure and additional financial resources. The Company’s continuation as a going concern is dependent, among other factors, upon its ability to comply with the terms of its financing agreements and to obtain additional financing. The financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of the Company. All significant intercompany transactions have been eliminated in consolidation.

FAIR VALUE OF FINANCIAL INSTRUMENTS. The fair values of cash, accounts receivable, accounts payable and accrued expenses approximate their carrying values. Financial instruments, when acquired, are held for purposes other than trading.

The fair value of the Company’s senior secured notes has been determined based upon current market rates (see Note 4). The balance of the Company’s debt, in combination with interest rate swap agreements, bears current market rates of interest or is payable on demand. Accordingly, the carrying amount is considered a reasonable approximation of fair value.

REVENUES. Sales are recognized when products are shipped. Returns are accounted for on the accrual basis. A portion of the sales made outside of Germany are covered by confirmed letters of credit or credit insurance. The Company does not generally require collateral for sales made within the United States.

INVENTORIES. Inventories are stated at the lower of cost (first-in, first-out method) or market.

PROPERTY AND EQUIPMENT. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to fifty years. Depreciation expense was $5,983,000 for fiscal 2000.

GOODWILL AND OTHER INTANGIBLES. The excess of the aggregate purchase price over the fair values of the net assets of businesses and product lines acquired has been recorded as goodwill and is being amortized on the straight-line method over forty years. Other intangibles are amortized over periods ranging from three to forty years. Goodwill amortization was $954,000 for fiscal 2000. Amortization of other intangibles was $1,928,000 for fiscal 2000.

LONG-LIVED ASSETS. The Company assesses impairment losses to be recorded on long-lived assets when indications of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts.

F-95

Decora Industries, Inc.

Notes to Consolidated Financial Statements

March 31, 2000

INCOME TAXES. Income taxes are provided based on the liability method pursuant to SFAS No. 109, Accounting for Income Taxes. Deferred income taxes are recorded to reflect expected future tax consequences of events that have been recognized in the Company’s financial statements or its tax returns, but not both. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in the years in which the differences are expected to reverse.

RESEARCH AND DEVELOPMENT. Research and development costs related to both present and future products are expenses as incurred and amounted to $3,090,000 in fiscal 2000.

STOCK-BASED COMPENSATION. The Company has elected to follow Accounting Principles Board Opinion (“APB”) No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its employee stock options. Under APB No. 25, when the exercise price of employee stock options equals the market price of the underlying stock on the date of grant, no compensation expenses is recorded. The Company has adopted the disclosure only provisions of SFAS No.123, Accounting for Stock-Based Compensation (see Note 6).

FOREIGN CURRENCY. The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars using year-end exchange rates. Income statement items are translated at average exchange rates prevailing during the year. The resulting translation adjustments are recorded as a separate component of shareholders’ equity. Exchange rate gains and losses on intercompany balances of a long-term investment nature are also recorded as a component of shareholders’ equity. Foreign currency transaction gains and losses, which historically have been immaterial, are included in net income. In addition, the Company also will occasionally enter into foreign currency hedges.

INTEREST RATE HEDGES. The Company is party to four interest rate cap agreements as of March 31, 2000 for DM 7.0 million, DM 5.6 million, DM 3.0 million and DM 3.0 million which are used to hedge against fluctuations in interest rates for existing debt balances. As these instruments are used to hedge existing debt, there is no requirement to record these agreements fair value.

The Company is also party to three interest rate swap agreements as of March 31, 2000 for DM 6.0 million, DM 5.0 million and DM 3.1 million. These agreements were used to convert variable rate debt to fixed rate debt. For the DM 5.0 million instrument, the related debt had been repaid early. However, Hornschuch was obliged to maintain the swap and pay (receive) the difference between Hornschuch’s fixed rate and the original variable rate.

USE OF ESTIMATES. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues, costs and expenses during the reporting period. Actual results may differ from those estimates.

2. ACQUISITIONS

HORNSCHUCH ACQUISITION. On October 1, 1997, the Company acquired 73.2% of the voting stock (the “Shares”) of Hornschuch through a newly formed subsidiary, DI Deutschland. The Shares and other intangible assets were acquired directly from Hornschuch’s two largest shareholders (the “Hornschuch Acquisition”) in private transactions for total consideration of DM 61,582,280, or approximately $35,000,000. Since October 1, 1997, the Company has increased its ownership to approximately 90% through open market purchases and the completion of a tender offer in March 1999.

The purchase of the Shares and other intangible assets was funded by a combination of debt and equity, including a loan (secured by the Shares) of approximately $21,205,000 to DI Deutschland from a German bank (the “Bank Loan”), a subordinated loan of $18,000,000 in the United States (the “Subordinated Loan”) provided by a pension fund (the “Pension Fund”) and a private placement of the Company’s common stock in the amount of $750,000. The Pension Fund was also granted Series A warrants which are currently exercisable for the purchase of 1,818,000 shares of common stock of the Company at an exercise price of $5.00 per share. The total amount raised was sufficient to fund the purchase of the other intangible assets and up to 75% of the shares of Hornschuch, repay an existing subordinated debt of $2.9 million and pay a portion of the $2.8 million in closing costs associated with the transaction.

RUBBERMAID DECORATIVE COVERINGS GROUP ACQUISITION. On April 29, 1998, the Company acquired certain assets, which had constituted Rubbermaid’s Decorative Coverings Group (the “DCG”), for an initial purchase price (subject to a purchase price contingency of $2.5 million based upon calendar 1998 DCG sales levels) of approximately $62.5 million (the “Rubbermaid Acquisition”). Based upon final 1998 calendar sales of the DCG, the purchase price was adjusted downward to approximately $60.5 million.

F-96

Decora Industries, Inc.

Notes to Consolidated Financial Statements

March 31, 2000

The assets acquired included inventory, manufacturing equipment, tradenames (including the Con-Tact trademark) and all other rights to three product lines: (i) the Con-Tact self-adhesive coverings line that was manufactured exclusively for Rubbermaid by Decora, (ii) Shelf Liner, a proprietary product line that was manufactured by Rubbermaid, and (iii) the Grip Liner non-adhesive covering line which is manufactured by a third party pursuant to the terms of an exclusive manufacturing agreement.

In order to finance the Rubbermaid Acquisition and to improve its capital structure, the Company issued $112,750,000 of 11.0% senior secured notes (the “Notes”). The Notes were issued with an original issue discount of $2,664,000 with interest payable semi-annually and no principal payments required prior to maturity on May 1, 2005. In addition, Hornschuch borrowed under its secured credit facilities approximately $10.0 million. Of the total amount raised, approximately $60,800,000 (includes approximately $300,000 of accrued interest) was paid to Rubbermaid, approximately $32,100,000 was used to refinance existing debt and related fees (including an $18.0 million 13% subordinated loan (the “Subordinated Loan”) which had been used to finance the Hornschuch Acquisition), approximately $5,800,000 was used to acquire additional Hornschuch shares (which increased DI Deutschland’s ownership from 76% to 90%) and approximately $8,800,000 was used to pay acquisition and financing related transaction fees and expenses. The remaining net proceeds were intended to be used to finance a portion of the acquisition of the remaining 10% equity interest in Hornschuch and for general corporate purposes, including working capital requirements. At the same time Decora entered into a three year, $15.0 million secured revolving line of credit. Its availability was based on a factor of the amount of Decora’s accounts receivable and inventory. As of March 31, 2000, the revolving line of credit had been fully utilized, and as described in Note 7(f), this credit facility was in default. In May 2000, this Credit Facility was refinanced (see Note 5).

Direct financing transaction costs incurred of approximately $4.7 million were deferred and are being amortized, using the effective interest rate method, over the term of the respective financings.

The Company is vigorously pursuing legal action against Rubbermaid (see Note 9).

ETCHART INC. ACQUISITION. In April 1999, Decora acquired certain assets from EtchArt Inc., a manufacturer of “wallpaper” for Windows TM, a line of window and glass coverings, including a customer list and inventory for approximately $850,000.

3. EMPLOYEE BENEFIT PLANS

Hornschuch maintains two noncontributory defined benefit pension plans in Germany. Both pension plans are unfunded as the laws requiring pension funding in Germany are considerably different than those in the U.S. Plan A represents a combination of individual pension arrangements negotiated with approximately 36 participants representing past and present management individuals and is open to additional participants based on individually negotiated employment contracts. The pension benefits under Plan A may vary to include only a specified annual benefit amount or may be based on compensation level and years of service. Plan B covers all employees of the Company with 1,652 active and retired participants. Plan B provides for a fixed monthly retirement benefit after 10 years of service with benefit increases based on additional years of service. Plan B was closed effective January 1, 1989, and any active participant at that time was permitted to accrue up to 10 more years of creditable service through December 31, 1998.

The following provides a reconciliation of the projected benefit obligation (“PBO”) for Hornschuch’s defined benefit plans (000s):

Balance at beginning of year	$	16,007
Service cost		127
Interest cost		849
Net amortization and deferral		(89	)
Total benefits paid		1,299
Adjustment for the minimum liability		68
Other		(1,944	)
Balance at end of year	$	13,719

Based on the purchase accounting for the Hornschuch Acquisition, the full PBO liability of $15,740,000 was recognized at the acquisition date. The projected benefit obligations at the end of fiscal 2000 and fiscal 1999 use a discount rate of 6.5% and a salary increase assumption of 1.5% in the actuarial valuation.

The Company has a profit sharing plan and a 401K plan covering its U.S. salaried employees. The Company does not contribute to the 401K plan. The Company contributes to the profit sharing plan based upon Company performance. Total expense relative to the profit sharing contributions amounted to $54,000 in fiscal 2000.

F-97

Decora Industries, Inc.

Notes to Consolidated Financial Statements

March 31, 2000

4. DEBT

Debt, at March 31, 2000, consists of (000s):

DII Senior Secured Notes (a)	$	112,750
DI Deutschland Credit Facility (b)		15,441
Hornschuch Lines of Credit (c)		11,299
Decora Term Loans (d)		42
Hornschuch Term Loans (e)		3,466
Decora Lines of Credit (f)		10,854
Decora Industrial Development Revenue Bonds (g)		1,960
		155,812
Less:
Amounts due within one year		(31,434	)
Unamortized debt discount		(2,125	)
	$	122,253

(a) In April 1998, in order to finance the Rubbermaid Acquisition and to improve its capital structure, the Company issued $112,750,000 of 11.0% senior secured notes (the “Notes”). The Notes were issued with an original issue discount of $2,664,000 with interest payable semi-annually and no principal payments required prior to maturity on May 1, 2005. The fair value of the Notes at March 31, 2000 was approximately $45,000,000, which was determined by the Company using market information provided by an investment banking firm as to the market value of similar debt amounts. The estimated fair value of the Notes does not necessarily reflect the amount at which the debt could be settled.

(b) On September 29, 1997, DI Deutschland entered into a loan agreement with a German bank for approximately DM 37.3 million (approximately $18.3 million at March 31, 2000) to provide a portion of the financing for the Hornschuch Acquisition. The loan bears interest at the German interbank borrowing rate plus 2.50%. In addition, DI Deutschland will be charged a fee of 0.50% per annum on the average daily balance of the difference between the original loan amount and the then current balance. The interest rate at March 31, 2000 was 5.6%.

The DI Deutschland Credit Facility is being repaid in semiannual installments of approximately DM 3.0 million (approximately $1.5 million) which commenced March 30, 1999. The final installment is due and payable on September 30, 2004. The DI Deutschland Credit Facility is secured by a pledge of all the capital stock of Hornschuch owned by DI Deutschland.

On March 30, 2000, the DI Deutschland failed to make principal and interest payments due in the amount of DM 3.8 million (approximately $1.9 million ) and were informed by its lender that it was in default under the DI Deutschland Credit Facility. Accordingly, the entire outstanding obligation of $15,441,000 is included in current liabilities as of March 31, 2000.

(c) Hornschuch has separate lines of credit with its primary lender and certain other financial institutions. Interest rates under the lines of credit range from 4.05% to 7.24% at March 31, 2000. At March 31, 2000, the availability under these lines was DM 14.0 million ($6.9 million).

(d) In September, 1995, Decora borrowed $375,000 from the Washington County Local Development Corporation. The loan bears interest at 5.00% and is payable in monthly installments ending September 1, 2000. It is secured by certain of Decora’s property and equipment. As of March 31, 2000, the outstanding balance of this note was $42,000.

Effective April 1, 1997, Decora entered into an interest rate swap agreement with its primary bank lender which expired on May 31, 1999. The agreement effectively converted $8,523,000 of its variable rate borrowings into fixed rate obligations. Under the terms of the agreement, Decora makes payments at a fixed rate of 8.58% and receives variable rate payments at LIBOR plus 200 basis points, repriced at the beginning of each month. While the underlying debt obligations have been repaid, Decora continued to make payments under the agreement until expiration in May 1999. The net amount which was paid or received is included in interest expense.

(e) Hornschuch has two term loans aggregating approximately DM 7,050,000 (approximately $3,455,000) at March 31, 2000. The first term loan has a balance of DM 2,850,000 (approximately $1,397,000), matures in March 2006, bears interest at 4.8% and is secured by certain assets. The first loan requires payments of DM 238,000 ($117,000) semiannually. The

F-98

Decora Industries, Inc.

Notes to Consolidated Financial Statements

March 31, 2000

second term loan of DM 4,200,000 (approximately $2,058,000) matures in March 2003, bears interest at LIBOR plus 0.9% (4.1% at March 31, 2000) is payable in semiannual installments of DM 700,000 (approximately $343,000) and is secured by a new printing press.

(f) On April 28, 1998, Decora entered into a $15.0 million revolving line of credit which matures in May 2001 and is secured by various accounts receivable and inventory. The amount outstanding under the facility, at the borrower’s election, bears interest at either the lender’s prime rate or LIBOR plus 2.25 basis points. As of March 31, 2000, Decora was unable to comply with certain covenants under this line of credit. Accordingly, the entire outstanding obligation of $10,854,000 is classified as a current liability as of March 31, 2000. See Note 5 regarding the refinancing of the revolving credit facility with a new lender.

Decora had a revolving line of credit of up to $6,000,000 which would have matured in August 1998 and was secured by various accounts receivable, inventory and equipment. The amount outstanding under the facility bore interest at prime plus 1-1/4%. On March 27, 1997, Decora established a second line of credit of up to $1,000,000 which also would have matured in August 1998, bore interest at prime plus 1.0% and was secured by certain accounts receivable. Availability under this credit facility was limited by specified percentages of certain international trade accounts receivable. At March 31, 1998, the amount outstanding under these lines of credit of $2,500,000 was repaid in full with the proceeds of the Notes.

(g) On November 13, 1996, Decora borrowed $2,460,000 through the issuance of Tax-Exempt Industrial Development Revenue Bonds (Decora Project), Series 1996 by the Counties of Warren and Washington, New York Industrial Development Agency. These bonds mature on November 1, 2004 and require sinking fund payments of $20,833 per month beginning November 1997 and bear interest at a floating rate which is adjusted weekly based on the remarketing agent’s ability to re-market the bonds at par. As of March 31, 2000, the interest rate on the bonds was 3.05%. The bonds are credit enhanced through a letter of credit issued by Decora’s primary lender and, in addition to interest on the bonds, Decora pays its primary lender an annual letter of credit fee equal to 1.50% of the outstanding balance of the letter of credit.

5. SUBSEQUENT EVENTS

On May 5, 2000, Decora completed the refinancing of the revolving credit facility (see Note 4(f)) and the implementation of a secured term financing. Subsequently, on June 12, 2000, Decora was informed by its new lender of an event of default under the terms of these secured financings.

The new lender has advised Decora that it will collect interest at the default rate during the continuation of the default. While the default permits the lender to accelerate the maturity of these secured financings and to prohibit the borrower from drawing under the revolving facility, to date Decora has been able to continue to draw under the revolving facility and the lender has not notified Decora of its intention to accelerate payments under the financing. At June 30, 2000, Decora is not able to comply with the covenants of these secured financings and Decora does not believe that prospectively it will be able to comply with these covenants without significant accommodation from its lender. While success in any of these endeavors cannot be assured, the Company is currently negotiating with Decora Deutschland’s lenders to permit Decora Duetschland to fund the interest payment on the 11% senior secured notes. Relying solely on the results of operations of Decora operations, management believes the Company will not be able to pay the interest due in November 2000 under the 11% senior secured notes.

The Company is reviewing Decora’s business plan with its financial advisers and lenders with the objective of seeking appropriate accommodations and to ascertain what actions can be taken to restore profitability. The Company is also evaluating potential changes in its capital structure and additional financial resources. There can be no assurance that the Company will be able to successfully implement the changes necessary for the Company to remain a going concern.

6. STOCK OPTIONS

The Company has several domestic long-term incentive plans under which shares of the Company’s common stock may be sold to directors, officers and key employees. Certain other parties have been granted stock options by the Company in connection with various transactions.

The Company adopted a Stock Option Plan in fiscal 1987 (the “1987 Plan”) pursuant to which 340,000 shares of common stock were available for grant. The 1987 Plan terminated on July 8, 1997. The 1987 Plan is administered by a committee of Directors of the Company who are not covered by the 1987 Plan. All options granted under the 1987 Plan terminate either

F-99

Decora Industries, Inc.

Notes to Consolidated Financial Statements

March 31, 2000

five or ten years after the date of grant and vest quarterly over a three-year period subsequent to the date of the grant, unless modified by the Company.

In fiscal 1988, the shareholders of the Company approved the Decora Industries, Inc. 1988 Employee Stock Purchase Plan (the “1988 Plan”) pursuant to which a total of 100,000 shares of the Company’s Common Stock could be issued to participants during the term of the 1988 Plan at an issue price of 85% of the fair market value at the date of the purchase. The 1988 Plan was administered by the Board of Directors provided that a majority were not covered by the 1988 Plan, or by a committee appointed by the Board of Directors. The 1988 Plan terminated on December 31, 1998; no shares were purchased pursuant to the 1988 Plan.

In fiscal 2000, the shareholders of the Company approved the Decora Industries, Inc. 1999 Stock Option Plan (the “1999 Plan”) pursuant to which 1,000,000 shares of common stock were available for grant. The Plan is administered by a committee of directors of the Company. All options granted under the 1999 Plan terminate five or ten years after the date of grant.

A summary of stock option activity under all plans for the year ended March 31, 2000 follows (000s except average price data):

	Options		Average Price
Outstanding at:
March 31, 1999	1,939		$	6.19
Granted	1,515		$	5.83
Exercised	(24	)	$	5.00
Expired	(1,160	)	$	5.90
March 31, 2000	2,270		$	6.11

The following table summarizes information about stock options outstanding at March 31, 2000:

	Options Outstanding				Options Exercisable
Exercise Price	Shares	Average Price		Term (months)	Shares	Average Price
$ 4.50 - $4.95	50,000	$	4.63	34.20	16,667	$	4.63
$ 5.00 - $5.50	818,000		5.33	47.01	605,000		5.42
$ 5.55 - $5.95	354,800		5.64	40.55	254,800		5.60
$ 6.00 - $6.99	730,000		6.36	40.04	540,664		6.37
$ 7.00 - $7.99	177,000		7.46	31.03	54,000		7.45
$ 8.00 - $9.30	140,000		8.03	26.36	44,000		8.09

Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair values on the fiscal 2000 grant dates for those awards, consistent with the requirements of SFAS No. 123. Accounting for Stock-Based Compensation, the Company’s net income and earnings per common share would have been reduced to the pro forma amounts indicated below (000s except per share data):

Net income (loss)	- As Reported	$	(22,046	)
	- Pro Forma		(23,559	)
Basic and diluted earnings per share	- As Reported		(2.87	)
	- Pro Forma		(3.07	)

The fair value of each stock option grant has been estimated on the date of each grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

Risk-free interest rate	5.83	%
Expected life (months)	50.0
Expected volatility	0.510
Expected dividend yield	—

The weighted average grant date fair values of options granted during fiscal 2000 was $1.01.

F-100

Decora Industries, Inc.

Notes to Consolidated Financial Statements

March 31, 2000

The Company reserved 95,000 shares of common stock for the future possible exercise of warrants, which can be exercised at prices ranging from $2.50 to $7.00 and expire on November 3, 2000.

7. INCOME TAXES

Income taxes are summarized as follows (000s):

Current provision:
United States:
Federal	$	—
State		16
Foreign		1,758
		1,774
Deferred provision (benefit):
United States:
Federal		6,383
State		—
Foreign		(396	)
		5,987
	$	7,761

The foreign provision for income taxes is based on foreign pre-tax earnings of approximately $3.1 million for fiscal year 2000. Domestic operations accounted for ($17.1) million of pre-tax loss in fiscal 2000.

The provision for (benefit from) income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pre-tax income as a result of the following (000s):

Provision at statutory rate	$	(4,909	)
State tax expenses		16
Effect of nondeductible items		274
Change in valuation allowance		12,355
Other		25
Income tax provision (benefit)	$	7,761

Approximately $32,546,000 and $4,100,000 of the Company’s net operating loss carryforwards remain available at March 31, 2000 in the United States and Germany, respectively. Their use is limited to future taxable earnings in the respective countries. In the United States, the carryforwards expire over the period 2003 through 2020, while in Germany the carryforwards have an unlimited life.

At March 31, 2000, foreign subsidiary earnings of $9,489,000 were considered permanently invested in those businesses. Accordingly, U.S. income taxes have not been provided on these earnings. Foreign withholding taxes would be payable to the foreign taxing authorities if these earnings were remitted. Subject to certain limitations, the withholding taxes would then be available for use as credits against the U.S. tax liability.

At fiscal year end 2000, the Company determined that it was appropriate to record a full valuation allowance against its U.S. deferred income tax assets as a result of its assessment of the probability of realizing those assets in the ordinary course of business. This $6,370,000 valuation allowance represents substantially all of the $7,761,000 year 2000 tax provision, the remainder being attributable to non-U.S. operations.

F-101

Decora Industries, Inc.

Notes to Consolidated Financial Statements

March 31, 2000

8. NET INCOME PER SHARE

The number of shares of common stock and common stock equivalents used in the computation of net income per common share, assuming dilution for each period, is the weighted average number of common shares outstanding during the periods and, if dilutive, common stock options, warrants and convertible securities which are considered common stock equivalents. The following is a reconciliation of the denominators for determining basic and diluted net income per common share for fiscal 2000 (000s):

Weighted average shares
Shares outstanding at beginning of year	7,342
Shares issued on a weighted average-basis	341
Shares used in the calculation of basic EPS	7,683
Effect of dilutive securities:
Contingently issuable shares	—
Options/warrants	—
Shares used in the calculation of diluted EPS	7,683

The total number of shares of common stock and common stock equivalents that were not included in the computation of diluted income per common share because they were anti-dilutive was approximately 2,685,000 for fiscal 2000.

9. COMMITMENTS AND CONTINGENCIES

LEASES

The Company uses certain equipment under lease arrangements, all of which are accounted for as operating leases. Rent expense was $1,977,000 for fiscal 2000. Rental commitments under long-term noncancelable operating leases are as follows (000s):

Fiscal 2001	$	1,520
Fiscal 2002		1,002
Fiscal 2003		327
Fiscal 2004		37
Fiscal 2005		—
Thereafter		—

LEGAL PROCEEDINGS

The Company made the Rubbermaid Acquisition pursuant to the terms of an asset purchase agreement (the “Asset Purchase Agreement”). Decora and Rubbermaid entered into a service agreement pursuant to which Rubbermaid agreed to provide certain logistics services for a nine-month transition period following the acquisition (the “Transition Services Agreement”). On or about April 1, 1999, the Company commenced a proceeding against Rubbermaid with the American Arbitration Association. The Company has alleged causes of action for breach of contract, breach of fiduciary duty, fraud and deceit, conversion, breach of the covenant of good faith and fair dealing, constructive fraud, and money had and received. The Company’s claims arise from Rubbermaid’s failure to perform its obligations as set forth in the Transition Services Agreement. The Company seeks damages in excess of $5,000,000 as a result of Rubbermaid’s wrongful acts. The Company is proceeding with the prosecution of its claims in arbitration.

On July 19, 1999, Rubbermaid filed a “counterclaim” against the Company in connection with the parties’ rights and obligation under the Transition Services Agreement. Rubbermaid claims an entitlement to an amount in excess of $1,280,000 as a result of services it allegedly performed and/or payments it allegedly made in connection with the Transition Services Agreement. The Company intends to continue to vigorously defend itself against these claims, which it believes to be unfounded.

The date of the arbitration hearing with respect to the above matter is August 28, 2000.

On September 16, 1999, the Company commenced a legal action against Rubbermaid in the United States District Court for the Northern District of Ohio. In the action, the Company has alleged causes of action for fraud and negligent misrepresentation in connection with the Asset Purchase Agreement. The Company claims that Rubbermaid fraudulently induced Decora into acquiring Rubbermaid’s Decorative Coverings Group by means of certain material misrepresentations, including misrepresentations with respect to the status of certain of the Decorative Covering Group’s major customer

F-102

Decora Industries, Inc.

Notes to Consolidated Financial Statements

March 31, 2000

accounts. The Company seeks damages in excess of $14,000,000 as a result of Rubbermaid’s wrongful acts. In response, Rubbermaid generally has denied the allegations in the Company’s complaint but has not asserted any affirmative claims, such as a cross-complaint, against the Company, except that in its prayer for relief, Rubbermaid requests that it be awarded costs and attorney’s fees to which it may be entitled under the terms of the Asset Purchase Agreement if it were the prevailing party in the action. The parties have stipulated and the federal court has ordered that the claims asserted in the federal action are to be arbitrated and that the arbitration is to commence no later than August 28, 2000.

The Company also has asserted claims in federal court against Rubbermaid on account of Rubbermaid’s alleged fraud and negligent misrepresentation in connection with the Asset Purchase Agreement. In response, Rubbermaid generally has denied the allegations in Decora’s complaint but has not asserted any affirmative claims, such as a cross-complaint, against Decora, except that in its prayer for relief, Rubbermaid requests that it be awarded costs and attorney’s fees to which it may be entitled under the terms of the Asset Purchase Agreement if it were the prevailing party in the action. The parties have stipulated and the federal court has ordered that the claims asserted in the federal action are to be arbitrated and that the arbitration is to commence no later than August 28, 2000.

The Company and its subsidiaries are defendants in pending actions which, in the opinion of management of the Company, are not material to the Company’s financial condition or results of operations. Although no assurances can be given regarding the ultimate outcome of such matters, the Company has accrued amounts for defense and settlement costs which the Company considers adequate.

GUARANTEE OF SUBSIDIARY DEBT

As part of the Hornschuch Acquisition, the Company acquired Hornschuch’s wholly-owned real estate subsidiaries. Management identified these subsidiaries as noncore operations upon acquisition and decided to sell them. The subsidiaries carry approximately $11.4 million in debt, with Hornschuch made a guarantor of the debt by virtue of its profit pooling agreement with the subsidiaries. The Company has estimated that the debt exceeds the net realizable value of these subsidiaries by approximately $2.9 million.

ARRANGEMENT WITH A PRIOR LENDER

On June 28, 1996, as part of an exchange, a lender (the “Holder”) received 200,000 shares of the Company’s common stock (the “new common stock”). The new common stock contained a guaranty (the “Guaranty”) requiring that the Company deliver to the Holder (i) additional shares of the Company’s common stock, (ii) cash or (iii) a combination of additional shares of the Company’s common stock and cash if the Company’s common stock price did not exceed $15.00 per share on the valuation date in April 1998 (the “Shortfall Amount”).

On July 9, 1998, the Company and the Holder entered into a payment and deferral agreement (the “Agreement”) relative to the Shortfall Amount. As a result, the Company paid $200,000 in cash to the Holder leaving an adjusted Shortfall Amount of approximately $2.0 million. The adjusted Shortfall Amount is accruing interest at 11.5% per annum until June 30, 1999. At that time the Company will deliver to the Holder (i) additional shares of the Company’s common stock; (ii) cash.

The July 1998 agreement was amended and restated in its entirety pursuant to the terms of an amended and restated payment deferral agreement dated September 23, 1999. Pursuant to the terms of the September 1999 agreement, the Company agreed to pay the entire Shortfall Amount in stock or cash by November 30, 1999. However, the Company has not yet paid the entire Shortfall Amount and is in negotiations with the Holder to obtain an extension of the time for payment, or (iii) a combination of additional shares of the Company’s common stock and cash equal to the adjusted Shortfall Amount plus accrued interest.

MINIMUM PURCHASE AGREEMENT

In conjunction with the Rubbermaid Acquisition, the Company entered into an exclusive manufacturing agreement in which the Company was required to purchase at least $6 million of product annually. In December 1999, the agreement was terminated. However, the Company continues to make purchases under an informal arrangement.

CHANGE IN CONTROL AGREEMENTS

The Company has granted to certain key executives compensation arrangements such that a change in control of the Company and their subsequent termination would result in a payment of a multiple of annual compensation.

F-103

Decora Industries, Inc.

Notes to Consolidated Financial Statements

March 31, 2000

10. MAJOR CUSTOMERS

Since the acquisition of Hornschuch on October 1, 1997, the Company’s sales reflect a broader range of customers. Prior to the acquisition of the DCG (see Note 2), Decora’s primary customer was Rubbermaid, which accounted for 31% of net sales in fiscal 1998. The Company has no other unusual credit risks or concentrations. The Company estimates an allowance for doubtful accounts based upon the credit worthiness of its customers as well as general economic conditions.

11. SEGMENT FINANCIAL DATA

The Company’s operating subsidiaries design, develop, manufacture and sell products, classified in two principal operating segments. The Company’s operating segments were generally determined on the basis of strategic business units within the operating subsidiaries which require different marketing strategies.

Consumer products include global sales of self-adhesive, decorative and surface protection products sold in a wide variety of retail stores worldwide.

Industrial products primarily include converted films for use in the manufacture of cabinets, furniture, automobiles, luggage and shoes which are sold to users and OEM’s in diversified markets, principally in Europe.

OPERATING SEGMENTS

Net sales (000s)

Consumer	$	108,931
Industrial		53,519
Consolidated	$	162,450

Operating profits (000s)

Consumer	$	4,856
Industrial		1,848
Total segment		6,704
General corporate expenses		4,719
		1,985
		16,011
Interest expense, net minority interest and extraordinary item	$	(14,026	)

Depreciation and amortization (000s)

Consumer	$	6,055
Industrial		3,035
Consolidated	$	9,090

GEOGRAPHIC AREAS

Net sales (000s)

United States	$	57,829
International:
Germany		45,402
Other		59,219
Consolidated	$	162,450

F-104

Decora Industries, Inc.

Notes to Consolidated Financial Statements

March 31, 2000

12. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in current assets and liabilities, exclusive of acquisitions, were as follows (000s):

Increase in accounts receivable	$	(3,825	)
(Increase) decrease in inventory		3,170
Increase in other assets		(173	)
Increase in accounts payable		1,413
Increase (decrease) in accrued liabilities		5,092
Decrease in other current liabilities		903
	$	6,580
Supplemental cash flow information is as follows (000s):
Cash paid during the year for interest	$	14,627
Cash paid during the year for income taxes	$	193

F-105

Pliant Corporation

Introduction to Unaudited Pro Forma

Consolidated Financial Statement

The following unaudited pro forma consolidated statement of operations for the year ended December 31, 2002 give effect to the Decora acquisition as if it occurred on January 1, 2002. The unaudited pro forma consolidated statement of operations are based on (i) Pliant Corporation’s audited Consolidated Statement of Operations for the year ended December 31, 2002 and (ii) Decora Industries, Inc.’s unaudited consolidated statement of operations for the period January 1, 2002 to May 22, 2002.

The unaudited pro forma results do not purport to be indicative of the combined results of operations that actually would have occurred if the Decora acquisition had been effected at January 1, 2002 or to project future results of operations for any period. The unaudited pro forma consolidated financial statement should be read in conjunction with Pliant Corporation’s consolidated financial statements and Decora Industries, Inc.’s consolidated financial statements and respective related notes thereto included elsewhere in this prospectus.

F-106

Pliant Corporation

Unaudited Pro Forma Consolidated Statement of Operations

for the year ended December 31, 2002

(Dollars in Thousands)

	Pliant Corporation and Subsidiaries			Decora business (January- May)			Pro forma adjustments			Pliant Corporation and Subsidiaries Pro Forma
Net sales	$	879,197		$	15,308		$			$	894,505
Cost of sales		714,463			10,946			(750	)(a)		724,659
Gross profit		164,734			4,362			750			169,846
Selling, general and administrative		85,351			4,466			(282	)(b)		89,535
Research and development		8,124									8,124
Plant closing costs, net		43,143									43,143
Total operating expenses		136,618			4,466			(282	)		140,802
Operating income		28,116			(104	)		1,032			29,044
Interest expense		(75,284	)		(991	)		(1,152	)(c)		(77,427	)
Reorganization items					(600	)					(600	)
Other income, net		2,276			143						2,419
Income before income taxes		(44,892	)		(1,552	)		(120	)		(46,564	)
Income tax expense (benefit)		(1,462	)					(43	)(d)		(1,505	)
Net income	$	(43,430	)	$	(1,552	)	$	(77	)	$	(45,059	)

F-107

PLIANT CORPORATION

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENT

(a) The reduction to cost of sales reflects a reduction in raw material costs of $450,000 and a reduction in freight expense of $300,000. The Company will internally produce a major portion of the plastic film that was previously purchased by Decora. The Company has sufficient unused capacity to produce the required raw material for Decora. The Company has contracts with carriers for freight at rates that are substantially lower than the rates paid by Decora.

(b) The reduction in selling, general and administrative expense reflects the reduction in administrative staff to eliminate the duplication of duties between Pliant employees and Decora employees. This adjustment reflects only the cost savings associated with terminations of employment or service that were specifically contemplated by the terms of the asset purchase agreement approved by the bankruptcy court.

(c) The adjustment to interest expense reflects incremental interest at current borrowing rates of 6.4% on the $18 million of debt incurred for the purchase.

(d) The adjustment to income taxes reflect the income tax adjustment for the total pre-tax adjustments at an average statutory income tax rate of 36%.

F-108

Pliant Corporation

$320,000,000 Principal Amount of

13% Senior Subordinated Notes due 2010

Which Are Guaranteed on a Senior Subordinated Basis by

Substantially All of Our Domestic Subsidiaries

Part II

Information not required in prospectus

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth the various expenses payable by the registrants in connection with the sale of the securities being registered. All of the amounts shown are estimated except the registration fee.

Securities and Exchange Commission registration fee	$	—
Printing expenses		—
Legal fees and expenses		—
Accounting fees and expenses		—
Miscellaneous fees and expenses		—
Total	$	—

Item 14. Indemnification of Directors and Officers.

Article IV of Pliant Corporation’s Third Amended and Restated Articles of Incorporation, as amended, provides that Pliant Corporation shall indemnify and advance expenses to its directors and officers and to any person who is or was serving at its request as a director or officer of another domestic or foreign corporation (and their respective estates or personal representatives) to the fullest extent as from time to time permitted by Utah law. In addition, pursuant to Article IV of the Third Amended and Restated Articles of Incorporation, as amended, the personal liability of the directors and officers of Pliant Corporation to Pliant Corporation or its shareholders, or to any third person, is eliminated or limited to the fullest extent as from time to time permitted by Utah law. Sections 16-10a-902 and 16-10a-907 of the Utah Revised Business Corporation Act provide that a corporation may indemnify its directors and officers who are made parties to a legal proceeding because of their positions with the corporation against liability incurred in the proceeding if the individual’s conduct was in good faith, the individual reasonably believed that his conduct was in, or not opposed to, the corporation’s best interests, and in the case of a criminal proceeding, had no reasonable cause to believe his conduct was unlawful. Under the Utah Revised Business Corporation Act, Pliant Corporation may not indemnify its directors or officers in connection with a proceeding by, or in the right of, Pliant Corporation in which the individual was adjudged liable to it or in any proceeding in which the individual was adjudged liable on the basis that he derived an improper personal benefit.

As authorized by Section 16-10a-841(1) of the Utah Revised Business Corporation Act, the Second Amended and Restated Bylaws of Pliant Corporation provide that Pliant Corporation’s directors shall not be personally liable to Pliant Corporation or its shareholders for monetary damages for any action taken or any failure to take any action, as a director, except liability for: (a) the amount of a financial benefit received by a director to which he or she is not entitled; (b) an intentional infliction of harm on Pliant Corporation or its shareholders; (c) a violation of Section 16-10a-842 of the Utah Revised Business Corporation Act for unlawful distributions; or (d) an intentional violation of criminal law. The Second Amended and Restated Bylaws also provide for indemnification of Pliant Corporation’s directors and officers and advancement of their expenses to the fullest extent as from time to time permitted by applicable law, including, without limitation, Section 16-10a-902 of the Utah Revised Business Corporation Act.

Item 15. Recent Sales of Unregistered Securities.

On July 17, 2000, we issued 1,650 shares of common stock in a private placement offering to members of our senior management who were not named executive officers. In the private placement offering, we received cash consideration of $483.13 per share, or approximately $800,000 in the aggregate. We believe

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that the issuance of common stock in the private placement was exempt from the registration requirements of the Securities Act pursuant to Regulation D or Rule 701 thereunder. Alternatively, we believe that the foregoing issuance of common stock, which did not involve a public offering or sale of securities, was exempt from the registration requirements of the Securities Act pursuant to the exemption from registration provided by Section 4(2) of the Securities Act. No underwriters, brokers or finders were involved in these transactions.

During the year ended December 31, 2000, we issued options to purchase 15,435 shares of our common stock to some of our officers and other employees pursuant to our 2000 stock incentive plan. We issued these options in exchange for services at an exercise price of $483.13 per share. One-sixth of these options vested on January 1, 2001 if the option holder was still our employee on this date. The remainder of these options vest in increments upon the achievement of performance targets. Any options that remain unvested will vest in full on December 31, 2009 if the option holder is still our employee on this date. These options expire ten years from the date of grant. We believe that the issuance of these options was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Regulation D thereunder because this issuance did not involve a public offering or sale. No underwriters, brokers or finders were involved in this transaction.

On July 16, 2001, we issued 32,391 shares of our common stock to the selling shareholders of Uniplast Holdings, Inc. in connection with the acquisition of 100% of the outstanding shares of common stock of Uniplast. We continue to hold an additional 313 shares in accordance with a holdback arrangement pending resolution of outstanding issues relating to the value of certain Uniplast assets. We believe that this issuance of our common stock was exempt from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(2) thereof or Regulation D thereunder because this issuance did not involve a public offering or sale. No underwriters, brokers or finders were involved in this transaction.

In connection with the acquisition of Uniplast, on July 16, 2001, we also issued 29,000 shares of our Series A preferred stock and preferred stock warrants to purchase 29,436 shares of our common stock to our then existing holders of preferred stock and to an affiliate of a selling stockholder of Uniplast. The preferred stock warrants are exercisable at any time prior to May 31, 2011 at an exercise price of $0.01 per share. Each preferred stock warrant entitles the holder to purchase 1.015 share of common stock. We received cash consideration of $29 million in the aggregate. We used the proceeds from this offering to pay a portion of the cost of the Uniplast acquisition. We believe that this issuance of our Series A preferred stock and preferred stock warrants was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Regulation D thereunder because this issuance did not involve a public offering or sale. No underwriters, brokers or finders were involved in this transaction.

Under our stockholders’ agreement, we were required to make a preemptive rights offering of additional shares of Series A preferred stock and preferred stock warrants to holders of our common stock as a result of the $29 million private placement of Series A preferred stock and preferred stock warrants described above. In addition to the preemptive rights offering, we also offered Series A preferred stock and preferred stock warrants to certain of our officers. On September 13, 2001, we completed the preemptive rights offering and the offering to our officers and sold 1,983 shares of Series A preferred stock and preferred stock warrants to purchase approximately 2,012 shares of our common stock to certain holders of our common stock and certain of our officers. The preferred stock warrants are exercisable at any time prior to May 31, 2011 at an exercise price of $0.01 per share. Each preferred stock warrant entitles the holder to purchase 1.015 shares of common stock. We received cash consideration of approximately $2.0 million in the aggregate. We used the proceeds from the preemptive rights offering and the offering to our officers to repay borrowings under our credit facility. We believe that this issuance of our Series A preferred stock and preferred stock warrants was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Regulation D thereunder because this issuance did not involve a public offering or sale. No underwriters, brokers or finders were involved in this transaction.

II-2

During the year ended December 31, 2001, we issued options to purchase 12,865 shares of our common stock to some of our officers and other employees pursuant to our 2000 stock incentive plan. We issued these options in exchange for services at an exercise price of $483.13 per share. One-sixth of these options vested on January 1, 2001 if the option holder was still our employee on this date. The remainder of these options vest in increments upon the achievement of performance targets. Any options that remain unvested will vest in full on December 31, 2009 if the option holder is still our employee on this date. These options expire ten years from the date of grant. We believe that the issuance of these options was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Regulation D thereunder because this issuance did not involve a public offering or sale. No underwriters, brokers or finders were involved in this transaction.

On July 15, 2002, we issued 207 shares of our common stock to Mr. Edward A. Lapekas, one of our directors. Mr. Lapekas paid $483.13 per share, for a total payment to us of $100,007.91. We received payment from Mr. Lapekas for those shares in June 2002, but did not issue the shares until July 15, 2002. We believe that the issuance of shares of our common stock to Mr. Lapekas was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Regulation D thereunder because this issuance did not involve a public offering or sale. No underwriters, brokers or finders were involved in this transaction.

During the year ended December 31, 2002, we issued options to purchase 20,425 shares of our common stock to some of our officers and other employees pursuant to our 2000 stock incentive plan. We issued these options in exchange for services at an exercise price of $483.13 per share. These options vest in increments upon the achievement of performance targets. Any options that remain unvested will vest in full on December 31, 2009 if the option holder is still our employee on this date. These options expire ten years from the date of grant. We believe that the issuance of these options was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Regulation D thereunder because this issuance did not involve a public offering or sale. No underwriters, brokers or finders were involved in this transaction.

On March 25, 2003, we issued 10,000 shares of our Series A preferred stock and warrants to purchase 43,962 shares of our common stock to J.P. Morgan Partners (BHCA), L.P. for $10 million. All of the proceeds of this sale were used to reduce our term debt. The warrants are exercisable at any time prior to May 31, 2011 at an exercise price of $0.01 per share. Each warrant entitles the holder to purchase 4.3962 shares of common stock. We believe that the issuance of the shares of Series A preferred stock and the warrants to purchase shares of our common stock was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Regulation D thereunder because this issuance did not involve a public offering or sale. No underwriters, brokers or finders were involved in this transaction.

During the three months ended March 31, 2003, we issued options to purchase up to 4,750 shares of our common stock to two employees in exchange for services. We issued these options under our 2000 Stock Incentive Plan at an exercise price of $483.13 per share. These options vest in increments upon the achievement of performance targets as of the end of any calendar quarter during the option term. Any options that remain unvested will vest in full on December 31, 2009 if the option holder is still our employee on this date. These options expire ten years from the date of grant. We believe that the issuance of the options was exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof or Regulation D thereunder because this issuance did not involve a public offering or sale. No underwriters, brokers or finders were involved in this transaction.

Item 16. Exhibits and Financial Statement Schedules.

(a) EXHIBITS

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2.1	Recapitalization Agreement, dated as of March 31, 2000 (the “Recapitalization Agreement”), among Pliant Corporation, Chase Domestic Investments, L.L.C., Richard P. Durham as Representative, and the shareholders of Pliant Corporation signatory thereto (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Pliant Corporation on April 12, 2000).
2.2	Amendment No. 1, dated as of April 3, 2000, to the Recapitalization Agreement (incorporated by reference to Exhibit 2.2 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
2.3	Amendment No. 2, dated as of May 31, 2000, to the Recapitalization Agreement (incorporated by reference to Exhibit 2.3 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.1	Third Amended and Restated Articles of Incorporation of Pliant Corporation (incorporated by reference to Exhibit 3.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.2	Articles of Amendment of Third Amended and Restated Articles of Incorporation of Pliant Corporation (incorporated by reference to Exhibit 3.2 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).
3.3	Articles of Amendment of Third Amended and Restated Articles of Incorporation of Pliant Corporation (incorporated by reference to Exhibit 3.3 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.4	Articles of Amendment of Third Amended and Restated Articles of Incorporation of Pliant Corporation (incorporated by reference to Exhibit 3.4 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
3.5	Articles of Amendment of Third Amended and Restated Articles of Incorporation of Pliant Corporation (incorporated by reference to Exhibit 3.5 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
3.6	Articles of Incorporation of Pliant Corporation International (formerly known as Huntsman Container Corporation International) (incorporated by reference to Exhibit 3.14 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-40067)).
3.7	Articles of Amendment to the Articles of Incorporation of Pliant Corporation International (formerly known as Huntsman Container Corporation International) (incorporated by reference to Exhibit 3.19 to Post-Effective Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.8	Articles of Incorporation of Pliant Film Products of Mexico, Inc. (formerly known as Huntsman Film Products of Mexico, Inc.) (incorporated by reference to Exhibit 3.16 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-40067)).
3.9	Articles of Amendment to the Articles of Incorporation of Pliant Film Products of Mexico, Inc. (formerly known as Huntsman Film Products of Mexico, Inc.) (incorporated by reference to Exhibit 3.20 to Post-Effective Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).

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3.10	Articles of Incorporation of Pliant Solutions Corporation (formerly known as Huntsman KCL Corporation) (incorporated by reference to Exhibit 3.7 to Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.11	Articles of Amendment to the Articles of Incorporation of Pliant Solutions Corporation (formerly known as Huntsman KCL Corporation) (incorporated by reference to Exhibit 3.21 to Post-Effective Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.12	Articles of Organization of Pliant Packaging of Canada, LLC (formerly known as Huntsman Packaging of Canada, LLC) (incorporated by reference to Exhibit 3.9 to Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.13	Certificate of Amendment to the Articles of Organization of Pliant Packaging of Canada, LLC (formerly known as Huntsman Packaging of Canada, LLC) (incorporated by reference to Exhibit 3.18 to Post-Effective Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.14	Certificate of Incorporation of Uniplast Holdings Inc., as amended (incorporated by reference to Exhibit 3.14 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.15	Certificate of Incorporation of Uniplast U.S., Inc., as amended (incorporated by reference to Exhibit 3.15 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.16	Certificate of Incorporation of Turex, Inc (incorporated by reference to Exhibit 3.16 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.17	Articles of Organization of Pierson Industries, Inc., as amended (incorporated by reference to Exhibit 3.17 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.18	Certificate of Incorporation of Uniplast Midwest, Inc. (incorporated by reference to Exhibit 3.18 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.19	Amended and Restated Bylaws of Pliant Corporation (incorporated by reference to Exhibit 3.19 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.20	Second Amended and Restated Bylaws of Pliant Corporation (incorporated by reference to Exhibit 3.6 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
3.21	Bylaws of Pliant Corporation International (formerly known as Huntsman Container Corporation International) (incorporated by reference to Exhibit 3.24 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-40067)).
3.22	Bylaws of Pliant Film Products of Mexico, Inc. (formerly known as Huntsman Film Products of Mexico, Inc.) (incorporated by reference to Exhibit 3.26 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-40067)).

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3.23	Bylaws of Pliant Solutions Corporation (formerly known as Huntsman KCL Corporation) (incorporated by reference to Exhibit 3.16 to Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.24	Operating Agreement of Pliant Packaging of Canada, LLC (formerly known as Huntsman Packaging of Canada, LLC) (incorporated by reference to Exhibit 3.18 to Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.25	Bylaws of Uniplast Holdings Inc., as amended (incorporated by reference to Exhibit 3.25 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.26	Bylaws of Uniplast U.S., Inc., as amended (incorporated by reference to Exhibit 3.26 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.27	Bylaws of Turex, Inc. (incorporated by reference to Exhibit 3.27 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.28	Bylaws of Pierson Industries, Inc., as amended (incorporated by reference to Exhibit 3.28 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.29	Code of Bylaws of Uniplast Midwest, Inc. (incorporated by reference to Exhibit 3.29 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
4.1	Indenture, dated as of May 31, 2000, among Pliant Corporation, the Note Guarantors party thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
4.2	Form of 2000 Note (incorporated by reference to Exhibit B to Exhibit 4.1).
4.3	First Supplemental Indenture, dated as of July 16, 2001, among Pliant Corporation, the New Note Guarantors party thereto, the existing Note Guarantors party thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.3 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
4.4	Indenture, dated as of April 10, 2002, among Pliant Corporation, the Note Guarantors party thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.4 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).
4.5	Form of 2002 Note (incorporated by reference to Exhibit B to Exhibit 4.4).
4.6	Indenture, dated as of May 30, 2003, among Pliant Corporation, the Note Guarantors party thereto and Wilmington Trust Company, as trustee.
4.7	Form of 2003 Note (incorporated by reference to Exhibit A to Exhibit 4.6).
4.8	Second Priority Security Agreement, dated as of May 30, 2003, among Pliant Corporation, the subsidiary guarantors party thereto and Wilmington Trust Company, as Collateral Agent.
4.9	Second Priority Pledge Agreement, dated as of May 30, 2003, among Pliant Corporation, the subsidiary guarantors party thereto and Wilmington Trust Company, as Collateral Agent.

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4.10	Exchange and Registration Rights Agreement, dated as of May 31, 2000, among Pliant Corporation, the Note Guarantors party thereto, and Chase Securities, Inc. and Deutsche Bank Securities Inc., as Initial Purchasers (incorporated by reference to Exhibit 4.3 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
4.11	Exchange and Registration Rights Agreement, dated as of April 10, 2002, among Pliant Corporation, the Note Guarantors party thereto, and J.P. Morgan Securities, Inc. and Deutsche Bank Securities Inc., as Initial Purchasers (incorporated by reference to Exhibit 4.7 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).
4.12	Exchange and Registration Rights Agreement, dated as of May 30, 2003, among Pliant Corporation, the Note Guarantors party thereto, and J.P. Morgan Securities Inc., Deutsche Bank Securities, Inc. and Credit Suisse First Boston LLC, as Initial Purchasers.
5.1	Opinion of O’Melveny & Myers LLP (formerly, O’Sullivan LLP) (incorporated by reference to Exhibit 5.1 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
5.2	Opinion of O’Melveny & Myers LLP (formerly, O’Sullivan LLP) (incorporated by reference to Exhibit 5.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).
10.1	Note Warrant Agreement, dated as of May 31, 2000, among Pliant Corporation and The Bank of New York, as Warrant Agent, relating to the 220,000 Note Warrants (incorporated by reference to Exhibit 10.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.2	Stockholders’ Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.2 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.3	Amendment No. 1 and Waiver, dated as of July 16, 2001, to the Stockholder’s Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.3 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.4	Amendment No. 2, dated as of December 19, 2001, to the Stockholder’s Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.4 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.5	Amendment No. 3, dated as of March 25, 2003, to the Stockholder’s Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.5 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).

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10.6	Amendment No. 4, dated as of June 5, 2003, to the Stockholder’s Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto.
10.7	Registration Rights Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.3 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.8	Amendment No. 1, dated as of June 13, 2000, to the Registration Rights Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.4 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.9	Amendment No. 2, dated as of March 25, 2003, to the Registration Rights Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.8 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.10	Securities Purchase Agreement, dated as of May 31, 2000, among Pliant Corporation and each of the purchasers of Pliant Corporation’s preferred stock listed on the signature pages thereto (incorporated by reference to Exhibit 10.5 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.11	Amendment No. 1 and Waiver, dated as of July 16, 2001, to the Securities Purchase Agreement dated as of May 31, 2000 among Pliant Corporation, and each of the purchasers of Pliant Corporation’s preferred stock listed on the signature pages thereto (incorporated by reference to Exhibit 10.7 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.12	Warrant Agreement, dated as of May 31, 2000, among Pliant Corporation and Chase Domestic Investments, L.L.C. (incorporated by reference to Exhibit 10.6 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.13	Amendment No. 1, dated as of July 16, 2001, to the Warrant Agreement dated as of May 31, 2000 among Pliant Corporation and the initial warrantholders listed in Schedule I thereto (incorporated by reference to Exhibit 10.9 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.14	Amendment No. 2, dated as of March 25, 2003, to the Warrant Agreement dated as of May 31, 2000 among Pliant Corporation and the initial warrantholders listed in Schedule I thereto (incorporated by reference to Exhibit 10.13 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.15	Securities Purchase Agreement, dated as of July 16, 2001, among Pliant Corporation and the purchasers of Pliant Corporation’s preferred stock listed on the schedules thereto (incorporated by reference to Exhibit 10.10 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).

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10.16	Securities Purchase Agreement, dated as of March 25, 2003, among Pliant Corporation and the Purchasers named therein (incorporated by reference to Exhibit 10.15 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.17	Securities Purchase Agreement, dated as of March 25, 2003, between Pliant Corporation and J.P. Morgan Partners (BHCA), L.P. (incorporated by reference to Exhibit 10.16 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.18	Credit Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among Pliant Corporation, the subsidiary guarantors party thereto, the various lenders from time to time party thereto, Bankers Trust Company, as Administrative Agent and Collateral Agent, and The Chase Manhattan Bank, as Syndication Agent, and The Bank of Nova Scotia, as the Documentation Agent (incorporated by reference to Exhibit 10.7 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.19	Amendment No. 1, dated as of September 30, 2000, to Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000 (incorporated by reference to Exhibit 10.1 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
10.20	Amendment No. 2, dated as of July 10, 2001, to the Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000 (incorporated by reference to Exhibit 10.13 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.21	Amendment No. 3, dated as of April 2, 2002, to the Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000 (incorporated by reference to Exhibit 10.15 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).
10.22	Amendment No. 4, dated as of September 30, 2002, to the Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000 (incorporated by reference to Exhibit 10.2 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2002).
10.23	Amendment No. 5, dated as of March 24, 2003, to the Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000 (incorporated by reference to Exhibit 10.22 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.24	Amendment No. 6, dated as of May 22, 2003, to the Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000.
10.25	Intercreditor Agreement, dated as of May 30, 2003, among Deutsche Bank Trust Company Americas, as Credit Agent, Wilmington Trust Company, as Trustee, and Pliant Corporation.
10.26	Guarantee Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among the subsidiary guarantors party thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.8 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).

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10.27	Supplement No. 1, dated as of July 19, 2001, to the Guarantee Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among Pliant Corporation, each of the subsidiaries listed on Schedule I thereto and Bankers Trust Company, as Administrative Agent (incorporated by reference to Exhibit 10.15 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.28	Security Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among the subsidiary guarantors party thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.9 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.29	Supplement No. 1, dated as of July 19, 2001, to the Security Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among Pliant Corporation, each of the subsidiaries listed on Schedule I thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.17 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.30	Pledge Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among the subsidiary guarantors party thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.10 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.31	Supplement No. 1, dated as of July 19, 2001, to the Pledge Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among Pliant Corporation, each of the subsidiaries listed on Schedule I thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.19 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.32	Indemnity, Subrogation and Contribution Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among the subsidiary guarantors party thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.11 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.33	Supplement No. 1, dated as of July 19, 2001, to the Indemnity, Subrogation and Contribution Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among Pliant Corporation, each of the subsidiaries listed on Schedule I thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.21 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.34	Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Richard P. Durham (incorporated by reference to Exhibit 10.12 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.35	Amendment No. 1, dated as of February 1, 2001, to the Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Richard P. Durham (incorporated by reference to Exhibit 10.14 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).
10.36	Separation Agreement, dated as of June 10, 2002, between Pliant Corporation and Richard P. Durham (incorporated by reference to Exhibit 10.1 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).

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10.37	Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Jack E. Knott (incorporated by reference to Exhibit 10.13 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.38	Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Scott K. Sorensen (incorporated by reference to Exhibit 10.14 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.39	Letter Agreement, dated as of December 27, 2000, terminating the Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Scott K. Sorensen (incorporated by reference to Exhibit 10.17 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).
10.40	Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Ronald G. Moffitt (incorporated by reference to Exhibit 10.15 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.41	Letter Agreement, dated as of January 22, 2001, terminating the Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Ronald G. Moffitt (incorporated by reference to Exhibit 10.19 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).
10.42	Employment Agreement, dated as of March 30, 2001, between Pliant Corporation and Brian E. Johnson (incorporated by reference to Exhibit 10.30 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.43	Restricted Stock Agreement, dated as of May 31, 2000, between Pliant Corporation and Richard P. Durham (incorporated by reference to Exhibit 10.16 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.44	Restricted Stock Agreement, dated as of May 31, 2000, between Pliant Corporation and Jack E. Knott (incorporated by reference to Exhibit 10.17 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.45	Restricted Stock Agreement, dated as of May 31, 2000, between Pliant Corporation and Scott K. Sorensen (incorporated by reference to Exhibit 10.18 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.46	Stock Redemption Agreement, dated as of December 27, 2000, between Pliant Corporation and Scott K. Sorensen (incorporated by reference to Exhibit 10.23 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).
10.47	Restricted Stock Agreement, dated as of May 31, 2000, between Pliant Corporation and Ronald G. Moffitt (incorporated by reference to Exhibit 10.19 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.48	Stock Redemption Agreement, dated as of February 1, 2001, between Pliant Corporation and Ronald G. Moffitt (incorporated by reference to Exhibit 10.25 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).
10.49	Pledge Agreement, dated as of May 31, 2000, in favor of Pliant Corporation made by Richard P. Durham (incorporated by reference to Exhibit 10.20 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).

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10.50	Amendment No. 1, dated as of March 1, 2001, to the Pledge Agreement dated as of May 31, 2000, among Pliant Corporation and Richard P. Durham (incorporated by reference to Exhibit 10.35 to Post-Effective Amendment No. 2 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.51	Pledge Agreement, dated as of May 31, 2000, in favor of Pliant Corporation made by Jack E. Knott (incorporated by reference to Exhibit 10.21 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.52	Amendment No. 1, dated as of April 1, 2001, to the Pledge Agreement dated as of May 31, 2000, among Pliant Corporation and Jack E. Knott (incorporated by reference to Exhibit 10.36 to Post-Effective Amendment No. 2 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.53	Pledge Agreement, dated as of May 31, 2000, in favor of Pliant Corporation made by Scott K. Sorensen (incorporated by reference to Exhibit 10.22 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.54	Pledge Agreement, dated as of May 31, 2000, in favor of Pliant Corporation made by Ronald G. Moffitt (incorporated by reference to Exhibit 10.23 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.55	1998 Pliant Corporation Stock Option Plan (incorporated by reference to Exhibit 10.10 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998).
10.56	Pliant Corporation Management Incentive Plan for Senior Divisional Management (1999) (incorporated by reference to Exhibit 10.1 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000).
10.57	Pliant Corporation 2000 Stock Incentive Plan (as amended and restated through April 17, 2002) (incorporated by reference to Exhibit 10.54 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.58	Second Amended and Restated Stock Option Agreement, dated as of May 31, 2000 between Pliant Corporation and Jack E. Knott (incorporated by reference to Exhibit 10.27 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.59	Pliant Corporation Management Incentive Plan (2000) (incorporated by reference to Exhibit 10.2 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000).
10.60	Pliant Corporation Management Incentive Plan (2001) (incorporated by reference to Exhibit 10.48 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.61	Pliant Corporation Management Incentive Plan (2002) (incorporated by reference to Exhibit 10.49 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.62	Pliant Corporation 2002 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002).
12.1	Statement re: computation of ratios of earning to fixed charges.

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21.1	Subsidiaries of Pliant Corporation (incorporated by reference to Exhibit 21.1 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
23.1	Consent of O’Melveny & Myers LLP (formerly, O’Sullivan LLP) (included in Exhibit 5.1).
23.2	Consent of O’Melveny & Myers LLP (formerly, O’Sullivan LLP) (included in Exhibit 5.2).
23.3	Consent of Ernst & Young LLP.
23.4	Consent of PricewaterhouseCoopers LLP.
24.1	Powers of Attorney (included on the signature pages).
25.1	Form T-1 Statement of Eligibility and Qualifications under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee (incorporated by reference to Exhibit 25.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
25.2	Form T-1 Statement of Eligibility and Qualifications under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee (incorporated by reference to Exhibit 25.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).
99.1	Letter of Pliant Corporation regarding Arthur Andersen LLP (incorporated by reference to Exhibit 99.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).

(b) FINANCIAL STATEMENT SCHEDULES

Pliant Corporation and Subsidiaries—Schedule II—Valuation and Qualifying Accounts for the years ended December 31, 2002, 2001 and 2000 (included on page F-44 of the prospectus filed pursuant to Part I of this registration statement).

Schedules other than the above have been omitted because they are either not applicable or the required information has been disclosed in the financial statements or notes thereto.

Item 17. Undertakings.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrants pursuant to the forgoing provisions, or otherwise, the Registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrants of expenses incurred or paid by a director, officer or controlling person of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrants hereby undertake:

II-13

1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement;

(a) To include any prospectus required by Section 10(a)(3) of the Securities Act;

(b) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(c) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

2. That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and

3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

II-14

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Schaumburg, in the State of Illinois, on the 24th day of June, 2003.

PLIANT CORPORATION
By:	/s/ Jack E. Knott II
Jack E. Knott II Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints each of Jack E. Knott II and Brian E. Johnson and each of them individually, with full power of substitution and resubstitution, his or her true and lawful attorney-in-fact and agent, with full powers to each of them to sign, in the names and in the capacities indicated below, this Registration Statement on Form S-1 filed with the Securities and Exchange Commission, and any and all amendments to said Registration Statement (including post-effective amendments), and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of debt securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratify and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. This Power of Attorney may be executed in counterparts and all capacities to sign any and all amendments.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the dates indicated:

Signature	Title	Date
/s/ Jack E. Knott II        Jack E. Knott II	Chief Executive Officer and Director (Principal Executive Officer)	June 24, 2003
/s/ Brian E. Johnson     Brian E. Johnson	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	June 24, 2003
/s/ Richard P. Durham Richard P. Durham	Director	June 24, 2003

/s/ Donald J. Hofmann, Jr. Donald J. Hofmann, Jr.	Director	June 24, 2003
/s/ Timothy J. Walsh Timothy J. Walsh	Director	June 24, 2003
/s/ John M.B. O’Connor John M.B. O’Connor	Director	June 24, 2003
/s/ Edward A. Lapekas Edward A. Lapekas	Director	June 24, 2003
/s/ Albert MacMillan Albert MacMillan	Director	June 24, 2003

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Schaumburg, in the State of Illinois, on the 24th day of June, 2003.

PLIANT CORPORATION INTERNATIONAL
By:	/s/ Jack E. Knott II
Jack E. Knott II President

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints each of Jack E. Knott II and Brian E. Johnson and each of them individually, with full power of substitution and resubstitution, his or her true and lawful attorney-in-fact and agent, with full powers to each of them to sign, in the names and in the capacities indicated below, this Registration Statement on Form S-1 filed with the Securities and Exchange Commission, and any and all amendments to said Registration Statement (including post-effective amendments), and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of debt securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratify and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. This Power of Attorney may be executed in counterparts and all capacities to sign any and all amendments.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the dates indicated:

Signature	Title	Date
/s/ Jack E. Knott II        Jack E. Knott II	President and Director (Principal Executive Officer)	June 24, 2003
/s/ Brian E. Johnson     Brian E. Johnson	Executive Vice President Treasurer and Director (Principal Financial and Accounting Officer)	June 24, 2003
/s/ Elise H. Scroggs Elise H. Scroggs	Vice President and Director	June 24, 2003

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Schaumburg, in the State of Illinois, on the 24th day of June, 2003.

PLIANT FILM PRODUCTS OF MEXICO, INC.
By:	/s/ Jack E. Knott II
Jack E. Knott II President

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints each of Jack E. Knott II and Brian E. Johnson and each of them individually, with full power of substitution and resubstitution, his or her true and lawful attorney-in-fact and agent, with full powers to each of them to sign, in the names and in the capacities indicated below, this Registration Statement on Form S-1 filed with the Securities and Exchange Commission, and any and all amendments to said Registration Statement (including post-effective amendments), and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of debt securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratify and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. This Power of Attorney may be executed in counterparts and all capacities to sign any and all amendments.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the dates indicated:

Signature	Title	Date
/s/ Jack E. Knott II        Jack E. Knott II	President and Director (Principal Executive Officer)	June 24, 2003
/s/ Brian E. Johnson     Brian E. Johnson	Executive Vice President, Treasurer and Director (Principal Financial and Accounting Officer)	June 24, 2003

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Schaumburg, in the State of Illinois, on the 24th day of June, 2003.

PLIANT SOLUTIONS CORPORATION
By:	/s/ Stanley B. Bikulege
Stanley B. Bikulege President and Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints each of Jack E. Knott II and Brian E. Johnson and each of them individually, with full power of substitution and resubstitution, his or her true and lawful attorney-in-fact and agent, with full powers to each of them to sign, in the names and in the capacities indicated below, this Registration Statement on Form S-1 filed with the Securities and Exchange Commission, and any and all amendments to said Registration Statement (including post-effective amendments), and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of debt securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratify and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. This Power of Attorney may be executed in counterparts and all capacities to sign any and all amendments.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the dates indicated:

Signature	Title	Date
/s/ Stanley B. Bikulege Stanley B. Bikulege	President and Chief Executive Officer (Principal Executive Officer)	June 24, 2003
/s/ Jack E. Knott II        Jack E. Knott II	Executive Vice President and Director	June 24, 2003
/s/ Brian E. Johnson     Brian E. Johnson	Executive Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer)	June 24, 2003

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Schaumburg, in the State of Illinois, on the 24th day of June, 2003.

PLIANT PACKAGING OF CANADA, LLC
By:	/s/ Jack E. Knott II
Jack E. Knott II President

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints each of Jack E. Knott II and Brian E. Johnson and each of them individually, with full power of substitution and resubstitution, his or her true and lawful attorney-in-fact and agent, with full powers to each of them to sign, in the names and in the capacities indicated below, this Registration Statement on Form S-1 filed with the Securities and Exchange Commission, and any and all amendments to said Registration Statement (including post-effective amendments), and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of debt securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratify and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. This Power of Attorney may be executed in counterparts and all capacities to sign any and all amendments.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the dates indicated:

Signature	Title	Date
/s/ Jack E. Knott II        Jack E. Knott II	President and Manager (Principal Executive Officer)	June 24, 2003
/s/ Brian E. Johnson     Brian E. Johnson	Vice President and Manager (Principal Financial and Accounting Officer)	June 24, 2003

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Schaumburg, in the State of Illinois, on the 24th day of June, 2003.

UNIPLAST HOLDINGS INC.
By:	/s/ Stanley B. Bikulege
Stanley B. Bikulege
President

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints each of Jack E. Knott II and Brian E. Johnson and each of them individually, with full power of substitution and resubstitution, his or her true and lawful attorney-in-fact and agent, with full powers to each of them to sign, in the names and in the capacities indicated below, this Registration Statement on Form S-1 filed with the Securities and Exchange Commission, and any and all amendments to said Registration Statement (including post-effective amendments), and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of debt securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratify and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. This Power of Attorney may be executed in counterparts and all capacities to sign any and all amendments.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the dates indicated:

Signature	Title	Date
/s/ Stanley B. Bikulege          Stanley B. Bikulege	President and Director (Principal Executive Officer)	June 24, 2003
/s/ Jack E. Knott II          Jack E. Knott II	Executive Vice President and Director	June 24, 2003
/s/ Brian E. Johnson          Brian E. Johnson	Executive Vice President, Treasurer and Director (Principal Financial and Accounting Officer)	June 24, 2003

/s/ Elise H. Scroggs          Elise H. Scroggs	Director	June 24, 2003
/s/ Len Azzaro          Len Azzaro	Director	June 24, 2003
/s/ Michael D. Annes          Michael D. Annes	Vice President, Secretary and Director	June 24, 2003

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Schaumburg, in the State of Illinois, on the 24th day of June, 2003.

UNIPLAST U.S., INC.
By:	/s/ Stanley B. Bikulege
Stanley B. Bikulege
President

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints each of Jack E. Knott II and Brian E. Johnson and each of them individually, with full power of substitution and resubstitution, his or her true and lawful attorney-in-fact and agent, with full powers to each of them to sign, in the names and in the capacities indicated below, this Registration Statement on Form S-1 filed with the Securities and Exchange Commission, and any and all amendments to said Registration Statement (including post-effective amendments), and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of debt securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratify and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. This Power of Attorney may be executed in counterparts and all capacities to sign any and all amendments.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the dates indicated:

Signature	Title	Date
/s/ Stanley B. Bikulege          Stanley B. Bikulege	President (Principal Executive Officer)	June 24, 2003
/s/ Jack E. Knott II          Jack E. Knott II	Executive Vice President and Director	June 24, 2003
/s/ Brian E. Johnson          Brian E. Johnson	Executive Vice President, Treasurer and Director (Principal Financial and Accounting Officer)	June 24, 2003

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on  its behalf by the undersigned, thereunto duly authorized, in the City of Schaumburg, in the State of Illinois, on the 24th day of  June, 2003.

TUREX, INC.
By:	/s/ Stanley B. Bikulege
Stanley B. Bikulege
President

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes  and appoints each of Jack E. Knott II and Brian E. Johnson and each of them individually, with full power of substitution and resubstitution, his or her true and lawful attorney-in-fact and agent, with full powers to each of them to sign, in the names and in the capacities indicated below, this Registration Statement on Form S-1 filed with the Securities and Exchange Commission, and any and all amendments to said Registration Statement (including post-effective amendments), and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of debt securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratify and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. This Power of Attorney may be executed in counterparts and all capacities to sign any and all amendments.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the dates indicated:

Signature	Title	Date
/s/ Stanley B. Bikulege          Stanley B. Bikulege	President and Director (Principal Executive Officer)	June 24, 2003
/s/ Jack E. Knott II          Jack E. Knott II	Executive Vice President and Director	June 24, 2003
/s/ Brian E. Johnson          Brian E. Johnson	Executive Vice President, Treasurer and Director (Principal Financial and Accounting Officer)	June 24, 2003

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on  its behalf by the undersigned, thereunto duly authorized, in the City of Schaumburg, in the State of Illinois, on the 24th day of  June, 2003.

PIERSON INDUSTRIES, INC.
By:	/s/ Stanley B. Bikulege
Stanley B. Bikulege
President and Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes  and appoints each of Jack E. Knott II and Brian E. Johnson and each of them individually, with full power of substitution and resubstitution, his or her true and lawful attorney-in-fact and agent, with full powers to each of them to sign, in the names and in the capacities indicated below, this Registration Statement on Form S-1 filed with the Securities and Exchange Commission, and any and all amendments to said Registration Statement (including post-effective amendments), and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of debt securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratify and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. This Power of Attorney may be executed in counterparts and all capacities to sign any and all amendments.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the dates indicated:

Signature	Title	Date
/s/ Stanley B. Bikulege          Stanley B. Bikulege	President, Chief Executive Officer and Director (Principal Executive Officer)	June 24, 2003
/s/ Jack E. Knott II          Jack E. Knott II	Executive Vice President and Director	June 24, 2003
/s/ Brian E. Johnson          Brian E. Johnson	Executive Vice President, Treasurer and Director (Principal Financial and Accounting Officer)	June 24, 2003
/s/ Michael D. Annes          Michael D. Annes	Vice President, Secretary, Clerk and Director	June 24, 2003

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on  its behalf by the undersigned, thereunto duly authorized, in the City of Schaumburg, in the State of Illinois, on the 24th day of  June, 2003.

UNIPLAST MIDWEST, INC.
By:	/s/ Stanley B. Bikulege
Stanley B. Bikulege President

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby severally constitutes and appoints each of Jack E. Knott II and Brian E. Johnson and each of them individually, with full power of substitution and resubstitution, his or her true and lawful attorney-in-fact and agent, with full powers to each of them to sign, in the names and in the capacities indicated below, this Registration Statement on Form S-1 filed with the Securities and Exchange Commission, and any and all amendments to said Registration Statement (including post-effective amendments), and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of debt securities of the Registrant, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratify and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. This Power of Attorney may be executed in counterparts and all capacities to sign any and all amendments.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the dates indicated:

Signature	Title	Date
/s/ Stanley B. Bikulege Stanley B. Bikulege	President (Principal Executive Officer)	June 24, 2003
/s/ Jack E. Knott II        Jack E. Knott II	Executive Vice President and Director	June 24, 2003
/s/ Brian E. Johnson     Brian E. Johnson	Executive Vice President, Treasurer and Director (Principal Financial and Accounting Officer)	June 24, 2003

INDEX TO EXHIBITS

2.1	Recapitalization Agreement, dated as of March 31, 2000 (the “Recapitalization Agreement”), among Pliant Corporation, Chase Domestic Investments, L.L.C., Richard P. Durham as Representative, and the shareholders of Pliant Corporation signatory thereto (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Pliant Corporation on April 12, 2000).
2.2	Amendment No. 1, dated as of April 3, 2000, to the Recapitalization Agreement (incorporated by reference to Exhibit 2.2 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
2.3	Amendment No. 2, dated as of May 31, 2000, to the Recapitalization Agreement (incorporated by reference to Exhibit 2.3 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.1	Third Amended and Restated Articles of Incorporation of Pliant Corporation (incorporated by reference to Exhibit 3.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.2	Articles of Amendment of Third Amended and Restated Articles of Incorporation of Pliant Corporation (incorporated by reference to Exhibit 3.2 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).
3.3	Articles of Amendment of Third Amended and Restated Articles of Incorporation of Pliant Corporation (incorporated by reference to Exhibit 3.3 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.4	Articles of Amendment of Third Amended and Restated Articles of Incorporation of Pliant Corporation (incorporated by reference to Exhibit 3.4 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
3.5	Articles of Amendment of Third Amended and Restated Articles of Incorporation of Pliant Corporation (incorporated by reference to Exhibit 3.5 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
3.6	Articles of Incorporation of Pliant Corporation International (formerly known as Huntsman Container Corporation International) (incorporated by reference to Exhibit 3.14 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-40067)).
3.7	Articles of Amendment to the Articles of Incorporation of Pliant Corporation International (formerly known as Huntsman Container Corporation International) (incorporated by reference to Exhibit 3.19 to Post-Effective Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.8	Articles of Incorporation of Pliant Film Products of Mexico, Inc. (formerly known as Huntsman Film Products of Mexico, Inc.) (incorporated by reference to Exhibit 3.16 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-40067)).

3.9	Articles of Amendment to the Articles of Incorporation of Pliant Film Products of Mexico, Inc. (formerly known as Huntsman Film Products of Mexico, Inc.) (incorporated by reference to Exhibit 3.20 to Post-Effective Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.10	Articles of Incorporation of Pliant Solutions Corporation (formerly known as Huntsman KCL Corporation) (incorporated by reference to Exhibit 3.7 to Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.11	Articles of Amendment to the Articles of Incorporation of Pliant Solutions Corporation (formerly known as Huntsman KCL Corporation) (incorporated by reference to Exhibit 3.21 to Post-Effective Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.12	Articles of Organization of Pliant Packaging of Canada, LLC (formerly known as Huntsman Packaging of Canada, LLC) (incorporated by reference to Exhibit 3.9 to Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.13	Certificate of Amendment to the Articles of Organization of Pliant Packaging of Canada, LLC (formerly known as Huntsman Packaging of Canada, LLC) (incorporated by reference to Exhibit 3.18 to Post-Effective Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.14	Certificate of Incorporation of Uniplast Holdings Inc., as amended (incorporated by reference to Exhibit 3.14 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.15	Certificate of Incorporation of Uniplast U.S., Inc., as amended (incorporated by reference to Exhibit 3.15 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.16	Certificate of Incorporation of Turex, Inc (incorporated by reference to Exhibit 3.16 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.17	Articles of Organization of Pierson Industries, Inc., as amended (incorporated by reference to Exhibit 3.17 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.18	Certificate of Incorporation of Uniplast Midwest, Inc. (incorporated by reference to Exhibit 3.18 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.19	Amended and Restated Bylaws of Pliant Corporation (incorporated by reference to Exhibit 3.19 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.20	Second Amended and Restated Bylaws of Pliant Corporation (incorporated by reference to Exhibit 3.6 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
3.21	Bylaws of Pliant Corporation International (formerly known as Huntsman Container Corporation International) (incorporated by reference to Exhibit 3.24 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-40067)).

3.22	Bylaws of Pliant Film Products of Mexico, Inc. (formerly known as Huntsman Film Products of Mexico, Inc.) (incorporated by reference to Exhibit 3.26 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-40067)).
3.23	Bylaws of Pliant Solutions Corporation (formerly known as Huntsman KCL Corporation) (incorporated by reference to Exhibit 3.16 to Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.24	Operating Agreement of Pliant Packaging of Canada, LLC (formerly known as Huntsman Packaging of Canada, LLC) (incorporated by reference to Exhibit 3.18 to Amendment No. 1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
3.25	Bylaws of Uniplast Holdings Inc., as amended (incorporated by reference to Exhibit 3.25 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.26	Bylaws of Uniplast U.S., Inc., as amended (incorporated by reference to Exhibit 3.26 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.27	Bylaws of Turex, Inc. (incorporated by reference to Exhibit 3.27 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.28	Bylaws of Pierson Industries, Inc., as amended (incorporated by reference to Exhibit 3.28 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
3.29	Code of Bylaws of Uniplast Midwest, Inc. (incorporated by reference to Exhibit 3.29 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
4.1	Indenture, dated as of May 31, 2000, among Pliant Corporation, the Note Guarantors party thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
4.2	Form of 2000 Note (incorporated by reference to Exhibit B to Exhibit 4.1).
4.3	First Supplemental Indenture, dated as of July 16, 2001, among Pliant Corporation, the New Note Guarantors party thereto, the existing Note Guarantors party thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.3 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
4.4	Indenture, dated as of April 10, 2002, among Pliant Corporation, the Note Guarantors party thereto and The Bank of New York, as trustee (incorporated by reference to Exhibit 4.4 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).
4.5	Form of 2002 Note (incorporated by reference to Exhibit B to Exhibit 4.4).
4.6	Indenture, dated as of May 30, 2003, among Pliant Corporation, the Note Guarantors party thereto and Wilmington Trust Company, as trustee.
4.7	Form of 2003 Note (incorporated by reference to Exhibit A to Exhibit 4.6).
4.8	Second Priority Security Agreement, dated as of May 30, 2003, among Pliant Corporation, the subsidiary guarantors party thereto and Wilmington Trust Company, as Collateral Agent.

4.9	Second Priority Pledge Agreement, dated as of May 30, 2003, among Pliant Corporation, the subsidiary guarantors party thereto and Wilmington Trust Company, as Collateral Agent.
4.10	Exchange and Registration Rights Agreement, dated as of May 31, 2000, among Pliant Corporation, the Note Guarantors party thereto, and Chase Securities, Inc. and Deutsche Bank Securities Inc., as Initial Purchasers (incorporated by reference to Exhibit 4.3 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
4.11	Exchange and Registration Rights Agreement, dated as of April 10, 2002, among Pliant Corporation, the Note Guarantors party thereto, and J.P. Morgan Securities, Inc. and Deutsche Bank Securities Inc., as Initial Purchasers (incorporated by reference to Exhibit 4.7 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).
4.12	Exchange and Registration Rights Agreement, dated as of May 30, 2003, among Pliant Corporation, the Note Guarantors party thereto, and J.P. Morgan Securities Inc., Deutsche Bank Securities, Inc. and Credit Suisse First Boston LLC, as Initial Purchasers.
5.1	Opinion of O’Melveny & Myers LLP (formerly, O’Sullivan LLP) (incorporated by reference to Exhibit 5.1 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
5.2	Opinion of O’Melveny & Myers LLP (formerly, O’Sullivan LLP) (incorporated by reference to Exhibit 5.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).
10.1	Note Warrant Agreement, dated as of May 31, 2000, among Pliant Corporation and The Bank of New York, as Warrant Agent, relating to the 220,000 Note Warrants (incorporated by reference to Exhibit 10.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.2	Stockholders’ Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.2 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.3	Amendment No. 1 and Waiver, dated as of July 16, 2001, to the Stockholder’s Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.3 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.4	Amendment No. 2, dated as of December 19, 2001, to the Stockholder’s Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.4 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).

10.5	Amendment No. 3, dated as of March 25, 2003, to the Stockholder’s Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.5 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.6	Amendment No. 4, dated as of June 5, 2003, to the Stockholder’s Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto.
10.7	Registration Rights Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.3 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.8	Amendment No. 1, dated as of June 13, 2000, to the Registration Rights Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.4 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.9	Amendment No. 2, dated as of March 25, 2003, to the Registration Rights Agreement, dated as of May 31, 2000, among Pliant Corporation, Chase Domestic Investments, L.L.C. and each of the stockholders and warrantholders listed on the signature pages thereto (incorporated by reference to Exhibit 10.8 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.10	Securities Purchase Agreement, dated as of May 31, 2000, among Pliant Corporation and each of the purchasers of Pliant Corporation’s preferred stock listed on the signature pages thereto (incorporated by reference to Exhibit 10.5 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.11	Amendment No. 1 and Waiver, dated as of July 16, 2001, to the Securities Purchase Agreement dated as of May 31, 2000 among Pliant Corporation, and each of the purchasers of Pliant Corporation’s preferred stock listed on the signature pages thereto (incorporated by reference to Exhibit 10.7 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.12	Warrant Agreement, dated as of May 31, 2000, among Pliant Corporation and Chase Domestic Investments, L.L.C. (incorporated by reference to Exhibit 10.6 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.13	Amendment No. 1, dated as of July 16, 2001, to the Warrant Agreement dated as of May 31, 2000 among Pliant Corporation and the initial warrantholders listed in Schedule I thereto (incorporated by reference to Exhibit 10.9 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.14	Amendment No. 2, dated as of March 25, 2003, to the Warrant Agreement dated as of May 31, 2000 among Pliant Corporation and the initial warrantholders listed in Schedule I thereto (incorporated by reference to Exhibit 10.13 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).

10.15	Securities Purchase Agreement, dated as of July 16, 2001, among Pliant Corporation and the purchasers of Pliant Corporation’s preferred stock listed on the schedules thereto (incorporated by reference to Exhibit 10.10 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.16	Securities Purchase Agreement, dated as of March 25, 2003, among Pliant Corporation and the Purchasers named therein (incorporated by reference to Exhibit 10.15 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.17	Securities Purchase Agreement, dated as of March 25, 2003, between Pliant Corporation and J.P. Morgan Partners (BHCA), L.P. (incorporated by reference to Exhibit 10.16 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.18	Credit Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among Pliant Corporation, the subsidiary guarantors party thereto, the various lenders from time to time party thereto, Bankers Trust Company, as Administrative Agent and Collateral Agent, and The Chase Manhattan Bank, as Syndication Agent, and The Bank of Nova Scotia, as the Documentation Agent (incorporated by reference to Exhibit 10.7 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.19	Amendment No. 1, dated as of September 30, 2000, to Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000 (incorporated by reference to Exhibit 10.1 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2000).
10.20	Amendment No. 2, dated as of July 10, 2001, to the Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000 (incorporated by reference to Exhibit 10.13 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.21	Amendment No. 3, dated as of April 2, 2002, to the Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000 (incorporated by reference to Exhibit 10.15 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).
10.22	Amendment No. 4, dated as of September 30, 2002, to the Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000 (incorporated by reference to Exhibit 10.2 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2002).
10.23	Amendment No. 5, dated as of March 24, 2003, to the Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000 (incorporated by reference to Exhibit 10.22 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.24	Amendment No. 6, dated as of May 22, 2003, to the Credit Agreement dated as of September 30, 1997, as amended and restated as of May 31, 2000.
10.25	Intercreditor Agreement, dated as of May 30, 2003, among Deutsche Bank Trust Company Americas, as Credit Agent, Wilmington Trust Company, as Trustee, and Pliant Corporation.

10.26	Guarantee Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among the subsidiary guarantors party thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.8 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.27	Supplement No. 1, dated as of July 19, 2001, to the Guarantee Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among Pliant Corporation, each of the subsidiaries listed on Schedule I thereto and Bankers Trust Company, as Administrative Agent (incorporated by reference to Exhibit 10.15 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.28	Security Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among the subsidiary guarantors party thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.9 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.29	Supplement No. 1, dated as of July 19, 2001, to the Security Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among Pliant Corporation, each of the subsidiaries listed on Schedule I thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.17 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.30	Pledge Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among the subsidiary guarantors party thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.10 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.31	Supplement No. 1, dated as of July 19, 2001, to the Pledge Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among Pliant Corporation, each of the subsidiaries listed on Schedule I thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.19 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.32	Indemnity, Subrogation and Contribution Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among the subsidiary guarantors party thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.11 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.33	Supplement No. 1, dated as of July 19, 2001, to the Indemnity, Subrogation and Contribution Agreement, dated as of September 30, 1997, as amended and restated as of May 31, 2000, among Pliant Corporation, each of the subsidiaries listed on Schedule I thereto and Bankers Trust Company, as Collateral Agent (incorporated by reference to Exhibit 10.21 to Pliant Corporation’s Registration Statement on Form S-1 (File No. 333-65754)).
10.34	Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Richard P. Durham (incorporated by reference to Exhibit 10.12 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.35	Amendment No. 1, dated as of February 1, 2001, to the Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Richard P. Durham (incorporated by reference to Exhibit 10.14 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).

10.36	Separation Agreement, dated as of June 10, 2002, between Pliant Corporation and Richard P. Durham (incorporated by reference to Exhibit 10.1 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
10.37	Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Jack E. Knott (incorporated by reference to Exhibit 10.13 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.38	Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Scott K. Sorensen (incorporated by reference to Exhibit 10.14 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.39	Letter Agreement, dated as of December 27, 2000, terminating the Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Scott K. Sorensen (incorporated by reference to Exhibit 10.17 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).
10.40	Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Ronald G. Moffitt (incorporated by reference to Exhibit 10.15 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.41	Letter Agreement, dated as of January 22, 2001, terminating the Employment Agreement, dated as of May 31, 2000, between Pliant Corporation and Ronald G. Moffitt (incorporated by reference to Exhibit 10.19 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).
10.42	Employment Agreement, dated as of March 30, 2001, between Pliant Corporation and Brian E. Johnson (incorporated by reference to Exhibit 10.30 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.43	Restricted Stock Agreement, dated as of May 31, 2000, between Pliant Corporation and Richard P. Durham (incorporated by reference to Exhibit 10.16 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.44	Restricted Stock Agreement, dated as of May 31, 2000, between Pliant Corporation and Jack E. Knott (incorporated by reference to Exhibit 10.17 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.45	Restricted Stock Agreement, dated as of May 31, 2000, between Pliant Corporation and Scott K. Sorensen (incorporated by reference to Exhibit 10.18 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.46	Stock Redemption Agreement, dated as of December 27, 2000, between Pliant Corporation and Scott K. Sorensen (incorporated by reference to Exhibit 10.23 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).
10.47	Restricted Stock Agreement, dated as of May 31, 2000, between Pliant Corporation and Ronald G. Moffitt (incorporated by reference to Exhibit 10.19 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.48	Stock Redemption Agreement, dated as of February 1, 2001, between Pliant Corporation and Ronald G. Moffitt (incorporated by reference to Exhibit 10.25 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000 filed on April 2, 2001).

10.49	Pledge Agreement, dated as of May 31, 2000, in favor of Pliant Corporation made by Richard P. Durham (incorporated by reference to Exhibit 10.20 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.50	Amendment No. 1, dated as of March 1, 2001, to the Pledge Agreement dated as of May 31, 2000, among Pliant Corporation and Richard P. Durham (incorporated by reference to Exhibit 10.35 to Post-Effective Amendment No. 2 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.51	Pledge Agreement, dated as of May 31, 2000, in favor of Pliant Corporation made by Jack E. Knott (incorporated by reference to Exhibit 10.21 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.52	Amendment No. 1, dated as of April 1, 2001, to the Pledge Agreement dated as of May 31, 2000, among Pliant Corporation and Jack E. Knott (incorporated by reference to Exhibit 10.36 to Post-Effective Amendment No. 2 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.53	Pledge Agreement, dated as of May 31, 2000, in favor of Pliant Corporation made by Scott K. Sorensen (incorporated by reference to Exhibit 10.22 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.54	Pledge Agreement, dated as of May 31, 2000, in favor of Pliant Corporation made by Ronald G. Moffitt (incorporated by reference to Exhibit 10.23 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.55	1998 Pliant Corporation Stock Option Plan (incorporated by reference to Exhibit 10.10 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998).
10.56	Pliant Corporation Management Incentive Plan for Senior Divisional Management (1999) (incorporated by reference to Exhibit 10.1 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000).
10.57	Pliant Corporation 2000 Stock Incentive Plan (as amended and restated through April 17, 2002) (incorporated by reference to Exhibit 10.54 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
10.58	Second Amended and Restated Stock Option Agreement, dated as of May 31, 2000 between Pliant Corporation and Jack E. Knott (incorporated by reference to Exhibit 10.27 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
10.59	Pliant Corporation Management Incentive Plan (2000) (incorporated by reference to Exhibit 10.2 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000).
10.60	Pliant Corporation Management Incentive Plan (2001) (incorporated by reference to Exhibit 10.48 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).
10.61	Pliant Corporation Management Incentive Plan (2002) (incorporated by reference to Exhibit 10.49 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).

10.62	Pliant Corporation 2002 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Pliant Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002).
12.1	Statement re: computation of ratios of earning to fixed charges.
21.1	Subsidiaries of Pliant Corporation (incorporated by reference to Exhibit 21.1 to Pliant Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002 filed on March 28, 2003).
23.1	Consent of O’Melveny & Myers LLP (formerly, O’Sullivan LLP) (included in Exhibit 5.1).
23.2	Consent of O’Melveny & Myers LLP (formerly, O’Sullivan LLP) (included in Exhibit 5.2).
23.3	Consent of Ernst & Young LLP.
23.4	Consent of PricewaterhouseCoopers LLP.
24.1	Powers of Attorney (included on the signature pages).
25.1	Form T-1 Statement of Eligibility and Qualifications under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee (incorporated by reference to Exhibit 25.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-42008)).
25.2	Form T-1 Statement of Eligibility and Qualifications under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee (incorporated by reference to Exhibit 25.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).
99.1	Letter of Pliant Corporation regarding Arthur Andersen LLP (incorporated by reference to Exhibit 99.1 to Pliant Corporation’s Registration Statement on Form S-4 (File No. 333-86532)).

EX-4.6

                                                                     EXHIBIT 4.6

================================================================================

                               PLIANT CORPORATION

                      11 1/8% Senior Secured Notes due 2009


                                   -----------


                                    INDENTURE

                            Dated as of May 30, 2003


                                   ----------


                            WILMINGTON TRUST COMPANY,

                                   as Trustee

================================================================================




                                TABLE OF CONTENTS



                                                                                                 Page
                                                                                                 ----
                                                                                                
                                    ARTICLE I

                   Definitions and Incorporation by Reference

SECTION 1.01.    Definitions........................................................................1
SECTION 1.02.    Other Definitions.................................................................27
SECTION 1.03.    Incorporation by Reference of Trust Indenture Act.................................28
SECTION 1.04.    Rules of Construction.............................................................28
SECTION 1.05.    Designated Senior Indebtedness....................................................29

                                   ARTICLE II

                                 The Securities

SECTION 2.01.    Amount of Securities; Issuable in Series..........................................29
SECTION 2.02.    Form and Dating...................................................................30
SECTION 2.03.    Execution and Authentication......................................................30
SECTION 2.04.    Registrar and Paying Agent........................................................31
SECTION 2.05.    Paying Agent to Hold Money in Trust...............................................32
SECTION 2.06.    Holder Lists......................................................................32
SECTION 2.07.    Transfer and Exchange.............................................................32
SECTION 2.08.    Replacement Securities............................................................33
SECTION 2.09.    Outstanding Securities............................................................34
SECTION 2.10.    Temporary Securities..............................................................34
SECTION 2.11.    Cancelation.......................................................................34
SECTION 2.12.    Defaulted Interest................................................................34
SECTION 2.13.    CUSIP and ISIN Numbers............................................................35

                                   ARTICLE III

                                   Redemption

SECTION 3.01.    Notices to Trustee................................................................35
SECTION 3.02.    Selection of Securities To Be Redeemed............................................35
SECTION 3.03.    Notice of Redemption..............................................................35
SECTION 3.04.    Effect of Notice of Redemption....................................................36
SECTION 3.05.    Deposit of Redemption Price.......................................................36
SECTION 3.06.    Securities Redeemed in Part.......................................................37




                                                                              ii

                                                                                                
                                   ARTICLE IV

                                    Covenants

SECTION 4.01.    Payment of Securities.............................................................37
SECTION 4.02.    SEC Reports.......................................................................37
SECTION 4.03.    Limitation on Indebtedness........................................................38
SECTION 4.04.    Limitation on Restricted Payments.................................................41
SECTION 4.05.    Limitation on Restrictions on Distributions from Restricted Subsidiaries..........44
SECTION 4.06.    Limitation on Sales of Assets and Subsidiary Stock................................46
SECTION 4.07.    Limitation on Transactions with Affiliates........................................49
SECTION 4.08.    Change of Control.................................................................51
SECTION 4.09.    Compliance Certificate............................................................52
SECTION 4.10.    Further Instruments and Acts......................................................52
SECTION 4.11.    Future Note Guarantors and Liens..................................................53
SECTION 4.12.    Limitation on Lines of Business...................................................54
SECTION 4.13.    Limitation on Liens...............................................................54

                                    ARTICLE V

                                Successor Company

SECTION 5.01.    When Company May Merge or Transfer Assets.........................................55

                                   ARTICLE VI

                              Defaults and Remedies

SECTION 6.01.    Events of Default.................................................................56
SECTION 6.02.    Acceleration......................................................................58
SECTION 6.03.    Other Remedies....................................................................59
SECTION 6.04.    Waiver of Past Defaults...........................................................59
SECTION 6.05.    Control by Majority...............................................................59
SECTION 6.06.    Limitation on Suits...............................................................59
SECTION 6.07.    Rights of Holders to Receive Payment..............................................60
SECTION 6.08.    Collection Suit by Trustee........................................................60
SECTION 6.09.    Trustee May File Proofs of Claim..................................................60
SECTION 6.10.    Priorities........................................................................60
SECTION 6.11.    Undertaking for Costs.............................................................61
SECTION 6.12.    Waiver of Stay or Extension Laws..................................................61





                                                                             iii

                                                                                                
                                   ARTICLE VII

                                     Trustee

SECTION 7.01.    Duties of Trustee.................................................................61
SECTION 7.02.    Rights of Trustee.................................................................62
SECTION 7.03.    Individual Rights of Trustee......................................................63
SECTION 7.04.    Trustee's Disclaimer..............................................................64
SECTION 7.05.    Notice of Defaults................................................................64
SECTION 7.06.    Reports by Trustee to Holders.....................................................64
SECTION 7.07.    Compensation and Indemnity........................................................64
SECTION 7.08.    Replacement of Trustee............................................................65
SECTION 7.09.    Successor Trustee by Merger.......................................................66
SECTION 7.10.    Eligibility; Disqualification.....................................................66
SECTION 7.11.    Preferential Collection of Claims Against the Company.............................67

                                  ARTICLE VIII

                       Discharge of Indenture; Defeasance

SECTION 8.01.    Discharge of Liability on Securities; Defeasance..................................67
SECTION 8.02.    Conditions to Defeasance..........................................................68
SECTION 8.03.    Application of Trust Money........................................................69
SECTION 8.04.    Repayment to Company..............................................................69
SECTION 8.05.    Indemnity for Government Obligations..............................................70
SECTION 8.06.    Reinstatement.....................................................................70

                                   ARTICLE IX

                                   Amendments

SECTION 9.01.    Without Consent of Holders........................................................70
SECTION 9.02.    With Consent of Holders...........................................................71
SECTION 9.03.    Compliance with Trust Indenture Act...............................................72
SECTION 9.04.    Revocation and Effect of Consents and Waivers.....................................72
SECTION 9.05.    Notation on or Exchange of Securities.............................................73
SECTION 9.06.    Trustee to Sign Amendments........................................................73

                                    ARTICLE X

                             Collateral and Security

SECTION 10.01.   Security Documents................................................................73
SECTION 10.02.   Recording and Opinions............................................................74
SECTION 10.03.   Release of Collateral.............................................................75





                                                                              iv

                                                                                                
SECTION 10.04.   Certificates of the Trustee.......................................................76
SECTION 10.05.   Authorization of Actions to Be Taken by the Trustee Under the Security Documents..76
SECTION 10.06.   Authorization of Receipt of Funds by the Trustee Under the Security Documents.....77
SECTION 10.07.   Termination of Security Interest..................................................77
SECTION 10.08.   Collateral Agent..................................................................77
SECTION 10.09.   Designations......................................................................78

                                   ARTICLE XI

                                 Note Guarantees

SECTION 11.01.   Note Guarantees...................................................................79
SECTION 11.02.   Limitation on Liability...........................................................81
SECTION 11.03.   Releases of Note Guarantees.......................................................81
SECTION 11.04.   Successors and Assigns............................................................82
SECTION 11.05.   No Waiver.........................................................................82
SECTION 11.06.   Modification......................................................................82
SECTION 11.07.   Execution of Supplemental Indenture for Future Note Guarantors....................82
SECTION 11.08.   Non-Impairment....................................................................82

                                   ARTICLE XII

                                  Miscellaneous

SECTION 12.01.   Trust Indenture Act Controls......................................................83
SECTION 12.02.   Notices...........................................................................83
SECTION 12.03.   Communication by Holders with Other Holders.......................................83
SECTION 12.04.   Certificate and Opinion as to Conditions Precedent................................84
SECTION 12.05.   Statements Required in Certificate or Opinion.....................................84
SECTION 12.06.   When Securities Disregarded.......................................................84
SECTION 12.07.   Rules by Trustee, Paying Agent and Registrar......................................85
SECTION 12.08.   Legal Holidays....................................................................85
SECTION 12.09.   GOVERNING LAW.....................................................................85
SECTION 12.10.   No Recourse Against Others........................................................85
SECTION 12.11.   Successors........................................................................85
SECTION 12.12.   Multiple Originals................................................................85
SECTION 12.13.   Table of Contents; Headings.......................................................85





                                                                               v

Appendix A     -   Provisions Relating to Original Securities, Additional
                   Securities, Private Exchange Notes and Exchange Notes
Exhibit A      -   Form of Initial Security and Private Exchange Note
Exhibit B      -   Form of Exchange Note
Exhibit C      -   Form of Supplemental Indenture
Exhibit D      -   Form of Transferee Letter of Representation




                    INDENTURE dated as of May 30, 2003, among PLIANT
               CORPORATION, a Utah corporation (the "Company"), PLIANT
               CORPORATION INTERNATIONAL, a Utah corporation, PLIANT FILM
               PRODUCTS OF MEXICO, INC., a Utah corporation, PLIANT SOLUTIONS
               CORPORATION, a Utah corporation, PLIANT PACKAGING OF CANADA, LLC,
               a Utah limited liability company, UNIPLAST HOLDINGS INC., a
               Delaware corporation, UNIPLAST U.S., INC., a Delaware
               corporation, PIERSON INDUSTRIES, INC., a Massachusetts
               corporation, TUREX, INC., a Rhode Island corporation, and
               UNIPLAST MIDWEST, INC., an Indiana corporation (collectively, the
               "Note Guarantors") and WILMINGTON TRUST COMPANY, a Delaware
               banking corporation, as trustee (the "Trustee").

          Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of (a) the Company's 11 1/8%
Senior Secured Notes due 2009 issued on the date hereof (the "Original
Securities"), (b) any Additional Securities (as defined herein) that may be
issued on any Issue Date (all such Securities in clauses (a) and (b) being
referred to collectively as the "Initial Securities"), (c) if and when issued as
provided in the Registration Agreement (as defined in Appendix A hereto (the
"Appendix")), the Company's 11 1/8% Senior Secured Notes due 2009 issued in the
Registered Exchange Offer (as defined in the Appendix) in exchange for any
Initial Securities (the "Exchange Notes") and (d) if and when issued as provided
in the Registration Agreement, the Private Exchange Notes (as defined in the
Appendix; the Private Exchange Notes, together with the Initial Securities and
any Exchange Notes issued hereunder, the "Securities") issued in the Private
Exchange. On the date hereof, $250,000,000 in aggregate principal amount of
Original Securities will be initially issued. Subject to the conditions and in
compliance with the covenants set forth herein, the Company may issue an
unlimited aggregate principal amount of Additional Securities from time to time.

                                    ARTICLE I

                   Definitions and Incorporation by Reference

          SECTION 1.01. Definitions.

          "Additional Assets" means (a) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Permitted Business or any improvements to any property or assets
that are used by the Company or a Restricted Subsidiary in a Permitted Business;
(b) Capital Stock of a Person that becomes a Restricted Subsidiary as a result
of the acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (c) Capital Stock constituting a minority interest in any Person
that at such time is a Restricted Subsidiary; provided,



                                                                               2

however, that any such Restricted Subsidiary described in clauses (b) or (c)
above is primarily engaged in a Permitted Business.

          "Additional Interest" means any additional interest or liquidated
damages payable under the Registration Agreement.

          "Additional Securities" means any 11 1/8% Senior Secured Notes due
2009, issued under the terms of this Indenture subsequent to the Closing Date
(other than the Exchange Notes or the Private Exchange Notes issued in exchange
for Original Securities).

          "Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of shares representing 10% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of the Company or of rights or
warrants to purchase such Voting Stock (whether or not currently exercisable)
and any Person who would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.

          "Asset Disposition" means any sale, lease (other than an operating
lease entered into in the ordinary course of business), transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of (a) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Restricted Subsidiary), (b) all or substantially all the assets of any
division or line of business of the Company or any Restricted Subsidiary or (c)
any other assets of the Company or any Restricted Subsidiary outside of the
ordinary course of business of the Company or such Restricted Subsidiary (other
than, in the case of (a), (b) and (c) above, (i) a disposition by a Restricted
Subsidiary to the Company or by the Company or a Restricted Subsidiary to a
Wholly Owned Subsidiary, (ii) for purposes of Section 4.06 only, the making of a
Permitted Investment or a disposition that constitutes a Restricted Payment
permitted by Section 4.04, (iii) sales of accounts receivable and related assets
(including contract rights) of the type specified in the definition of
"Qualified Securitization Transaction" to a Securitization Entity for the fair
market value thereof, (iv) a disposition of obsolete or worn out property or
equipment or property or equipment that is no longer used or useful in the
conduct of business of the Company and its Restricted Subsidiaries, (v) any
other disposition of assets with a fair market value, as conclusively determined
by senior management of the Company in good faith, of less than $1.0 million,
(vi) sales or grants of licenses to use the Company's or any Restricted
Subsidiary's patents, trade secrets, know-how and technology to the extent that
such



                                                                               3

license does not prohibit the licensor from using the patent, trade secret,
know-how or technology or require the licensor to pay any fees for such use,
(vii) the disposition of all or substantially all of the assets of the Company
in compliance with Section 5.01 and (viii) the disposition of any Capital Stock
or other ownership interest in or assets or property of an Unrestricted
Subsidiary.

          "Attributable Debt" in respect of a Sale/Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Securities, 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).

          "Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (a) the
sum of the products of the numbers of years from the date of determination to
the dates of each successive scheduled principal payment of such Indebtedness or
scheduled redemption or similar payment with respect to such Preferred Stock
multiplied by the amount of such payment by (b) the sum of all such payments.

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

          "Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of the Board of Directors
of the Company.

          "Business Day" means each day which is not a Legal Holiday.

          "Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.

          "Capitalized Lease Obligations" means an obligation that is required
to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be prepaid by the lessee
without payment of a penalty.

          "Change of Control" means the occurrence of any of the following
events:



                                                                               4

          (a) prior to the first public offering of common stock of the Company,
     the Permitted Holders cease to be the "beneficial owner" (as defined in
     Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a
     majority in the aggregate of the total voting power of the Voting Stock of
     the Company, whether as a result of issuance of securities of the Company,
     any merger, consolidation, liquidation or dissolution of the Company, any
     direct or indirect transfer of securities by any Permitted Holder or
     otherwise (for purposes of this clause (a) and clause (b) below, the
     Permitted Holders shall be deemed to beneficially own any Voting Stock of
     an entity (the "specified entity") held by any other entity (the "parent
     entity") so long as the Permitted Holders beneficially own (as so defined),
     directly or indirectly, in the aggregate a majority of the voting power of
     the Voting Stock of the parent entity);

          (b) (i) any "person" (as such term is used in Sections 13(d) and 14(d)
     of the Exchange Act, including any group acting for the purpose of
     acquiring, holding or disposing of securities within the meaning of Rule
     13d-5(b)(1) under the Exchange Act), other than one or more Permitted
     Holders, is or becomes the beneficial owner (as defined in clause (a)
     above, except that for purposes of this clause (b) a person (including a
     Permitted Holder) shall be deemed to have "beneficial ownership" of all
     shares that any such person has the right to acquire, whether such right is
     exercisable immediately, only after the passage of time, upon the happening
     of any event or otherwise), directly or indirectly, of more than 50% of the
     total voting power of the Voting Stock of the Company and (ii) the
     Permitted Holders "beneficially own" (as defined in clause (a) above),
     directly or indirectly, in the aggregate a lesser percentage of the total
     voting power of the Voting Stock of the Company than such other person and
     do not have the right or ability by voting power, contract or otherwise to
     elect or designate for election a majority of the Board of Directors of the
     Company (for the purposes of this clause (b), such other person shall be
     deemed to beneficially own any Voting Stock of a specified entity held by a
     parent entity, if such other person is the beneficial owner (as defined in
     this clause (b)), directly or indirectly, of more than 50% of the voting
     power of the Voting Stock of such parent entity and the Permitted Holders
     "beneficially own" (as defined in clause (a) above), directly or
     indirectly, in the aggregate a lesser percentage of the voting power of the
     Voting Stock of such parent entity and do not have the right or ability by
     voting power, contract or otherwise to elect or designate for election a
     majority of the Board of Directors of such parent entity);

          (c) during any period of two consecutive years, individuals who at the
     beginning of such period constituted the Board of Directors of the Company
     (together with any new directors (i) selected in accordance with the
     Stockholders Agreement so long as such agreement is in effect or otherwise
     nominated by the Permitted Holders or (ii) whose election by the Board of
     Directors of the Company or whose nomination for election by the
     stockholders of the Company was approved by a vote of at least a majority
     of the members of the Board of Directors of the Company, then still in
     office, who were either directors at the beginning of such period or whose
     election or nomination for election was



                                                                               5

     previously so approved by the Board of Directors or in accordance with the
     Stockholders Agreement or otherwise by the Permitted Holders) cease for any
     reason to constitute a majority of the Board of Directors of the Company
     then in office;

          (d) the adoption of a plan relating to the liquidation or dissolution
     of the Company; or

          (e) the merger or consolidation of the Company with or into another
     Person or the merger of another Person with or into the Company, or the
     sale of all or substantially all the assets of the Company to another
     Person (other than a Person that is controlled by the Permitted Holders),
     and, in the case of any such merger or consolidation, the securities of the
     Company that are outstanding immediately prior to such transaction and
     which represent 100% of the aggregate voting power of the Voting Stock of
     the Company are changed into or exchanged for cash, securities or property,
     unless pursuant to such transaction such securities are changed into or
     exchanged for, in addition to any other consideration, securities of the
     surviving Person or transferee that represent immediately after such
     transaction, at least a majority of the aggregate voting power of the
     Voting Stock of the surviving Person or transferee.

          "Closing Date" means the date of this Indenture.

          "Code" means the Internal Revenue Code of 1986, as amended.

          "Collateral" means all property and assets of the Company or any Note
Guarantor with respect to which from time to time a Lien is granted as security
for the Securities (including any Additional Securities and any Exchange Notes).

          "Collateral Agent" means the Trustee in its capacity as the
"Collateral Agent" under and as defined in the Security Documents and any
successor thereto in such capacity.

          "Commodity Agreement" means any commodity futures contract, commodity
option or other similar agreement or arrangement entered into by the Company or
any of its Subsidiaries designed to protect the Company or any of its
Subsidiaries against fluctuations in the price of commodities actually at the
time used in the ordinary course of business of the Company or its Subsidiaries.

          "Common Collateral Agent" means a bank or trust company authorized to
exercise corporate trust powers that has been appointed by the Company, and has
agreed, to act as collateral agent for the equal and ratable benefit of both the
holders of obligations secured by the Liens Securing Note Obligations and the
holders of all other obligations secured by Liens Securing Other Second-Lien
Obligations, in its capacity as such collateral agent.

          "Company" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any



                                                                               6

provision contained herein and required by the TIA, each other obligor on
the indenture securities.

          "Consolidated Coverage Ratio" as of any date of determination means
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
publicly available ending prior to the date of such determination to (b)
Consolidated Interest Expense for such four fiscal quarters; provided, however,
that (i) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding on such
date of determination or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Indebtedness as if such Indebtedness had
been Incurred on the first day of such period and the discharge of any other
Indebtedness repaid, repurchased, defeased or otherwise discharged with the
proceeds of such new Indebtedness as if such discharge had occurred on the first
day of such period, (ii) if the Company or any Restricted Subsidiary has repaid,
repurchased, defeased or otherwise discharged any Indebtedness since the
beginning of such period or if any Indebtedness is to be repaid, repurchased,
defeased or otherwise discharged (in each case other than Indebtedness Incurred
under any revolving credit facility unless such Indebtedness has been
permanently repaid and has not been replaced) on the date of the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and
Consolidated Interest Expense for such period shall be calculated on a pro forma
basis as if such discharge had occurred on the first day of such period and as
if the Company or such Restricted Subsidiary has not earned the interest income
actually earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge such
Indebtedness, (iii) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition in excess of $10.0
million which constitutes all or substantially all of an operating unit of a
business, the EBITDA for such period shall be reduced by an amount equal to the
EBITDA (if positive) directly attributable to the assets that are the subject of
such Asset Disposition for such period or increased by an amount equal to the
EBITDA (if negative) directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (iv) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary or
is merged with and into the Company) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, EBITDA and Consolidated Interest



                                                                               7

Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (v) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition or any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (iii) or (iv) above if made by the Company or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition of assets occurred on the first day
of such period. For purposes of this definition, whenever pro forma effect is to
be given to an Investment or acquisition of assets, 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 Company. Any such pro forma calculations may include
operating expense reductions for such period resulting from the acquisition
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
Company's chief financial officer and another Officer which states (i) the
amount of such adjustment or adjustments, (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 and (iii)
that any related Incurrence of Indebtedness is permitted pursuant to this
Indenture. 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).

          "Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its Consolidated Restricted Subsidiaries
plus, to the extent Incurred by the Company and its Restricted 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 Company or any
Restricted 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



                                                                               8

net benefits are otherwise reflected in Consolidated Net Income, (h) dividends
and distributions declared in respect of all Disqualified Stock of the Company
and dividends and distributions declared and paid in respect of all Preferred
Stock of any of the Subsidiaries of the Company that is not a Note Guarantor, to
the extent held by Persons other than the Company or a 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 Company) 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
Company or any Subsidiary of the Company 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 Net Income" means, for any period, the net income (loss)
of the Company and its Consolidated 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 Company) if
     such Person is not a Restricted Subsidiary, except that (i) subject to the
     limitations contained in clauses (d), (e) and (f) below, the Company'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 Company or a
     Restricted Subsidiary as a dividend or other distribution (subject, in the
     case of a dividend or other distribution made to a Restricted Subsidiary,
     to the limitations contained in clause (c) below) and (ii) the Company's
     equity in a net loss of 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 Company or a Restricted Subsidiary;

          (b) other than for purposes of clauses (iv) and (v) of the definition
     of Consolidated Coverage Ratio any net income (or loss) of any Person
     acquired by the Company 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 Restricted Subsidiary if such
     Restricted 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 Restricted Subsidiary, directly or
     indirectly, to the Company, except that (i) subject to the limitations
     contained in clauses (d), (e) and (f) below, the Company's equity in the
     net income of any such Restricted 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 Restricted Subsidiary
     during such period to the Company or another Restricted Subsidiary as a
     dividend, distribution, loan or advance (subject, in the case of a



                                                                               9

     dividend, distribution, loan or advance made to another Restricted
     Subsidiary, to the limitation contained in this clause) and (ii) the
     Company's equity in a net loss of any such Restricted 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 Company or its Consolidated 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.

          Notwithstanding the foregoing, for the purposes of Section 4.04 only,
there shall be excluded from Consolidated Net Income any dividends, repayments
of loans or advances or other transfers of assets from Unrestricted Subsidiaries
to the Company or a Restricted Subsidiary to the extent such dividends,
repayments or transfers increase the amount of Restricted Payments permitted
under such Section pursuant to clause (a)(iv)(C)(vi) thereof.

          "Consolidation" means the consolidation of the amounts of each of the
Restricted Subsidiaries with those of the Company in accordance with GAAP
consistently applied; provided, however, that "Consolidation" shall not include
consolidation of the accounts of any Unrestricted Subsidiary, but the interest
of the Company or any Restricted Subsidiary in an Unrestricted Subsidiary shall
be accounted for as an investment. The term "Consolidated" has a correlative
meaning.

          "Corporate Trust Office" means the principal office of the Trustee at
which at any time its corporate trust business shall be administered, which
office at the date hereof is located at Rodney Square North, 1100 North Market
Street, Wilmington, DE 19890-0001, Attention: Corporate Trust Administration, or
such other address as the Trustee may designate from time to time by notice to
the Holders and the Issuer, or the principal corporate trust office of any
successor Trustee (or such other address as a successor Trustee may designate
from time to time by notice to the Holders and the Company).

          "Credit Agent" means Deutsche Bank Trust Company Americas, in its
capacity as administrative agent and collateral agent for the lenders party to
the Credit Agreement or any successor thereto, or any Person otherwise
designated the "Credit Agent" pursuant to the Intercreditor Agreement.

          "Credit Agreement" means the credit agreement dated as of September
30, 1997, as amended and restated as of May 31, 2000 (and further amended by
Amendments No. 1 through 6), among the Company, Aspen Industrial, S.A. de C.V.,
the financial institutions party thereto as lenders, Deutsche Bank Trust Company
Americas, as administrative agent and collateral agent, and JPMorgan Chase Bank,
as syndication



                                                                              10

agent, together with related documents thereto including any guarantee
agreements and security documents, as further amended, modified, supplemented,
restated, renewed, refunded, replaced, restructured, repaid or refinanced from
time to time (including any agreement extending the maturity thereof or
increasing the amount of available borrowings thereunder or adding Restricted
Subsidiaries of the Company as additional borrowers or guarantors thereunder)
whether with the original agents and lenders or otherwise and whether provided
under the original credit agreement or other credit agreements or otherwise.

          "Credit Agreement Obligations" means (i) all Bank Indebtedness and all
other Indebtedness outstanding under one or more of any other First-Lien Credit
Facilities that constitutes Permitted Debt or is otherwise permitted pursuant to
Section 4.03 and that is designated by the Company as "Credit Agreement
Obligations" for purposes of this Indenture and is secured by a Permitted Lien
described in clause (a) of the definition thereof, (ii) all other obligations
(not constituting Indebtedness) of the Company or any Note Guarantor under the
Credit Agreement or any such other First-Lien Credit Facility and (iii) all
other obligations of the Company or any Note Guarantor in respect of Hedging
Obligations or obligations in respect of cash management services that are
designated by the Company to be "Credit Agreement Obligations" for purposes of
this Indenture. Notwithstanding anything to the contrary in the previous
sentence, any Indebtedness and other obligations Incurred under the Credit
Agreement or otherwise shall be deemed to constitute Credit Agreement
Obligations if the holders of such Indebtedness or other obligations or their
agent or representative shall have received a written representation from the
Company in, or in connection with, the Credit Agreement or other agreement
governing such Indebtedness or other obligations that such Indebtedness
constitutes, Credit Agreement Obligations (whether or not such Indebtedness is
at any time determined not to have been permitted to be Incurred under this
Indenture).

          "Credit Facilities" means one or more (i) debt facilities (including,
without limitation, the Credit Agreement) or commercial paper facilities,
providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to lenders or to special purpose
entities formed to borrow from lenders against such receivables) or letters of
credit, (ii) debt securities, indentures or other forms of debt financing
(including convertible or exchangeable debt instruments) or (iii) instruments or
agreements evidencing any other Indebtedness, in each case, as amended,
supplemented, modified, extended, renewed, restated or refunded in whole or in
part from time to time.

          "Currency Agreement" means with respect to any Person any foreign
exchange contract, currency swap agreements or other similar agreement or
arrangement to which such Person is a party or of which it is a beneficiary.

          "Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.

          "Discharge of Credit Agreement Obligations" means payment in full in
cash of the principal of and interest and premium, if any, on all Indebtedness
outstanding



                                                                              11

under the First-Lien Credit Facilities or, with respect to Hedging Obligations
or letters of credit outstanding thereunder, delivery of cash collateral or
backstop letters of credit in respect thereof in compliance with such First-Lien
Credit Facility, in each case after or concurrently with termination of all
commitments to extend credit thereunder, and payment in full of any other Credit
Agreement Obligations that are due and payable or otherwise accrued and owing at
or prior to the time such principal, interest and premium, if any, are paid.

          "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
Indebtedness or Disqualified Stock (excluding Capital Stock convertible or
exchangeable solely at the option of the Company or a Restricted Subsidiary,
provided, that any such conversion or exchange shall be deemed an issuance of
Indebtedness or an issuance of Disqualified Stock, as applicable) or (c) is
redeemable at the option of the holder thereof, in whole or in part, in the case
of clauses (a), (b) and (c), on or prior to 91 days after the Stated Maturity of
the Securities; 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; provided further, that any Capital Stock that would
not constitute Disqualified Stock but for provisions thereof giving holders
thereof the right to require such Person to repurchase or redeem such Capital
Stock upon the occurrence of an "asset sale" or "change of control" shall not
constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock provide that such Person may not
repurchase or redeem such Capital Stock pursuant to such provisions unless such
Person has first complied with the provisions of Sections 4.06 and 4.08, as
applicable; 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
Indebtedness, 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.

          "Domestic Overdraft Facility" means an overdraft line of credit in a
maximum principal amount of $10.0 million at any time outstanding.

          "Domestic Subsidiary" means any Restricted Subsidiary of the Company
other than a Foreign Subsidiary.

          "EBITDA" for any period means 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 Company and its
Consolidated Restricted Subsidiaries, (b) Consolidated Interest Expense, (c)
depreciation expense of the Company



                                                                              12

and its Consolidated Restricted Subsidiaries, (d) amortization expense of the
Company and its Consolidated Restricted Subsidiaries (but excluding amortization
expense attributable to a prepaid cash item that was paid in a prior period),
(e) other noncash charges of the Company and its Consolidated Restricted
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 Restricted Subsidiary of
the Company 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
Restricted Subsidiary was included in calculating Consolidated Net Income and
only if a corresponding amount would be permitted at the date of determination
to be dividended, loaned or advanced to the Company by such Restricted
Subsidiary without prior approval of Persons other than the Board of Directors
or holders of the Company's Capital 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
Restricted Subsidiary or its stockholders.

          "Equity Offering" means any public or private sale of the common stock
of the Company, other than any public offering with respect to the Company's
common stock registered on Form S-8 or other issuances upon exercise of options
by employees of the Company or any of its Restricted Subsidiaries.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Exchange Note Guarantees" means the guarantees made by the Note
Guarantors pursuant to the Registration Agreement.

          "Excluded Contribution" means net cash proceeds received by the
Company from (a) contributions to its common equity capital and (b) the sale
(other than to a Subsidiary of the Company or to any Company or Subsidiary
management equity plan or stock option plan or any other management or employee
benefit plan or agreement) of Capital Stock (other than Disqualified Stock) of
the Company, in each case designated as Excluded Contributions pursuant to an
Officers' Certificate executed on the date such capital contributions are made
or the date such Capital Stock is sold, as the case may be, which are excluded
from the calculation set forth in Section 4.04(a)(iv)(3).

          "Existing Credit Agreement Obligations" means any Obligations (as
defined in the Security Documents (as defined in the Credit Agreement)),
including any such Obligations in respect of the Credit Agreement.

          "Existing Management Stockholders" means each of Richard P. Durham,
Jack E. Knott, Scott K. Sorensen, Ronald G. Moffitt, Brian E. Johnson, Michael
D. Annes, Len Azzaro, Stanley B. Bikulege and Elise H. Scroggs.



                                                                              13

          "First-Lien Credit Facilities" means (x) the Credit Facilities
provided pursuant to the Credit Agreement and (y) any other Credit Facility
that, in the case of both clauses (x) and (y), is secured by a Permitted Lien
described in clause (a) of the definition thereof and, except for the Credit
Facilities provided pursuant to the senior bank facilities existing on the
Closing Date, is designated by the Company as a "First-Lien Credit Facility" for
the purposes of this Indenture.

          "Foreign Subsidiary" means any Restricted Subsidiary of the Company
organized, and conducting its principal operations, outside the United States of
America.

          "Foreign Subsidiary Asset Disposition" means any direct or indirect
sale, issuance, conveyance, transfer, lease, assignment or other transfer for
value by the Company or any of its Restricted Subsidiaries (including any
Sale/Leaseback Transaction) to any Person other than the Company or a Restricted
Subsidiary of the Company of the Capital Stock of any Foreign Subsidiary or any
of the property or assets of any Foreign Subsidiary.

          "GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the Closing Date, 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.
All ratios and computations based on GAAP contained in this Indenture shall be
computed in conformity with GAAP, unless expressly provided otherwise.

          "Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation.

          "Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Commodity Agreement, Interest Rate Agreement or Currency
Agreement.



                                                                              14

          "Holder" means the Person in whose name a Security is registered on
the Registrar's books.

          "Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning.

          "Indebtedness" 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 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;

          (e) all Capitalized Lease Obligations and all Attributable Debt of
     such Person;

          (f) 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 that is not a Note Guarantor, any Preferred
     Stock (but excluding, in each case, any accrued dividends);

          (g) 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;

          (h) to the extent not otherwise included in this definition, the net
     obligations under Hedging Obligations of such Person;

          (i) to the extent not otherwise included, the amount then outstanding
     (i.e., advanced, and received by, and available for use by, such Person)
     under any receivables financing (as set forth in the books and records of
     such Person and



                                                                              15

     confirmed by the agent, trustee or other representative of the institution
     or group providing such receivables financing); and

          (j) all obligations of the type referred to in clauses (a) through (i)
     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.

          Notwithstanding the foregoing, "Indebtedness" shall not include
unsecured indebtedness of the Company and its Restricted Subsidiaries Incurred
to finance insurance premiums in a principal amount not in excess of the
insurance premiums to be paid by the Company and its Restricted Subsidiaries for
a three-year period beginning on the date of Incurrence of any such
Indebtedness. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.

          "Indenture" means this Indenture as amended or supplemented from time
to time.

          "Indenture Documents" means (a) this Indenture, the Securities and the
Security Documents and (b) any other related document or instrument executed and
delivered pursuant to any Indenture Document described in clause (a) of this
definition evidencing or governing Obligations.

          "Intangible Assets" means goodwill, patents, trademarks and other
intangibles as determined in accordance with GAAP.

          "Intercreditor Agreement" means (a) that certain intercreditor
agreement, dated as of the date of this Indenture, by and among the Company, the
Credit Agent and the Trustee, as amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time and
(b) after the termination of the Intercreditor Agreement referred to in clause
(a) above, any other intercreditor agreement, with terms no less favorable to
the Holders than the Intercreditor Agreement referred to in clause (a) above,
entered into by and among the Company, a Representative and the Trustee, as
amended (incuding any amendment and restatement thereof), supplemented or
otherwise modified from time to time.

          "Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.

          "Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extension of credit



                                                                              16

(including by way of Guarantee or similar arrangement) or capital contribution
to (by means of any transfer of cash or other property (excluding Capital Stock
of the Company) to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person. For purposes of
the definition of "Unrestricted Subsidiary" and Section 4.04, (a) "Investment"
shall include the portion (proportionate to the Company's equity interest in
such Subsidiary) of the fair market value of the net assets of any Subsidiary of
the Company at the time that such Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (i) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (ii) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; (b) any property transferred to or
from an Unrestricted Subsidiary shall be valued at its fair market value at the
time of such transfer, in each case as determined in good faith by (x) the
senior management of the Company if the amount thereof is less than $2.0 million
and (y) the Board of Directors if in excess thereof; and (c) the amount of any
Investment shall be the original cost as of the date of determination of such
Investment plus the cost of all additional Investments by the Company or any of
its Restricted Subsidiaries, without any adjustments for increases or decreases
in value or write-ups, write-downs or write-offs with respect to such
Investments.

          "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).

          "Material Subsidiary" means, at any date of determination, any
Subsidiary of the Company that, together with its Subsidiaries, (a) for the most
recent fiscal year of the Company accounted for more than 10.0% of the
consolidated revenues of the Company or (b) as of the end of such fiscal year,
was the owner of 10.0% of the consolidated assets of the Company, all as set
forth on the most recently available consolidated financial statement of the
Company and its consolidated Subsidiaries for such fiscal year prepared in
conformity with GAAP.

          "Mortgaged Property" means, initially, the parcels of real property
located at the following locations: (i) 299 Clukey Drive, Harrington, Delaware;
(ii) 1330 Lebanon Road, Danville, Kentucky; (iii) 10 Greenfield Road, South
Deerfield, Massachusetts; (iv) 1 Edison Drive, McAlester, Oklahoma; (v) 851
Garrett Parkway, Lewisburg, Tennessee; (vi) 230 Enterprise Drive, Newport News,
Virginia; (vii) 8039 South 192nd Street, Kent, Washington; and (viii) 1701 First
Avenue, Chippewa Falls, Wisconsin, and includes each other parcel of real
property and the improvements thereto with respect to which a Mortgage is
granted pursuant to Section 4.11.

          "Mortgages" means a mortgage, deed of trust, assignment of leases and
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations.



                                                                              17

          "Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to the properties or assets that are the subject of such
Asset Disposition or received in any other non-cash form) therefrom, in each
case net of (a) all legal, accounting, investment banking, title and recording
tax expenses, commissions and other fees and expenses incurred, and all Federal,
state, provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (b) all
payments made on any Indebtedness which is secured by any assets subject to such
Asset Disposition, in accordance with the terms of any Lien upon or other
security agreement of any kind with respect to such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law be repaid out of the proceeds from such Asset Disposition, (c)
all distributions and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such Asset Disposition,
(d) the decrease in proceeds from Qualified Securitization Transactions which
results from such Asset Disposition and (e) appropriate amounts to be provided
by the seller as a reserve, in accordance with GAAP, against any liabilities
associated with the property or other assets disposed of in such Asset
Disposition and retained by the Company or any Restricted Subsidiary after such
Asset Disposition.

          "Net Cash Proceeds", with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees and expenses actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.

          "Note Guarantee" means each Guarantee of the obligations with respect
to the Securities issued by a Person pursuant to the terms of this Indenture.

          "Note Guarantor" means any Person that has issued a Note Guarantee.

          "Obligations" means all obligations of the Company and the Note
Guarantors under this Indenture, the Securities and the other Indenture
Documents, including obligations to the Trustee and the Collateral Agent,
whether for payment of principal of, interest, including Additional Interest, if
any, on the Securities and all other monetary obligations of the Company and the
Note Guarantors under this Indenture, the Securities and the other Indenture
Documents, whether for fees, expenses, indemnification or otherwise.

          "Officer" means the Chairman of the Board, the Chief Executive
Officer, the Chief Financial Officer, the President, any Vice President, the
Treasurer, the Secretary or any Assistant Secretary of the Company.

          "Officers' Certificate" means a certificate signed by two Officers.



                                                                              18

          "Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company.

          "Other Second-Lien Obligations" means (i) Indebtedness of the Company
and the Restricted Subsidiaries (other than the Securities and the Note
Guarantees) that is secured by a Permitted Lien described in clause (a) of the
definition thereof and that is equally and ratably secured with the Securities
and is designated by the Company as an Other Second-Lien Obligation and (ii) all
other obligations (not constituting Indebtedness) of the Company or any Note
Guarantor under the agreements governing the Indebtedness referred to in clause
(i).

          "Permitted Business" means the design, manufacture and/or marketing of
films and flexible packaging products for food, personal care, medical, retail,
agricultural, industrial and other applications or any businesses that are
reasonably related, ancillary or complementary thereto.

          "Permitted Holders" means each of (i) J.P. Morgan Partners, LLC and
its Affiliates, (ii) Southwest Industrial Films, LLC and its Affiliates, (iii)
the Christena Karen H. Durham Trust, (iv) the Existing Management Stockholders
and their Related Parties and (v) any Person acting in the capacity of an
underwriter in connection with a public or private offering of the Company's
Capital Stock

          "Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in: (a) the Company, a Restricted Subsidiary or a Person
that will, upon the making of such Investment, become a Restricted Subsidiary;
provided, however, that after giving effect to such Investment the Company is
still in compliance with Section 4.12; (b) another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that after giving effect to such
Investment the Company is still in compliance with Section 4.12; (c) Temporary
Cash Investments; (d) receivables owing to the Company or any Restricted
Subsidiary if created or acquired in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the Company
or any such Restricted Subsidiary deems reasonable under the circumstances; (e)
payroll, travel and similar advances or loans to cover matters that are expected
at the time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (f) loans or
advances to officers, directors, consultants or employees made (A) in the
ordinary course of business and not exceeding $3.0 million in any year or (B) to
fund purchases of stock under the Company's 2000 Stock Incentive Plan, the 2002
Stock Incentive Plan and any similar plans or employment arrangements; (g)
Capital Stock, obligations or other securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of a
debtor; (h) any Person to the extent such Investment represents the non-cash
portion of the consideration received for an



                                                                              19

Asset Disposition that was made pursuant to and in compliance with Section 4.06;
(i) any Investment by the Company or a Restricted Subsidiary in a Securitization
Entity or any Investment by a Securitization Entity in any other Person in
connection with a Qualified Securitization Transaction; provided that any
Investment in a Securitization Entity is in the form of a purchase money note or
an equity interest; (j) Hedging Obligations entered into in the ordinary course
of business; (k) endorsements of negotiable instruments and documents in the
ordinary course of business; (l) assets or securities of a Person acquired by
the Company or a Restricted Subsidiary to the extent the consideration for such
acquisition consists of Capital Stock (other than Disqualified Stock) of the
Company; (m) Investments in existence on the Closing Date; (n) Investments of a
Person or any of its Subsidiaries existing at the time such Person becomes a
Restricted Subsidiary of the Company or at the time such Person merges or
consolidates with the Company or any of its Restricted Subsidiaries, in either
case in compliance with this Indenture, provided that such Investments were not
made by such Person in connection with, or in anticipation or contemplation of,
such Person becoming a Restricted Subsidiary of the Company or such merger or
consolidation; (o) Investments in Unrestricted Subsidiaries or joint ventures
not to exceed $30.0 million since the Closing Date plus (A) the aggregate net
after-tax amount returned since the Closing Date to the Company or any
Restricted Subsidiary in cash on or with respect to any Investments made since
the Closing Date in Unrestricted Subsidiaries and joint ventures whether through
interest payments, principal payments, dividends or other distributions or
payments (including such dividends, distributions or payments made concurrently
with such Investment), (B) the net after-tax cash proceeds received since the
Closing Date by the Company or any Restricted Subsidiary from the disposition of
all or any portion of such Investments (other than to the Company or a
Subsidiary of the Company), and (C) upon redesignation since the Closing Date of
an Unrestricted Subsidiary as a Restricted Subsidiary, the fair market value of
such Subsidiary, provided that any amounts included pursuant to the foregoing
clauses (A), (B) and (C) are excluded from the calculation set forth in clause
(a)(iv)(C) under Section 4.04; and (p) additional Investments since the Closing
Date in an aggregate amount not to exceed $15.0 million.

          "Permitted Liens" means: (a) Liens upon any property of the Company or
any Restricted Subsidiary securing any Indebtedness permitted to be incurred
under Section 4.03 and all other obligations of the Company or any Restricted
Subsidiary in respect of such Indebtedness not constituting Indebtedness; (b)
Liens securing the Securities (including any Additional Securities and any
Exchange Notes) and the Note Guarantees thereof; (c) Liens in favor of the
Company or any Restricted Subsidiary; (d) Liens on property of a Person existing
at the time such Person is merged with or into or consolidated with or acquired
by the Company or any Restricted Subsidiary; (e) Liens on property existing at
the time of acquisition of the property by the Company or any Restricted
Subsidiary; (f) Liens to secure Indebtedness (including Capitalized Lease
Obligations) permitted by Section 4.03(b)(vi) covering only the property,
equipment or other assets acquired with such Indebtedness or additions or
improvements to such assets; (g) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
concluded; provided that any reserve or other appropriate provision as is
required in conformity with GAAP has been made therefor; (h) Liens



                                                                              20

incurred in the ordinary course of business, including, without limitation,
judgment and attachment liens of the Company or any Restricted Subsidiary of the
Company with respect to obligations that do not exceed in the aggregate $25.0
million at any one time outstanding and that are not incurred in connection with
the borrowing of money or the obtaining of advances of credit (other than trade
credit in the ordinary course of business, not evidenced by a note and not past
due); (i) Liens in favor of the Trustee, the trustee under the Senior
Subordinated Notes Indentures, the warrant agent under the warrant agreement
dated as of May 31, 2000 entered into by the Company and any other trustee or
warrant agent acting in such capacity with respect to one or more future
indentures or agreements so long as the related Indebtedness is permitted to be
Incurred under Section 4.03; (j) Liens incurred in connection with Refinancing
Indebtedness, but only if such Liens extend to no more assets than the Liens
securing the Indebtedness being refinanced; (k) Liens securing Hedging
Obligations; (l) statutory Liens of landlords and carriers', warehousemen's,
mechanics', suppliers', materialmen's, repairmen's, or other like Liens
(including contractual landlords liens) arising in the ordinary course of
business and with respect to amounts not yet delinquent by more than 60 days or
being contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor; (m) Liens incurred and deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security; (n) Liens to secure
Indebtedness of any Foreign Subsidiary; (o) licenses, sublicenses, subleases,
easements, zoning restrictions, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Company or any of
its Restricted Subsidiaries; (p) Liens on specific items of inventory or other
goods and proceeds thereof of any Person securing such Person's obligations in
respect of bankers' acceptances issued or created for the account of such Person
to facilitate the purchase, shipment or storage of such inventory or other
goods; (q) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and the property relating to such
letters of credit and products and proceeds thereof; (r) any interest or title
of a lessor in the property subject to any lease or arising from filing Uniform
Commercial Code financing statements regarding leases; (s) judgment liens in
respect of judgments that do not constitute an Event of Default; (t) Liens
existing on the Closing Date; (u) Liens incurred or deposits made to secure the
performance of bids, trade contracts, leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature, in each
case in the ordinary course of business; (v) ground leases in respect of real
property on which facilities owned or leased by the Company or any of its
Restricted Subsidiaries are located; (w) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (x) leases or subleases granted to
other Persons and not interfering in any material respect with the business of
the Company and its Restricted Subsidiaries, taken as a whole; (y) Liens in
connection with a Qualified Securitization Transaction incurred in compliance
with Section 4.03(b)(ix); (z) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of setoff or similar
rights; and (aa) Liens securing insurance premium financing arrangements which
are otherwise excluded from the definition of Indebtedness.



                                                                              21

          "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

          "Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over Capital Stock of any other class of such Person.

          "principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.

          "Public Market" means any time after (a) an Equity Offering has been
consummated and (b) at least 15% of the total issued and outstanding common
stock of the Company has been distributed by means of an effective registration
statement under the Securities Act.

          "Qualified Securitization Transaction" means any transaction or series
of transactions that may be entered into by the Company or any of its
Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell,
convey or otherwise transfer pursuant to customary terms to (a) a Securitization
Entity (in the case of a transfer by the Company or any of its Subsidiaries) and
(b) any other Person (in the case of a transfer by a Securitization Entity), or
may grant a security interest in any accounts receivable (whether now existing
or arising or acquired in the future) of the Company or any of its Subsidiaries,
and any assets related thereto including, without limitation, all collateral
securing such accounts receivable, all contracts and contract rights and all
guarantees or other obligations in respect of such accounts receivable, proceeds
of such accounts receivable and other assets (including contract rights) which
are customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.

          "Qualified Stock" means any Capital Stock that is not Disqualified
Stock.

          "Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.

          "Refinancing Indebtedness" means Indebtedness that is Incurred to
Refinance any Indebtedness of the Company or any Restricted Subsidiary existing
on the Closing Date or Incurred in compliance with this Indenture (including
Indebtedness of the Company or a Restricted Subsidiary that Refinances
Refinancing Indebtedness); provided, however, that: (a) the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being Refinanced, (b) the



                                                                              22

Refinancing Indebtedness has an Average Life at the time such Refinancing
Indebtedness is Incurred that is equal to or greater than the Average Life of
the Indebtedness being refinanced, (c) such Refinancing Indebtedness is Incurred
in an aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) (whether in U.S. dollars or a foreign currency) that is
equal to or less than the aggregate principal amount (or if issued with original
issue discount, the aggregate accreted value) (in U.S. dollars or such foreign
currency, as applicable) then outstanding (plus, without duplication, accrued
interest, premium and defeasance costs required to be paid under the terms of
the Indebtedness being Refinanced and the fees, expenses, discounts, commissions
and other issuance costs incurred in connection with the Refinancing
Indebtedness) of the Indebtedness being Refinanced, and (d) if the Indebtedness
being Refinanced is subordinated in right of payment to the Securities or a Note
Guarantee of a Note Guarantor, such Refinancing Indebtedness is subordinated in
right of payment to the Securities or the Note Guarantee at least to the same
extent as the Indebtedness being Refinanced; provided further, however, that
Refinancing Indebtedness shall not include: (i) Indebtedness of a Restricted
Subsidiary that is not a Note Guarantor that Refinances Indebtedness of the
Company or (ii) Indebtedness of the Company or a Restricted Subsidiary that
Refinances Indebtedness of an Unrestricted Subsidiary.

          "Related Parties" means with respect to a Person (a) that is a natural
person (1) any spouse, parent or lineal descendant (including adopted children)
of such Person or (2) the estate of such Person during any period in which such
estate holds Capital Stock of the Company for the benefit of any person referred
to in clause (a)(1) and (b) any trust, corporation, partnership, limited
liability company or other entity, the beneficiaries, stockholders, partners,
owners or Persons beneficially owning an interest of more than 50% of which
consist of such Person and/or such other Persons referred to in the immediately
preceding clause (a).

          "Representative" means the trustee, agent or representative (if any)
for an issue of Senior Indebtedness.

          "Restricted Investment" means any Investment other than a Permitted
Investment.

          "Restricted Subsidiary" means any Subsidiary of the Company other than
an Unrestricted Subsidiary.

          "Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired by the Company or a Restricted Subsidiary
whereby the Company or a Restricted Subsidiary transfers such property to a
Person and the Company or such Restricted Subsidiary leases it from such Person,
other than (a) leases between the Company and a Wholly Owned Subsidiary or
between Wholly Owned Subsidiaries or (b) any arrangement whereby the transfer
involves fixed or capital assets and is consummated within 120 days after the
date the Company or a Restricted Subsidiary acquires or finishes construction of
such fixed or capital assets.

          "SEC" means the Securities and Exchange Commission.



                                                                              23

          "Second Priority Pledge Agreement" means the Second Priority Pledge
Agreement dated as of May 30, 2003, among the Company, the Pledgors (as defined
therein) and the Collateral Agent, as such agreement may be amended, modified,
supplemented or restated from time to time.

          "Second Priority Security Agreement" means the Second Priority
Security Agreement dated as of May 30, 2003, among the Company, the Grantors (as
defined therein) and the Collateral Agent, as such agreement may be amended,
modified, supplemented or restated from time to time.

          "Securities" means the Securities issued under this Indenture.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Security Documents" means the Second Priority Pledge Agreement, the
Second Priority Security Agreement, the Mortgages and any other document or
instrument pursuant to which a Lien is granted by the Company or any Note
Guarantor to secure any Obligations or under which rights or remedies with
respect to such Lien are governed, as such agreements may be amended, modified,
supplemented or restated from time to time.

          "Securitization Entity" means a Wholly Owned Subsidiary of the Company
(or another Person in which the Company or any Subsidiary of the Company makes
an Investment and to which the Company or any Subsidiary of the Company
transfers accounts receivable and related assets) which engages in no activities
other than in connection with the financing of accounts receivable or equipment
and which is designated by the Board of Directors of the Company (as provided
below) as a Securitization Entity (a) no portion of the Indebtedness or any
other obligations (contingent or otherwise) of which (i) is guaranteed by the
Company or any Subsidiary of the Company (excluding guarantees of obligations
(other than the principal of, and interest on, Indebtedness) pursuant to
Standard Securitization Undertakings), (ii) is recourse to or obligates the
Company or any Subsidiary of the Company in any way other than pursuant to
Standard Securitization Undertakings or (iii) subjects any property or asset of
the Company or any Subsidiary of the Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings, (b) with which neither the Company nor any
Subsidiary of the Company has any material contract, agreement, arrangement or
understanding other than on terms no less favorable to the Company or such
Subsidiary than those that might be obtained at the time from Persons that are
not Affiliates of the Company, other than fees payable in the ordinary course of
business in connection with servicing receivables of such entity and (c) to
which neither the Company nor any Subsidiary of the Company has any obligation
to maintain or preserve such entity's financial condition or cause such entity
to achieve certain levels of operating results. Any such designation by the
Board of Directors of the Company shall be evidenced to the Trustee, by filing
with the Trustee a certified copy of the resolution of the Board of Directors
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing conditions.



                                                                              24

          "Senior Indebtedness" of the Company or any Note Guarantor, as the
case may be, means the principal of, premium (if any) and accrued and unpaid
interest on (including interest accruing on or after the filing of any petition
in bankruptcy or for reorganization of the Company or any Note Guarantor, as
applicable, regardless of whether or not a claim for post-filing interest is
allowed in such proceedings), and fees and other amounts owing in respect of,
Bank Indebtedness, the Securities (in the case of the Company), the Note
Guarantees (in the case of the Note Guarantors) and all other Indebtedness of
the Company or any Note Guarantor, as applicable, whether outstanding on the
Closing Date or thereafter Incurred, unless in the instrument creating or
evidencing the same or pursuant to which the same is outstanding it is provided
that such obligations are subordinated in right of payment to the Securities or
such Note Guarantor's Note Guarantee.

          "Senior Subordinated Notes" of the Company means the $220,000,000
aggregate principal amount of the Company's 13% senior subordinated notes due
2010 issued by the Company on May 31, 2000 and the $100,000,000 aggregate
principal amount of the Company's 13% senior subordinated notes due 2010 issued
by the Company on April 10, 2002, in each case together with the exchange notes
issued in respect thereof.

          "Senior Subordinated Notes Indentures" means the indentures dated as
of May 31, 2000, and April 10, 2002, among the Company, the subsidiary
guarantors party thereto and The Bank of New York, as trustee, under which the
Company's Senior Subordinated Notes were issued, each as amended, modified or
supplemented from time to time.

          "Significant Subsidiary" means any Restricted Subsidiary that would be
a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.

          "Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company which are reasonably customary in an accounts
receivable securitization transaction.

          "Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).

          "Stockholders Agreement" means the Stockholders Agreement among the
Company and the holders of the Company's Capital Stock party thereto, as in
effect on the Closing Date and as amended from time to time, so long as the
Permitted Holders own a majority of the Capital Stock subject to such agreement.



                                                                              25

          "Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Closing Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement. "Subordinated Obligation" of a Note Guarantor has a
correlative meaning.

          "Subsidiary" of any Person means 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 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 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.

          "Tangible Assets" means Total Assets less Intangible Assets.

          "Temporary Cash Investments" means any of the following: (a) any
investment in direct obligations of the United States of America or any agency
or instrumentality thereof or obligations Guaranteed or insured by the United
States of America or any agency or instrumentality thereof, (b) investments in
checking accounts, savings accounts, time deposit accounts, certificates of
deposit, bankers' acceptances and money market deposits maturing within 360 days
of the date of acquisition thereof issued by a bank or trust company that is
organized under the laws of the United States of America, any state thereof or
any foreign country recognized by the United States of America having capital,
surplus and undivided profits aggregating in excess of $250,000,000 (or the
foreign currency equivalent thereof) and whose long-term debt is rated "A" (or
such similar equivalent rating) or higher by at least one nationally recognized
statistical rating organization (as defined in Rule 436 under the Securities
Act), (c) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (a) above entered into
with a bank meeting the qualifications described in clause (b) above, (d)
investments in commercial paper, maturing not more than 270 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher) according
to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard
and Poor's Ratings Service, a division of The McGraw-Hill Companies, Inc.
("S&P"), (e) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or "A" by
Moody's Investors Service, Inc. and (f) investments in money market funds that
invest substantially all of their assets in securities of the types described in
clauses (a) through (e) above.

          "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the Closing Date.



                                                                              26

          "Total Assets" means the total consolidated assets of the Company and
its Restricted Subsidiaries, as shown on the most recent balance sheet of the
Company.

          "Trade Payables" means, with respect to any Person, any accounts
payable or any indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person arising in the ordinary course of business
in connection with the acquisition of goods or services.

          "Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.

          "Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.

          "Uniform Commercial Code" means the New York Uniform Commercial Code
as in effect from time to time.

          "Unrestricted Subsidiary" means (a) Pliant Investment, Inc. and any
Subsidiary of the Company that at the time of determination shall be designated
an Unrestricted Subsidiary by the Board of Directors in the manner provided
below and (b) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary of the Company) to be an Unrestricted
Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Capital
Stock in or Indebtedness of, or owns or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (i) the
Subsidiary to be so designated at the time of designation has total Consolidated
assets of $1,000 or less or (ii) if such Subsidiary has Consolidated assets
greater than $1,000, then such designation would be permitted under Section
4.04. The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after giving effect
to such designation (a) the Company could Incur $1.00 of additional Indebtedness
under Section 4.03(a) and (b) no Default shall have occurred and be continuing.
Any such designation of a Subsidiary as a Restricted Subsidiary or Unrestricted
Subsidiary by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the resolution of the Board of
Directors giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing provisions.

          "U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.

          "Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally



                                                                              27

entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof.

          "Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company
all the Capital Stock of which (other than directors' qualifying Capital Stock)
is owned by the Company or another Wholly Owned Subsidiary.

          SECTION 1.02. Other Definitions.



                                                                            Defined in
Term                                                                         Section
- ----                                                                        -----------
                                                                          
"Affiliate Transaction"....................................................  4.07(a)
"Appendix".................................................................  Preamble
"Bankruptcy Law"...........................................................  6.01
"Change of Control Offer"..................................................  4.08(b)
"covenant defeasance option"...............................................  8.01(b)
"Custodian"................................................................  6.01
"Definitive Securities"....................................................  Appendix A
"Event of Default".........................................................  6.01
"Global Securities"........................................................  Appendix A
"Guaranteed Obligations"...................................................  11.01
"incorporated provision"...................................................  12.01
"Initial Securities".......................................................  Preamble
"Issue Date"...............................................................  Appendix A
"legal defeasance option"..................................................  8.01(b)
"Legal Holiday"............................................................  12.08
"Liens Securing Note Obligations"..........................................  10.08(d)
"Liens Securing Other Second-Lien Obligations".............................  10.08(d)
"Notice of Default"........................................................  6.01
"Offer"....................................................................  4.06(b)
"Offer Amount".............................................................  4.06(c)(ii)
"Offer Period".............................................................  4.06(c)(ii)
"Original Securities"......................................................  Preamble
"Paying Agent".............................................................  2.04
"Permitted Debt"...........................................................  4.03(b)
"Private Exchange".........................................................  Appendix A
"Private Exchange Notes"...................................................  Appendix A
"protected purchaser"......................................................  2.08
"Purchase Date"............................................................  4.06(c)(i)
"Registration Agreement"...................................................  Appendix A
"Registered Exchange Offer"................................................  Appendix A
"Registrar"................................................................  2.04
"Restricted Payment".......................................................  4.04(a)
"Securities Custodian".....................................................  Appendix A
"Successor Company"........................................................  5.01(a)




                                                                              28



                                                                            Defined in
Term                                                                         Section
- ----                                                                        -----------
                                                                          
"Transfer Restricted Securities"...........................................  Appendix A


          SECTION 1.03. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA, which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:

          "Commission" means the SEC.

          "indenture securities" means the Securities and the Note Guarantees.

          "indenture security holder" means a Holder.

          "indenture to be qualified" means this Indenture.

          "indenture trustee" or "institutional trustee" means the Trustee.

          "obligor" on the indenture securities means the Company, the Note
Guarantors and any other obligor on the indenture securities.

          All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.

          SECTION 1.04. Rules of Construction. Unless the context otherwise
requires:

          (a) a term has the meaning assigned to it;

          (b) an accounting term not otherwise defined has the meaning assigned
     to it in accordance with GAAP;

          (c) "or" is not exclusive;

          (d) "including" means including without limitation;

          (e) words in the singular include the plural and words in the plural
     include the singular;

          (f) unsecured Indebtedness shall not be deemed to be subordinate or
     junior to Secured Indebtedness merely by virtue of its nature as unsecured
     Indebtedness;

          (g) the principal amount of any noninterest bearing or other discount
     security at any date shall be the principal amount thereof that would be
     shown on



                                                                              29

     a balance sheet of the issuer dated such date prepared in accordance with
     GAAP; and

          (h) the principal amount of any Preferred Stock shall be (i) the
     maximum liquidation value of such Preferred Stock or (ii) the maximum
     mandatory redemption or mandatory repurchase price (not including, in
     either case, any redemption or repurchase premium) with respect to such
     Preferred Stock, whichever is greater.

          SECTION 1.05. Designated Senior Indebtedness. For purposes of the
Senior Subordinated Notes Indentures, the Securities and the Note Guarantees
shall constitute Designated Senior Indebtedness (as such term is defined in the
Senior Subordinated Notes Indentures) of the Company and the Note Guarantors, as
the case may be.

                                   ARTICLE II

                                 The Securities

          SECTION 2.01. Amount of Securities; Issuable in Series. The aggregate
principal amount of Securities that may be authenticated and delivered under
this Indenture is unlimited. The Securities may be issued in one or more series.
All Securities of any one series shall be substantially identical except as to
denomination.

          With respect to any Additional Securities issued after the Closing
Date (except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities pursuant to
Sections 2.07, 2.08, 2.09, 2.10 or 3.06 or the Appendix), there shall be (a)
established in or pursuant to a resolution of the Board of Directors and (b) set
forth or determined in the manner provided in an Officers' Certificate prior to
the issuance of such Additional Securities:

          (1) whether such Additional Securities shall be issued as part of a
new or existing series of Securities and the title of such Additional Securities
(which shall distinguish the Additional Securities of the series from Securities
of any other series);

          (2) the aggregate principal amount of such Additional Securities which
may be authenticated and delivered under this Indenture, which may be in an
unlimited aggregate principal amount;

          (3) the issue price and issuance date of such Additional Securities,
including the date from which interest on such Additional Securities shall
accrue; provided, however, that Additional Securities may be issued only if they
are fungible with the other Securities issued under this Indenture for U.S.
federal income tax purposes;

          (4) if applicable, that such Additional Securities shall be issuable
in whole or in part in the form of one or more Global Notes and, in such case,
the respective



                                                                              30

depositaries for such Global Notes, the form of any legend or legends which
shall be borne by such Global Notes in addition to or in lieu of those set forth
in Exhibit A hereto and any circumstances in addition to or in lieu of those set
forth in Section 2.3 of the Appendix in which any such Global Note may be
exchanged in whole or in part for Additional Securities registered, or any
transfer of such Global Note in whole or in part may be registered, in the name
or names of Persons other than the depositary for such Global Note or a nominee
thereof; and

          (5) if applicable, that such Additional Securities shall not be issued
in the form of Original Securities as set forth in Exhibit A, but shall be
issued in the form of Exchange Notes as set forth in Exhibit B.

          If any of the terms of any Additional Securities are established by
action taken pursuant to a resolution of the Board of Directors, a copy of an
appropriate record of such action shall be certified by the Secretary or any
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Officers' Certificate or the indenture supplemental hereto
setting forth the terms of the Additional Securities.

          SECTION 2.02. Form and Dating. Provisions relating to the Original
Securities, the Additional Securities, the Private Exchange Notes and the
Exchange Notes are set forth in the Appendix, which is hereby incorporated in
and expressly made a part of this Indenture. The (a) Original Securities and the
Trustee's certificate of authentication, (b) Private Exchange Notes and the
Trustee's certificate of authentication and (c) Additional Securities (if issued
as Transfer Restricted Securities), if any, and the Trustee's certificate of
authentication shall each be substantially in the form of Exhibit A hereto,
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Notes and the Additional Securities issued other than as Transfer
Restricted Securities, if any, and the Trustee's certificate of authentication
shall each be substantially in the form of Exhibit B hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company or any Note Guarantor is subject, if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). Each Security shall be dated the date of its
authentication. The Securities shall be issuable only in registered form without
interest coupons and only in denominations of $1,000 and integral multiples
thereof.

          The Initial Securities, the Private Exchange Notes and the Exchange
Notes shall vote and consent together on all matters (as to which any of the
Securities may vote or consent) as one class and shall be treated as a single
class of Securities issued under this Indenture.

          SECTION 2.03. Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature.



                                                                              31

          If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.

          A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.

          The Trustee shall authenticate and make available for delivery
Securities as set forth in the Appendix.

          The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Any such appointment shall be
evidenced by an instrument signed by a Trust Officer, a copy of which shall be
furnished to the Company. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as any
Registrar, Paying Agent or agent for service of notices and demands.

          SECTION 2.04. Registrar and Paying Agent. (a) The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent, and the
term "Registrar" includes any co-registrars. The Company initially appoints the
Trustee as (i) Registrar and Paying Agent in connection with the Securities and
(ii) the Securities Custodian with respect to the Global Securities.

          (b) The Company shall enter into an appropriate agency agreement with
any Registrar or Paying Agent not a party to this Indenture, which shall
incorporate the terms of the TIA. The agreement shall implement the provisions
of this Indenture that relate to such agent. The Company shall notify the
Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically organized Wholly Owned Subsidiaries may act
as Paying Agent or Registrar.

          (c) The Company may remove any Registrar or Paying Agent upon written
notice to such Registrar or Paying Agent and to the Trustee; provided, however,
that no such removal shall become effective until (i) acceptance of an
appointment by a successor as evidenced by an appropriate agreement entered into
by the Company and such successor Registrar or Paying Agent, as the case may be,
and delivered to the Trustee or (ii) notification to the Trustee that the
Trustee shall serve as Registrar or Paying Agent until the appointment of a
successor in accordance with clause (i) above.



                                                                              32

The Registrar or Paying Agent may resign at any time upon written notice to the
Company and the Trustee.

          SECTION 2.05. Paying Agent to Hold Money in Trust. Prior to each due
date of the principal of and interest, including Additional Interest, if any, on
any Security, the Company shall deposit with the Paying Agent (or if the Company
or a Wholly Owned Subsidiary is acting as Paying Agent, segregate and hold in
trust for the benefit of the Persons entitled thereto) a sum sufficient to pay
such principal, interest, including Additional Interest, if any, when so
becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal of and interest, including Additional Interest, if any, on
the Securities, and shall notify the Trustee of any default by the Company in
making any such payment. If the Company or a Subsidiary of the Company acts as
Paying Agent, it shall segregate the money held by it as Paying Agent and hold
it as a separate trust fund. The Company at any time may require a Paying Agent
to pay all money held by it to the Trustee and to account for any funds
disbursed by the Paying Agent. Upon complying with this Section, the Paying
Agent shall have no further liability for the money delivered to the Trustee.

          SECTION 2.06. Holder Lists. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders. If the Trustee is not the Registrar, the Company
shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at
least five Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Holders.

          SECTION 2.07. Transfer and Exchange. The Securities shall be issued in
registered form and shall be transferable only upon the surrender of a Security
for registration of transfer and in compliance with the Appendix. When a
Security is presented to the Registrar with a request to register a transfer,
the Registrar shall register the transfer as requested if its requirements
therefor are met. When Securities are presented to the Registrar with a request
to exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met. To permit registration of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Securities at the
Registrar's request. The Company may require payment of a sum sufficient to pay
all taxes, assessments or other governmental charges in connection with any
transfer or exchange pursuant to this Section. The Company shall not be required
to make and the Registrar need not register transfers or exchanges of Securities
selected for redemption (except, in the case of Securities to be redeemed in
part, the portion thereof not to be redeemed) or any Securities for a period of
15 days before a selection of Securities to be redeemed.

          Prior to the due presentation for registration of transfer of any
Security, the Company, the Note Guarantors, the Trustee, the Paying Agent, and
the Registrar may deem and treat the Person in whose name a Security is
registered as the absolute owner of



                                                                              33

such Security for the purpose of receiving payment of principal of and (subject
to paragraph 2 of the Securities) interest, if any, on such Security and for all
other purposes whatsoever, whether or not such Security is overdue, and none of
the Company, any Note Guarantor, the Trustee, the Paying Agent, or the Registrar
shall be affected by notice to the contrary.

          Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interest in such Global Security
may be effected only through a book-entry system maintained by (a) the Holder of
such Global Security (or its agent) or (b) any Holder of a beneficial interest
in such Global Security, and that ownership of a beneficial interest in such
Global Security shall be required to be reflected in a book entry.

          All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture shall evidence the same debt and shall be entitled to
the same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.

          The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Depositary
Participants or beneficial owners of interests in any Global Security) other
than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.

          SECTION 2.08. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met, such that the Holder (a)
satisfies the Company or the Trustee within a reasonable time after such Holder
has notice of such loss, destruction or wrongful taking and the Registrar does
not register a transfer prior to receiving such notification, (b) makes such
request to the Company or the Trustee prior to the Security being acquired by a
protected purchaser as defined in Section 8-303 of the Uniform Commercial Code
(a "protected purchaser") and (c) satisfies any other reasonable requirements of
the Trustee. If required by the Trustee or the Company, such Holder shall
furnish an indemnity bond sufficient in the judgment of the Trustee to protect
the Company, the Trustee, the Paying Agent and the Registrar from any loss that
any of them may suffer if a Security is replaced. The Company and the Trustee
may charge the Holder for their expenses in replacing a Security. In the event
any such mutilated, lost, destroyed or wrongfully taken Security has become or
is about to become due and payable, the Company in its discretion may pay such
Security instead of issuing a new Security in replacement thereof.

          Every replacement Security is an additional obligation of the Company.



                                                                              34

          The provisions of this Section 2.08 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, lost, destroyed or wrongfully taken
Securities.

          SECTION 2.09. Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancelation and those described in this Section
as not outstanding. Subject to Section 12.06, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security.

          If a Security is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a protected purchaser.

          If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal, interest, including Additional Interest, if any, payable on that
date with respect to the Securities (or portions thereof) to be redeemed or
maturing, as the case may be, then on and after that date such Securities (or
portions thereof) cease to be outstanding and interest on them ceases to accrue.

          SECTION 2.10. Temporary Securities. In the event that Definitive
Securities are to be issued under the terms of this Indenture, until such
Definitive Securities are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate Definitive
Securities and deliver them in exchange for temporary Securities upon surrender
of such temporary Securities at the office or agency of the Company, without
charge to the Holder.

          SECTION 2.11. Cancelation. The Company at any time may deliver
Securities to the Trustee for cancelation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and shall dispose of canceled Securities in accordance with its
customary procedures or deliver canceled Securities to the Company pursuant to
written direction by an Officer. The Company may not issue new Securities to
replace Securities it has redeemed, paid or delivered to the Trustee for
cancelation. The Trustee shall not authenticate Securities in place of canceled
Securities other than pursuant to the terms of this Indenture.

          SECTION 2.12. Defaulted Interest. If the Company defaults in a payment
of interest on the Securities, the Company shall pay the defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the Persons who are
Holders on a subsequent special record date. The Company shall fix or cause to
be fixed any such special record



                                                                              35

date and payment date to the reasonable satisfaction of the Trustee and shall
promptly mail or cause to be mailed to each Holder a notice that states the
special record date, the payment date and the amount of defaulted interest to be
paid.

          SECTION 2.13. CUSIP and ISIN Numbers. The Company in issuing the
Securities may use "CUSIP" and "ISIN" numbers (if then generally in use) and, if
so, the Trustee shall use "CUSIP" and "ISIN" numbers in notices of redemption as
a convenience to Holders; provided, however, that any such notice may state that
no representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company shall promptly notify the Trustee of any
change in the CUSIP number.

                                   ARTICLE III

                                   Redemption

          SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date and the principal amount of Securities
to be redeemed.

          The Company shall give each notice to the Trustee provided for in this
Section at least 60 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from the Company to the effect that such redemption will comply with
the conditions herein. Any such notice may be canceled at any time prior to
notice of such redemption being mailed to any Holder and shall thereby be void
and of no effect.

          SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that the Trustee in its sole
discretion shall deem to be fair and appropriate. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have denominations larger than $1,000. Securities and portions of them the
Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company promptly of the method it has chosen for the selection of Securities
or portions of Securities to be called for redemption.

          SECTION 3.03. Notice of Redemption. (a) At least 30 days but not more
than 60 days before a date for redemption of Securities, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed at such Holder's registered address.

          The notice shall identify the Securities to be redeemed and shall
state:



                                                                              36

          (i) the redemption date;

          (ii) the redemption price and the amount of accrued interest,
     including Additional Interest, if any, to the redemption date;

          (iii) the name and address of the Paying Agent;

          (iv) that Securities called for redemption must be surrendered to the
     Paying Agent to collect the redemption price;

          (v) if fewer than all the outstanding Securities are to be redeemed,
     the certificate numbers and principal amounts of the particular Securities
     to be redeemed;

          (vi) that, unless the Company defaults in making such redemption
     payment or the Paying Agent is prohibited from making such payment pursuant
     to the terms of this Indenture, interest on Securities (or portion thereof)
     called for redemption ceases to accrue on and after the redemption date;

          (vii) the CUSIP or ISIN number, if any, printed on the Securities
     being redeemed; and

          (viii) that no representation is made as to the correctness or
     accuracy of the CUSIP or ISIN number, if any, listed in such notice or
     printed on the Securities.

          (b) At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.

          SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest, including Additional
Interest, if any, to the redemption date; provided, however, that if the
redemption date is after a regular record date and on or prior to the interest
payment date, the accrued interest, including Additional Interest, if any, shall
be payable to the Holder of the redeemed Securities registered on the relevant
record date. Failure to give notice or any defect in the notice to any Holder
shall not affect the validity of the notice to any other Holder.

          SECTION 3.05. Deposit of Redemption Price. Prior to 11:00 a.m., New
York City time, on the redemption date, the Company shall deposit with the
Paying Agent (or, if the Company or a Wholly Owned Subsidiary is the Paying
Agent, shall segregate and hold in trust) money sufficient to pay the redemption
price of and accrued interest, including Additional Interest, if any, on all
Securities or portions thereof to be redeemed on that date other than Securities
or portions of Securities called for redemption that have been delivered by the
Company to the Trustee for cancelation.



                                                                              37

Concurrently with such deposit, the Company shall deliver an Officers'
Certificate and an Opinion of Counsel to the effect that the redemption complies
with the conditions contained in this Indenture. On and after the redemption
date, interest, including Additional Interest, if any, shall cease to accrue on
Securities or portions thereof called for redemption so long as the Company has
deposited with the Paying Agent funds sufficient to pay the principal of, plus
accrued and unpaid interest, including Additional Interest, if any, on, the
Securities to be redeemed, unless the Paying Agent is prohibited from making
such payment pursuant to the terms of this Indenture.

          SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security surrendered.

                                   ARTICLE IV

                                    Covenants

          SECTION 4.01. Payment of Securities. The Company shall promptly pay
the principal of and interest, including Additional Interest, if any, on the
Securities on the dates and in the manner provided in the Securities and in this
Indenture. Principal, interest, including Additional Interest, if any, shall be
considered paid on the date due if on such date the Trustee or the Paying Agent
holds in accordance with this Indenture money sufficient to pay all principal
and interest then due and the Trustee or the Paying Agent, as the case may be,
is not prohibited from paying such money to the Holders on that date pursuant to
the terms of this Indenture.

          The Company shall pay interest on overdue principal at the rate borne
by the Securities, and it shall pay interest on overdue installments of interest
at the same rate to the extent lawful.

          SECTION 4.02. SEC Reports. Notwithstanding that the Company may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the SEC (if permitted by SEC practice and
applicable law and regulations) and provide the Trustee and Holders and
prospective Holders (upon request) within 15 days after it files them with the
SEC (or if not permitted, within 15 days after it would have otherwise been
required to file them with the SEC), copies of the Company's annual report and
the information, documents and other reports that are specified in Sections 13
and 15(d) of the Exchange Act. In addition, following the existence of a Public
Market, the Company shall furnish to the Trustee and the Holders, promptly upon
their becoming available, copies of the annual report to shareholders and any
other information provided by the Company to its shareholders generally. The
Company also shall comply with the other provisions of Section 314(a) of the
TIA.

          Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from



                                                                              38

information contained therein, including the Company's compliance with any of
its covenants hereunder (as to which the Trustee is entitled to rely exclusively
on Officers' Certificates).

          SECTION 4.03. Limitation on Indebtedness. (a) The Company shall not,
and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; provided, however, that the Company or any
Restricted Subsidiary that is a Note Guarantor may Incur Indebtedness if on the
date of such Incurrence and after giving effect thereto the Consolidated
Coverage Ratio would be greater than 2.25:1.00.

          (b) Notwithstanding Section 4.03(a), the Company and its Restricted
Subsidiaries may Incur the following Indebtedness (collectively, the "Permitted
Debt"):

          (i) Indebtedness Incurred pursuant to the Credit Agreement in an
     aggregate principal amount not to exceed $320.0 million at any one time
     outstanding less the aggregate amount of (1) all repayments of principal of
     such Indebtedness pursuant to Section 4.06 and (2) the aggregate principal
     amount of Indebtedness Incurred and at such time outstanding pursuant to
     Section 4.03(b)(ix).

          (ii) Indebtedness of the Company owed to and held by any Restricted
     Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by
     the Company or any Restricted Subsidiary; provided, however, that (1) any
     subsequent issuance or transfer of any Capital Stock or any other event
     that results in any such Restricted Subsidiary ceasing to be a Restricted
     Subsidiary or any subsequent transfer of any such Indebtedness (except to
     the Company or a Restricted Subsidiary) shall be deemed, in each case, to
     constitute the Incurrence of such Indebtedness by the issuer thereof, (2)
     if the Company is the obligor on such Indebtedness, such Indebtedness is
     expressly subordinated to the prior payment in full in cash of all
     obligations with respect to the Securities, (3) if a Restricted Subsidiary
     is the obligor on such Indebtedness, such Indebtedness is made pursuant to
     an intercompany note and (4) if a Note Guarantor is the obligor on such
     Indebtedness and the Company is not the obligee, such Indebtedness is
     subordinated in right of payment to the Note Guarantee of such Note
     Guarantor;

          (iii) Indebtedness (1) represented by the Securities, (not including
     any Additional Securities), the Exchange Notes and any replacement
     Securities issued pursuant to this Indenture, (2) outstanding on the
     Closing Date (other than the Indebtedness described in clauses (i) and (ii)
     above) including, without limitation, the Senior Subordinated Notes, (3)
     consisting of Refinancing Indebtedness Incurred in respect of any
     Indebtedness described in this clause (iii) (including Refinancing
     Indebtedness) or Section 4.03(a) and (4) consisting of Guarantees of any
     Indebtedness otherwise permitted by the terms of this Indenture;

          (iv) (1) Indebtedness of a Restricted Subsidiary Incurred and
     outstanding on or prior to the date on which such Restricted Subsidiary was
     acquired by the Company (other than Indebtedness Incurred as consideration
     in, or to provide all



                                                                              39

     or any portion of the funds or credit support utilized to consummate, the
     transaction or series of related transactions pursuant to which such
     Restricted Subsidiary became a Subsidiary of or was otherwise acquired by
     the Company) and (2) Refinancing Indebtedness Incurred by a Restricted
     Subsidiary in respect of Indebtedness Incurred by such Restricted
     Subsidiary pursuant to this clause (iv);

          (v) Indebtedness of the Company or a Restricted Subsidiary (1) in
     respect of performance bonds, bankers' acceptances, letters of credit and
     surety or appeal bonds provided by the Company and its Restricted
     Subsidiaries in the ordinary course of their business, and (2) under
     Commodity Agreements, Interest Rate Agreements and Currency Agreements
     entered into for bona fide hedging purposes of the Company or any
     Restricted Subsidiary in the ordinary course of business; provided,
     however, that such Interest Rate Agreements or Currency Agreements do not
     increase the principal amount of Indebtedness of the Company and its
     Restricted Subsidiaries outstanding at any time other than as a result of
     fluctuations in interest rates or foreign currency exchange rates or by
     reason of fees, indemnities and compensation payable thereunder;

          (vi) Indebtedness (including Capitalized Lease Obligations and
     Attributable Debt) Incurred by the Company or any of its Restricted
     Subsidiaries to finance the purchase, lease or improvement of property
     (real or personal), equipment or other assets (in each case whether through
     the direct purchase of assets or the Capital Stock of any Person owning
     such assets); provided that the aggregate principal amount of all
     Indebtedness Incurred pursuant to this clause (vi) and all Refinancing
     Indebtedness Incurred to refund, refinance or replace any Indebtedness
     Incurred pursuant to this clause (vi), at any time outstanding, does not
     exceed the greater of (x) 5.0% of Tangible Assets and (y) $30.0 million;

          (vii) Indebtedness arising from the honoring by a bank or other
     financial institution of a check, draft or similar instrument drawn against
     insufficient funds in the ordinary course, provided that such Indebtedness
     is extinguished within five Business Days of Incurrence;

          (viii) Indebtedness of the Company and its Restricted Subsidiaries
     arising from agreements of the Company or a Restricted Subsidiary providing
     for indemnification, adjustment of purchase price or similar obligations,
     in each case incurred or assumed in connection with the disposition of any
     business, assets or a Subsidiary of the Company in accordance with the
     terms of this Indenture, other than Guarantees by the Company or any
     Restricted Subsidiary of Indebtedness Incurred by any Person acquiring all
     or any portion of such business, assets or a Subsidiary of the Company for
     the purpose of financing such acquisition; provided, however, that the
     maximum aggregate liability in respect of all such Indebtedness shall not
     exceed the gross proceeds, including the fair market value as determined in
     good faith by a majority of the Board of Directors of noncash proceeds (the
     fair market value of such noncash proceeds being measured at the time it is
     received and without giving effect to any subsequent changes in value),



                                                                              40

     actually received by the Company and its Restricted Subsidiaries in
     connection with such disposition;

          (ix) the Incurrence by a Securitization Entity of Indebtedness in a
     Qualified Securitization Transaction that is not recourse to the Company or
     any Restricted Subsidiary of the Company (except for Standard
     Securitization Undertakings) in an aggregate principal amount, together
     with the aggregate principal amount of Indebtedness Incurred pursuant to
     Section 4.03(b)(i), not to exceed $320.0 million at any one time
     outstanding, less the aggregate amount of all repayments of principal of
     Indebtedness Incurred pursuant to Section 4.03(b)(i) pursuant to Section
     4.06;

          (x) Indebtedness of Foreign Subsidiaries; provided that the aggregate
     outstanding amount of Indebtedness incurred by such Foreign Subsidiaries
     under this clause (x) does not exceed at any one time an amount equal to
     the sum of (A) 80% of the consolidated book value of the accounts
     receivable of all Foreign Subsidiaries and (B) 60% of the consolidated book
     value of the inventory of all Foreign Subsidiaries;

          (xi) Indebtedness under any Domestic Overdraft Facility; or

          (xii) Indebtedness of the Company and its Restricted Subsidiaries (in
     addition to Indebtedness permitted to be Incurred pursuant to Section
     4.03(a) or any other clause of this Section 4.03(b)); provided that the
     aggregate principal amount on the date of Incurrence, when added to all
     other Indebtedness Incurred pursuant to this clause (xii) and then
     outstanding, shall not exceed $20.0 million.

          (c) Notwithstanding any other provision of this Section 4.03, the
maximum amount of Indebtedness that the Company or any Restricted Subsidiary may
Incur pursuant to this Section shall not be deemed to be exceeded solely as a
result of fluctuations in the exchange rates of currencies. For purposes of
determining the outstanding principal amount of any particular Indebtedness
Incurred pursuant to this Section 4.03, (i) Indebtedness Incurred pursuant to
the Credit Agreement prior to or on the Closing Date shall be treated as
Incurred pursuant to Section 4.03 (b)(i), (ii) Guarantees of, or obligations in
respect of letters of credit relating to, Indebtedness which is otherwise
included in the determination of a particular amount of Indebtedness shall not
be included, (iii) if obligations in respect of letters of credit are Incurred
pursuant to the Credit Agreement and are being treated as Incurred pursuant to
Section 4.03(b)(i) and the letters of credit relate to other Indebtedness, then
such other Indebtedness shall not be included, (iv) the principal amount of any
Disqualified Stock of the Company or a Restricted Subsidiary or Preferred Stock
of a Restricted Subsidiary that is not a Note Guarantor will be equal to the
greater of the maximum mandatory redemption or repurchase price (not including,
in either case, any redemption or repurchase premium) or the maximum liquidation
preference, (v) the principal amount of Indebtedness, Disqualified Stock of the
Company or a Restricted Subsidiary or Preferred Stock of a Restricted Subsidiary
that is not a Note Guarantor issued at a price less than the principal amount
thereof, the maximum fixed redemption or repurchase price thereof



                                                                              41

or liquidation preference thereof, as applicable, will be equal to the amount of
the liability or obligation in respect thereof determined in accordance with
GAAP, (vi) if such Indebtedness is denominated in a currency other than U.S.
dollars, the U.S. dollar equivalent principal amount thereof shall be calculated
based on the relevant currency exchange rates in effect on the date such
Indebtedness was Incurred, (vii) the accrual of interest, accrual of dividends,
the accretion of accreted value, the payment of interest in the form of
additional Indebtedness and the payment of dividends or distributions in the
form of additional Capital Stock shall not be deemed an Incurrence of
Indebtedness for purposes of this Section 4.03, (viii) Indebtedness permitted by
this Section 4.03 need not be permitted solely by reference to one provision
permitting such Indebtedness but may be permitted in part by one such provision
and in part by one or more other provisions of this Section permitting such
Indebtedness, and (ix) in the event that Indebtedness meets the criteria of more
than one of the types of Indebtedness described in this Section 4.03, the
Company, in its sole discretion, shall classify (or later reclassify) such
Indebtedness and only be required to include the amount of such Indebtedness in
one of such clauses.

          SECTION 4.04. Limitation on Restricted Payments. (a) The Company shall
not, and shall not permit any Restricted Subsidiary, directly or indirectly, to
(i) declare or pay any dividend or make any distribution of any kind on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) or similar payment to the holders
(solely in their capacities as such) of its Capital Stock except dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and except dividends or distributions payable to the Company or another
Restricted Subsidiary (and, if such Restricted Subsidiary has shareholders other
than the Company or other Restricted Subsidiaries, to its other shareholders on
a pro rata basis), (ii) purchase, redeem, retire or otherwise acquire for value
any Capital Stock of the Company or any Restricted Subsidiary held by Persons
other than the Company or another Restricted Subsidiary, (iii) purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment any
Subordinated Obligations (other than (1) the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of acquisition and (2) Indebtedness Incurred
pursuant to Section 4.03(b)(ii)) or (iv) make any Investment (other than a
Permitted Investment) in any Person (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or Investment
being herein referred to as a "Restricted Payment") if at the time the Company
or such Restricted Subsidiary makes such Restricted Payment:

          (1) a Default shall have occurred and be continuing (or would result
     therefrom);

          (2) the Company could not Incur at least $1.00 of additional
     Indebtedness under Section 4.03(a); or

          (3) the aggregate amount of such Restricted Payment and all other
     Restricted Payments (the amount so expended, if other than in cash, to be



                                                                              42

     determined in good faith by the Board of Directors, whose determination
     shall be conclusive and evidenced by a resolution of the Board of
     Directors) declared or made subsequent to the Closing Date would exceed the
     sum, without duplication, of:

               (i) 50% of the Consolidated Net Income accrued during the period
          (treated as one accounting period) from the beginning of the fiscal
          quarter immediately following the fiscal quarter during which the
          Closing Date occurred to the end of the most recent fiscal quarter
          ending prior to the date of such Restricted Payment for which
          consolidated financial statements of the Company are publicly
          available (or, in case such Consolidated Net Income shall be a
          deficit, minus 100% of such deficit);

               (ii) 100% of the aggregate Net Cash Proceeds (other than in
          respect of an Excluded Contribution) received by the Company (x) as
          capital contributions to the Company after the Closing Date or (y)
          from the issue or sale of its Capital Stock (other than Disqualified
          Stock) subsequent to the Closing Date (other than a capital
          contribution from or an issuance or sale to (a) a Subsidiary of the
          Company or (b) an employee equity ownership or participation plan or
          other trust established by the Company or any of its Subsidiaries);

               (iii) 100% of the fair market value (as determined in good faith
          by the Board of Directors of the Company) of shares of Qualified Stock
          of the Company or any Restricted Subsidiary issued after the Closing
          Date to acquire assets from a third party;

               (iv) the amount by which Indebtedness of the Company or its
          Restricted Subsidiaries is reduced on the Company's balance sheet upon
          the conversion or exchange (other than by a Subsidiary of the Company)
          subsequent to the Closing Date of any Indebtedness of the Company or
          its Restricted Subsidiaries issued after the Closing Date which is
          convertible or exchangeable for Capital Stock (other than Disqualified
          Stock) of the Company (less the amount of any cash or the fair market
          value of other property distributed by the Company or any Restricted
          Subsidiary upon such conversion or exchange);

               (v) 100% of the aggregate amount received by the Company or any
          Restricted Subsidiary in cash from the sale or other disposition
          (other than to (x) the Company or a Subsidiary of the Company or (y)
          an employee equity ownership or participation plan or other trust
          established by the Company or any of its Subsidiaries) of Restricted
          Investments made by the Company or any Restricted Subsidiary after the
          Closing Date and from repurchases and redemptions of such Restricted
          Investments from the Company or any Restricted Subsidiary by any
          Person (other than (x) the Company or any of its Subsidiaries or (y)
          an employee equity ownership or participation plan or other trust
          established by the Company or any of



                                                                              43

          its Restricted Subsidiaries) and from repayments of loans or advances
          which constituted Restricted Investments;

               (vi) the amount equal to the net reduction in Investments in
          Unrestricted Subsidiaries since the Closing Date, resulting from (x)
          payments of dividends, repayments of the principal of loans or
          advances or other transfers of assets to the Company or any Restricted
          Subsidiary from Unrestricted Subsidiaries or (y) the redesignation of
          Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each
          case as provided in the definition of "Investment") not to exceed, in
          the case of any Unrestricted Subsidiary, the amount of Investments
          previously made by the Company or any Restricted Subsidiary in such
          Unrestricted Subsidiary, which amount was included in the calculation
          of the amount of Restricted Payments; and

               (vii) $5.0 million.

          (b) The provisions of Section 4.04(a) shall not prohibit:

          (i) any purchase, repurchase, retirement or other acquisition or
     retirement for value of, or other distribution in respect of, Capital Stock
     of the Company made by exchange for, or out of the proceeds of the
     substantially concurrent sale of, Capital Stock of the Company or capital
     contributions to the Company after the Closing Date (other than
     Disqualified Stock and other than Capital Stock issued or sold to, or
     capital contribution from, a Subsidiary of the Company or an employee
     equity ownership or participation plan or other trust established by the
     Company or any of its Subsidiaries); provided, however, that (1) such
     Restricted Payment shall be excluded in the calculation of the amount of
     Restricted Payments and (2) the Net Cash Proceeds from such sale or capital
     contribution applied in the manner set forth in this clause (i) shall be
     excluded from the calculation of amounts under Section 4.04(a)(iv)(3)(ii);

          (ii) any purchase, repurchase, redemption, defeasance or other
     acquisition or retirement for value of Subordinated Obligations of the
     Company or a Restricted Subsidiary made by exchange for, or out of the
     proceeds of the substantially concurrent sale of, (x) Capital Stock of the
     Company or a Restricted Subsidiary or (y) Subordinated Obligations of the
     Company or a Restricted Subsidiary that are permitted to be Incurred
     pursuant to Section 4.03; provided, however, that such purchase,
     repurchase, redemption, defeasance or other acquisition or retirement for
     value shall be excluded in the calculation of the amount of Restricted
     Payments;

          (iii) any purchase or redemption of Subordinated Obligations from Net
     Available Cash to the extent permitted by Section 4.06; provided, however,
     that such purchase or redemption shall be excluded in the calculation of
     the amount of Restricted Payments;



                                                                              44

          (iv) Investments that are made with Excluded Contributions; provided,
     however, that such Investments shall be excluded in the calculation of the
     amount of Restricted Payments;

          (v) dividends or other distributions paid to holders of, or
     redemptions from holders of, Capital Stock within 60 days after the date of
     declaration thereof, or the giving of formal notice of redemption, if at
     such date of declaration such dividends or other distributions or
     redemptions would have complied with this Section 4.04(a); provided,
     however, that such dividend, distribution or redemption shall be included
     in the calculation of the amount of Restricted Payments;

          (vi) any repurchase of Capital Stock owned by former officers,
     directors, consultants or employees of the Company or its Subsidiaries or
     their assigns, estates and heirs or entities controlled by them; provided,
     however, that the amount of such repurchases since the Closing Date shall
     not, in the aggregate, exceed the sum of (1) $10.0 million (which amount
     shall be increased by the amount of any Net Cash Proceeds to the Company
     from (A) sales of Capital Stock of the Company to management, other
     employees or Permitted Holders subsequent to the Closing Date to the extent
     such amounts are not included under Section 4.04(a)(iv)(3)(ii) and (B) any
     "key-man" life insurance policies which are used to make such repurchases)
     and (2) $2.0 million per fiscal year of the Company commencing with fiscal
     year 2003 (which amount may be used in a subsequent fiscal year to the
     extent not used during a fiscal year); provided further, however, that the
     cancelation of Indebtedness owing to the Company from such former officers,
     directors, consultants or employees of the Company or any of its Restricted
     Subsidiaries in connection with a repurchase of Capital Stock of the
     Company shall not be deemed to constitute a Restricted Payment under this
     Indenture; provided further, however, that such repurchase shall be
     included in the calculation of the amount of Restricted Payments;

          (vii) repurchases of Capital Stock deemed to occur upon the exercise
     of stock options, warrants or other convertible securities if such Capital
     Stock represents a portion of the exercise price thereof; provided,
     however, that such repurchases shall be excluded in the calculation of the
     amount of Restricted Payments; or

          (viii) so long as no Default or Event of Default shall have occurred
     and be continuing, payments not to exceed $500,000 in the aggregate since
     the Closing Date to enable the Company to make payments to holders of its
     Capital Stock in lieu of the issuance of fractional shares of its Capital
     Stock; provided, however, that such payments shall be excluded in the
     calculation of the amount of Restricted Payments.

          SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to



                                                                              45

(a) pay dividends or make any other distributions on its Capital Stock or pay
any Indebtedness or other obligations owed to the Company or any of its
Restricted Subsidiaries (it being understood that the priority of any preferred
stock in receiving dividends or liquidating distributions prior to dividends or
liquidating distributions being paid on common stock shall not be deemed a
restriction on the ability to make distributions on Capital Stock), (b) make any
loans or advances to the Company (it being understood that the subordination of
loans or advances made to the Company to other Indebtedness Incurred by the
Company shall not be deemed a restriction on the ability to make loans or
advances) or (c) transfer any of its property or assets to the Company or any of
its Restricted Subsidiaries, except:

          (i) any encumbrance or restriction pursuant to applicable law or any
     applicable rule, regulation or order, or an agreement in effect at or
     entered into on the Closing Date (including the Credit Agreement, this
     Indenture, the Security Documents (whether or not they become effective on
     or after the Closing Date) and the Senior Subordinated Notes Indentures);

          (ii) any encumbrance or restriction pursuant to a security agreement,
     pledge agreement or other document in connection with any Credit Agreement
     Obligation Incurred after the Closing Date;

          (iii) any encumbrance or restriction with respect to a Restricted
     Subsidiary pursuant to an agreement relating to any Capital Stock or
     Indebtedness of such Restricted Subsidiary, in each case Incurred by such
     Restricted Subsidiary prior to the date on which such Restricted Subsidiary
     was acquired by the Company (other than Capital Stock or Indebtedness
     Incurred as consideration in, in contemplation of, or to provide all or any
     portion of the funds or credit support utilized to consummate the
     transaction or series of related transactions pursuant to which such
     Restricted Subsidiary became a Restricted Subsidiary or was otherwise
     acquired by the Company) and outstanding on such date;

          (iv) any encumbrance or restriction pursuant to an agreement effecting
     a Refinancing of Indebtedness Incurred pursuant to an agreement referred to
     in clause (c)(i), (c)(ii) or (c)(iii) of this Section 4.05 or this clause
     (c)(iv) or contained in any amendment to an agreement referred to in clause
     (c)(i), (c)(ii) or (c)(iii) of this Section 4.05 or this clause (c)(iv);
     provided, however, that the encumbrances and restrictions contained in any
     such Refinancing agreement or amendment are no more restrictive, taken as a
     whole, than the encumbrances and restrictions contained in such predecessor
     agreements;

          (v) in the case of clause (c), any encumbrance or restriction (1) that
     restricts in a customary manner the assignment of any lease, license or
     similar contract or the subletting, assignment or transfer of any property
     or asset that is subject to a lease, license or similar contract, (2) that
     is or was created by virtue of any transfer of, agreement to transfer or
     option or right with respect to any property or assets of the Company or
     any Restricted Subsidiary not otherwise prohibited by this Indenture, (3)
     contained in security agreements securing



                                                                              46

     Indebtedness of a Restricted Subsidiary to the extent such encumbrance or
     restriction restricts the transfer of the property subject to such security
     agreements, or (4) encumbrances or restrictions relating to Indebtedness
     permitted to be Incurred pursuant to Section 4.03(b)(vi) for property
     acquired in the ordinary course of business that only imposes encumbrances
     or restrictions on the property so acquired (it being agreed that any such
     encumbrance or restriction may also secure other Indebtedness permitted to
     be Incurred by the Company and provided by the same financing source
     providing the Indebtedness Incurred pursuant to Section 4.03(b)(vi));

          (vi) with respect to a Restricted Subsidiary, any restriction imposed
     pursuant to an agreement entered into for the sale or disposition of all or
     substantially all the Capital Stock or assets of such Restricted Subsidiary
     pending the closing of such sale or disposition;

          (vii) customary provisions in joint venture agreements and other
     similar agreements entered into in the ordinary course of business;

          (viii) Indebtedness or other contractual requirements of a
     Securitization Entity in connection with a Qualified Securitization
     Transaction; provided, that such restrictions apply only to such
     Securitization Entity;

          (ix) net worth provisions in leases and other agreements entered into
     by the Company or any Restricted Subsidiary in the ordinary course of
     business; and

          (x) any agreement or instrument governing Indebtedness (whether or not
     outstanding) of Foreign Subsidiaries of the Company permitted to be
     Incurred pursuant to Section 4.03(a) or Section 4.03(b)(x).

          SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock.
(a)The Company shall not, and shall not permit any Restricted Subsidiary to,
make any Asset Disposition unless (i) the Company or such Restricted Subsidiary
receives consideration (including by way of relief from, or by any other Person
assuming sole responsibility for, any liabilities, contingent or otherwise) at
the time of such Asset Disposition at least equal to the fair market value of
the Capital Stock and assets subject to such Asset Disposition, (ii) at least
75% of the consideration thereof received by the Company or such Restricted
Subsidiary is in the form of (1) cash or Temporary Cash Investments, (2)
properties and assets to be owned by the Company or any Restricted Subsidiary
and used in a Permitted Business or (3) Capital Stock in one or more Persons
engaged in a Permitted Business that are or thereby become Restricted
Subsidiaries of the Company, and (iii) an amount equal to 100% of the Net
Available Cash from such Asset Disposition is applied by the Company (or such
Restricted Subsidiary, as the case may be):

          (1) first, (i) to the extent the Company elects (or is required by the
     terms of any Indebtedness), to prepay, repay, redeem or purchase any Credit
     Agreement Obligations or any Indebtedness Incurred by a Subsidiary of the
     Company that is



                                                                              47

     not a Note Guarantor, or (ii) to the extent the Company or such Restricted
     Subsidiary elects, to reinvest in Additional Assets (including by means of
     an Investment in Additional Assets by a Restricted Subsidiary with Net
     Available Cash received by the Company or another Restricted Subsidiary or
     the application by the Company of the Net Available Cash received by a
     Restricted Subsidiary of the Company), in each case within 365 days (or, in
     the case of Foreign Subsidiary Asset Dispositions, 545 days) from the later
     of such Asset Disposition or the receipt of such Net Available Cash,
     provided that pending the final application of any such Net Available Cash,
     the Company and its Restricted Subsidiaries may temporarily reduce
     Indebtedness or otherwise invest such Net Available Cash in any manner not
     prohibited by this Indenture;

          (2) second, within 365 days from the later of such Asset Disposition
     or the receipt of such Net Available Cash (or, in the case of Foreign
     Subsidiary Asset Dispositions, 545 days), to the extent of the balance of
     such Net Available Cash after such application in accordance with clause
     (1), to make an Offer (as defined below) to purchase Securities pursuant to
     and subject to the conditions set forth in Section 4.06(b); provided,
     however, that if the Company elects (or is required by the terms of any
     other Senior Indebtedness), such Offer may be made ratably to purchase the
     Securities and such other Senior Indebtedness of the Company; and

          (3) third, to the extent of the balance of such Net Available Cash
     after application in accordance with clauses (1) (other than the proviso
     thereof) and (2) for any general corporate purpose not restricted by the
     terms of this Indenture;

provided, however, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (1) or (2) above, the Company or such
Restricted Subsidiary shall retire such Indebtedness and shall cause the related
loan commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased.

          Notwithstanding the foregoing provisions of this Section 4.06, the
Company and the Restricted Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 4.06(a) except to the extent that
the aggregate Net Available Cash from all Asset Dispositions since the Closing
Date that is not applied in accordance with this Section 4.06(a) exceeds $10.0
million since the Closing Date.

          For the purposes of this Section 4.06, the following are deemed to be
cash: (A) the assumption of any liabilities of the Company (other than
Disqualified Stock of the Company) or any Restricted Subsidiary and the release
of the Company or such Restricted Subsidiary from all liability on such
liabilities in connection with such Asset Disposition and (B) securities
received by the Company or any Restricted Subsidiary from the transferee that
are promptly converted by the Company or such Restricted Subsidiary into cash.



                                                                              48

          (b) In the event of an Asset Disposition that requires the purchase of
Securities (and other Senior Indebtedness) pursuant to Section 4.06(a)(iii)(2),
the Company shall be required to purchase Securities (and other Senior
Indebtedness) tendered pursuant to an offer by the Company for the Securities
(and other Senior Indebtedness) (the "Offer") at a purchase price of 100% of
their principal amount plus accrued and unpaid interest, including Additional
Interest, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date) in accordance with the procedures (including proration in
the event of oversubscription) set forth in Section 4.06(c). If the aggregate
purchase price of Securities (and other Senior Indebtedness) tendered pursuant
to the Offer is less than the Net Available Cash allotted to the purchase of the
Securities (and other Senior Indebtedness), the Company shall apply the
remaining Net Available Cash for any general corporate purpose not restricted by
the terms of this Indenture. The Company shall not be required to make an Offer
for Securities (and other Senior Indebtedness) pursuant to this Section 4.06 if
the Net Available Cash available therefor (after application of the proceeds as
provided in clause (1) of Section 4.06(a)(iii)) is less than $10.0 million for
any particular Asset Disposition since the Closing Date (which lesser amount
shall be carried forward for purposes of determining whether an Offer is
required with respect to the Net Available Cash from any subsequent Asset
Disposition). Upon completion of the Offer, the amount of Net Available Cash
shall be reduced to zero.

          (c) (i) Promptly, and in any event within 10 days after the Company
becomes obligated to make an Offer, the Company shall be obligated to deliver to
the Trustee and send, by first-class mail to each Holder, a written notice
stating that the Holder may elect to have his Securities purchased by the
Company either in whole or in part (subject to proration as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain such information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum shall
include (1) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company filed subsequent to such Quarterly Report, other than Current
Reports describing Asset Dispositions otherwise described in the offering
materials (or corresponding successor reports), (2) a description of material
developments in the Company's business subsequent to the date of the latest of
such reports, and (3) if material, appropriate pro forma financial information)
and all instructions and materials necessary to tender Securities pursuant to
the Offer, together with the address referred to in clause (c) (iii).

          (ii) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Company shall deliver to the
Trustee an Officers' Certificate as to (1) the amount of the Offer (the "Offer
Amount"), (2) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (3) the compliance
of such allocation with the provisions of



                                                                              49

Section 4.06(a). By no later than 11:00 a.m. New York City time on the Purchase
Date, the Company shall irrevocably deposit with the Trustee or with a paying
agent (or, if the Company is acting as its own paying agent, segregate and hold
in trust) an amount equal to the Offer Amount or, if less, the purchase price of
Securities (and other Senior Indebtedness) tendered and accepted for payment in
the Offer. Upon the expiration of the period for which the Offer remains open
(the "Offer Period"), the Company shall deliver to the Trustee for cancelation
the Securities or portions thereof that have been properly tendered to and are
to be accepted by the Company. The Trustee (or the Paying Agent, if not the
Trustee) shall, on the date of purchase, mail or deliver payment to each
tendering Holder in the amount of the purchase price.

          (iii) Holders electing to have a Security purchased shall be required
to surrender the Security, with an appropriate form duly completed, to the
Company at the address specified in the notice at least three Business Days
prior to the Purchase Date. Holders shall be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the Purchase Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered by the Holder for purchase and a statement that such Holder is
withdrawing his election to have such Security purchased. If at the expiration
of the Offer Period the aggregate principal amount of Securities and any other
Senior Indebtedness included in the Offer surrendered by holders thereof exceeds
the Offer Amount, the Company shall select the Securities and other Senior
Indebtedness to be purchased on a pro rata basis (with such adjustments as may
be deemed appropriate by the Company so that only Securities and other Senior
Indebtedness in denominations of $1,000, or integral multiples thereof, shall be
purchased). Holders whose Securities are purchased only in part will be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.

          (iv) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section. A Security shall
be deemed to have been accepted for purchase at the time the Trustee, directly
or through an agent, mails or delivers payment therefor to the surrendering
Holder.

          (v) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.

          SECTION 4.07. Limitation on Transactions with Affiliates. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, enter into or conduct any transaction (including, the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate of the



                                                                              50

Company (an "Affiliate Transaction") unless such Affiliate Transaction is on
terms (i) that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the time of
such transaction in arm's-length dealings with a Person who is not such an
Affiliate, (ii) that, in the event that such Affiliate Transaction involves an
aggregate amount in excess of $5.0 million, (1) are set forth in writing and (2)
except as provided in Section 4.07(a)(iii), have been approved by a majority of
the members of the Board of Directors having no personal stake in such Affiliate
Transaction (if any such members exist) and (iii) that, in the event (1) such
Affiliate Transaction involves an amount in excess of $10.0 million, or (2) if
there are no members of the Board of Directors having no personal stake in such
Affiliate Transaction and such Affiliate Transaction involves an aggregate
amount in excess of $5.0 million, have been determined by a nationally
recognized appraisal, accounting or investment banking firm to be fair, from a
financial standpoint, to the Company and its Restricted Subsidiaries.

          (b) The provisions of Section 4.07(a) shall not prohibit (i) any
Restricted Payment permitted to be paid pursuant to Section 4.04, (ii) any
issuance of securities, or other payments awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, options to
purchase Capital Stock of the Company and equity ownership, restricted stock
plans, long-term incentive plans, stock appreciation rights plans, participation
plans or similar employee benefits plans approved by the Board of Directors,
(iii) the grant of options (and the exercise thereof) to purchase Capital Stock
of the Company or similar rights to employees and directors of the Company
pursuant to plans approved by the Board of Directors, (iv) loans or advances to
officers, directors or employees in the ordinary course of business, but in any
event not to exceed $2.0 million in the aggregate outstanding at any one time
with respect to all loans and advances made since the Closing Date, (v) the
payment of reasonable fees to directors of the Company and its Subsidiaries who
are not employees of the Company or its Subsidiaries and other reasonable fees,
compensation, benefits and indemnities paid or entered into by the Company or
its Restricted Subsidiaries in the ordinary course of business to or with the
officers, directors or employees of the Company and its Restricted Subsidiaries,
(vi) any transaction between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries, (vii) the provision by Persons who may be deemed
Affiliates or stockholders of the Company (other than J.P. Morgan Partners, LLC
and Persons directly or indirectly controlled by J.P. Morgan Partners, LLC) of
investment banking, commercial banking, trust, lending or financing, investment,
underwriting, placement agent, financial advisory or similar services to the
Company or its Subsidiaries performed after the Closing Date, (viii) sales of
Capital Stock to Permitted Holders approved by a majority of the members of the
Board of Directors who do not have a material direct or indirect financial
interest in or with respect to the transaction being considered, or (ix) the
existence or performance by the Company or any Restricted Subsidiary under any
agreement as in effect as of the Closing Date or replacement agreement therefor
or any transaction contemplated thereby (including pursuant to any amendment
thereto or replacement agreement therefor) so long as such amendment or
replacement is not more disadvantageous to the Holders of the Securities in any
material respect than the original agreement as in effect on the Closing Date.



                                                                              51

          SECTION 4.08. Change of Control. (a) Upon a Change of Control, each
Holder shall have the right to require that the Company repurchase all or any
part of such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, including
Additional Interest, if any, to the date of repurchase (subject to the right of
Holders of record on the relevant record date to receive interest, including
Additional Interest, if any, due on the relevant interest payment date), in
accordance with the terms contemplated in Section 4.08(b); provided, however,
that notwithstanding the occurrence of a Change of Control, the Company shall
not be obligated to repurchase the Securities pursuant to this Section 4.08 in
the event that it has exercised its right to redeem all the Securities under
paragraph 5 of the Securities. In the event that at the time of such Change of
Control the terms of any agreement governing Bank Indebtedness of the Company or
its Subsidiaries restrict or prohibit the repurchase of Securities pursuant to
this Section 4.08, then prior to the mailing of the notice to Holders provided
for in Section 4.08(b) below but in any event within 30 days following any
Change of Control, the Company shall (i) repay in full all such Bank
Indebtedness or offer to repay in full all such Bank Indebtedness and repay the
Bank Indebtedness of each lender who has accepted such offer or (ii) obtain the
requisite consent of the lenders under such agreements to permit the repurchase
of the Securities as provided for in Section 4.08(b).

          (b) Within 30 days following any Change of Control (except as provided
in the proviso to the first sentence of Section 4.08(a)), the Company shall mail
a notice to each Holder with a copy to the Trustee (the "Change of Control
Offer") stating:

          (i) that a Change of Control has occurred and that such Holder has the
     right to require the Company to purchase all or a portion (in integral
     multiples of $1,000) of such Holder's Securities at a purchase price in
     cash equal to 101% of the principal amount thereof, plus accrued and unpaid
     interest, including Additional Interest, if any, to the date of repurchase
     (subject to the right of Holders of record on the relevant record date to
     receive interest, including Additional Interest, if any, due on the
     relevant interest payment date);

          (ii) the circumstances and relevant facts and financial information
     regarding such Change of Control;

          (iii) the repurchase date (which shall be no earlier than 30 days nor
     later than 60 days from the date such notice is mailed); and

          (iv) the instructions determined by the Company, consistent with this
     Section, that a Holder must follow in order to have its Securities
     purchased.

          (c) Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days prior to the
purchase date. Holders shall be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
purchase date a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount



                                                                              52

of the Security which was delivered for purchase by the Holder and a statement
that such Holder is withdrawing his election to have such Security purchased.
Holders whose Securities are purchased only in part shall be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.

          (d) On the purchase date, all Securities purchased by the Company
under this Section shall be delivered to the Trustee for cancelation, and the
Company shall pay the purchase price plus accrued and unpaid interest, including
Additional Interest, if any, to the Holders entitled thereto.

          (e) Notwithstanding the foregoing provisions of this Section, the
Company shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set forth in Section
4.08(b) applicable to a Change of Control Offer made by the Company and
purchases all Securities validly tendered and not withdrawn under such Change of
Control Offer.

          (f) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section 4.08. A Security
shall be deemed to have been accepted for purchase at the time the Trustee,
directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.

          (g) Prior to any Change of Control Offer, the Company shall deliver to
the Trustee an Officers' Certificate stating that all conditions precedent
contained herein to the right of the Company to make such offer have been
complied with.

          (h) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.

          SECTION 4.09. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate (which certificate may be the same certificate required by
TIA Section 314(a)(4)) stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA Section 314(a)(4).

          SECTION 4.10. Further Instruments and Acts. Upon request of the
Trustee, the Company shall execute and deliver such further instruments and do
such



                                                                              53

further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.

          SECTION 4.11. Future Note Guarantors and Liens. If any Restricted
Subsidiary shall, after the Closing Date, become a guarantor (i) of any Credit
Agreement Obligations or other Senior Indebtedness or (ii) any Subordinated
Obligation, other than, in each case, a Foreign Subsidiary that guarantees
Indebtedness Incurred by another Foreign Subsidiary, then the Company shall, at
the time, cause such Subsidiary to (a) execute a supplemental indenture
substantially in the form set forth in Exhibit C hereto pursuant to which such
Restricted Subsidiary will Guarantee payment of the Securities, and (b) if such
Subsidiary grants any Lien upon any of its property as security for any Credit
Agreement Obligations or any Other Second-Lien Obligations, (x) execute Security
Documents that grant the Trustee a second-priority Lien upon such property for
the benefit of the Holders upon substantially the same terms as the security
documents in respect of such Credit Agreement Obligations or Other Second-Lien
Obligations, but subject to the Intercreditor Agreement, and (y) take all such
actions (including the filing and recording of financing statements, fixture
filings, Mortgages and other documents) that may be required under any
applicable law, or which the Trustee may reasonably request, to create and
perfect such second-priority Lien, all at the expense of the Company and the
Note Guarantors, including all reasonable fees and expenses of counsel incurred
by the Trustee in connection therewith; provided that such Subsidiary shall not
be required to grant a second-priority Lien upon such property for the benefit
of the Holders if (i) a second-priority Lien in such property cannot be granted
or perfected under applicable law or (ii) such grant requires the consent of any
third party, which consent such Subsidiary is unable to obtain using
commercially reasonable efforts, and (c) deliver to the Trustee an Opinion of
Counsel, reasonably satisfactory to the Trustee, that such supplemental
indenture and any such Security Documents, as the case may be, are valid and
binding obligations of such Subsidiary enforceable against such Subsidiary in
accordance with their terms, subject to customary exceptions, including
exceptions for bankruptcy, fraudulent conveyance and equitable principles.

          From and after the Closing Date, if the Company or any Note Guarantor
creates any additional security interest upon any of its property to secure any
Credit Agreement Obligations or any Other Second-Lien Obligations, it shall
concurrently grant a second-priority Lien (subject to Permitted Liens) upon such
property as security for the Securities by (i) executing Security Documents that
grant the Trustee a second-priority Lien upon such property for the benefit of
the Holders upon substantially the same terms as those that create such
additional security interests, but subject to the Intercreditor Agreement, and
(ii) take all such actions (including the filing and recording of financing
statements, fixture filings, Mortgages and other documents) that may be required
under any applicable law, or which the Trustee may reasonably request to create
and perfect such second-priority Lien, all at the expense of the Company and the
Note Guarantors, including all reasonable fees and expenses of counsel incurred
by the Trustee in connection therewith; provided that the Company or such Note
Guarantor shall not be required to grant a second-priority Lien upon such
property as security for the Securities if (x) a second-priority Lien in such
property cannot be granted or perfected under applicable law or (y) such grant
requires the consent of any third party, which consent the



                                                                              54

Company or such Note Guarantor is unable to obtain using commercially reasonable
efforts.

          In addition, the Company and each Note Guarantor shall, with respect
to each parcel of real property in the United States acquired by the Company or
any Note Guarantor after the Closing Date that secures the Credit Agreement
Obligations, use commercially reasonable efforts to deliver to the Collateral
Agent, for the benefit of or addressed to the Trustee or the Collateral Agent,
as applicable, the following, but only to the extent that the following
documents are required to be delivered to the Credit Agent pursuant to the
Credit Agreement:

          (a) a fully executed, acknowledged, and recorded Mortgage similar to
that provided for the benefit of the Credit Agent except that such mortgage or
deed of trust shall be subject to the terms of the Intercreditor Agreement;

          (b) an opinion of local counsel in a form substantially similar to the
opinion provided for the benefit of the Credit Agent, or otherwise reasonably
acceptable to the Trustee;

          (c) a fully-paid title insurance policy in a form substantially
similar to the title insurance policy delivered to the Credit Agent (including
such endorsements as the Credit Agent obtained in its title insurance policy)
with no exceptions other than (i) Permitted Liens and exceptions included under
the title insurance policy in favor of the Credit Agent, (ii) the Credit Agent's
existing Lien on such property and (iii) other changes reasonably acceptable to
the Trustee; and

          (d) the most recent survey of each property together with either (i)
an updated survey certification from the applicable surveyor stating that, based
on a visual inspection of the property and the knowledge of the surveyor, there
has been no change in the facts depicted in the survey or (ii) an affidavit from
the Company and the Note Guarantors stating that there has been no change, other
than, in each case, changes reasonably acceptable to the Trustee, in the facts
depicted in the survey, in each case, in forms substantially similar to those
delivered to the Credit Agent.

          The Company shall provide each of the foregoing described in clauses
(a) through (e) above at its own expense and shall pay all reasonable fees and
expenses of counsel incurred by the Trustee in connection with each of the
foregoing.

          SECTION 4.12. Limitation on Lines of Business. The Company shall not,
and shall not permit any Restricted Subsidiary to, engage in any business, other
than a Permitted Business, except that the Company and any of its Restricted
Subsidiaries may engage in a new business so long as the Company and its
Restricted Subsidiaries, taken as a whole, remain substantially engaged in a
Permitted Business.

          SECTION 4.13. Limitation on Liens. The Company shall not, and shall
not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, assume or suffer to exist any Lien of any kind on any asset now
owned or hereafter acquired by the Company or its Restricted Subsidiaries,
except Permitted Liens.



                                                                              55

                                    ARTICLE V

                                Successor Company

          SECTION 5.01. When Company May Merge or Transfer Assets. (a) The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to, any Person, unless:

          (i) the resulting, surviving or transferee Person (the "Successor
     Company") shall be a corporation organized and existing under the laws of
     the United States of America, any State thereof or the District of Columbia
     and the Successor Company (if not the Company) shall expressly assume, by a
     supplemental indenture hereto, executed and delivered to the Trustee, in
     form satisfactory to the Trustee, all the obligations of the Company under
     the Securities and this Indenture;

          (ii) immediately after giving effect to such transaction (and treating
     any Indebtedness which becomes an obligation of the Successor Company or
     any Restricted Subsidiary as a result of such transaction as having been
     Incurred by the Successor Company or such Restricted Subsidiary at the time
     of such transaction), no Default shall have occurred and be continuing;

          (iii) immediately after giving effect to such transaction, the
     Successor Company would be able to Incur an additional $1.00 of
     Indebtedness pursuant to Section 4.03(a); and

          (iv) the Company shall have delivered to the Trustee an Officers'
     Certificate and an Opinion of Counsel, each stating that such
     consolidation, merger or transfer and such supplemental indenture (if any)
     comply with this Indenture.

          The Successor Company shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this Indenture, but the
predecessor Company in the case of a conveyance, transfer or lease of all or
substantially all its assets shall not be released from the obligation to pay
the principal of and interest on the Securities.

          (b) The Company shall not permit any Note Guarantor to consolidate
with or merge with or into, or convey, transfer or lease all or substantially
all its assets to, any Person unless:

          (i) (1) the resulting, surviving or transferee Person will be a
     corporation, partnership or limited liability company organized and
     existing under the laws of the United States of America, any State thereof
     or the District of Columbia, and such Person (if not such Note Guarantor)
     shall expressly assume, by a supplemental indenture, executed and delivered
     to the Trustee, in form satisfactory to the Trustee, all the obligations of
     such Note Guarantor under its Note Guarantee; (2) immediately after giving
     effect to such transaction (and



                                                                              56

     treating any Indebtedness which becomes an obligation of the resulting,
     surviving or transferee Person or any Restricted Subsidiary as a result of
     such transaction as having been Incurred by such Person or such Restricted
     Subsidiary at the time of such transaction), no Default shall have occurred
     and be continuing; and (3) the Company shall have delivered to the Trustee
     an Officers' Certificate and an Opinion of Counsel, each stating that such
     consolidation, merger or transfer and such supplemental indenture (if any)
     comply with this Indenture; or

          (ii) such transaction results in the Company receiving cash or other
     property (other than Capital Stock representing a controlling interest in
     the successor entity), and the transaction is made in compliance with
     Section 4.06.

          (c) Notwithstanding the foregoing, (i) any Restricted Subsidiary may
consolidate with, merge into or transfer or lease all or part of its properties
and assets to the Company or a Subsidiary that is a Note Guarantor and (ii) the
Company may merge with an Affiliate incorporated solely for (1) the purpose of
incorporating the Company or (2) organizing the Company in another jurisdiction
to realize tax or other benefits.

                                   ARTICLE VI

                              Defaults and Remedies

          SECTION 6.01. Events of Default. An "Event of Default" occurs if:

          (a) the Company defaults in any payment of interest on any Security or
     in any payment of Additional Interest, in each case, when the same becomes
     due and payable and such default continues for a period of 30 days;

          (b) the Company (i) defaults in the payment of the principal of any
     Security when the same becomes due and payable at its Stated Maturity, upon
     required redemption or repurchase, upon declaration or otherwise or (ii)
     fails to redeem or purchase Securities when required pursuant to this
     Indenture or the Securities;

          (c) the Company or any Note Guarantor fails to comply with Section
     5.01;

          (d) the Company or any Restricted Subsidiary fails to comply with
     Section 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12 or 4.13 (other
     than a failure to purchase Securities when required under Section 4.06 or
     4.08) and such failure continues for 45 days after the written notice
     specified below;

          (e) the Company or any Restricted Subsidiary fails to comply with any
     of its agreements in the Securities, this Indenture or any Security
     Document (other than those referred to in (a), (b), (c) or (d) above) and
     such failure continues for 60 days after the written notice specified
     below;



                                                                              57

          (f) the principal amount of any Indebtedness of the Company or any
     Restricted Subsidiary is not paid within any applicable grace period after
     final maturity or the acceleration by the holders thereof because of a
     default and the aggregate principal amount of such Indebtedness unpaid or
     accelerated exceeds $10.0 million or its foreign currency equivalent at the
     time and such failure continues for 30 days after the written notice
     specified below;

          (g) the Company or any Significant Subsidiary pursuant to or within
     the meaning of any Bankruptcy Law:

               (i) commences a voluntary case;

               (ii) consents to the entry of an order for relief against it in
          an involuntary case;

               (iii) consents to the appointment of a Custodian of it or for any
          substantial part of its property; or

               (iv) makes a general assignment for the benefit of its creditors;
          or takes any comparable action under any foreign laws relating to
          insolvency;

          (h) a court of competent jurisdiction enters an order or decree under
     any Bankruptcy Law that:

               (i) is for relief against the Company or any Significant
          Subsidiary in an involuntary case;

               (ii) appoints a Custodian of the Company or any Significant
          Subsidiary or for any substantial part of its property; or

               (iii) orders the winding up or liquidation of the Company or any
          Significant Subsidiary;

     or any similar relief is granted under any foreign laws and the order or
     decree remains unstayed and in effect for 60 days;

          (i) any judgment or decree for the payment of money in excess of $10.0
     million (net of any amounts with respect to which a reputable and
     creditworthy insurance company has acknowledged liability in writing) or
     its foreign currency equivalent against the Company or a Restricted
     Subsidiary if such judgment or decree becomes final and nonappealable and
     remains outstanding for a period of 60 days following such judgment and is
     not discharged, waived or the execution thereof stayed; or

          (j) (1) any Note Guarantee, or any Security Document executed by, or
     any security interest granted thereunder by a Note Guarantor that is a
     Material Subsidiary ceases to be in full force and effect (except as
     contemplated by the terms of this Indenture, the Security Documents, the
     Intercreditor Agreement or



                                                                              58

     the Note Guarantees), except (i) as a result of (A) the Credit Agent's or
     Trustee's failure to take any action reasonably requested by the Company in
     order to maintain a valid and perfected Lien on any Collateral or (B) any
     action taken by the Credit Agent or Trustee to release any Lien on any
     Collateral or (ii) Liens on any item of Collateral with a fair market value
     not exceeding $500,000 or (2) any Note Guarantor or Person acting by or on
     behalf of such Note Guarantor denies or disaffirms its obligations under
     this Indenture, any Note Guarantee or any Security Document and, in each
     case, such Default continues for 10 days after the written notice specified
     below.

          The foregoing shall constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.

          The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.

          A Default under clause (d), (e), (f) or (j) above is not an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities notify the Company of the Default and the Company or
the Note Guarantor, as applicable, does not cure such Default within the time
specified after receipt of such notice. Such notice must specify the Default,
demand that it be remedied and state that such notice is a "Notice of Default".

          The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which is, or with the giving of notice or the lapse of time or both
would become, an Event of Default, its status and what action the Company is
taking or proposes to take with respect thereto.

          SECTION 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(g) or (h) with respect to the
Company) occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities by written notice (specifying the
Event of Default and stating that the notice is a "notice of acceleration") to
the Company may declare the principal of and accrued but unpaid interest
(including Additional Interest, if any) on all the Securities to be due and
payable. Upon such a declaration, such principal and interest (including
Additional Interest, if any) shall be due and payable immediately. If an Event
of Default specified in Section 6.01(g) or (h) with respect to the Company
occurs, the principal of and interest (including Additional Interest, if any) on
all the Securities shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holders.
The Holders of a majority in principal amount of the Securities by notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of



                                                                              59

Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.

          SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.

          The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder in exercising any right or remedy accruing
upon an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative.

          SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (a) a Default in the payment of the
principal of or interest on a Security, (b) a Default arising from the failure
to redeem or purchase any Security when required pursuant to the terms of this
Indenture or (c) a Default in respect of a provision that under Section 9.02
cannot be amended without the consent of each Holder affected. When a Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or impair any consequent right.

          SECTION 6.05. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Holders or would involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction. Prior to taking any
action hereunder, the Trustee shall be entitled to indemnification satisfactory
to it in its sole discretion against all losses and expenses caused by taking or
not taking such action.

          SECTION 6.06. Limitation on Suits. (a) Except to enforce the right to
receive payment of principal, premium (if any) or interest when due, no Holder
may pursue any remedy with respect to this Indenture or the Securities unless:

          (i) the Holder gives to the Trustee written notice stating that an
     Event of Default is continuing;

          (ii) the Holders of at least 25% in principal amount of the Securities
     make a written request to the Trustee to pursue the remedy;



                                                                              60

          (iii) such Holder or Holders offer to the Trustee reasonable security
     or indemnity reasonably satisfactory to it against any loss, liability or
     expense;

          (iv) the Trustee does not comply with the request within 60 days after
     receipt of the request and the offer of security or indemnity; and

          (v) the Holders of a majority in principal amount of the Securities do
     not give the Trustee a direction inconsistent with the request during such
     60-day period.

          (b) A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.

          SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest, including Additional Interest, if any, on
the Securities held by such Holder, on or after the respective due dates
expressed or provided for in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.

          SECTION 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company or any other obligor on the Securities for the whole amount then due and
owing (together with interest on overdue principal and (to the extent lawful) on
any unpaid interest at the rate provided for in the Securities) and the amounts
provided for in Section 7.07.

          SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Holders allowed in
any judicial proceedings relative to the Company, any Subsidiary or Note
Guarantor, their creditors or their property and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 7.07.

          SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:

          FIRST: to the Trustee for amounts due under Section 7.07;

          SECOND: to Holders for amounts due and unpaid on the Securities for
     principal and interest, ratably, and any Additional Interest, without
     preference or



                                                                              61

     priority of any kind, according to the amounts due and payable on the
     Securities for principal and interest, including any Additional Interest,
     respectively; and

          THIRD: to the Company.

          The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section. At least 15 days before such record date, the
Trustee shall mail to each Holder and the Company a notice that states the
record date, the payment date and amount to be paid.

          SECTION 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount of the Securities.

          SECTION 6.12. Waiver of Stay or Extension Laws. Neither the Company
nor any Note Guarantor (to the extent it may lawfully do so) shall at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company and each Note Guarantor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and shall not hinder, delay or impede the execution of any power herein
granted to the Trustee, but shall suffer and permit the execution of every such
power as though no such law had been enacted.

                                   ARTICLE VII

                                     Trustee

          SECTION 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.

          (b) Except during the continuance of an Event of Default:

          (i) the Trustee undertakes to perform such duties and only such duties
     as are specifically set forth in this Indenture and no implied covenants or
     obligations shall be read into this Indenture against the Trustee; and



                                                                              62

          (ii) in the absence of bad faith on its part, the Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Indenture. However,
     with respect to any certificate or opinions required to be furnished to it
     hereunder, the Trustee shall examine the certificates and opinions to
     determine whether or not they conform to the requirements of this Indenture
     (but need not confirm or investigate the accuracy of mathematical
     calculations or other facts stated therein).

          (c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:

          (i) this paragraph does not limit the effect of paragraph (b) of this
     Section;

          (ii) the Trustee shall not be liable for any error of judgment made in
     good faith by a Trust Officer unless it is proved that the Trustee was
     negligent in ascertaining the pertinent facts; and

          (iii) the Trustee shall not be liable with respect to any action it
     takes or omits to take in good faith in accordance with a direction
     received by it pursuant to Section 6.05.

          (iv) No provision of this Indenture shall require the Trustee to
     expend or risk its own funds or otherwise incur financial liability in the
     performance of any of its duties hereunder or in the exercise of any of its
     rights or powers, if it shall have reasonable grounds to believe that
     repayment of such funds or adequate indemnity against such risk or
     liability is not reasonably assured to it.

          (d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.

          (e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.

          (f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.

          (g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.

          SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively rely
on any document (whether in its original or facsimile form) believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.

          (b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any



                                                                              63

action it takes or omits to take in good faith in reliance on the Officers'
Certificate or Opinion of Counsel.

          (c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.

          (d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.

          (e) The Trustee may consult with counsel of its selection, and the
advice or opinion of such counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect of any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.

          (f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
note or other paper or document unless requested in writing to do so by the
Holders of not less than a majority in principal amount of the Securities at the
time outstanding, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney at the Company's expense and shall incur no
liability or additional liability of any kind by reason of such inquiry or
investigation.

          (g) The rights, privileges, protections, immunities and benefits given
to the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.

          (h) The Trustee may request that the Company deliver a certificate
setting forth the names of individuals and/or titles of officers authorized at
such time to take specified actions pursuant to this Indenture, which Officers'
Certificate may be signed by any person authorized to sign an Officers'
Certificate, including any person specified as so authorized in any certificate
previously delivered and not superseded.

          (i) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.

          SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it



                                                                              64

were not Trustee. Any Paying Agent or Registrar may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.

          SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, any Note Guarantee or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Company or any Note Guarantor
in this Indenture or in any document issued in connection with the sale of the
Securities or in the Securities other than the Trustee's certificate of
authentication. The Trustee shall not be charged with knowledge of any Default
or Event of Default under Sections 6.01(c), (d), (e), (f), (i) or (j) or of the
identity of any Significant Subsidiary unless either (a) a Trust Officer shall
have actual knowledge thereof or (b) the Trustee shall have received notice
thereof in accordance with Section 12.02 hereof from the Company, any Note
Guarantor or any Holder at the Corporate Trust Office of the Trustee, such
notice referencing the Securities and this Indenture.

          SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Holder notice of the Default within the earlier of 90 days after it occurs or 30
days after it is actually known to a Trust Officer. Except in the case of a
Default in payment of principal of or interest on any Security (including
payments pursuant to the mandatory redemption provisions of such Security, if
any), the Trustee may withhold the notice if and so long as a committee of its
Trust Officers in good faith determines that withholding the notice is in the
interests of Holders.

          SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with May 15, 2004, and in any event
prior to July 15 in each year, the Trustee shall mail to each Holder a brief
report dated as of such May 15 that complies with TIA Section 313(a) if and to
the extent required thereby. The Trustee shall also comply with TIA Section
313(b) and 313(c).

          A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each stock exchange (if any) on which the Securities are
listed. The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.

          SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its services as shall be
agreed to in writing from time to time by the Company and the Trustee. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company and each Note Guarantor, jointly and severally, shall
indemnify the Trustee and any predecessor Trustee against any and all loss,
liability,



                                                                              65

claim, damage or expense (including reasonable attorneys' fees), including taxes
(other than taxes based upon, measured by or determined by the income of the
Trustee), incurred by or in connection with the administration of this trust and
the performance of its duties hereunder, including its duties as Collateral
Agent. The Trustee shall notify the Company of any claim for which it may seek
indemnity promptly upon obtaining actual knowledge thereof; provided, however,
that any failure so to notify the Company shall not relieve the Company or any
Note Guarantor of its indemnity obligations hereunder. The Company shall defend
the claim and the indemnified party shall provide reasonable cooperation at the
Company's expense in the defense. Such indemnified parties may have separate
counsel and the Company and the Note Guarantors, as applicable shall pay the
fees and expenses of such counsel; provided, however, that the Company shall not
be required to pay such fees and expenses if it assumes such indemnified
parties' defense and, in such indemnified parties' reasonable judgment, there is
no conflict of interest between the Company and the Note Guarantors, as
applicable, and such parties in connection with such defense. The Company need
not reimburse any expense or indemnify against any loss, liability or expense
incurred by an indemnified party through such party's own wilful misconduct,
negligence or bad faith or in the case of the Collateral Agent, through its own
wilful misconduct, gross negligence or bad faith.

          To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest and Additional Interest, if any, on particular
Securities.

          The Company's payment obligations pursuant to this Section shall
survive the satisfaction or discharge of this Indenture, any rejection or
termination of this Indenture under any bankruptcy law or the resignation or
removal of the Trustee. Without prejudice to any other rights available to the
Trustee under applicable law, when the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.01(g) or (h) with respect to the
Company, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.

          SECTION 7.08. Replacement of Trustee. (a) The Trustee may resign at
any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:

          (i) the Trustee fails to comply with Section 7.10;

          (ii) the Trustee is adjudged bankrupt or insolvent;

          (iii) a receiver or other public officer takes charge of the Trustee
     or its property; or

          (iv) the Trustee otherwise becomes incapable of acting.

          (b) If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably



                                                                              66

promptly appoint a successor Trustee, or if a vacancy exists in the office of
Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), the Company shall promptly appoint a successor Trustee.

          (c) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the lien provided for
in Section 7.07.

          (d) If a successor Trustee does not take office within 30 days after
the retiring Trustee resigns or is removed, the retiring Trustee or the Holders
of 10% in principal amount of the Securities may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Trustee at the expense of the Company.

          (e) If the Trustee fails to comply with Section 7.10, unless the
Trustee's duty to resign is stayed as provided in TIA Section 310(b), any Holder
who has been a bona fide holder of a Security for at least six months may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

          (f) Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.

          SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.

          In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.

          SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b); subject to its right to



                                                                              67

apply for a stay of its duty to resign under the penultimate paragraph of TIA
Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.

          SECTION 7.11. Preferential Collection of Claims Against the Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.

                                  ARTICLE VIII

                       Discharge of Indenture; Defeasance

          SECTION 8.01. Discharge of Liability on Securities; Defeasance.
(a)When (i) all outstanding Securities (other than Securities replaced or paid
pursuant to Section 2.08) have been canceled or delivered to the Trustee for
cancelation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof, and the Company irrevocably deposits with the
Trustee funds in an amount sufficient or U.S. Government Obligations, the
principal of and interest on which will be sufficient, or a combination thereof
sufficient, in the written opinion of a nationally recognized firm of
independent public accountants delivered to the Trustee (which delivery shall
only be required if U.S. Government Obligations have been so deposited), to pay
the principal of, premium (if any) and interest and Additional Interest, if any,
on the outstanding Securities when due at maturity or upon redemption of,
including interest thereon to maturity or such redemption date (other than
Securities replaced or paid pursuant to Section 2.08) and Additional Interest,
if any, and if in the case of both clause (i) and (ii) the Company pays all
other sums payable hereunder by the Company, then this Indenture shall, subject
to Section 8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.

          (b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all of its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12, 4.13, and 10.02 the operation of
Section 5.01(a)(iii), 6.01(d), 6.01(f), 6.01(g) (with respect to Significant
Subsidiaries of the Company only), 6.01(h) (with respect to Significant
Subsidiaries of the Company only) 6.01(i) and 6.01(j) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option. In the event that the
Company terminates all of its obligations under the Securities and this
Indenture by exercising its legal defeasance option or its covenant defeasance
option, the obligations under the Note Guarantees shall each be terminated
simultaneously with the termination of such obligations.



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          If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.01(d),
6.01(f), 6.01(g) (with respect to Significant Subsidiaries only), 6.01(h) (with
respect to Significant Subsidiaries only), 6.01(i) or 6.01(j) or because of the
failure of the Company to comply with Section 5.01(a)(iii).

          Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.

          (c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 7.07, 7.08, and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04, 8.05, and 8.06
shall survive.

          SECTION 8.02. Conditions to Defeasance. (a) The Company may exercise
its legal defeasance option or its covenant defeasance option only if:

          (i) the Company irrevocably deposits in trust with the Trustee money
     in an amount sufficient or U.S. Government Obligations, the principal of
     and interest on which will be sufficient, or a combination thereof
     sufficient, to pay the principal of, premium (if any) and interest, on the
     Securities when due at maturity or redemption, as the case may be,
     including interest thereon to maturity or such redemption date and
     Additional Interest (if any);

          (ii) the Company delivers to the Trustee a certificate from a
     nationally recognized firm of independent accountants expressing their
     opinion that the payments of principal and interest when due and without
     reinvestment on the deposited U.S. Government Obligations plus any
     deposited money without investment will provide cash at such times and in
     such amounts as will be sufficient to pay principal, premium, if any,
     interest and Additional Interest, if any, when due on all the Securities to
     maturity or redemption, as the case may be;

          (iii) 123 days pass after the deposit is made and during the 123-day
     period no Default specified in Section 6.01(g) or (h) with respect to the
     Company occurs which is continuing at the end of the period;

          (iv) the deposit does not constitute a default under any other
     agreement binding on the Company;

          (v) the Company delivers to the Trustee an Opinion of Counsel to the
     effect that the trust resulting from the deposit does not constitute, or is
     qualified as, a regulated investment company under the Investment Company
     Act of 1940;

          (vi) in the case of the legal defeasance option, the Company shall
     have delivered to the Trustee an Opinion of Counsel stating that (1) the
     Company has



                                                                              69

     received from, or there has been published by, the Internal Revenue Service
     a ruling, or (2) since the date of this Indenture there has been a change
     in the applicable Federal income tax law, in either case to the effect
     that, and based thereon such Opinion of Counsel shall confirm that, the
     Holders will not recognize income, gain or loss for Federal income tax
     purposes as a result of such deposit and legal defeasance and will be
     subject to Federal income tax on the same amounts, in the same manner and
     at the same times as would have been the case if such deposit and legal
     defeasance had not occurred;

          (vii) in the case of the covenant defeasance option, the Company shall
     have delivered to the Trustee an Opinion of Counsel to the effect that the
     Holders will not recognize income, gain or loss for Federal income tax
     purposes as a result of such deposit and covenant defeasance and will be
     subject to Federal income tax on the same amounts, in the same manner and
     at the same times as would have been the case if such deposit and covenant
     defeasance had not occurred; and

          (viii) the Company delivers to the Trustee an Officers' Certificate
     and an Opinion of Counsel, each stating that all conditions precedent to
     the defeasance and discharge of the Securities as contemplated by this
     Article 8 have been complied with.

          (b) Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.

          (c) Notwithstanding the foregoing, the Opinion of Counsel required by
clause (vi) above need not be delivered if all Securities not theretofore
delivered to the Trustee for cancelation have become due and payable.

          SECTION 8.03. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest and Additional Interest, if any, on the
Securities.

          SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any money or U.S.
Government Obligations held by it as provided in this Article which, in the
written opinion of nationally recognized firm of independent public accountants
delivered to the Trustee (which delivery shall only be required if U.S.
Government Obligations have been so deposited), are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
discharge or defeasance in accordance with this Article.

          Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal, interest or Additional Interest (if any) that
remains unclaimed for two years, and, thereafter, Holders entitled to the money
must look to the Company



                                                                              70

for payment as general creditors, and the Trustee and the Paying Agent shall
have no further liability with respect to such monies.

          SECTION 8.05. Indemnity for Government Obligations. The Company shall
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.

          SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of principal of or interest or Additional Interest,
if any, on, any Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.

                                   ARTICLE IX

                                   Amendments

          SECTION 9.01. Without Consent of Holders. (a) The Company, the Note
Guarantors and the Trustee may amend this Indenture, the Securities, the
Security Documents or the Intercreditor Agreement without notice to or consent
of any Holder:

          (i) to cure any ambiguity, omission, defect or inconsistency;

          (ii) to comply with Article 5;

          (iii) to provide for uncertificated Securities in addition to or in
     place of certificated Securities; provided, however, that the
     uncertificated Securities are issued in registered form for purposes of
     Section 163(f) of the Code or in a manner such that the uncertificated
     Securities are described in Section 163(f)(2)(B) of the Code;

          (iv) to add additional Guarantees with respect to the Securities or to
     secure further the Securities;

          (v) to add to the covenants of the Company for the benefit of the
     Holders or to surrender any right or power herein conferred upon the
     Company;

          (vi) to comply with any requirement of the SEC in connection with
     qualifying, or maintaining the qualification of, this Indenture under the
     TIA;



                                                                              71

          (vii) to make any change that does not materially and adversely affect
     the rights of any Holder under the provisions of this Indenture;

          (viii) to provide for the issuance of the Exchange Notes, Private
     Exchange Notes, or the Additional Securities which shall have terms
     substantially identical in all material respects to the Original Securities
     (except that the transfer restrictions and Additional Interest provisions
     contained in the Original Securities shall be modified or eliminated, as
     appropriate), and which shall be treated, together with any outstanding
     Original Securities, as a single issue of securities; and

          (ix) if necessary, in connection with any addition or release of
     Collateral permitted under the terms of this Indenture or the Security
     Documents.

          In addition, without the consent of any Holder, any amendment, waiver
or consent agreed to by the Credit Agent or the holders of Credit Agreement
Obligations under any provision of any of the security documents granting the
first-priority Lien on any Collateral to secure the Credit Agreement Obligations
shall automatically apply to the comparable provision of this Indenture and the
comparable Security Document entered into in connection with the Securities. The
Company and the Note Guarantors shall also be entitled to other releases of the
Collateral or the Note Guarantees as described in Article 8 and Sections 10.03,
10.07 and 11.03 hereof. If the Company wishes under other circumstances to
obtain an amendment or waiver or seek a consent under any Security Document, any
Note Guarantee or the Intercreditor Agreement, the Company may mail written
notice of its request to the Trustee and the Holders, specifying the amendment,
waiver or consent, the reason it is being sought and any other information
necessary for the Holders to reasonably consider such matter. If the Company
does not receive written objections from Holders of at least 25% in aggregate
principal amount of the Securities within 20 Business Days after such mailing,
such amendment, waiver or consent shall be deemed granted. If the Company
receives such objections, then it shall not be entitled to effect such amendment
or waiver, and such consent shall not be effective, unless the Company obtains
the consent of the Holders of a majority in outstanding principal amount of the
Securities (including any Additional Securities) then outstanding voting as a
single class (including consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Securities).

          (b) After an amendment under this Section 9.01 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 9.01.

          SECTION 9.02. With Consent of Holders. (a) The Company, the Note
Guarantors and the Trustee may amend this Indenture, the Securities, the
Security Documents or the Intercreditor Agreement without notice to any Holder
but with the written consent of the Holders of at least a majority in principal
amount of the Securities then outstanding (including consents obtained in
connection with a tender offer or exchange for, or purchase of, the Securities)
and compliance with any provisions of this



                                                                              72

Indenture may be waived with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Securities). However, without the consent of each Holder
affected, an amendment or waiver may not:

          (i) reduce the amount of Securities whose Holders must consent to an
     amendment;

          (ii) reduce the rate of or extend the time for payment of interest
     (including Additional Interest, if any) on any Security;

          (iii) reduce the principal of or extend the Stated Maturity of any
     Security;

          (iv) reduce the premium payable upon the redemption of any Security or
     change the time at which any Security may be redeemed in accordance with
     Article 3;

          (v) make any Security payable in money other than that stated in the
     Security;

          (vi) impair the right of any Holder to receive payment of principal
     of, and interest (including Additional Interest, if any) on, such Holder's
     Securities on or after the due dates therefor or to institute suit for the
     enforcement of any payment on or with respect to such Holder's Securities;

          (vii) make any change in Section 6.04 or 6.07 or the second sentence
     of this Section 9.02; or

          (viii) modify the Note Guarantees in any manner adverse to the
     Holders.

          It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.

          After an amendment under this Section 9.02 becomes effective, the
Company shall mail to Holders a notice briefly describing such amendment. The
failure to give such notice to all Holders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section 9.02.

          SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall comply with the TIA as then in effect.

          SECTION 9.04. Revocation and Effect of Consents and Waivers. (a) A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the



                                                                              73

Trustee receives the notice of revocation before the date on which the Trustee
receives an Officers' Certificate from the Company certifying that the requisite
number of consents have been received. After an amendment or waiver becomes
effective, it shall bind every Holder. An amendment or waiver becomes effective
upon the (i) receipt by the Company or the Trustee of the requisite number of
consents, (ii) satisfaction of conditions to effectiveness as set forth in this
Indenture and any indenture supplemental hereto containing such amendment or
waiver and (iii) execution of such amendment or waiver (or supplemental
indenture) by the Company and the Trustee.

          (b) The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Holders at such record
date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.

          SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.

          SECTION 9.06. Trustee to Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture and that such amendment
is the legal, valid and binding obligation of the Company and the Note
Guarantors enforceable against them in accordance with its terms, subject to
customary exceptions, and complies with the provisions hereof (including Section
9.03).

                                    ARTICLE X

                             Collateral and Security

          SECTION 10.01. Security Documents. The due and punctual payment of the
principal of and interest (including Additional Interest, if any) on the
Securities when and as the same shall be due and payable, whether on an interest
payment date, at



                                                                              74

maturity, by acceleration, repurchase, redemption or otherwise, and interest on
the overdue principal of and interest (including Additional Interest, if any) on
the Securities and performance of all other obligations of the Company and the
Note Guarantors to the Holders or the Trustee under this Indenture and the
Securities, according to the terms hereunder or thereunder, are secured as
provided in the Security Documents, subject to the terms of the Intercreditor
Agreement. Each Holder, by its acceptance thereof, consents and agrees to all of
the terms of the Security Documents (including the provisions providing for
foreclosure and release of Collateral) and the Intercreditor Agreement as the
same may be in effect or may be amended from time to time in accordance with
their terms and authorizes and directs the Collateral Agent to enter into the
Security Documents and the Intercreditor Agreement and to perform its
obligations and exercise its rights thereunder in accordance therewith. The
Company shall deliver to the Trustee (if it is not then the Collateral Agent)
copies of all documents delivered to the Collateral Agent pursuant to the
Security Documents, and will do or cause to be done all such acts and things as
may be required by the next sentence of this Section 10.01, to assure and
confirm to the Trustee and the Collateral Agent the security interest in the
Collateral contemplated hereby, by the Security Documents or any part thereof,
as from time to time constituted, so as to render the same available for the
security and benefit of this Indenture and of the Securities secured hereby,
according to the intent and purposes herein expressed. The Company shall take,
and shall cause its Restricted Subsidiaries to take, any and all actions
reasonably required to cause the Security Documents to create and maintain, as
security for the Obligations of the Company and the Note Guarantors hereunder, a
valid and enforceable perfected second-priority Lien and security interest in
and on all the Collateral (subject to the terms of the Intercreditor Agreement),
in favor of the Collateral Agent for the benefit of the Holders, second in
priority (subject to Permitted Liens) to any and all security interests at any
time granted in the Collateral to secure Credit Agreement Obligations.

          SECTION 10.02. Recording and Opinions. (a) The Company will deliver to
the Collateral Agent and the Trustee on May 15 in each year beginning with May
15, 2004, an Opinion of Counsel, which may be rendered by internal counsel to
the Company, dated as of such date, either:

          (i) stating substantially to the effect that, in the opinion of such
     counsel, action has been taken with respect to the recording, filing,
     re-recording, and re-filing of this Indenture or any Security Document as
     is necessary to maintain the Lien of this Indenture or any Security
     Documents and reciting with respect to the security interests in the
     Collateral the details of such action or referring to prior Opinions of
     Counsel in which such details are given; or

          (ii) stating that, in the opinion of such counsel, no such action is
     necessary to maintain and perfect such Lien under this Indenture and the
     Security Documents.

          (b) The Company will otherwise comply with the provisions of TIA
Section 314(b).



                                                                              75

          SECTION 10.03. Release of Collateral. (a) Subject to subsections (b),
(c) and (d) of this Section 10.03, Collateral may be released from the Lien and
security interest created by the Security Documents at any time or from time to
time in accordance with the provisions of the Security Documents, the
Intercreditor Agreement, or as provided hereby. Whether prior to or after the
Discharge of Credit Agreement Obligations, upon the request of the Company
pursuant to an Officers' Certificate certifying that all conditions precedent
hereunder have been met and without the consent of any Holder, the Company and
the Note Guarantors will be entitled to releases of assets included in the
Collateral from the Liens securing the Securities under any one or more of the
following circumstances:

          (i) to enable the Company or any Note Guarantor to consummate any
     sale, lease, conveyance or other disposition of any assets or rights
     permitted or not prohibited under Section 4.06 hereof;

          (ii) if the Company or any Note Guarantor provides substitute
     collateral with at least an equivalent fair value, as determined in good
     faith by the Board of Directors;

          (iii) if all of the stock of any Subsidiary of the Company that is
     pledged to the Collateral Agent is released or if any Subsidiary that is a
     Note Guarantor is released from its Note Guarantee, such Subsidiary's
     assets will also be released;

          (iv) in respect of assets included in the Collateral with a fair
     value, as determined in good faith by the Board of Directors, of up to $2.0
     million in any calendar year, subject to a cumulative carryover for any
     amount not used in any prior calendar year; or

          (v) pursuant to an amendment, waiver or supplement in accordance with
     Article 9 hereof.

          Upon receipt of such Officers' Certificate and any necessary or proper
instruments of termination, satisfaction or release prepared by the Company, the
Collateral Agent shall execute, deliver or acknowledge such instruments or
releases to evidence the release of any Collateral permitted to be released
pursuant to this Indenture or the Security Documents.

          In addition, if all other Liens (other than Permitted Liens described
in clauses (b) through (aa) of the definition thereof) on any asset that secure
Credit Agreement Obligations or any Other Second-Lien Obligations then secured
by that asset (including all commitments thereunder) are released then the
Liens, if any, of the Collateral Agent, for itself or for the benefit of the
Holders, on such Collateral shall be automatically, unconditionally and
simultaneously released; provided, that after giving effect to the release,
obligations secured by the first-priority Liens on the remaining Collateral
remain outstanding. Upon receipt of an Officers' Certificate certifying that all
conditions precedent hereunder have been met and any necessary or proper
instruments of termination, satisfaction or release prepared by the Company, and
without the consent



                                                                              76

of any Holder, the Collateral Agent shall execute, deliver or acknowledge any
such instruments or releases to evidence such automatic release.

          (b) Except as otherwise provided in the Intercreditor Agreement and
except as set forth in the preceding paragraph, no Collateral may be released
from the Lien and security interest created by the Security Documents pursuant
to the provisions of the Security Documents unless the Officers' Certificate
required by this Section 10.03 has been delivered to the Collateral Agent.

          (c) At any time when a Default or Event of Default has occurred and is
continuing and the maturity of the Securities has been accelerated (whether by
declaration or otherwise) and the Trustee has delivered a notice of acceleration
to the Collateral Agent, no release of Collateral pursuant to the provisions of
the Security Documents will be effective as against the Holders, except as
otherwise provided in the Intercreditor Agreement.

          (d) The release of any Collateral from the terms of this Indenture and
the Security Documents shall not be deemed to impair the security under this
Indenture in contravention of the provisions hereof if and to the extent the
Collateral is released pursuant to the terms of (i) the Intercreditor Agreement
or (ii) this Indenture and the Security Documents. To the extent applicable, the
Company will cause TIA Section 313(b), relating to reports, and TIA Section
314(d), relating to the release of property or securities from the Lien and
security interest of this Indenture and the Security Documents and relating to
the substitution therefor of any property or securities to be subjected to the
Lien and security interest of this Indenture and the Security Documents, to be
complied with. Any certificate or opinion required by TIA Section 314(d) may be
made by an Officer of the Company except in cases where TIA Section 314(d)
requires that such certificate or opinion be made by an independent Person,
which Person will be an independent engineer, appraiser or other expert selected
or approved by the Trustee and the Collateral Agent in the exercise of
reasonable care.

          SECTION 10.04. Certificates of the Trustee. In the event that the
Company wishes to release Collateral in accordance with the Security Documents
at a time when the Trustee is not itself also the Collateral Agent and the
Company has delivered the certificates and documents required by the Security
Documents and Section 10.03 hereof, the Trustee will determine whether it has
received all documentation required by TIA Section 314(d) in connection with
such release and, based on such determination, will deliver a certificate to the
Collateral Agent setting forth such determination.

          SECTION 10.05. Authorization of Actions to Be Taken by the Trustee
Under the Security Documents. Subject to the provisions of Section 7.01 and 7.02
hereof and the Intercreditor Agreement, the Trustee may, in its sole discretion
and without the consent of the Holders, direct, on behalf of the Holders, the
Collateral Agent to, take all actions it deems necessary or appropriate in order
to:

          (a) enforce any of the terms of the Security Documents; and



                                                                              77

          (b) collect and receive any and all amounts payable in respect of the
Obligations of the Company hereunder.

          Subject to Section 3 of the Intercreditor Agreement, the Trustee will
have power to institute and maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Collateral by any acts that may be
unlawful or in violation of the Security Documents or this Indenture, and such
suits and proceedings as the Trustee may deem expedient to preserve or protect
its interests and the interests of the Holders in the Collateral (including
power to institute and maintain suits or proceedings to restrain the enforcement
of or compliance with any legislative or other governmental enactment, rule or
order that may be unconstitutional or otherwise invalid if the enforcement of,
or compliance with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the Holders or of the
Trustee).

          SECTION 10.06. Authorization of Receipt of Funds by the Trustee Under
the Security Documents. Subject to the provisions of the Intercreditor
Agreement, the Trustee is authorized to receive any funds for the benefit of the
Holders distributed under the Security Documents, and to make further
distributions of such funds to the Holders according to the provisions of this
Indenture.

          SECTION 10.07. Termination of Security Interest. The Trustee will, at
the request of the Company, deliver a certificate to the Collateral Agent
stating that such Obligations have been paid in full, and instruct the
Collateral Agent to release the Liens pursuant to this Indenture and the
Security Documents upon (1) payment in full of the principal of, accrued and
unpaid interest (including Additional Interest, if any) on the Securities and
all other Obligations under this Indenture, the Note Guarantees and the Security
Documents that are due and payable at or prior to the time such principal,
accrued and unpaid interest and Additional Interest, if any, are paid, (2) a
satisfaction and discharge of this Indenture as described in Article 8 or (3) a
legal defeasance or covenant defeasance as described in Article 8. Upon receipt
of such instruction and any necessary or proper instruments of termination,
satisfaction or release prepared by the Company, the Collateral Agent shall
execute, deliver or acknowledge any such instruments or releases to evidence the
release of all such Liens.

          SECTION 10.08. Collateral Agent. (a) The Trustee shall initially act
as Collateral Agent and shall be authorized to appoint co-Collateral Agents as
necessary in its sole discretion. Except as otherwise explicitly provided herein
or in the Security Documents, neither the Collateral Agent nor any of its
respective officers, directors, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The Collateral
Agent shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither the Collateral Agent nor any
of its officers, directors, employees or agents shall be responsible for any act
or failure to act hereunder, except for its own willful misconduct, gross
negligence or bad faith.



                                                                              78

          (b) The Trustee, as Collateral Agent, is authorized and directed to
(i) enter into the Security Documents, (ii) enter into the Intercreditor
Agreement, (iii) bind the Holders on the terms as set forth in the Security
Documents and the Intercreditor Agreement and (iv) perform and observe its
obligations under the Security Documents and the Intercreditor Agreement.

          (c) If the Company (i) incurs Indebtedness constituting Credit
Agreement Obligations at any time when no Intercreditor Agreement is in effect
or at any time when Indebtedness constituting Credit Agreement Obligations
entitled to the benefit of an existing Intercreditor Agreement is concurrently
retired, and (ii) delivers to the Collateral Agent an Officers' Certificate so
stating and requesting the Collateral Agent to enter into an Intercreditor
Agreement in favor of a designated agent or representative for the holders of
the Indebtedness so incurred, the Collateral Agent shall (and is hereby
authorized and directed to) enter into such Intercreditor Agreement, bind the
Holders on the terms set forth therein, and perform and observe its obligations
thereunder.

          (d) If (i) the Company at any time incurs any Indebtedness
constituting Other Second-Lien Obligations, (ii) the indenture or agreement
governing such Indebtedness provides that, notwithstanding the date, manner or
order of grant, attachment or perfection of any Liens granted to the Collateral
Agent under the Security Documents (the "Liens Securing Note Obligations") or
granted to the holders of Other Second-Lien Obligations or any agent or
representative for the holders of Other Second-Lien Obligations (the "Liens
Securing Other Second-Lien Obligations"), the Liens Securing Note Obligations
and the Liens Securing Other Second-Lien Obligations shall be of equal dignity,
priority and rank, (iii) the Company delivers to the Collateral Agent an
Officers' Certificate so stating and requesting that the Collateral Agent assign
or transfer the Liens Securing Note Obligations to a Common Collateral Agent
identified therein and (iv) the Company delivers to the Collateral Agent and the
Common Collateral Agent an Opinion of Counsel further confirming as to all such
Liens each of the matters referred to in Section 10.02(a)(i), giving effect to
the assignment or transfer requested in such Officers' Certificate, then (A) the
Liens Securing Note Obligations shall be of equal dignity, priority and rank
with all such Liens Securing Other Second-Lien Obligations and (B) the
Collateral Agent shall, upon receipt of the necessary or proper documentation
prepared by the Company, assign or transfer the Liens Securing Note Obligations
to the Common Collateral Agent as requested in such Officers' Certificate.

          SECTION 10.09. Designations. Except as provided in the next sentence,
for purposes of the provisions hereof and the Intercreditor Agreement requiring
the Company to designate Indebtedness for the purposes of the term "Credit
Agreement Obligations", "First-Lien Credit Facilities", "Other Second-Lien
Obligations" or any other such designations hereunder or under the Intercreditor
Agreement, any such designation shall be sufficient if the relevant designation
is set forth in writing, signed on behalf of the Company by an Officer and
delivered to the Trustee, the Collateral Agent and the Credit Agent. For all
purposes hereof and the Intercreditor Agreement, the Company hereby designates
the Credit Facilities provided pursuant to the Credit Agreement as a "First-Lien
Credit Facility" and any Existing Credit Agreement Obligations as "Credit
Agreement Obligations."



                                                                              79

                                   ARTICLE XI

                                 Note Guarantees

          SECTION 11.01. Note Guarantees. (a) Each Note Guarantor hereby jointly
and severally and unconditionally guarantees, as a primary obligor and not
merely as a surety, to each Holder and to the Trustee and its successors and
assigns (i) the full and punctual payment when due, whether at Stated Maturity,
by acceleration, by redemption or otherwise, of all obligations of the Company
under this Indenture (including obligations to the Trustee) and the Securities,
whether for payment of principal of, interest on or Additional Interest, if any,
in respect of the Securities and all other monetary obligations (to the fullest
extent permitted by applicable law) of the Company under this Indenture and the
Securities and (ii) the full and punctual performance within applicable grace
periods of all other obligations of the Company whether for fees, expenses,
indemnification or otherwise under this Indenture and the Securities (all the
foregoing being hereinafter collectively called the "Guaranteed Obligations").
To the fullest extent permitted by applicable law, each Note Guarantor further
agrees that the Guaranteed Obligations may be extended or renewed, in whole or
in part, without notice or further assent from each such Note Guarantor, and
that each such Note Guarantor shall remain bound under this Article 11
notwithstanding any extension or renewal of any Guaranteed Obligation.

          (b) Each Note Guarantor waives presentation to, demand of payment from
and protest to the Company of any of the Guaranteed Obligations and also waives
notice of protest for nonpayment. Each Note Guarantor waives notice of any
default under the Securities or the Guaranteed Obligations. The obligations of
each Note Guarantor hereunder shall not be affected by (i) the failure of any
Holder or the Trustee to assert any claim or demand or to enforce any right or
remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (ii) any extension or renewal of
any thereof; (iii) any rescission, waiver, amendment or modification of any of
the terms or provisions of this Indenture, the Securities or any other
agreement; (iv) the release of any security held by any Holder or the Trustee
for the Guaranteed Obligations or any of them; (v) the failure of any Holder or
Trustee to exercise any right or remedy against any other guarantor of the
Guaranteed Obligations; or (vi) any change in the ownership of such Note
Guarantor, except as provided in Section 11.02(b).

          (c) Each Note Guarantor hereby waives any right to which it may be
entitled to have its obligations hereunder divided among the Note Guarantors,
such that such Note Guarantor's obligations would be less than the full amount
claimed. Each Note Guarantor hereby waives any right to which it may be entitled
to have the assets of the Company first be used and depleted as payment of the
Company's or such Note Guarantor's obligations hereunder prior to any amounts
being claimed from or paid by such Note Guarantor hereunder. Each Note Guarantor
hereby waives any right to which it may be entitled to require that the Company
be sued prior to an action being initiated against such Note Guarantor.



                                                                              80

          (d) Each Note Guarantor further agrees that its Note Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and not
a guarantee of collection) and waives any right to require that any resort be
had by any Holder or the Trustee to any security held for payment of the
Guaranteed Obligations.

          (e) Except as expressly set forth in Sections 8.01(b), 11.02 and
11.07, the obligations of each Note Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guaranteed Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Note Guarantor herein shall not be discharged
or impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any thereof,
by any default, failure or delay, wilful or otherwise, in the performance of the
obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
any Note Guarantor or would otherwise operate as a discharge of any Note
Guarantor as a matter of law or equity.

          (f) Each Note Guarantor agrees that its Note Guarantee shall remain in
full force and effect until payment in full of all the Guaranteed Obligations or
such Note Guarantee is released in compliance with Section 11.03 or upon the
merger or the sale of all the Capital Stock or assets of the Note Guarantor in
compliance with Section 4.06 or Article 5. Each Note Guarantor further agrees
that its Note Guarantee herein shall, to the fullest extent permitted by
applicable law, continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of principal of or interest or
Additional Interest, if any, on any Guaranteed Obligation is rescinded or must
otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.

          (g) In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any Note
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest or Additional Interest, if any, on any Guaranteed Obligation when
and as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, or to perform or comply with any other Guaranteed
Obligation, each Note Guarantor hereby promises to and shall, upon receipt of
written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to
the Holders or the Trustee an amount equal to the sum of (i) the unpaid
principal amount of such Guaranteed Obligations, (ii) accrued and unpaid
interest on such Guaranteed Obligations (but only to the extent not prohibited
by law) and (iii) all other monetary obligations of the Company to the Holders
and the Trustee.

          (h) Each Note Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any Guaranteed
Obligations guaranteed hereby until payment in full of all Guaranteed
Obligations. Each Note



                                                                              81

Guarantor further agrees that, as between it, on the one hand, and the Holders
and the Trustee, on the other hand, to the fullest extent permitted by
applicable law, (i) the maturity of the Guaranteed Obligations guaranteed hereby
may be accelerated as provided in Article 6 for the purposes of any Note
Guarantee herein, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Guaranteed Obligations guaranteed
hereby, and (ii) in the event of any declaration of acceleration of such
Guaranteed Obligations as provided in Article 6, such Guaranteed Obligations
(whether or not due and payable) shall forthwith become due and payable by such
Note Guarantor for the purposes of this Section 11.01.

          (i) Each Note Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee or any Holder in enforcing any rights under this Section 11.01.

          (j) Upon request of the Trustee, each Note Guarantor shall execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Indenture.

          SECTION 11.02. Limitation on Liability. Any term or provision of this
Indenture to the contrary notwithstanding, the maximum aggregate amount of the
Guaranteed Obligations guaranteed hereunder by any Note Guarantor shall not
exceed the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Note Guarantor, void or voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.

          SECTION 11.03. Releases of Note Guarantees. A Note Guarantee shall be
released without any action required on the part of the Trustee or any Holder:
(a) if the Guarantee of Credit Agreement Obligations made by such Note Guarantor
is released by the Credit Agent or otherwise, unless such Note Guarantor remains
a guarantor of the Senior Subordinated Notes or other Subordinated Obligations;
(b) if (i) all of the Capital Stock of, or all or substantially all of the
assets of such Note Guarantor is sold or otherwise disposed of (including by way
of merger or consolidation) to a Person other than the Company or any of the
Domestic Subsidiaries or (ii) such Note Guarantor ceases to be a Restricted
Subsidiary, and the Company otherwise complies, to the extent applicable, with
Section 4.06 and Section 5.01 hereof; or (c) if the Company designates such Note
Guarantor as an Unrestricted Subsidiary. A Note Guarantor may also be released
from its obligations under its Note Guarantee in connection with an amendment
permitted by Article 9.

          Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such release was made
by the Company in accordance with the provisions of this Indenture, the Trustee
will execute any documents prepared by the Company reasonably required in order
to evidence the release of any Note Guarantor from its obligations under its
Note Guarantee.



                                                                              82

          Any Note Guarantor not released from its obligations under its Note
Guarantee will remain liable for the full amount of principal of and interest on
the Securities and for the other obligations of any Note Guarantor under this
Indenture as provided in this Article 11.

          SECTION 11.04. Successors and Assigns. This Article 11 shall be
binding upon each Note Guarantor and its successors and assigns and shall inure
to the benefit of the successors and assigns of the Trustee and the Holders and,
in the event of any transfer or assignment of rights by any Holder or the
Trustee, the rights and privileges conferred upon that party in this Indenture
and in the Securities shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions of this
Indenture.

          SECTION 11.05. No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article 11 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 11 at law,
in equity, by statute or otherwise.

          SECTION 11.06. Modification. No modification, amendment or waiver of
any provision of this Article 11, nor the consent to any departure by any Note
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Note Guarantor in any case shall entitle such Note
Guarantor to any other or further notice or demand in the same, similar or other
circumstances.

          SECTION 11.07. Execution of Supplemental Indenture for Future Note
Guarantors. Each Subsidiary which is required to become a Note Guarantor
pursuant to Section 4.11 shall promptly execute and deliver to the Trustee a
supplemental indenture in the form of Exhibit C hereto pursuant to which such
Subsidiary shall become a Note Guarantor under this Article 11 and shall
guarantee the Guaranteed Obligations. Concurrently with the execution and
delivery of such supplemental indenture, the Company shall deliver to the
Trustee an Opinion of Counsel and an Officers' Certificate to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Subsidiary and that, subject to the application of bankruptcy, insolvency,
moratorium, fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether considered
in a proceeding at law or in equity, the Note Guarantee of such Note Guarantor
is a valid and binding obligation of such Note Guarantor, enforceable against
such Note Guarantor in accordance with its terms and or to such other matters as
the Trustee may reasonably request.

          SECTION 11.08. Non-Impairment. The failure to endorse a Note Guarantee
on any Security shall not affect or impair the validity thereof.



                                                                              83

                                   ARTICLE XII

                                  Miscellaneous

          SECTION 12.01. Trust Indenture Act Controls. If and to the extent that
any provision of this Indenture limits, qualifies or conflicts with the duties
imposed by, or with another provision (an "incorporated provision") included in
this Indenture by operation of, TIA Sections 310 to 318, inclusive, such imposed
duties or incorporated provision shall control.

          SECTION 12.02. Notices. Any notice or communication shall be in
writing (which may be a facsimile with the original to follow) and delivered in
person or mailed by first-class mail addressed as follows:

                            if to the Company:

                            Pliant Corporation
                            1515 Woodfield Road, Suite 600
                            Schaumburg, Illinois 60173

                            Attention of:
                            Brian E. Johnson

                            if to the Trustee:

                            Wilmington Trust Company
                            Rodney Square North
                            1100 North Market Street
                            Wilmington, DE 19890-0001

                            Attention of:
                            Corporate Trust Administration

          The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.

          Any notice or communication mailed to a Holder shall be mailed, first
class mail, to the Holder at the Holder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.

          Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.

          SECTION 12.03. Communication by Holders with Other Holders. Holders
may communicate pursuant to TIA Section 312(b) with other Holders with respect
to



                                                                              84

their rights under this Indenture or the Securities. The Company, the Trustee,
the Registrar and anyone else shall have the protection of TIA Section 312(c).

          SECTION 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:

          (a) an Officers' Certificate in form reasonably satisfactory to the
     Trustee stating that, in the opinion of the signers, all conditions
     precedent, if any, provided for in this Indenture relating to the proposed
     action have been complied with; and

          (b) an Opinion of Counsel in form reasonably satisfactory to the
     Trustee stating that, in the opinion of such counsel, all such conditions
     precedent have been complied with (provided, however, that such counsel may
     rely as to matters of fact on Officers' Certificates).

          SECTION 12.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture (other than pursuant to Section 4.09) shall
include:

          (a) a statement that the individual making such certificate or opinion
     has read such covenant or condition;

          (b) a brief statement as to the nature and scope of the examination or
     investigation upon which the statements or opinions contained in such
     certificate or opinion are based;

          (c) a statement that, in the opinion of such individual, he has made
     such examination or investigation as is necessary to enable him to express
     an informed opinion as to whether or not such covenant or condition has
     been complied with; and

          (d) a statement as to whether or not, in the opinion of such
     individual, such covenant or condition has been complied with.

          SECTION 12.06. When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company, any Note
Guarantor or by any Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any Note
Guarantor (other than JP Morgan Securities, Inc.) shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Subject to the foregoing, only Securities outstanding at the time
shall be considered in any such determination.



                                                                              85

          SECTION 12.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Holders. The
Registrar and the Paying Agent may make reasonable rules for their functions.

          SECTION 12.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or other day on which banking institutions are not required by law or
regulation to be open in the State of New York. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.

          SECTION 12.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO
THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.

          SECTION 12.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company or any of the Note Guarantors,
shall not have any liability for any obligations of the Company or any of the
Note Guarantors under the Securities or this Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Holder shall waive and release all such liability.
The waiver and release shall be part of the consideration for the issue of the
Securities.

          SECTION 12.11. Successors. All agreements of the Company and each Note
Guarantor in this Indenture and the Securities shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.

          SECTION 12.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.

          SECTION 12.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.



                                                                              86

          IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.

                                     PLIANT CORPORATION,

                                     by /s/ Brian E. Johnson
                                        ----------------------------------------
                                        Name:  Brian E. Johnson
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                     PLIANT SOLUTIONS CORPORATION,

                                     by /s/ Brian E. Johnson
                                        ----------------------------------------
                                        Name:  Brian E. Johnson
                                        Title: Executive Vice President and
                                               Chief Financial Officer

                                     PLIANT CORPORATION INTERNATIONAL,
                                     PLIANT FILM PRODUCTS OF MEXICO, INC.,
                                     UNIPLAST HOLDINGS INC.,
                                     UNIPLAST U.S., INC.,
                                     TUREX, INC.,
                                     PIERSON INDUSTRIES, INC.,
                                     UNIPLAST MIDWEST, INC.

                                     by /s/ Brian E. Johnson
                                        ----------------------------------------
                                        Name:  Brian E. Johnson
                                        Title: Executive Vice President and
                                               Treasurer

                                     PLIANT PACKAGING OF CANADA, LLC

                                     by /s/ Brian E. Johnson
                                        ----------------------------------------
                                        Name:  Brian E. Johnson
                                        Title: Vice President

                                     WILMINGTON TRUST COMPANY, as Trustee

                                     By /s/ James D. Nesci
                                        ----------------------------------------
                                        Name:  James D. Nesci
                                        Title: Authorized Signer



                                                                      APPENDIX A

                   PROVISIONS RELATING TO ORIGINAL SECURITIES,
                  ADDITIONAL SECURITIES, PRIVATE EXCHANGE NOTES
                               AND EXCHANGE NOTES

     1. Definitions

     1.1 Definitions

     For the purposes of this Appendix A the following terms shall have the
meanings indicated below:

          "Applicable Procedures" means, with respect to any transfer or
transaction involving a Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such Global Security,
Euroclear and Clearstream, in each case to the extent applicable to such
transaction and as in effect from time to time.

          "Clearstream" means Clearstream Banking, societe anonyme, or any
successor securities clearing agency.

          "Definitive Security" means a certificated Initial Security, Private
Exchange Note or Exchange Note (bearing the Restricted Securities Legend if the
transfer of such Security is restricted by applicable law) that does not include
the Global Securities Legend.

          "Depositary" means The Depository Trust Company, its nominees and
their respective successors.

          "Euroclear" means the Euroclear Clearance System or any successor
securities clearing agency.

          "Global Securities Legend" means the legend set forth under that
caption in Exhibit A to this Indenture.

          "IAI" means an institutional "accredited investor" as described in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

          "Initial Purchasers" means J.P. Morgan Securities Inc., Credit Suisse
First Boston LLC and Deutsche Bank Securities Inc.

          "Issue Date" means, with respect to any Initial Securities, the date
on which such Initial Securities are originally issued.

          "Private Exchange" means an offer by the Company, pursuant to the
Registration Agreement, to issue and deliver to certain purchasers, in exchange
for the Initial Securities held by such purchasers as part of their initial
distribution, a like aggregate principal amount of Private Exchange Notes.



                                                                               2

          "Private Exchange Notes" means the Securities of the Company issued in
exchange for Initial Securities pursuant to this Indenture in connection with
the Private Exchange pursuant to the Registration Agreement.

          "Purchase Agreement" means (a) the Purchase Agreement dated May 22,
2003, among the Company, the Note Guarantors and the Initial Purchasers and (b)
any other similar Purchase Agreement relating to Additional Securities.

          "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

          "Registered Exchange Offer" means an offer by the Company, pursuant to
the Registration Agreement, to certain Holders of Initial Securities, to issue
and deliver to such Holders, in exchange for their Initial Securities, a like
aggregate principal amount of Exchange Notes registered under the Securities
Act.

          "Registration Agreement" means (a) the Exchange and Registration
Rights Agreement dated May 30, 2003, among the Company, the Note Guarantors and
the Initial Purchasers and (b) any other similar Exchange and Registration
Rights Agreement relating to Additional Securities.

          "Regulation S" means Regulation S under the Securities Act.

          "Regulation S Securities" means all Initial Securities offered and
sold outside the United States in reliance on Regulation S.

          "Restricted Period", with respect to any Securities, means the period
of 40 consecutive days beginning on and including the later of (a) the day on
which such Securities are first offered to persons other than distributors (as
defined in Regulation S under the Securities Act) in reliance on Regulation S,
notice of which day shall be promptly given by the Company to the Trustee, and
(b) the Issue Date with respect to such Securities.

          "Restricted Securities Legend" means the legend set forth in Section
2.3(e)(i) herein.

          "Rule 501" means Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.

          "Rule 144A" means Rule 144A under the Securities Act.

          "Rule 144A Securities" means all Initial Securities offered and sold
to QIBs in reliance on Rule 144A.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary) or any successor person thereto, who
shall initially be the Trustee.



                                                                               3

          "Shelf Registration Statement" means a registration statement filed by
the Company in connection with the offer and sale of Initial Securities pursuant
to the Registration Agreement.

          "Transfer Restricted Securities" means Definitive Securities and any
other Securities that bear or are required to bear the Restricted Securities
Legend.

     1.2 Other Definitions

                                                               Defined
                  Term:                                       in Section:
                  ----                                        -----------
"Agent Members"..............................................   2.1(c)
"IAI Global Security"........................................   2.1(b)
"Global Security"............................................   2.1(b)
"Regulation S Global Security"...............................   2.1(b)
"Rule 144A Global Security"..................................   2.1(b)

     2. The Securities

     2.1 Form and Dating

          (a) The Original Securities issued on the date hereof will be (i)
offered and sold by the Company pursuant to the Purchase Agreement and (ii)
resold, initially only to (1) QIBs in reliance on Rule 144A and (2) Persons
other than U.S. Persons (as defined in Regulation S) in reliance on Regulation
S. Such Original Securities may thereafter be transferred to, among others,
QIBs, purchasers in reliance on Regulation S and, except as set forth below,
IAIs in accordance with Rule 501. Additional Securities offered after the date
hereof may be offered and sold by the Company from time to time pursuant to one
or more Purchase Agreements in accordance with applicable law.

          (b) Global Securities. Rule 144A Securities shall be issued initially
in the form of one or more permanent global Securities in definitive, fully
registered form (collectively, the "Rule 144A Global Security") and Regulation S
Securities shall be issued initially in the form of one or more global
Securities (collectively, the "Regulation S Global Security), in each case
without interest coupons and bearing the Global Securities Legend and Restricted
Securities Legend, which shall be deposited on behalf of the purchasers of the
Securities represented thereby with the Securities Custodian, and registered in
the name of the Depositary or a nominee of the Depositary, duly executed by the
Company and authenticated by the Trustee as provided in this Indenture. One or
more global securities in definitive, fully registered form without interest
coupons and bearing the Global Securities Legend and the Restricted Securities
Legend (collectively, the "IAI Global Security") shall also be issued on the
Closing Date, deposited with the Securities Custodian, and registered in the
name of the Depositary or a nominee of the Depositary, duly executed by the
Company and authenticated by the Trustee as provided in this Indenture to
accommodate transfers of beneficial interests in the Securities to IAIs
subsequent to the initial distribution. Beneficial ownership interests in the
Regulation S Global Security shall not be exchangeable for interests in the Rule
144A Global Security, the IAI Global Security or any other Security without a
Restricted Securities Legend until the expiration of the Restricted Period. The
Rule 144A Global Security, the IAI Global Security and the Regulation S



                                                                               4

Global Security are each referred to herein as a "Global Security" and are
collectively referred to herein as "Global Securities", provided, that the term
"Global Security" when used in Sections 2.1(b), 2.1(c), 2.3(g)(i), 2.3(h)(i) and
2.4 of this Appendix shall also include any Security in global form issued in
connection with a Registered Exchange Offer or Private Exchange. The aggregate
principal amount of the Global Securities may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee and on the schedules thereto as hereinafter provided.

          (c) Book-Entry Provisions. This Section 2.1(c) shall apply only to a
Global Security deposited with or on behalf of the Depositary.

          The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(c) and Section 2.2 and pursuant to an order of the Company
signed by two Officers, authenticate and deliver initially one or more Global
Securities that (i) shall be registered in the name of the Depositary for such
Global Security or Global Securities or the nominee of such Depositary and (ii)
shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instructions or held by the Trustee as Securities Custodian.

          Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as Securities Custodian or
under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.

          (d) Definitive Securities. Except as provided in Section 2.3 or 2.4,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.

     2.2 Authentication. The Trustee shall authenticate and make available for
delivery upon a written order of the Company signed by two Officers (a) Original
Securities for original issue on the date hereof in an aggregate principal
amount of $250,000,000, (b) subject to the terms of this Indenture, Additional
Securities in an unlimited aggregate principal amount and (c) the (i) Exchange
Notes for issue only in a Registered Exchange Offer and (ii) Private Exchange
Notes for issue only in the Private Exchange, in the case of each of (i) and
(ii) pursuant to the Registration Agreement and for a like principal amount of
Initial Securities exchanged pursuant thereto. Such order



                                                                               5

shall specify the amount of the Securities to be authenticated, the date on
which the original issue of Securities is to be authenticated and whether the
Securities are to be Original Securities, Additional Securities, Exchange Notes
or Private Exchange Notes. The aggregate principal amount of Securities
outstanding at any time is unlimited.

     2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar with a
request:

          (i) to register the transfer of such Definitive Securities; or

          (ii) to exchange such Definitive Securities for an equal principal
     amount of Definitive Securities of other authorized denominations,

the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Securities surrendered for transfer or exchange:

          (1) shall be duly endorsed or accompanied by a written instrument of
     transfer in form reasonably satisfactory to the Company and the Registrar,
     duly executed by the Holder thereof or his attorney duly authorized in
     writing; and

          (2) in the case of Definitive Securities which are Transfer Restricted
     Securities, are accompanied by the following additional information and
     documents, as applicable:

               (A) if such Definitive Securities are being delivered to the
          Registrar by a Holder for registration in the name of such Holder,
          without transfer, a certification from such Holder to that effect (in
          the form set forth on the reverse side of the Initial Security or
          Private Exchange Note, as applicable); or

               (B) if such Definitive Securities are being transferred to the
          Company, a certification to that effect (in the form set forth on the
          reverse side of the Initial Security or Private Exchange Note, as
          applicable); or

               (C) if such Definitive Securities are being transferred pursuant
          to an exemption from registration in accordance with Rule 144 under
          the Securities Act or in reliance upon another exemption from the
          registration requirements of the Securities Act, (x) a certification
          to that effect (in the form set forth on the reverse side of the
          Initial Security or Private Exchange Note, as applicable) and (y) if
          the Company so requests, an opinion of counsel or other evidence
          reasonably satisfactory to it as to the compliance with the
          restrictions set forth in the legend set forth in Section 2.3(d)(i)
          and (z) in the case of a transfer to an IAI, a signed letter
          substantially in the form of Exhibit D.

               (b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a



                                                                               6

beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by a written instrument of transfer in
form reasonably satisfactory to the Company and the Registrar, together with:

               (i) certification (in the form set forth on the reverse side of
          the Initial Security or Private Exchange Note, as applicable) that
          such Definitive Security is being transferred (1) to a QIB in
          accordance with Rule 144A, (2) to an IAI that has furnished to the
          Trustee a signed letter substantially in the form of Exhibit D, and in
          the case of clause (2), an opinion of counsel or other evidence
          reasonably satisfactory to it as to the compliance with the
          restrictions set forth in the legend set forth in Section 2.3(d)(i) or
          (3) outside the United States in an offshore transaction within the
          meaning of Regulation S and in compliance with Rule 904 under the
          Securities Act; and

               (ii) written instructions directing the Trustee to make, or to
          direct the Securities Custodian to make, an adjustment on its books
          and records with respect to such Global Security to reflect an
          increase in the aggregate principal amount of the Securities
          represented by the Global Security, such instructions to contain
          information regarding the Depositary account to be credited with such
          increase, then the Trustee shall cancel such Definitive Security and
          cause, or direct the Securities Custodian to cause, in accordance with
          the standing instructions and procedures existing between the
          Depositary and the Securities Custodian, the aggregate principal
          amount of Securities represented by the Global Security to be
          increased by the aggregate principal amount of the Definitive Security
          to be exchanged and shall credit or cause to be credited to the
          account of the Person specified in such instructions a beneficial
          interest in the Global Security equal to the principal amount of the
          Definitive Security so canceled. If no Global Securities are then
          outstanding and the Global Security has not been previously exchanged
          for certificated securities pursuant to Section 2.4, the Company shall
          issue and the Trustee shall authenticate, upon written order of the
          Company in the form of an Officers' Certificate, a new Global Security
          in the appropriate principal amount.

               (c) Transfer and Exchange of Global Securities. (i) The transfer
and exchange of Global Securities or beneficial interests therein shall be
effected through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depositary therefor. A transferor of a beneficial interest in a Global
Security shall deliver a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to be credited with a beneficial interest in such Global Security or
another Global Security and such account shall be credited in accordance with
such order with a beneficial interest in the applicable Global Security and the
account of the Person making the transfer shall be debited by an amount equal to
the beneficial interest in the Global Security being transferred. Transfers by
an owner of a beneficial interest in the Rule 144A Global Security or the IAI
Global Security to a transferee who takes delivery of such interest through the
Regulation S Global Security,



                                                                               7

whether before or after the expiration of the Restricted Period, shall be made
only upon receipt by the Trustee of a certification in the form provided on the
reverse of the Initial Securities from the transferor to the effect that such
transfer is being made in accordance with Regulation S or (if available) Rule
144 under the Securities Act and that, if such transfer is being made prior to
the expiration of the Restricted Period, the interest transferred shall be held
immediately thereafter through Euroclear or Clearstream. In the case of a
transfer of a beneficial interest in the Rule 144A Global Security for an
interest in the IAI Global Security, the transferee must furnish a signed letter
substantially in the form of Exhibit D to the Trustee and an opinion of counsel
or other evidence reasonably satisfactory to the Trustee as to the compliance
with the restrictions set forth in the legend set forth in Section 2.3(d)(i).

               (ii) If the proposed transfer is a transfer of a beneficial
          interest in one Global Security to a beneficial interest in another
          Global Security, the Registrar shall reflect on its books and records
          the date and an increase in the principal amount of the Global
          Security to which such interest is being transferred in an amount
          equal to the principal amount of the interest to be so transferred,
          and the Registrar shall reflect on its books and records the date and
          a corresponding decrease in the principal amount of Global Security
          from which such interest is being transferred.

               (iii) Notwithstanding any other provisions of this Appendix
          (other than the provisions set forth in Section 2.4), a Global
          Security may not be transferred as a whole except by the Depositary to
          a nominee of the Depositary or by a nominee of the Depositary to the
          Depositary or another nominee of the Depositary or by the Depositary
          or any such nominee to a successor Depositary or a nominee of such
          successor Depositary.

               (iv) In the event that a Global Security is exchanged for
          Definitive Securities pursuant to Section 2.4 prior to the
          consummation of the Registered Exchange Offer or the effectiveness of
          the Shelf Registration Statement with respect to such Securities, such
          Securities may be exchanged only in accordance with such procedures as
          are substantially consistent with the provisions of this Section 2.3
          (including the certification requirements set forth on the reverse of
          the Initial Securities intended to ensure that such transfers comply
          with Rule 144A or such other applicable exemption from registration
          under the Securities Act, as the case may be) and such other
          procedures as may from time to time be adopted by the Company.

               (d) Restrictions on Transfer of Regulation S Global Security. (i)
Prior to the expiration of the Restricted Period, interests in the Regulation S
Global Security may only be held through Euroclear or Clearstream. During the
Restricted Period, beneficial ownership interests in the Regulation S Global
Security may only be sold, pledged or transferred through Euroclear or
Clearstream in accordance with the Applicable Procedures and only (1) to the
Company, (2) so long as such security is eligible for resale pursuant to Rule
144A, to a person whom the selling holder reasonably believes is a QIB that
purchases for its own account or for the account of a QIB to whom notice is
given



                                                                               8

that the resale, pledge or transfer is being made in reliance on Rule 144A, (3)
in an offshore transaction in accordance with Regulation S, (4) pursuant to an
exemption from registration under the Securities Act provided by Rule 144 (if
applicable) under the Securities Act, (5) to an IAI purchasing for its own
account, or for the account of such an IAI, in a minimum principal amount of
Securities of $250,000 or (6) pursuant to an effective registration statement
under the Securities Act, in each case in accordance with any applicable
securities laws of any state of the United States. Prior to the expiration of
the Restricted Period, transfers by an owner of a beneficial interest in the
Regulation S Global Security to a transferee who takes delivery of such interest
through the Rule 144A Global Security or the IAI Global Security shall be made
only in accordance with Applicable Procedures and upon receipt by the Trustee of
a written certification from the transferor of the beneficial interest in the
form provided on the reverse of the Initial Security to the effect that such
transfer is being made to (1) a QIB within the meaning of Rule 144A in a
transaction meeting the requirements of Rule 144A or (2) an IAI purchasing for
its own account, or for the account of such an IAI, in a minimum principal
amount of the Securities of $250,000. Such written certification shall no longer
be required after the expiration of the Restricted Period. In the case of a
transfer of a beneficial interest in the Regulation S Global Security for an
interest in the IAI Global Security, the transferee must furnish a signed letter
substantially in the form of Exhibit D to the Trustee.

               (ii) Upon the expiration of the Restricted Period, beneficial
          ownership interests in the Regulation S Global Security shall be
          transferable in accordance with applicable law and the other terms of
          this Indenture.

               (e) Legend.

               (i) Except as permitted by the following paragraphs (ii), (iii)
          or (iv), each Security certificate evidencing the Global Securities
          and the Definitive Securities (and all Securities issued in exchange
          therefor or in substitution thereof) shall bear a legend in
          substantially the following form (each defined term in the legend
          being defined as such for purposes of the legend only):

          "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
          STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
          PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
          PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
          REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
          TO, SUCH REGISTRATION.

          THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS
          BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS
          PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
          SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION
          DATE") THAT IS [IN



                                                                               9

          THE CASE OF RULE 144A NOTES: TWO YEARS] [IN THE CASE OF REGULATION S
          NOTES: 40 DAYS] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
          THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS
          THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY
          (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS
          BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS
          THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
          SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
          INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
          THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
          INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING
          MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT
          OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S
          UNDER THE SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE
          MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
          THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY
          FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
          ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
          SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO
          OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION
          OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
          FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
          THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
          TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY
          OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
          SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE
          REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE."

Each Definitive Security shall bear the following additional legend:

          "IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
          REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
          AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
          TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS."

               (ii) Upon any sale or transfer of a Transfer Restricted Security
          that is a Definitive Security, the Registrar shall permit the Holder
          thereof to exchange such Transfer Restricted Security for a Definitive
          Security that does not bear the legends set forth above and rescind
          any restriction on the transfer of such Transfer



                                                                              10

          Restricted Security if the Holder certifies in writing to the
          Registrar that its request for such exchange was made in reliance on
          Rule 144 (such certification to be in the form set forth on the
          reverse of the Initial Security, or Private Exchange Note, as
          applicable) and delivers an opinion of counsel or other evidence
          reasonably satisfactory to the Registrar as to the compliance with the
          restrictions set forth in the legend set forth in Section 2.3(d)(i)).

               (iii) After a transfer of any Initial Securities or Private
          Exchange Notes during the period of the effectiveness of a Shelf
          Registration Statement with respect to such Initial Securities or
          Private Exchange Notes, as the case may be, all requirements
          pertaining to the Restricted Securities Legend on such Initial
          Securities or such Private Exchange Notes shall cease to apply and the
          requirements that any such Initial Securities or such Private Exchange
          Notes be issued in global form shall continue to apply.

               (iv) Upon the consummation of a Registered Exchange Offer with
          respect to the Initial Securities pursuant to which Holders of such
          Initial Securities are offered Exchange Notes in exchange for their
          Initial Securities, all requirements pertaining to Initial Securities
          that Initial Securities be issued in global form shall continue to
          apply, and Exchange Notes in global form without the Restricted
          Securities Legend shall be available to Holders that exchange such
          Initial Securities in such Registered Exchange Offer.

               (v) Upon the consummation of a Private Exchange with respect to
          the Initial Securities pursuant to which Holders of such Initial
          Securities are offered Private Exchange Notes in exchange for their
          Initial Securities, all requirements pertaining to such Initial
          Securities that Initial Securities be issued in global form shall
          continue to apply, and Private Exchange Notes in global form with the
          Restricted Securities Legend shall be available to Holders that
          exchange such Initial Securities in such Private Exchange.

               (vi) Upon a sale or transfer after the expiration of the
          Restricted Period of any Initial Security acquired pursuant to
          Regulation S, all requirements that such Initial Security bear the
          Restricted Securities Legend shall cease to apply and the requirements
          requiring any such Initial Security be issued in global form shall
          continue to apply.

               (vii) Any Additional Securities sold in a registered offering
          shall not be required to bear the Restricted Notes Legend.

               (f) Cancelation or Adjustment of Global Security. At such time as
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, transferred, redeemed, repurchased or canceled, such
Global Security shall be returned by the Depositary to the Trustee for
cancelation or retained and canceled by the Trustee. At any time prior to such
cancelation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global
Security, redeemed, repurchased or canceled, the principal amount of



                                                                              11

Securities represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.

               (g) Obligations with Respect to Transfers and Exchanges of
Securities.

               (i) To permit registrations of transfers and exchanges, the
          Company shall execute and the Trustee shall authenticate, Definitive
          Securities and Global Securities at the Registrar's request.

               (ii) No service charge shall be made for any registration of
          transfer or exchange, but the Company may require payment of a sum
          sufficient to cover any transfer tax, assessments, or similar
          governmental charge payable in connection therewith (other than any
          such transfer taxes, assessments or similar governmental charge
          payable upon exchanges to be registered in the name of the registered
          Holder effecting the exchange pursuant to Sections 2.06, 3.06, 4.06,
          4.08 and 9.05 of this Indenture).

               (iii) Prior to the due presentation for registration of transfer
          of any Security, the Company, the Trustee, the Paying Agent or the
          Registrar may deem and treat the person in whose name a Security is
          registered as the absolute owner of such Security for the purpose of
          receiving payment of principal of and interest on such Security and
          for all other purposes whatsoever, whether or not such Security is
          overdue, and none of the Company, the Trustee, the Paying Agent or the
          Registrar shall be affected by notice to the contrary.

               (iv) All Securities issued upon any transfer or exchange pursuant
          to the terms of this Indenture shall evidence the same debt and shall
          be entitled to the same benefits under this Indenture as the
          Securities surrendered upon such transfer or exchange.

               (h) No Obligation of the Trustee.

               (i) The Trustee shall have no responsibility or obligation to any
          beneficial owner of a Global Security, a member of, or a participant
          in the Depositary or any other Person with respect to the accuracy of
          the records of the Depositary or its nominee or of any participant or
          member thereof, with respect to any ownership interest in the
          Securities or with respect to the delivery to any participant, member,
          beneficial owner or other Person (other than the Depositary) of any
          notice (including any notice of redemption or repurchase) or the
          payment of any amount, under or with respect to such Securities. All
          notices and communications to be given to the Holders and all payments
          to be made to Holders under the Securities shall be given or made only
          to the registered Holders (which shall be the Depositary or its
          nominee in the case of a Global Security). The rights of beneficial
          owners in any Global Security shall be exercised only through the
          Depositary subject to the applicable rules and procedures of the
          Depositary. The



                                                                              12

          Trustee may rely and shall be fully protected in relying upon
          information furnished by the Depositary with respect to its members,
          participants and any beneficial owners.

               (ii) The Trustee shall have no obligation or duty to monitor,
          determine or inquire as to compliance with any restrictions on
          transfer imposed under this Indenture or under applicable law with
          respect to any transfer of any interest in any Security (including any
          transfers between or among Depositary participants, members or
          beneficial owners in any Global Security) other than to require
          delivery of such certificates and other documentation or evidence as
          are expressly required by, and to do so if and when expressly required
          by, the terms of this Indenture, and to examine the same to determine
          substantial compliance as to form with the express requirements
          hereof.

     2.4 Definitive Securities

               (a) A Global Security deposited with the Depositary or with the
Trustee as Securities Custodian pursuant to Section 2.1 or issued in connection
with a Registered Exchange Offer or Private Exchange shall be transferred to the
beneficial owners thereof in the form of Definitive Securities in an aggregate
principal amount equal to the principal amount of such Global Security, in
exchange for such Global Security, only if such transfer complies with Section
2.3 and (i) the Depositary notifies the Company that it is unwilling or unable
to continue as a Depositary for such Global Security or if at any time the
Depositary ceases to be a "clearing agency" registered under the Exchange Act,
and a successor depositary is not appointed by the Company within 90 days of
such notice or after the Company becomes aware of such cessation, or (ii) an
Event of Default has occurred and is continuing or (iii) the Company, in its
sole discretion, notifies the Trustee in writing that it elects to cause the
issuance of certificated Securities under this Indenture.

               (b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section 2.4 shall be surrendered by the
Depositary to the Trustee, to be so transferred, in whole or from time to time
in part, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations. Any
portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of $1,000 and any
integral multiple thereof and registered in such names as the Depositary shall
direct. Any certificated Initial Security in the form of a Definitive Security
delivered in exchange for an interest in the Global Security shall, except as
otherwise provided by Section 2.3(d), bear the Restricted Securities Legend.

               (c) Subject to the provisions of Section 2.4(b), the registered
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.



                                                                              13

               (d) In the event of the occurrence of any of the events specified
in Section 2.4(a)(i), (ii) or (iii), the Company will promptly make available to
the Trustee a reasonable supply of Definitive Securities in fully registered
form without interest coupons.



                                                                       EXHIBIT A

                        [FORM OF FACE OF INITIAL SECURITY
                           AND PRIVATE EXCHANGE NOTE]

                           [GLOBAL SECURITIES LEGEND]

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

          TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

                         [Restricted Securities Legend]

          THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

          THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS
BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS [IN THE CASE OF RULE
144A NOTES: TWO YEARS] [IN THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY
OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A



                                                                               2

REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT
THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF
THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.

          Each Definitive Security shall bear the following additional legend:

          IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.



                                                                               3

No.                                                                  $__________

                      11 1/8% Senior Secured Note due 2009

                                                          CUSIP No. ____________
                                                           ISIN No. ____________

          PLIANT CORPORATION, a Utah corporation, promises to pay to Cede & Co.,
or registered assigns, the principal sum [listed on the Schedule of Increases or
Decreases in Global Security attached hereto]/1/ [of $_____]/2/ on September 1,
2009.

          Interest Payment Dates: March 1 and September 1.

          Record Dates: February 15 and August 15.

- --------
      /1/ Insert if Security is to be issued in global form.

      /2/ Insert if Security is to be issued in definitive form.



                                                                               4

          Additional provisions of this Security are set forth on the other side
of this Security.

          IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed.

                                         PLIANT CORPORATION,

                                         by
                                           -------------------------------------
                                         Name:
                                         Title:

                                         by
                                           -------------------------------------
                                         Name:
                                         Title:

Dated:

TRUSTEE'S CERTIFICATE OF
     AUTHENTICATION

WILMINGTON TRUST COMPANY,

     as Trustee, certifies
     that this is one of
     the Securities referred
     to in the Indenture.


By:
   ------------------------------
        Authorized Signatory

- ----------
*/ If the Security is to be issued in global form, add the Global Securities
Legend and the attachment from Exhibit A captioned "TO BE ATTACHED TO GLOBAL
SECURITIES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".



                                                                               5

                    [FORM OF REVERSE SIDE OF INITIAL SECURITY
                           AND PRIVATE EXCHANGE NOTE]

                      11 1/8% Senior Secured Note due 2009

1. Interest

          (a) PLIANT CORPORATION, a Utah corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company shall pay interest
semiannually on March 1 and September 1 of each year, beginning September 1,
2003. Interest on the Securities shall accrue from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for, from the Issue Date until the principal hereof is due.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.

          (b) Additional Interest. The holder of this Security is entitled to
the benefits of an Exchange and Registration Rights Agreement, dated as of May
30, 2003 among the Company, Pliant Corporation International, Pliant Film
Products of Mexico, Inc., Pliant Solutions Corporation, Pliant Packaging of
Canada, LLC, Uniplast Holdings Inc., Uniplast U.S., Inc., Turex, Inc., Pierson
Industries, Inc. and Uniplast Midwest, Inc. (the "Note Guarantors") and the
Initial Purchasers named therein (the "Registration Agreement"). Capitalized
terms used in this paragraph (b) but not defined herein have the meanings
assigned to them in the Registration Agreement. Subject to the terms of the
Registration Agreement, if (i) the Shelf Registration Statement or Exchange
Offer Registration Statement, as applicable under the Registration Agreement, is
not filed with the Commission on or prior to the date specified in the
Registration Agreement, (ii) the Exchange Offer Registration Statement or the
Shelf Registration Statement, as the case may be, is not declared effective on
or prior to the date specified in the Registration Agreement, (iii) the
Registered Exchange Offer is not consummated on or prior to 190 days after the
Issue Date (other than in the event the Company files a Shelf Registration
Statement), or (iv) the Shelf Registration Statement is filed and declared
effective on or prior to the date specified in the Registration Agreement but
shall thereafter cease to be effective (at any time that the Company is
obligated to maintain the effectiveness thereof) without being succeeded within
60 days by an additional Registration Statement filed and declared effective
(each such event referred to in clauses (i) through (iv), a "Registration
Default"), the Company shall pay liquidated damages to each holder of Transfer
Restricted Securities, during the period of such Registration Default, in an
amount equal to 1.0% per annum on the principal amount of the Securities
constituting Transfer Restricted Securities held by such Holder until the
applicable Registration Statement is filed or declared effective, the Registered
Exchange Offer is consummated or the Shelf Registration Statement again becomes
effective, an



                                                                               6

additional Registration Statement becomes effective or a post-effective
amendment to the Shelf Registration Statement becomes effective, as the case may
be. All accrued liquidated damages shall be paid to holders in the same manner
as interest payments on the Securities on semi-annual payment dates which
correspond to interest payment dates for the Securities. Following the cure of
all Registration Defaults, the accrual of liquidated damages shall cease. The
Trustee shall have no responsibility with respect to the determination of the
amount of any such liquidated damages. For purposes of the foregoing, "Transfer
Restricted Securities" means (i) each Initial Security until the date on which
such Initial Security has been exchanged for a freely transferable Exchange Note
in the Registered Exchange Offer, it being understood that the requirement that
an Exchange Dealer deliver a prospectus in connection with sales of Exchange
Notes acquired in the Registered Exchange Offer shall not mean that the Exchange
Note is not freely transferable, (ii) each Initial Security or Private Exchange
Note until the date on which such Initial Security or Private Exchange Note has
been effectively registered under the Securities Act and disposed of in
accordance with a Shelf Registration Statement or (iii) each Initial Security or
Private Exchange Note until the date on which such Initial Security or Private
Exchange Note is distributed to the public pursuant to Rule 144 under the
Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.
The Company shall not be required to pay liquidated damages to any Holder of
Transfer Restricted Securities to the extent such Holder fails to comply with
certain obligations specified in the Registration Agreement.

2. Method of Payment

          The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders at the close of business on
the February 15 and August 15 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company shall pay principal, premium, if any, liquidated
damages, if any, and interest in money of the United States of America that at
the time of payment is legal tender for payment of public and private debts.
Payments in respect of the Securities represented by a Global Security
(including principal, premium, if any, liquidated damages, if any, and interest)
shall be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company or any successor depositary. The
Company will make all payments in respect of a certificated Security (including
principal, premium, if any, interest and liquidated damages, if any), at the
office of the Paying Agent, except that, at the option of the Company, payment
of interest or liquidated damages may be made by mailing a check to the
registered address of each Holder thereof; provided, however, that payments on
the Securities may also be made, in the case of a Holder of at least $1,000,000
aggregate principal amount of Securities, by wire transfer to a U.S. dollar
account maintained by the payee with a bank in the United States if such Holder
elects payment by wire transfer by giving written notice to the Trustee or the
Paying Agent to such effect designating such account no later than 30 days
immediately preceding the relevant due date for payment (or such other date as
the Trustee may accept in its discretion).



                                                                               7

3. Paying Agent and Registrar

          Initially, WILMINGTON TRUST COMPANY, a Delaware banking corporation
(the "Trustee"), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent or Registrar without notice. The Company or any of
its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent
or Registrar.

4. Indenture

          The Company issued the Securities under an Indenture dated as of May
30, 2003 (the "Indenture"), among the Company, the Note Guarantors and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the
"TIA"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all terms and
provisions of the Indenture, and Holders (as defined in the Indenture) are
referred to the Indenture and the TIA for a statement of such terms and
provisions.

          The Securities are senior secured obligations of the Company. The
Company shall be entitled, subject to its compliance with Section 4.03 of the
Indenture, to issue Additional Securities pursuant to Section 2.01 of the
Indenture. This Security is one of the [Original Securities] [Additional
Securities] [Private Exchange Notes] referred to in the Indenture. The
Securities include the Original Securities, the Additional Securities and any
Exchange Notes and Private Exchange Notes issued in exchange for Initial
Securities pursuant to the Indenture. The Original Securities, the Additional
Securities and any Exchange Notes and Private Exchange Notes are treated as a
single class of securities under the Indenture. The Indenture imposes certain
limitations on the ability of the Company and its Restricted Subsidiaries to,
among other things, make certain Investments and other Restricted Payments, pay
dividends and other distributions, incur Indebtedness, enter into consensual
restrictions upon the payment of certain dividends and distributions by such
Restricted Subsidiaries, enter into or permit certain transactions with
Affiliates, make asset sales and incur Liens. The Indenture also imposes
limitations on the ability of the Company and each Note Guarantor to consolidate
or merge with or into any other Person or the Company to convey, transfer or
lease all or substantially all its property.

          To guarantee the due and punctual payment of the principal, interest
and liquidated damages, if any, on the Securities and all other amounts payable
by the Company under the Indenture and the Securities when and as the same shall
be due and payable, whether at maturity, by acceleration or otherwise, according
to the terms of the Securities and the Indenture, the Note Guarantors have
jointly and severally unconditionally guaranteed the Guaranteed Obligations on a
senior secured basis pursuant to the terms of the Indenture.



                                                                               8

          The Securities are secured on a second-priority basis by the Liens
created by the Security Documents pursuant to, and subject to, the terms of the
Indenture and the Intercreditor Agreement.

5. Optional Redemption

          Except as set forth in the following paragraph, the Securities shall
not be redeemable at the option of the Company prior to June 1, 2007. On or
after June 1, 2007, the Securities shall be redeemable at the option of the
Company, in whole or in part, on not less than 30 nor more than 60 days prior
notice, at the following redemption prices (expressed as percentages of
principal amount), plus accrued and unpaid interest and liquidated damages, if
any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest and liquidated damages, if any, due on
the relevant interest payment date), if redeemed during the 12-month period
commencing on June 1 of the years set forth below:

                                               REDEMPTION
                    YEAR                         PRICE
                    -------------------------------------
                    2007                        105.563%
                    2008                        102.781%
                    2009                        100.000%

          In addition, prior to June 1, 2006, the Company may redeem up to a
maximum of 35% of the original aggregate principal amount of the Securities
(calculated after giving effect to any issuance of Additional Securities) with
the Net Cash Proceeds of one or more Equity Offerings by the Company at a
redemption price equal to 111.125% of the principal amount thereof, plus accrued
and unpaid interest and liquidated damages, if any, thereon to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest and liquidated damages, if any, due on the relevant interest
payment date); provided, however, that after giving effect to any such
redemption, at least 65% of the original aggregate principal amount of the
Securities (calculated after giving effect to any issuance of Additional
Securities) remains outstanding, and any such redemption shall be made within
120 days of such Equity Offering upon not less than 30 nor more than 60 days
notice mailed to each holder of Securities being redeemed and otherwise in
accordance with the procedures set forth in the Indenture.

6. Sinking Fund

          The Securities are not subject to any sinking fund.



                                                                               9

7. Notice of Redemption

          Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his or her registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued and unpaid interest and liquidated damages, if any, on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest (and, if applicable, liquidated
damages) ceases to accrue on such Securities (or such portions thereof) called
for redemption.

8. Repurchase of Securities at the Option of Holders upon Change of Control

          Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest and liquidated damages, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due and liquidated damages, if any, on
the relevant interest payment date that is on or prior to the date of purchase)
as provided in, and subject to the terms of, the Indenture.

          In accordance with Section 4.06 of the Indenture, the Company will be
required to offer to purchase Securities upon the occurrence of certain events.

9. Denominations; Transfer; Exchange

          The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with, and subject to the restrictions on transfer and
exchange set forth in, the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or to transfer or exchange any Securities for a period of 15 days prior to a
selection of Securities to be redeemed.

10. Persons Deemed Owners

          Except as provided in paragraph 2 hereof, the registered Holder of
this Security may be treated as the owner of it for all purposes.



                                                                              10

11. Unclaimed Money

          If money for the payment principal, interest or liquidated damages, if
any, remains unclaimed for two years, the Trustee and the Paying Agent shall pay
the money back to the Company at its written request unless an abandoned
property law designates another Person. After any such payment, Holders entitled
to the money must look to the Company for payment and not to the Trustee for
payment as general creditors and the Trustee and the Paying Agent shall have no
further liability with respect to such monies.

12. Discharge and Defeasance

          Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal of, and interest and liquidated damages, if any, on, the
Securities to redemption or maturity, as the case may be.

13. Amendment, Waiver

          Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any Holder
but with the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Securities and (ii) any default or
compliance with any provisions of the Indenture may be waived with the written
consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder, the Company, the Note Guarantors
and the Trustee may amend the Indenture or the Securities (i) to cure any
ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of
the Indenture; (iii) to provide for uncertificated Securities in addition to or
in place of certificated Securities; (iv) to add Note Guarantees with respect to
the Securities or to secure the Securities; (v) to add additional covenants or
to surrender rights and powers conferred on the Company; (vi) to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; (vii) to make any change that does not materially and
adversely affect the rights of any Holder under the provisions of the Indenture;
(viii) to provide for the issuance of the Additional Securities, the Exchange
Notes or Private Exchange Notes or (ix) if necessary, in connection with any
addition or release of Collateral permitted under the terms of the Indenture or
the Security Documents.

14. Defaults and Remedies

          If an Event of Default occurs (other than an Event of Default relating
to certain events of bankruptcy, insolvency or reorganization of the Company)
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the outstanding Securities may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. If an Event of
Default relating to certain events of bankruptcy, insolvency or reorganization
of the Company occurs, the principal of and



                                                                              11

interest on all the Securities shall become immediately due and payable without
any declaration or other act on the part of the Trustee or any Holders. Under
certain circumstances, the Holders of a majority in principal amount of the
outstanding Securities may rescind any such acceleration with respect to the
Securities and its consequences.

          If an Event of Default occurs and is continuing, the Trustee shall be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the Holders unless such Holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense and certain other conditions are complied with. Except to
enforce the right to receive payment of principal, premium (if any) or interest
when due, no Holder may pursue any remedy with respect to the Indenture or the
Securities unless (i) such Holder has previously given the Trustee notice that
an Event of Default is continuing, (ii) Holders of at least 25% in principal
amount of the outstanding Securities have requested the Trustee in writing to
pursue the remedy, (iii) such Holders have offered the Trustee reasonable
security or indemnity against any loss, liability or expense, (iv) the Trustee
has not complied with such request within 60 days after the receipt of the
request and the offer of security or indemnity and (v) the Holders of a majority
in principal amount of the outstanding Securities have not given the Trustee a
direction inconsistent with such request within such 60-day period. Subject to
certain restrictions, the Holders of a majority in principal amount of the
outstanding Securities are given the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or the Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability. Prior to taking
any action under the Indenture, the Trustee shall be entitled to indemnification
or security reasonably satisfactory to it against all losses and expenses caused
by taking or not taking such action.

15. Trustee Dealings with the Company

          Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company, a Note Guarantor or its Affiliates and may otherwise deal
with the Company, a Note Guarantor or its Affiliates with the same rights it
would have if it were not Trustee.

16. No Recourse Against Others

          A director, officer, employee or stockholder, as such, of the Company
or any Note Guarantor shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Holder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.



                                                                              12

17. Authentication

          This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.

18. Abbreviations

          Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).

19. Governing Law

          THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITH OUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

20. CUSIP and ISIN Numbers

          The Company has caused CUSIP and ISIN numbers to be printed on the
Securities and has directed the Trustee to use CUSIP and ISIN numbers in notices
of redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Securities or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

21. Designated Senior Indebtedness

          For purposes of the Senior Subordinated Notes Indentures, the
Securities and the Note Guarantees shall constitute Designated Senior
Indebtedness (as such term is defined in the Senior Subordinated Notes
Indentures) of the Company and the Note Guarantors, as the case may be.

          The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.



                                                                              13

                                 ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to


________________________________________________________________________________
(Print or type assignee's name, address and zip code)

________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint              agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.

________________________________________________________________________________

Date: ________________  Your Signature:
                                       ---------------------

________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

Signature Guarantee:

Date: ___________________                   --------------------------
Signature must be guaranteed                Signature of Signature
by a participant in a                       Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee



                                                                              14

      CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER
                              RESTRICTED SECURITIES

This certificate relates to $_________ principal amount of Securities held in
(check applicable space) ____ book-entry or _____ definitive form by the
undersigned.

The undersigned (check one box below):

[ ]  has requested the Trustee by written order to deliver in exchange for its
     beneficial interest in the Global Security held by the Depositary a
     Security or Securities in definitive, registered form of authorized
     denominations and an aggregate principal amount equal to its beneficial
     interest in such Global Security (or the portion thereof indicated above);

[ ]  has requested the Trustee by written order to exchange or register the
     transfer of a Security or Securities.

In connection with any transfer of any of the Securities evidenced by this
certificate, the undersigned confirms that such Securities are being transferred
in accordance with its terms:

CHECK ONE BOX BELOW

(1)      [ ]   to the Company; or

(2)      [ ]   to the Registrar for registration in the name of the Holder,
               without transfer; or

(3)      [ ]   pursuant to an effective registration statement under the
               Securities Act of 1933; or

(4)      [ ]   inside the United States to a "qualified institutional buyer"
               (as defined in Rule 144A under the Securities Act of 1933) that
               purchases for its own account or for the account of a qualified
               institutional buyer to whom notice is given that such transfer is
               being made in reliance on Rule 144A, in each case pursuant to and
               in compliance with Rule 144A under the Securities Act of 1933; or

(5)      [ ]   outside the United States in an offshore transaction within the
               meaning of Regulation S under the Securities Act of 1933 in
               compliance with Rule 904 under the Securities Act of 1933 and
               such security shall be held immediately after the transfer
               through Euroclear or Clearstream until the expiration of the
               Restricted Period (as defined in the Indenture); or

(6)      [ ]   to an institutional "accredited investor" (as defined in Rule
               501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that
               has furnished to the Trustee a signed letter containing certain
               representations and agreements; or



                                                                              15

(7)      [ ]   pursuant to another available exemption from registration
               provided by Rule 144 under the Securities Act of 1933.

               Unless one of the boxes is checked, the Trustee will refuse to
          register any of the Securities evidenced by this certificate in the
          name of any Person other than the registered Holder thereof; provided,
          however, that if box (5) or (6) is checked, the Trustee may require,
          prior to registering any such transfer of the Securities, such legal
          opinions, certifications and other information required by the
          Indenture to confirm that such transfer is being made pursuant to an
          exemption from, or in a transaction not subject to, the registration
          requirements of the Securities Act of 1933.


                                                     ------------------------
                                                     Your Signature

Signature Guarantee:

Date: ___________________                --------------------------
Signature must be guaranteed               Signature of Signature
by a participant in a                            Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee



                                                                              16

              TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.

          The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.

Dated: ________________
                                           ------------------------------------
                                                NOTICE:  To be executed by
                                                   an executive officer



                                                                              17

                      [TO BE ATTACHED TO GLOBAL SECURITIES]

              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

               The initial principal amount of this Global Security is $[ ]. The
     following increases or decreases in this Global Security have been made:



            Amount of decrease     Amount of increase     Principal amount of    Signature of
            in principal amount    in principal amount    this Global Security   authorized signatory
Date of     of this Global         of this Global         following such         of Trustee or
Exchange    Security               Security               decrease or increase   Securities Custodian
                                                                     





                                                                              18

                       OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 (Asset Disposition) or 4.08 (Change of Control) of the
Indenture, check the box:

                   Asset Disposition [ ] Change of Control [ ]

          If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount
($1,000 or an integral multiple thereof):

$

Date: __________________ Your Signature:
                                         ----------------------
(Sign exactly as your name appears on the other side of the Security)


Signature Guarantee:
                    --------------------------------------------------------
                    Signature must be guaranteed by a participant in a
                    recognized signature guaranty medallion program or other
                    signature guarantor acceptable to the Trustee



                                                                       EXHIBIT B

                         [FORM OF FACE OF EXCHANGE NOTE]
                           [Global Securities Legend]

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

          TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL
BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.



                                                                               2

No.                                                                  $__________

                      11 1/8% Senior Secured Note due 2009

                                                            CUSIP No. __________
                                                             ISIN No. __________

          PLIANT CORPORATION, a Utah corporation, promises to pay to Cede & Co.,
or registered assigns, the principal sum [listed on the Schedule of Increases or
Decreases in Global Security attached hereto]/3/ [of $______] on September 1,
2009.

          Interest Payment Dates: March 1 and September 1.

          Record Dates: February 15 and August 15.

- ----------
/3/



                                                                               3

          Additional provisions of this Security are set forth on the other side
of this Security.

          IN WITNESS WHEREOF, the parties have caused this instrument to be duly
executed.

                                         PLIANT CORPORATION,

                                         by
                                           -------------------------------------
                                           Name:
                                           Title:

                                         by
                                           -------------------------------------
                                           Name:
                                           Title:

Dated:

TRUSTEE'S CERTIFICATE OF
     AUTHENTICATION

WILMINGTON TRUST COMPANY,

     as Trustee, certifies
     that this is one of
     the Securities referred
     to in the Indenture.

     by
       --------------------------
          Authorized Signatory

- ----------
*/ If the Security is to be issued in global form, add the Global Securities
Legend and the attachment from Exhibit A captioned "TO BE ATTACHED TO GLOBAL
SECURITIES - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY".



                                                                               4

                     [FORM OF REVERSE SIDE OF EXCHANGE NOTE]

                      11 1/8% Senior Secured Note due 2009

1.  Interest

          PLIANT CORPORATION, a Utah corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above. The Company shall pay interest
semiannually on March 1 and September 1 of each year, beginning September 1,
2003. Interest on the Securities shall accrue from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for, from the Issue Date until the principal hereof is due.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities, and it shall pay interest on overdue installments of interest at
the same rate to the extent lawful.

2.  Method of Payment

          The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are registered Holders at the close of business on
the February 15 and August 15 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company shall pay principal, premium, if any, and
interest in money of the United States of America that at the time of payment is
legal tender for payment of public and private debts. Payments in respect of the
Securities represented by a Global Security (including principal, premium and
interest) shall be made by wire transfer of immediately available funds to the
accounts specified by The Depository Trust Company or any successor depositary.
The Company will make all payments in respect of a certificated Security
(including principal, premium, if any, and interest), at the office of the
Paying Agent, except that, at the option of the Company, payment of interest may
be made by mailing a check to the registered address of each Holder thereof;
provided, however, that payments on the Securities may also be made, in the case
of a Holder of at least $1,000,000 aggregate principal amount of Securities, by
wire transfer to a U.S. dollar account maintained by the payee with a bank in
the United States if such Holder elects payment by wire transfer by giving
written notice to the Trustee or the Paying Agent to such effect designating
such account no later than 30 days immediately preceding the relevant due date
for payment (or such other date as the Trustee may accept in its discretion).

3.  Paying Agent and Registrar

          Initially, WILMINGTON TRUST COMPANY , a Delaware banking corporation
(the "Trustee"), will act as Paying Agent and Registrar. The Company may appoint
and change any Paying Agent or Registrar without notice. The Company or any



                                                                               5

of its domestically incorporated Wholly Owned Subsidiaries may act as Paying
Agent or Registrar.

4.  Indenture

          The Company issued the Securities under an Indenture dated as of May
30, 2003 (the "Indenture"), between among the Company, the Note Guarantors and
the Trustee. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the Indenture
(the "TIA"). Terms defined in the Indenture and not defined herein have the
meanings ascribed thereto in the Indenture. The Securities are subject to all
terms and provisions of the Indenture, and Holders (as defined in the Indenture)
are referred to the Indenture and the TIA for a statement of such terms and
provisions.

          The Securities are senior secured obligations of the Company. The
Company shall be entitled, subject to its compliance with Section 4.03 of the
Indenture, to issue Additional Securities pursuant to Section 2.01 of the
Indenture. This Security is one of the Exchange Notes referred to in the
Indenture. The Securities include the Original Securities, the Additional
Securities and any Exchange Notes and Private Exchange Notes issued in exchange
for the Initial Securities pursuant to the Indenture. The Original Securities,
the Additional Securities, the Exchange Notes and the Private Exchange Notes are
treated as a single class of securities under the Indenture. The Indenture
imposes certain limitations on the ability of the Company and its Restricted
Subsidiaries to, among other things, make certain Investments and other
Restricted Payments, pay dividends and other distributions, incur Indebtedness,
enter into consensual restrictions upon the payment of certain dividends and
distributions by such Restricted Subsidiaries, enter into or permit certain
transactions with Affiliates, make Asset Sales and incur Liens. The Indenture
also imposes limitations on the ability of the Company and each Note Guarantor
to consolidate or merge with or into any other Person or the Company to convey,
transfer or lease all or substantially all of its property.

          To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the Company
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Note Guarantors have, jointly and
severally, unconditionally guaranteed the Guaranteed Obligations on a senior
basis subordinated pursuant to the terms of the Indenture.

          The Securities are secured on a second-priority basis by the Liens
created by the Security Documents pursuant to, and subject to, the terms of the
Indenture and the Intercreditor Agreement.

5.  Optional Redemption

          Except as set forth in the following paragraph, the Securities shall
not be redeemable at the option of the Company prior to June 1, 2007. On or
after June 1, 2007,



                                                                               6

the Securities shall be redeemable at the option of the Company, in whole or in
part, on not less than 30 nor more than 60 days prior notice, at the following
redemption prices (expressed as percentages of principal amount), plus accrued
and unpaid interest and liquidated damages, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), if redeemed during
the 12-month period commencing on June 1 of the years set forth below:

                                                 REDEMPTION
                    YEAR                            PRICE
                    ---------------------------------------
                    2007                           105.563%
                    2008                           102.781%
                    2009                           100.000%

          In addition, prior to June 1, 2006, the Company may redeem up to a
maximum of 35% of the original aggregate principal amount of the Securities
(calculated after giving effect to any issuance of Additional Securities) with
the Net Cash Proceeds of one or more Equity Offerings (i) by the Company at a
redemption price equal to 111.125% of the principal amount thereof, plus accrued
and unpaid interest and liquidated damages thereon, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that after giving effect to any such redemption, at least 65% of the original
aggregate principal amount of the Securities (calculated after giving effect to
any issuance of Additional Securities) remains outstanding, and any such
redemption shall be made within 120 days of such Equity Offering upon not less
than 30 nor more than 60 days notice mailed to each Holder of Securities being
redeemed and otherwise in accordance with the procedures set forth in the
Indenture.

6.  Sinking Fund

          The Securities are not subject to any sinking fund.

7.  Notice of Redemption

          Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at his or her registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued and unpaid interest and liquidated damages, if any, on all Securities
(or portions thereof) to be redeemed on the redemption date is deposited with
the Paying Agent on or before the redemption date and certain other conditions
are satisfied, on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.



                                                                               7

8.  Repurchase of Securities at the Option of Holders upon Change of Control

          Upon a Change of Control, any Holder of Securities will have the
right, subject to certain conditions specified in the Indenture, to cause the
Company to repurchase all or any part of the Securities of such Holder at a
purchase price equal to 101% of the principal amount of the Securities to be
repurchased plus accrued and unpaid interest and liquidated damages, if any, to
the date of repurchase (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date that is on or prior to the date of purchase) as provided in, and subject to
the terms of, the Indenture.

          In accordance with Section 4.06 of the Indenture, the Company will be
required to offer to purchase Securities upon the occurrence of certain events.

9.  Denominations; Transfer; Exchange

          The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. Upon any transfer or exchange, the
Registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or to transfer or exchange any Securities for a period of 15 days prior to a
selection of Securities to be redeemed or 15 days before an interest payment
date.

10. Persons Deemed Owners

          Except as provided in paragraph 2 hereof, the registered Holder of
this Security may be treated as the owner of it for all purposes.

11. Unclaimed Money

          If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent shall pay the money back to the
Company at its written request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must look
only to the Company and not to the Trustee for payment as general creditors and
the Trustee and the Paying Agent shall have no further liability with respect to
such monies.

12. Discharge and Defeasance

          Subject to certain conditions, the Company at any time may terminate
some of or all its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.



                                                                               8

13. Amendment, Waiver

          Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended without prior notice to any Holder
but with the written consent of the Holders of at least a majority in aggregate
principal amount of the outstanding Securities and (ii) any default or
compliance with any of the provisions of the Indenture may be waived with the
written consent of the Holders of at least a majority in principal amount of the
outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Holder, the Company, the Note Guarantors
and the Trustee may amend the Indenture or the Securities (i) to cure any
ambiguity, omission, defect or inconsistency; (ii) to comply with Article 5 of
the Indenture; (iii) to provide for uncertificated Securities in addition to or
in place of certificated Securities; (iv) to add Note Guarantees with respect to
the Securities or to secure the Securities; (v) to add additional covenants or
to surrender rights and powers conferred on the Company; (vi) to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; (vii) to make any change that does not materially and
adversely affect the rights of any Holder under the provisions of the Indenture;
(viii) to provide for the issuance of the Additional Securities, the Exchange
Notes or Private Exchange Notes; and (ix) if necessary, in connection with any
addition or release of Collateral permitted under the terms of the Indenture or
the Security Documents.

14. Defaults and Remedies

          If an Event of Default occurs (other than an Event of Default relating
to certain events of bankruptcy, insolvency or reorganization of the Company)
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the outstanding Securities may declare the principal of and accrued
but unpaid interest on all the Securities to be due and payable. If an Event of
Default relating to certain events of bankruptcy, insolvency or reorganization
of the Company occurs, the principal of and interest on all the Securities shall
become immediately due and payable without any declaration or other act on the
part of the Trustee or any Holders. Under certain circumstances, the Holders of
a majority in principal amount of the outstanding Securities may rescind any
such acceleration with respect to the Securities and its consequences.

          If an Event of Default occurs and is continuing, the Trustee shall be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the Holders unless such Holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense and certain other conditions are complied with. Except to
enforce the right to receive payment of principal, premium (if any) or interest
when due, no Holder may pursue any remedy with respect to the Indenture or the
Securities unless (i) such Holder has previously given the Trustee notice that
an Event of Default is continuing, (ii) Holders of at least 25% in principal
amount of the outstanding Securities have requested the Trustee in writing to
pursue the remedy, (iii) such Holders have offered the Trustee reasonable
security or indemnity against any loss, liability or expense, (iv) the Trustee
has not complied with such request within 60 days after the receipt of the
request and the offer of security or



                                                                               9

indemnity and (v) the Holders of a majority in principal amount of the
outstanding Securities have not given the Trustee a direction inconsistent with
such request within such 60-day period. Subject to certain restrictions, the
Holders of a majority in principal amount of the outstanding Securities are
given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other Holder or that would
involve the Trustee in personal liability. Prior to taking any action under the
Indenture, the Trustee shall be entitled to indemnification or security
reasonably satisfactory to it against all losses and expenses caused by taking
or not taking such action.

15. Trustee Dealings with the Company

          Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company, a Note Guarantor or its Affiliates and may otherwise deal
with the Company, a Note Guarantor or its Affiliates with the same rights it
would have if it were not Trustee.

16. No Recourse Against Others

          A director, officer, employee or stockholder, as such, of the Company
or any Note Guarantor shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Holder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.

17. Authentication

          This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.

18. Abbreviations

          Customary abbreviations may be used in the name of a Holder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).

19. Governing Law

          THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS



                                                                              10

OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION
WOULD BE REQUIRED THEREBY.

20. CUSIP and ISIN Numbers

          The Company has caused CUSIP and ISIN numbers to be printed on the
Securities and has directed the Trustee to use CUSIP and ISIN numbers in notices
of redemption as a convenience to Holders. No representation is made as to the
accuracy of such numbers either as printed on the Securities or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.

21. Designated Senior Indebtedness.

          For purposes of the Senior Subordinated Notes Indentures, the
Securities and the Note Guarantees shall constitute Designated Senior
Indebtedness (as such term is defined in the Senior Subordinated Notes
Indentures) of the Company and the Note Guarantors, as the case may be.

          The Company will furnish to any Holder of Securities upon written
request and without charge to the Holder a copy of the Indenture which has in it
the text of this Security.



                                                                              11

                                 ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to


________________________________________________________________________________
              (Print or type assignee's name, address and zip code)


________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint             agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.


________________________________________________________________________________

Date: ________________ Your Signature:
                                       ---------------------

________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

Signature Guarantee:

Date: ___________________               --------------------------
Signature must be guaranteed            Signature of Signature
by a participant in a                   Guarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee



                                                                              12

                       OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 (Asset Disposition) or 4.08 (Change of Control) of the
Indenture, check the box:

                   Asset Disposition [ ] Change of Control [ ]

          If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount
($1,000 or an integral multiple thereof):

$

Date: __________________ Your Signature:
                                         ------------------
(Sign exactly as your name appears on the other side of the Security)


Signature Guarantee:
                    --------------------------------------------------------
                    Signature must be guaranteed by a participant in a
                    recognized signature guaranty medallion program or other
                    signature guarantor acceptable to the Trustee



                                                                              13

                      [TO BE ATTACHED TO GLOBAL SECURITIES]

              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

          The initial principal amount of this Global Security is $[ ]. The
following increases or decreases in this Global Security have been made:



            Amount of decrease     Amount of increase     Principal amount of    Signature of
            in principal amount    in principal amount    this Global Security   authorized signatory
Date of     of this Global         of this Global         following such         of Trustee or
Exchange    Security               Security               decrease or increase   Securities Custodian
                                                                     





                                                                       EXHIBIT C

                         FORM OF SUPPLEMENTAL INDENTURE

                    SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated
               as of          , among [GUARANTOR] (the "New Guarantor"), a
               subsidiary of PLIANT CORPORATION (or its successor), a Utah
               corporation (the "Company"), [OTHER EXISTING GUARANTORS] and
               WILMINGTON TRUST COMPANY, a Delaware banking corporation, as
               trustee under the indenture referred to below (the "Trustee").

                              W I T N E S S E T H :

          WHEREAS the Company and [OLD GUARANTORS] (the "Existing Guarantors")
has heretofore executed and delivered to the Trustee an Indenture (the
"Indenture") dated as of May 30, 2003, providing for the issuance initially of
an aggregate principal amount of $250,000,000 of 11 1/8% Senior Secured Notes
due 2009 (the "Securities");

          WHEREAS Section 4.11 of the Indenture provides that under certain
circumstances the Company is required to cause the New Guarantor to execute and
deliver to the Trustee a supplemental indenture pursuant to which the New
Guarantor shall unconditionally guarantee all the Company's obligations under
the Securities pursuant to a Note Guarantee on the terms and conditions set
forth herein; and

          WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the
Company and the Existing Guarantors are authorized to execute and deliver this
Supplemental Indenture;

          NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the New
Guarantor, the Company, the Existing Guarantors and the Trustee mutually
covenant and agree for the equal and ratable benefit of the holders of the
Securities as follows:

          1. Agreement to Guarantee. The New Guarantor hereby agrees, jointly
and severally with all the Existing Guarantors, to unconditionally guarantee the
Company's obligations under the Securities on the terms and subject to the
conditions set forth in Article 11 the Indenture and to be bound by all other
applicable provisions of the Indenture and the Securities.

          2. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all



                                                                               2

purposes, and every holder of Securities heretofore or hereafter authenticated
and delivered shall be bound hereby.

          3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

          4. Trustee Makes No Representation. The recitals contained herein
shall be taken as the statements of the Company, [NEW GUARANTOR] and the
Existing Guarantors, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of this Supplemental Indenture.

          5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.

          6. Effect of Headings. The Section headings herein are for convenience
only and shall not effect the construction thereof.

          IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.

                                         [NEW GUARANTOR],

                                         by
                                           -------------------------------------
                                           Name:
                                           Title:

                                         PLIANT CORPORATION,

                                         by
                                           -------------------------------------
                                           Name:
                                           Title:



                                                                               3

                                         [OTHER EXISTING GUARANTORS],

                                         by
                                           -------------------------------------
                                           Name:
                                           Title:

                                         WILMINGTON TRUST COMPANY, as Trustee,

                                         by
                                           -------------------------------------
                                           Name:
                                           Title:



                                                                       EXHIBIT D

                                     Form of
                       Transferee Letter of Representation

Pliant Corporation
1515 Woodfield Road, Suite 600
Schaumburg, Illinois 60173

Ladies and Gentlemen:

          This certificate is delivered to request a transfer of $     principal
amount of the 11 1/8% Senior Secured Notes due 2009 (the "Notes") of Pliant
Corporation (the "Issuer").

Upon transfer, the Notes would be registered in the name of the new beneficial
owner as follows:

Name:_________________________________________________________________

Address:_______________________________________________________________

Taxpayer ID Number:____________________________________________________

The undersigned represents and warrants to you that:

1.   We are an institutional "accredited investor" (as defined in Rule
     501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended
     (the "Securities Act")), purchasing for our own account or for the account
     of such an institutional "accredited investor" at least $250,000 principal
     amount of the Notes, and we are acquiring the Notes not with a view to, or
     for offer or sale in connection with, any distribution in violation of the
     Securities Act. We have such knowledge and experience in financial and
     business matters as to be capable of evaluating the merits and risks of our
     investment in the Notes, and we invest in or purchase securities similar to
     the Notes in the normal course of our business. We, and any accounts for
     which we are acting, are each able to bear the economic risk of our or its
     investment.

2.   We understand that the Notes have not been registered under the Securities
     Act and, unless so registered, may not be sold except as permitted in the
     following sentence. We agree on our own behalf and on behalf of any
     investor account for which we are purchasing Notes to offer, sell or
     otherwise transfer such Securities prior to the date that is two years
     after the later of the date of original issue and the last date on which
     the Company or any affiliate of the Company was the owner of such Notes (or
     any predecessor thereto) (the "Resale Restriction Termination Date") only
     (a) to the Company, (b) pursuant to a registration statement that has been
     declared effective under the Securities Act, (c) in a transaction complying
     with the requirements of Rule 144A under the Securities



                                                                               2

     Act ("Rule 144A"), to a person we reasonably believe is a qualified
     institutional buyer under Rule 144A (a "QIB") that is purchasing for its
     own account or for the account of a QIB and to whom notice is given that
     the transfer is being made in reliance on Rule 144A, (d) to an
     institutional "accredited investor" within the meaning of Rule 501(a)(1),
     (2), (3) or (7) under the Securities Act that is purchasing for its own
     account or for the account of such an institutional "accredited investor,"
     in each case, in a minimum principal amount of Notes of $250,000, or (e)
     pursuant to any other available exemption from the registration
     requirements of the Securities Act, including the exemption provided for by
     Rule 144 thereunder (if available) subject in each of the foregoing cases
     to any requirement of law that the disposition of our property or the
     property of such investor account or accounts be at all times within our or
     their control and in compliance with any applicable state securities laws.
     The foregoing restrictions on resale will not apply subsequent to the
     Resale Restriction Termination Date. If any resale or other transfer of the
     Notes is proposed to be made pursuant to clause (d) above prior to the
     Resale Restriction Termination Date, the transferor shall deliver a letter
     from the transferee substantially in the form of this letter to the Company
     and the Trustee, which shall provide, among other things, that the
     transferee is an institutional "accredited investor" within the meaning of
     Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is
     acquiring such Notes for investment purposes and not for distribution in
     violation of the Securities Act. Each purchaser acknowledges that the
     Company and the Trustee reserve the right prior to the offer, sale or other
     transfer prior to the Resale Restriction Termination Date of the Securities
     pursuant to clause (d) or (e) above to require the delivery of an opinion
     of counsel, certifications or other information satisfactory to the Company
     and the Trustee.

                                                   TRANSFEREE:_________________,

                                                  by:
                                                     ---------------------------

EX-4.8

                                                                     EXHIBIT 4.8

                            SECOND PRIORITY SECURITY AGREEMENT dated as of May
                    30, 2003, among PLIANT CORPORATION, a Utah corporation (the
                    "Issuer"), each subsidiary of the Issuer listed on Schedule
                    I hereto (each such subsidiary individually a "Guarantor"
                    and collectively, the "Guarantors"; the Guarantors and the
                    Issuer are referred to collectively herein as the
                    "Grantors") and WILMINGTON TRUST COMPANY, a Delaware banking
                    corporation ("Wilmington Trust"), as collateral agent (in
                    such capacity, the "Collateral Agent") for the Secured
                    Parties (as defined herein).

                                   WITNESSETH:

                WHEREAS, pursuant to the terms, conditions and provisions of (a)
the Indenture dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the "Indenture"), among the Issuer, the
Guarantors and Wilmington Trust, as trustee (the "Trustee"), and (b) the
Purchase Agreement dated as of May 22, 2003, among the Issuer, the Guarantors
and J.P. Morgan Securities Inc., Credit Suisse First Boston LLC and Deutsche
Bank Securities Inc. (the "Initial Purchasers"), the Issuer is issuing
$250,000,000 aggregate principal amount of 11 1/8% Senior Secured Notes due 2009
and may issue, from time to time, additional notes in accordance with the
provisions of the Indenture (collectively, the "Notes"), which will be
guaranteed on a senior secured basis by each of the Guarantors;

                WHEREAS, pursuant to the Security Agreement dated as of
September 30, 1997, as amended and restated as of May 31, 2000 (as amended,
supplemented or otherwise modified from time to time), among the Issuer, each of
the subsidiaries of the Issuer party thereto or which becomes a party thereto
pursuant to the Credit Agreement referred to below (together with the Issuer,
each a "Credit Agreement Grantor" and, collectively, the "Credit Agreement
Grantors") and Deutsche Bank Trust Company Americas (formerly known as Bankers
Trust Company), as collateral agent, the Credit Agreement Grantors have granted
to the Credit Agent (as defined below) a first-priority lien and security
interest in the Collateral (as defined below) in connection with the Credit
Agreement dated as of September 30, 1997, as amended and restated as of May 31,
2000 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Issuer, Aspen Industrial, S.A. de C.V., a Mexico
corporation (the "Mexico Borrower"), the lenders from time to time party thereto
(the "Lenders"), Deutsche Bank Trust Company Americas, as administrative agent
and collateral agent (in such capacity, together with any successor Credit Agent
as provided and defined in the Intercreditor Agreement, the "Credit Agent") for
the Lenders and JPMorgan Chase Bank, as syndication agent;

                WHEREAS, the Issuer, the Collateral Agent and the Credit Agent
have entered into an Intercreditor Agreement, dated as of the date hereof (the
"Intercreditor



                                                                               2

Agreement"), pursuant to which the lien upon and security interest in the
Collateral granted by this Agreement are and shall be subordinated in all
respects to the lien upon and security interest in the Collateral granted
pursuant to, and subject to the terms and conditions of, the Senior Lender
Documents (as defined in Article I hereof);

                WHEREAS, each Grantor is executing and delivering this Agreement
pursuant to the terms of the Indenture to induce the Trustee to enter into the
Indenture and the Initial Purchasers to purchase the Notes; and

                WHEREAS, each Grantor has duly authorized the execution,
delivery and performance of this Agreement.

                NOW, THEREFORE, for and in consideration of the premises, and of
the mutual covenants herein contained, and in order to induce the Trustee to
enter into the Indenture and the Initial Purchasers to purchase the Notes, each
Grantor and the Collateral Agent, on behalf of itself and each Secured Party
(and each of their respective successors or assigns), hereby agree as follows:

                                   ARTICLE I.

                                   DEFINITIONS

                Section 1.01. Definition of Terms Used Herein. Unless the
context otherwise requires, all capitalized terms used but not defined herein
shall have the meanings set forth in the Indenture.

                Section 1.02. Definition of Certain Terms Used Herein. As used
herein, the following terms shall have the following meanings:

                "Account Debtor" shall mean any Person who is or who may become
obligated to any Grantor under, with respect to or on account of an Account.

                "Accounts" shall mean any and all right, title and interest of
any Grantor to payment for goods and services sold or leased, including any such
right evidenced by chattel paper, whether due or to become due, whether or not
it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.

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

                "Collateral" shall mean all (a) Accounts Receivable, (b)
Documents, (c) Equipment, (d) General Intangibles, (e) Inventory, (f) cash and
cash accounts, (g) Investment Property and (h) Proceeds; provided, however, that
Collateral shall not include with respect to any Grantor, any item of property
to the extent the grant by such



                                                                               3

Grantor of a security interest pursuant to this Agreement in such Grantor's
right, title and interest in such item of property is prohibited by an
applicable contractual obligation (including but not limited to a Capitalized
Lease Obligation) or requirement of law or would give any other Person the right
to terminate its obligations with respect to such item of property and provided,
further, that the limitation in the foregoing proviso shall not affect, limit,
restrict or impair the grant by any Grantor of a security interest pursuant to
this Agreement in any money or other amounts due or to become due under any
Account, contract, agreement or General Intangible.

                "Commodity Account" shall mean an account maintained by a
Commodity Intermediary in which a Commodity Contract is carried out for a
Commodity Customer.

                "Commodity Contract" shall mean a commodity futures contract, an
option on a commodity futures contract, a commodity option or any other contract
that, in each case, is (a) traded on or subject to the rules of a board of trade
that has been designated as a contract market for such a contract pursuant to
the federal commodities laws or (b) traded on a foreign commodity board of
trade, exchange or market, and is carried on the books of a Commodity
Intermediary for a Commodity Customer.

                "Commodity Customer" shall mean a Person for whom a Commodity
Intermediary carries a Commodity Contract on its books.

                "Commodity Intermediary" shall mean (a) a Person who is
registered as a futures commission merchant under the federal commodities laws
or (b) a Person who in the ordinary course of its business provides clearance or
settlement services for a board of trade that has been designated as a contract
market pursuant to federal commodities laws.

                "Copyright License" shall mean any written agreement, now or
hereafter in effect, granting any right to any third party under any Copyright
now or hereafter owned by any Grantor or which such Grantor otherwise has the
right to license, or granting any right to such Grantor under any Copyright now
or hereafter owned by any third party, and all rights of such Grantor under any
such agreement.

                "Copyrights" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all copyright rights in any work subject
to the copyright laws of the United States, whether as author, assignee,
transferee or otherwise, and (b) all registrations and applications for
registration of any such copyright in the United States, including
registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office, including those listed
on Schedule II.

                "Credit Agreement" shall have the meaning assigned to such term
in the recitals of this Agreement.

                "Discharge of Senior Lender Claims" shall have the meaning
assigned to such term in the Intercreditor Agreement.



                                                                               4

                "Documents" shall mean all instruments, files, records, ledger
sheets and documents covering or relating to any of the Collateral.

                "Entitlement Holder" shall mean a Person identified in the
records of a Securities Intermediary as the Person having a Security Entitlement
against the Securities Intermediary. If a Person acquires a Security Entitlement
by virtue of Section 8-501(b)(2) or (3) of the Uniform Commercial Code, such
Person is the Entitlement Holder.

                "Equipment" shall mean all equipment, furniture and furnishings,
including tools, parts and supplies of every kind and description, and all
improvements, accessions or appurtenances thereto, that are now or hereafter
owned by any Grantor.

                "Financial Asset" shall mean (a) a Security, (b) an obligation
of a Person or a share, participation or other interest in a Person or in
property or an enterprise of a Person, which is, or is of a type, dealt with in
or traded on financial markets, or which is recognized in any area in which it
is issued or dealt in as a medium for investment or (c) any property that is
held by a Securities Intermediary for another Person in a Securities Account if
the Securities Intermediary has expressly agreed with the other Person that the
property is to be treated as a Financial Asset under Article 8 of the Uniform
Commercial Code. As the context requires, the term Financial Asset shall mean
either the interest itself or the means by which a Person's claim to it is
evidenced, including a certificated or uncertificated Security, a certificate
representing a Security or a Security Entitlement.

                "First-Lien Termination Date" shall mean, subject to Section 5.6
of the Intercreditor Agreement, the date on which the Discharge of Senior Lender
Claims occurs.

                "General Intangibles" shall mean all choses in action and causes
of action and all other assignable intangible personal property of any Grantor
of every kind and nature (other than Accounts Receivable) now owned or hereafter
acquired by any Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under leases, whether
entered into as lessor or lessee, Hedging Agreements and other agreements but
excluding contract rights in contracts which prohibit assignment or the granting
of a security interest), Intellectual Property, goodwill, registrations,
franchises, tax refund claims and any letter of credit, guarantee, claim,
security interest or other security held by or granted to any Grantor to secure
payment by an Account Debtor of any of the Accounts Receivable.

                "Hedging Agreement" shall mean any interest rate protection
agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging
arrangement.

                "Indenture Documents" shall mean the Indenture, the Notes, this
Agreement, the other Security Documents and the Intercreditor Agreement, as such
agreements may be amended, supplemented or otherwise modified from time to time.



                                                                               5

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

                "Inventory" shall mean all goods of any Grantor, whether now
owned or hereafter acquired, held for sale or lease, or furnished or to be
furnished by any Grantor under contracts of service, or consumed in any
Grantor's business, including raw materials, intermediates, work in process,
packaging materials, finished goods, semi-finished inventory, scrap inventory,
manufacturing supplies and spare parts, and all such goods that have been
returned to or repossessed by or on behalf of any Grantor.

                "Investment Property" shall mean all Securities (whether
certificated or uncertificated), Security Entitlements, Securities Accounts,
Commodity Contracts and Commodity Accounts of any Grantor, whether now owned or
hereafter acquired by any Grantor.

                "License" shall mean any Patent License, Trademark License,
Copyright License or other franchise agreement, license or sublicense to which
any Grantor is a party, including those listed on Schedule III (other than those
agreements in existence on the date hereof and listed on Schedule III and those
agreements entered into after the date hereof, which by their terms prohibit
assignment or a grant of a security interest by such Grantor as licensee
thereunder).

                "Lien" shall mean 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).

                "Mortgages" shall mean the mortgages dated as of May 30, 2003
and those entered into hereafter, in each case between the record owner of each
Mortgaged Property (as defined in the applicable Mortgage) and the Trustee.

                "Obligations" shall mean all obligations of the Issuer and the
Guarantors under the Indenture, the Notes and the other Indenture Documents,
including obligations to the Trustee and the Collateral Agent, whether for
payment of principal of, interest on or additional interest, if any, on the
Notes and all other monetary obligations of the Issuer and the Guarantors under
the Indenture, the Notes and the other Indenture Documents, whether for fees,
expenses, indemnification or otherwise.

                "Officer" shall mean the Chairman of the Board, the Chief
Executive Officer, the Chief Financial Officer, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Issuer. "Officer" of a Grantor has a correlative
meaning.



                                                                               6

                "Other Second-Lien Obligations" shall have the meaning assigned
to such term in the Indenture.

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

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

                "Perfection Certificate" shall mean a certificate substantially
in the form of Annex 1 hereto, completed and supplemented with the schedules and
attachments contemplated thereby, and duly executed by a financial officer of
the Issuer.

                "Proceeds" shall mean any consideration received from the sale,
exchange, license, lease or other disposition of any asset or property that
constitutes Collateral, any value received as a consequence of the possession of
any Collateral and any payment received from any insurer or other person or
entity as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which constitutes
Collateral, and shall include, (a) any claim of any Grantor against any third
party for (and the right to sue and recover for and the rights to damages or
profits due or accrued arising out of or in connection with) (i) past, present
or future infringement of any Patent now or hereafter owned by any Grantor, or
licensed under a Patent License, (ii) past, present or future infringement or
dilution of any Trademark now or hereafter owned by any Grantor or licensed
under a Trademark License or injury to the goodwill associated with or
symbolized by any Trademark now or hereafter owned by any Grantor, (iii) past,
present or future breach of any License and (iv) past, present or future
infringement of any Copyright now or hereafter owned by any Grantor or licensed
under a Copyright License and (b) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.

                "Secured Parties" shall mean the Trustee, the Collateral Agent,
each Holder and the successors and assigns of each of the foregoing.

                "Securities" shall mean any obligations of an issuer or any
shares, participations or other interests in an issuer or in property or an
enterprise of an issuer which (a) are represented by a certificate representing
a security in bearer or registered form, or the transfer of which may be
registered upon books maintained for that purpose



                                                                               7

by or on behalf of the issuer, (b) are one of a class or series or by its terms
is divisible into a class or series of shares, participations, interests or
obligations and (c)(i) are, or are of a type, dealt with or traded on securities
exchanges or securities markets or (ii) are a medium for investment and by their
terms expressly provide that they are a security governed by Article 8 of the
UCC.

                "Securities Account" shall mean an account to which a Financial
Asset is or may be credited in accordance with an agreement under which the
Person maintaining the account undertakes to treat the Person for whom the
account is maintained as entitled to exercise rights that comprise the Financial
Asset.

                "Security Documents" shall mean this Agreement, the Second
Priority Pledge Agreement, the Mortgages and any other document or instrument
pursuant to which a Lien is granted by the Company or any Note Guarantor to
secure any Obligations or under which rights or remedies with respect to such
Lien are governed, as such agreements may be amended, modified or supplemented
from time to time.

                "Security Entitlements" shall mean the rights and property
interests of an Entitlement Holder with respect to a Financial Asset.

                "Security Interest" shall have the meaning assigned to such term
in Section 2.01.

                "Security Intermediary" shall mean (a) a clearing corporation or
(b) a Person, including a bank or broker, that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.

                "Senior Lender Claims" shall have the meaning assigned to such
term in the Intercreditor Agreement.

                "Senior Lender Documents" shall have the meaning assigned to
such term in the Intercreditor Agreement.

                "TIA" shall mean the Trust Indenture Act of 1939 (15 U.S.C.
77aaa-77bbbb) as in effect on the date hereof.

                "Trademark License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to use any Trademark
now or hereafter owned by any Grantor or which any Grantor otherwise has the
right to license, or granting to any Grantor any right to use any Trademark now
or hereafter owned by any third party, and all rights of any Grantor under any
such agreement.

                "Trademarks" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all trademarks, service marks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith,



                                                                               8

including registrations and registration applications in the United States
Patent and Trademark Office, any State of the United States, and all extensions
or renewals thereof, including those listed on Schedule V, (b) all goodwill
associated therewith or symbolized thereby and (c) all other assets, rights and
interests that uniquely reflect or embody such goodwill.

                "Uniform Commercial Code" or "UCC" shall mean the Uniform
Commercial Code as from time to time in effect in the State of New York.

                SECTION 1.01. Rules of Interpretation. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. Unless the context otherwise requires: (a) a term has the meaning
assigned to it; (b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP; (c) "or" is not exclusive; (d)
"including" means including without limitation; and (e) words in the singular
include the plural and words in the plural include the singular.

                                   ARTICLE II.

                                SECURITY INTEREST

                Section 2.01. Security Interest. As security for the payment or
performance, as the case may be, in full of the Obligations, each Grantor hereby
bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates
and transfers to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, a security interest in, all of such Grantor's right, title and interest
in, to and under the Collateral (the "Security Interest"). Without limiting the
foregoing, in accordance with, and to the extent consistent with, the terms of
the Intercreditor Agreement, the Collateral Agent is hereby authorized to file
one or more financing statements, continuation statements, filings with the
United States Patent and Trademark Office or United States Copyright Office (or
any successor office) or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security Interest granted by
each Grantor, without the signature of any Grantor (but, prior to the occurrence
of any Event of Default or Default, the Collateral Agent shall provide notice of
such filing to such Grantor), and naming any Grantor or the Grantors as debtors
and the Collateral Agent as secured party.

                Section 2.02. No Assumption of Liability. The Security Interest
is granted as security only and shall not subject the Collateral Agent or any
other Secured Party to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral.



                                                                               9

                                  ARTICLE III.

                         REPRESENTATIONS AND WARRANTIES

                The Grantors jointly and severally represent and warrant to the
Collateral Agent and the Secured Parties that:

                Section 3.01. Title and Authority. Each Grantor has good and
valid rights in and title to the Collateral with respect to which it has
purported to grant a Security Interest hereunder and has full power and
authority to grant to the Collateral Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other Person other than any consent or approval which has been obtained
or the failure of which to obtain could not reasonably be expected to have a
material adverse effect on (a) the condition (financial or otherwise), results
of operations, business or prospects of the Issuer and its subsidiaries taken as
a whole, (b) the ability of the Issuer and the Guarantors to perform any
material obligations under any Security Document, or (c) the rights of or
benefits available to the Secured Parties under any Security Document (each, a
"Material Adverse Effect").

                Section 3.02. Filings. (a) The Perfection Certificate has been
duly prepared, completed and executed and the information set forth therein is
correct and complete. Fully executed UCC financing statements, as applicable, or
other appropriate filings, recordings or registrations containing a description
of the Collateral have been delivered to the Collateral Agent for filing in each
governmental, municipal or other office specified in Schedule 6 to the
Perfection Certificate, which are all the filings, recordings and registrations
(other than filings, recordings and registrations required to be made in the
United States Patent and Trademark Office and the United States Copyright Office
in order to perfect the Security Interest in Collateral consisting of United
States Patents, United States Trademarks and United States Copyrights) that are
necessary to publish notice of and protect the validity of and to establish a
legal, valid and perfected second-priority security interest in favor of the
Collateral Agent (for the ratable benefit of the Secured Parties) in respect of
all Collateral in which the Security Interest may be perfected by filing,
recording or registration in the United States (or any political subdivision
thereof), and no further or subsequent filing, refiling, recording, rerecording,
registration or reregistration is necessary in any such jurisdiction, except as
provided under applicable law with respect to the filing of continuation
statements and such filings, recordings and registrations as may be necessary to
perfect the Security Interest as a result of any event described in Section 5.03
of the Credit Agreement.

                (b) Each Grantor represents and warrants that fully executed
security agreements in the form hereof and containing a description of all
Collateral consisting of Intellectual Property shall have been received and
recorded within three months after the execution of this Agreement with respect
to United States Patents and United States registered Trademarks (and Trademarks
for which United States registration applications are pending) and within one
month after the execution of this Agreement with respect to United States
registered Copyrights by the United States Patent and Trademark Office



                                                                              10

and the United States Copyright Office pursuant to 35 U.S.C. Section 261, 15
U.S.C. Section 1060 or 17 U.S.C. Section 205 and the regulations thereunder, as
applicable, to protect the validity of and to establish a legal, valid and
perfected second-priority security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all Collateral
consisting of Patents, Trademarks and Copyrights in which a security interest
may be perfected by filing, recording or registration in the United States (or
any political subdivision thereof), and no further or subsequent filing,
refiling, recording, rerecording, registration or reregistration is necessary
(other than such actions as are necessary to perfect the Security Interest with
respect to any Collateral consisting of Patents, Trademarks and Copyrights (or
registration or application for registration thereof) acquired or developed
after the date hereof).

                Section 3.03. Validity of Security Interest. The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations, (b) subject
to the filings described in Section 3.02 above, a perfected security interest in
all Collateral in which a security interest may be perfected by filing,
recording or registering a financing statement or analogous document in the
United States (or any political subdivision thereof) pursuant to the UCC or
other applicable law in such jurisdictions and (c) a security interest that
shall be perfected in all Collateral in which a security interest may be
perfected in the United States Patent and Trademark Office and the United States
Copyright Office upon the receipt and recording of this Agreement with the
United States Patent and Trademark Office and the United States Copyright
Office, as applicable, within the three-month period (commencing as of the date
hereof) pursuant to 35 U.S.C. Section 261 or 15 U.S.C. Section 1060 or the
one-month period (commencing as of the date hereof) pursuant to 17 U.S.C.
Section 205 and otherwise as may be required pursuant to the laws of any other
necessary jurisdiction. The Security Interest is and shall be a second-priority
Security Interest, prior to any other Lien on any of the Collateral, other than
(x) Liens securing Senior Lender Claims or (y) any other Permitted Liens.

                Section 3.04. Absence of Other Liens. The Collateral is owned by
the Grantors free and clear of any Lien, except for Permitted Liens. No Grantor
has filed or consented to the filing of (a) any financing statement or analogous
document under the UCC or any other applicable laws covering any Collateral, (b)
any assignment in which any Grantor assigns any Collateral or any security
agreement or similar instrument covering any Collateral in the United States
Patent and Trademark Office or the United States Copyright Office or (c) any
assignment in which any Grantor assigns any Collateral or any security agreement
or similar instrument covering any Collateral with any foreign governmental,
municipal or other office, which financing statement or analogous document is
still in effect, except, in each case, for Permitted Liens.

                                   ARTICLE IV.

                                    COVENANTS

                Section 4.01. Records. Each Grantor agrees to maintain, at its
own cost and expense, such complete and accurate records with respect to the
Collateral owned by



                                                                              11

it as is consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged, but in any event to include
complete accounting records indicating all payments and proceeds received with
respect to any part of the Collateral, and, at such time or times as the
Collateral Agent may reasonably request, promptly to prepare and deliver to the
Collateral Agent a duly certified schedule or schedules in form and detail
reasonably satisfactory to the Collateral Agent showing the identity, amount and
location of any and all Collateral.

                Section 4.02. Protection of Security. Each Grantor shall, at its
own cost and expense, take any and all actions necessary to defend title to the
Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien
other than Permitted Liens.

                Section 4.03. Further Assurances. Each Grantor agrees, at its
own expense, to execute, acknowledge, deliver and cause to be duly filed all
such further instruments and documents and take all such actions as the
Collateral Agent, in accordance with, and to the extent consistent with, the
terms of the Intercreditor Agreement, may from time to time reasonably request
to better assure, preserve, protect and perfect the Security Interest and the
rights and remedies created hereby, including the payment of any fees and taxes
required in connection with the execution and delivery of this Agreement, the
granting of the Security Interest and the filing of any financing statements
(including fixture filings) or other documents in connection herewith or
therewith. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note or other
instrument, such note or instrument shall be immediately pledged and delivered
to the Credit Agent (or, if the First-Lien Termination Date has already
occurred, the Collateral Agent) pursuant to the terms of the Pledge Agreement
(as defined in the Credit Agreement) (or, if the First-Lien Termination Date has
occurred, the Second Priority Pledge Agreement).

                Without limiting the generality of the foregoing, each Grantor
hereby authorizes the Credit Agent (or, if the First-Lien Termination Date has
already occurred, the Collateral Agent), with prompt notice thereof to the
Grantors, to supplement this Agreement by supplementing Schedule II, III, IV or
V hereto or adding additional schedules hereto to specifically identify any
registered asset or item that may constitute Copyrights, Patents or Trademarks;
provided, however, that any Grantor shall have the right, exercisable within 30
days after it has been notified by the Credit Agent (or, if the First-Lien
Termination Date has already occurred, the Collateral Agent) of the specific
identification of such Collateral, to advise the Credit Agent (or, if the
First-Lien Termination Date has already occurred, the Collateral Agent) in
writing of any inaccuracy of the representations and warranties made by such
Grantor hereunder with respect to such Collateral. Each Grantor agrees that it
will use its best efforts to take such action as shall be necessary in order
that all representations and warranties hereunder shall be true and correct with
respect to such Collateral within 30 days after the date it has been notified by
the Credit Agent (or, if the First-Lien Termination Date has already occurred,
the Collateral Agent) of the specific identification of such Collateral.



                                                                              12

                Section 4.04. Inspection and Verification. The Collateral Agent
and such Persons as the Collateral Agent may reasonably designate shall have the
right, at the Grantors' own cost and expense, to inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and
the premises upon which any of the Collateral is located, to discuss the
Grantors' affairs with the officers of the Grantors and their independent
accountants and to verify under reasonable procedures the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral, including, in the case of Accounts or Collateral in the
possession of any third party, by contacting Account Debtors or the third person
possessing such Collateral for the purpose of making such a verification. The
Collateral Agent agrees to maintain the confidentiality of the Information (as
defined below) obtained by it from such inspection or verification, except that
such Information may be disclosed (a) to its and its Affiliates' investment
advisors, directors, officers, employees and agents, including accountants,
legal counsel and other advisors (the "Representatives"), (b) to the extent
requested or demanded by any governmental authority or any self-regulatory
organization (including the National Association of Insurance Commissioners or
other similar organization), (c) to the extent required by applicable laws or
regulations or by any subpoena, order or similar legal process, (d) to any other
party to this Agreement, (e) in connection with the exercise of any remedies
hereunder or any suit, action or proceeding relating to this agreement or any
other Transaction Document or the enforcement of rights hereunder or thereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of, or any prospective assignee of, any
of its rights or obligations under this agreement, (g) with the consent of the
Company or (h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes available to
the Collateral Agent on a nonconfidential basis from a source other than the
Company, any Subsidiary or any of their Representatives that is not known to
such Person to be subject to any obligation of confidentiality to the Company or
any Subsidiary. For the purposes of this Section, "Information" means all
information received from the Company, any Subsidiary or any of their
Representatives relating to the Company, the Subsidiaries or their businesses,
other than any such information that is available to the Collateral Agent on a
nonconfidential basis prior to disclosure by the Company. Notwithstanding the
foregoing, the Collateral Agent shall have the absolute right to share any
information it gains from such inspection or verification with any Secured Party
that agrees to be bound by an agreement containing provisions substantially the
same as those of this Section; provided, however, that the exercise of such
right shall not violate any securities law or regulation.

                Section 4.05. Taxes; Encumbrances. In accordance with, and to
the extent consistent with, the terms of the Intercreditor Agreement, at its
option, the Collateral Agent may discharge past due taxes, assessments, charges,
fees, Liens, security interests or other encumbrances at any time levied or
placed on the Collateral and not permitted under the Indenture, and may pay for
the maintenance and preservation of the Collateral to the extent any Grantor
fails to do so as required by the Indenture or this Agreement, and each Grantor
jointly and severally agrees to reimburse the Collateral Agent on demand for any
payment made or any expense incurred by the Collateral Agent pursuant to the
foregoing authorization; provided, however, that nothing in this



                                                                              13

Section 4.05 shall be interpreted as excusing any Grantor from the performance
of, or imposing any obligation on the Collateral Agent or any Secured Party to
cure or perform, any covenants or other promises of any Grantor with respect to
taxes, assessments, charges, fees, Liens, security interests or other
encumbrances and maintenance as set forth herein or in the other Indenture
Documents.

                Section 4.06. Assignment of Security Interest. If at any time
any Grantor shall take a security interest in any property of an Account Debtor
or any other Person to secure payment and performance of an Account, such
Grantor shall promptly assign such security interest to the Credit Agent and the
Collateral Agent. Such assignment need not be filed of public record unless
necessary to continue the perfected status of the security interest against
creditors of and transferees from the Account Debtor or other Person granting
the security interest.

                Section 4.07. Continuing Obligations of the Grantors. Each
Grantor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement or
instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and each Grantor jointly and severally agrees to indemnify
and hold harmless the Collateral Agent and the Secured Parties from and against
any and all liability for such performance.

                Section 4.08. Use and Disposition of Collateral. None of the
Grantors shall make or permit to be made an assignment, pledge or hypothecation
of the Collateral or shall grant any other Lien in respect of the Collateral,
except as expressly permitted by the Indenture. Unless and (in accordance with,
and to the extent consistent with, the terms of the Intercreditor Agreement)
until the Collateral Agent shall notify the Grantors (which notice may be given
by telephone if promptly confirmed in writing) that (i) an Event of Default
shall have occurred and be continuing and (ii) during the continuance thereof
the Grantors shall not sell, convey, lease, assign, transfer or otherwise
dispose of any Collateral, the Grantors may use and dispose of the Collateral in
any lawful manner not inconsistent with the provisions of this Agreement, the
Indenture or any other Indenture Document. Without limiting the generality of
the foregoing, each Grantor agrees that it shall not permit any Inventory to be
in the possession or control of any warehouseman, bailee, agent or processor at
any time, other than Inventory that is in transit by any means, unless such
warehouseman, bailee, agent or processor shall have been notified of the
Security Interest and each Grantor shall use its best efforts to obtain a
written agreement in form and substance reasonably satisfactory to the
Collateral Agent to hold the Inventory subject to the Security Interest and the
instructions of the Credit Agent (or, if the First-Lien Termination Date has
occurred, the Collateral Agent) and to waive and release any Lien held by it
with respect to such Inventory, whether arising by operation of law or
otherwise.

                Section 4.09. Limitation on Modification of Accounts. None of
the Grantors will, without the prior written consent of the Credit Agent (or, if
the First-Lien Termination Date has occurred, the Collateral Agent), grant any
extension of the time of payment of any of the Accounts Receivable, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partly, any Person liable for the



                                                                              14

payment thereof or allow any credit or discount whatsoever thereon, other than
extensions, credits, discounts, compromises or settlements granted or made in
the ordinary course of business and consistent with its current practices and in
accordance with such prudent and standard practices used in industries that are
the same as or similar to those in which such Grantor is engaged.

                Section 4.10. Insurance. The Grantors, at their own expense,
shall maintain or cause to be maintained insurance covering physical loss or
damage to the Inventory and Equipment with financially sound and reputable
insurers and against such risks as are customarily insured against by Persons
engaged in the same or similar business, and of such types and in such amounts
as are customarily carried under similar circumstances by such other Persons.
Subject to the Intercreditor Agreement, each Grantor irrevocably makes,
constitutes and appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Grantor's true and lawful
agent (and attorney-in-fact) for the purpose, during the continuance of an Event
of Default, of making, settling and adjusting claims in respect of Collateral
under policies of insurance, endorsing the name of such Grantor on any check,
draft, instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect thereto.
Subject to the Intercreditor Agreement, in the event that any Grantor at any
time or times shall fail to obtain or maintain any of the policies of insurance
required hereby or to pay any premium in whole or part relating thereto, the
Collateral Agent may, without waiving or releasing any obligation or liability
of the Grantors hereunder or any Event of Default, in its sole discretion,
obtain and maintain such policies of insurance and pay such premium and take any
other actions with respect thereto as the Collateral Agent deems reasonably
advisable. Subject to the Intercreditor Agreement, all sums disbursed by the
Collateral Agent in connection with this Section 4.10, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, shall
be payable, upon demand, by the Grantors to the Collateral Agent and shall be
additional Obligations secured hereby.

                Section 4.11. Legend. Each Grantor shall legend, in form and
manner reasonably satisfactory to the Credit Agent (or, if the First-Lien
Termination Date has occurred, the Collateral Agent), its Accounts Receivable
and its books, records and documents evidencing or pertaining thereto with an
appropriate reference to the fact that such Accounts Receivable have been
assigned to the Credit Agent and the Collateral Agent for the benefit of the
Secured Parties and each of the Credit Agent and the Collateral Agent has a
security interest therein.

                Section 4.12. Covenants Regarding Patent, Trademark and
Copyright Collateral. (a) Each Grantor agrees that it will not, nor will it
permit any of its licensees to, do any act, or omit to do any act, whereby any
Patent which is material to the conduct of such Grantor's business may become
invalidated or dedicated to the public, and agrees, to the extent practicable,
that it shall continue to mark any products covered by a Patent with the
relevant patent number as necessary and sufficient to establish and preserve its
maximum rights under applicable patent laws.



                                                                              15

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

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

                (d) Each Grantor shall notify the Collateral Agent promptly if
it knows that any Patent, Trademark or Copyright material to the conduct of its
business may become abandoned, lost or dedicated to the public, or of any
adverse determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office or United States Copyright Office) regarding such Grantor's
ownership of any Patent, Trademark or Copyright, its right to register the same,
or to keep and maintain the same.

                (e) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, United States Copyright
Office or any office or agency in any political subdivision of the United
States, unless it promptly informs the Collateral Agent, and, in accordance
with, and to the extent consistent with, the terms of the Intercreditor
Agreement, upon request of the Collateral Agent, executes and delivers any and
all agreements, instruments, documents and papers as the Collateral Agent may
request to evidence the Collateral Agent's security interest in such Patent,
Trademark or Copyright, and, in accordance with, and to the extent consistent
with, the terms of the Intercreditor Agreement, each Grantor hereby appoints the
Collateral Agent as its attorney-in-fact to execute and file such writings for
the foregoing purposes (and, prior to the occurrence of any Event of Default or
Default, such Grantor shall be notified of such filing), all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with an
interest, is irrevocable.

                (f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States, to maintain and pursue each
material application relating to the Patents, Trademarks and/or Copyrights (and
to obtain the relevant grant or registration) and to maintain each issued Patent
and each registration of the Trademarks and Copyrights that is material to the
conduct of any Grantor's business, including timely filings of applications for
renewal, affidavits of use, affidavits of incontestability and payment of



                                                                              16

maintenance fees, and, if consistent with good business judgment, to initiate
opposition, interference and cancelation proceedings against third parties.

                (g) In the event that any Grantor has reason to believe that any
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.

                (h) Upon and during the continuance of an Event of Default, each
Grantor shall use its reasonable best efforts to obtain all requisite consents
or approvals by the licensor of each Copyright License, Patent License or
Trademark License to effect the assignment of all of such Grantor's right, title
and interest thereunder to the Credit Agent and the Collateral Agent or their
designees for the benefit of the Secured Parties in accordance with the
Intercreditor Agreement.

                Section 4.13. Compliance with the TIA. To the extent applicable,
the Issuer will comply with TIA Section 314(b), relating to opinions of counsel
regarding the Lien and Security Interest created pursuant to this Agreement and
the other Indenture Documents.

                                   ARTICLE V.

                                POWER OF ATTORNEY

                Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent and attorney-in-fact,
and in such capacity the Collateral Agent shall have the right, with power of
substitution for each Grantor and in each Grantor's name or otherwise, for the
use and benefit of the Collateral Agent and the Secured Parties, upon the
occurrence and during the continuance of an Event of Default (a) to receive,
endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral or any
part thereof; (b) to demand, collect, receive payment of, give receipt for and
give discharges and releases of all or any of the Collateral; (c) to sign the
name of any Grantor on any invoice or bill of lading relating to any of the
Collateral; (d) to send verifications of Accounts Receivable to any Account
Debtor; (e) to commence and prosecute any and all suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect or
otherwise realize on all or any of the Collateral or to enforce any rights in
respect of any Collateral; (f) to settle, compromise, compound, adjust or defend
any actions, suits or proceedings relating to all or any of the Collateral; (g)
to notify, or to require any Grantor to notify, Account Debtors to make payment
directly to the Collateral Agent; and (h) to use, sell, assign, transfer,
pledge, make any agreement with respect to or otherwise deal with all or any of
the Collateral, and to do all other acts and things necessary to carry out the
purposes of this Agreement, as fully and completely as though



                                                                              17

the Collateral Agent were the absolute owner of the Collateral for all purposes;
provided, however, that nothing herein contained shall be construed as requiring
or obligating the Collateral Agent or any Secured Party to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment received
by the Collateral Agent or any Secured Party, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any property covered
thereby, and no action taken or omitted to be taken by the Collateral Agent or
any Secured Party with respect to the Collateral or any part thereof shall give
rise to any defense, counterclaim or offset in favor of any Grantor or (unless
such action is the result of gross negligence or willful misconduct) to any
claim or action against the Collateral Agent or any Secured Party. It is
understood and agreed that the appointment of the Collateral Agent as the agent
and attorney-in-fact of the Grantors for the purposes set forth above is coupled
with an interest and is irrevocable. The provisions of this Section shall in no
event relieve any Grantor of any of its obligations hereunder or under any other
Indenture Document with respect to the Collateral or any part thereof or impose
any obligation on the Collateral Agent or any Secured Party to proceed in any
particular manner with respect to the Collateral or any part thereof, or in any
way limit the exercise by the Collateral Agent or any Secured Party of any other
or further right which it may have on the date of this Agreement or hereafter,
whether hereunder, under any other Indenture Document, by law or otherwise.

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

                                   ARTICLE VI.

                                    REMEDIES

                Section 6.01. Remedies upon Default. In accordance with, and to
the extent consistent with, the terms of the Intercreditor Agreement, upon the
occurrence and during the continuance of an Event of Default, each Grantor
agrees to deliver each item of Collateral to the Collateral Agent on demand, and
it is agreed that the Collateral Agent shall have the right to take any of or
all the following actions at the same or different times: (a) with respect to
any Collateral consisting of Intellectual Property, on demand, to cause the
Security Interest to become an assignment, transfer and conveyance of any of or
all such Collateral by the applicable Grantors to the Collateral Agent, or to
license or sublicense, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any such Collateral throughout the world on
such terms and conditions and in such manner as the Collateral Agent shall
determine (other than in violation of any then-existing licensing or contractual
arrangements to the extent that waivers cannot be obtained), and (b) with or
without legal process and with or without prior notice or demand for
performance, to take possession of the Collateral and without liability for
trespass to enter any premises where the Collateral may be located for the
purpose of taking possession of or removing the Collateral and, generally, to
exercise any and all rights afforded to a secured party under the UCC or other
applicable law. Without



                                                                              18

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

                The Collateral Agent shall give the Grantors 10 days' prior
written notice (which each Grantor agrees is reasonable notice within the
meaning of Section 9-611 of the UCC as in effect in the State of New York or its
equivalent in other jurisdictions) of the Collateral Agent's intention to make
any sale of Collateral. Such notice, in the case of a public sale, shall state
the time and place for such sale and, in the case of a sale at a broker's board
or on a securities exchange, shall state the board or exchange at which such
sale is to be made and the day on which the Collateral, or portion thereof, will
first be offered for sale at such board or exchange. Any such public sale shall
be held at such time or times within ordinary business hours and at such place
or places as the Collateral Agent may fix and state in the notice (if any) of
such sale. At any such sale, the Collateral, or portion thereof, to be sold may
be sold in one lot as an entirety or in separate parcels, as the Collateral
Agent may (in its sole and absolute discretion) determine. The Collateral Agent
shall not be obligated to make any sale of any Collateral if it shall determine
not to do so, regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral Agent may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may be sold again upon like
notice. At any public (or, to the extent permitted by law, private) sale made
pursuant to this Section, any Secured Party may bid for or purchase, free (to
the extent permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also hereby waived
and released to the extent permitted by law), the Collateral or any part thereof
offered for sale and may make payment on account thereof by using any claim then
due and payable to such Secured Party from any Grantor as a credit against the
purchase price, and such Secured Party



                                                                              19

may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to any Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Collateral Agent shall be free to carry
out such sale pursuant to such agreement and no Grantor shall be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, in accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, the Collateral Agent may proceed by a suit or suits at
law or in equity to foreclose this Agreement and to sell the Collateral or any
portion thereof pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.

                Section 6.02. Application of Proceeds. In accordance with, and
to the extent consistent with, the terms of the Intercreditor Agreement, the
Collateral Agent shall apply the proceeds of any collection or sale of the
Collateral, as well as any Collateral consisting of cash, as follows:

                FIRST, to the payment of all costs and expenses incurred by the
        Trustee or the Collateral Agent (in its capacity as such hereunder or
        under any other Indenture Document) in connection with such collection
        or sale or otherwise in connection with this Agreement, any other
        Indenture Document or any of the Obligations (or any such costs and
        expenses incurred by a trustee or a collateral agent in connection with
        Other Second-Lien Obligations), including all court costs and the
        reasonable fees and expenses of its agents and legal counsel, the
        repayment of all advances made by the Trustee or Collateral Agent
        hereunder or under any other Indenture Document on behalf of any Grantor
        and any other costs or expenses incurred in connection with the exercise
        of any right or remedy hereunder or under any other Indenture Document
        and any other amounts due to the Trustee or the Collateral Agent under
        Section 7.07 of the Indenture;

                SECOND, to the payment in full of the Obligations owed to the
        Holders and any Other Second-Lien Obligations owed to holders of such
        Indebtedness (the amounts so applied to be distributed among the Holders
        and any holders of Other Second-Lien Obligations pro rata in accordance
        with the amounts of the Obligations owed to the Holders and Other
        Second-Lien Obligations owed to holders of such Indebtedness on the date
        of any such distribution); and

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

                The Collateral Agent shall have absolute discretion as to the
time of application of any such proceeds, moneys or balances in accordance with
this Agreement. The Collateral Agent may fix a record date and payment date for
any payment to Holders pursuant to this Section 6.02. At least 15 days before
such record date, the Collateral Agent shall mail to each Holder and the Issuer
a notice that states the record date, the



                                                                              20

payment date and the amount to be paid. Upon any sale of the Collateral by the
Collateral Agent (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt of the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for the
misapplication thereof.

                Section 6.03. Grant of License to Use Intellectual Property. In
accordance with, and to the extent consistent with, the Intercreditor Agreement,
for the purpose of enabling the Collateral Agent to exercise rights and remedies
under this Article at such time as the Collateral Agent shall be lawfully
entitled to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to the extent that
such license does not violate any then existing licensing arrangements (to the
extent that waivers cannot be obtained) to use, license or sub-license any of
the Collateral consisting of Intellectual Property now owned or hereafter
acquired by such Grantor, and wherever the same may be located, and including in
such license reasonable access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof and sufficient rights of quality control in
favor of Grantor to avoid the invalidation of the Trademarks subject to the
license. The use of such license by the Collateral Agent shall be exercised, at
the option of the Collateral Agent (if the First-Lien Termination Date has
occurred), upon the occurrence and during the continuation of an Event of
Default; provided that any license, sub-license or other transaction entered
into by the Collateral Agent in accordance herewith shall be binding upon the
Grantors notwithstanding any subsequent cure of an Event of Default.

                                  ARTICLE VII.

                                  MISCELLANEOUS

                Section 7.01. Notices. All communications and notices hereunder
shall (except as otherwise expressly permitted herein) be in writing and given
as provided in Section 12.02 of the Indenture. All communications and notices
hereunder to any Guarantor shall be given to it at its address or telecopy
number set forth on Schedule I, with a copy to the Issuer.

                Section 7.02. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest and all obligations of the
Grantors hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Indenture, any other Indenture
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Indenture, any other Indenture Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release



                                                                              21

or amendment or waiver of or consent under or departure from any guarantee,
securing or guaranteeing all or any of the Obligations, or (d) any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor in respect of the Obligations or this Agreement.

                Section 7.03. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Grantor herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the
Secured Parties and shall survive the purchase and resale of the Notes by the
Initial Purchasers, regardless of any investigation made by the Initial
Purchasers or on their behalf, and shall continue in full force and effect until
this Agreement shall terminate.

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

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

                Section 7.06. Collateral Agent's Fees and Expenses;
Indemnification. In accordance with, and to the extent consistent with, the
terms of the Intercreditor Agreement, (a) each Grantor jointly and severally
agrees to pay upon demand to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees, disbursements and other
charges of its counsel and of any experts or agents, which the Collateral Agent
may incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from or other realization
upon any of the Collateral, (iii) the exercise, enforcement or protection of any
of the rights of the Collateral Agent hereunder or (iv) the failure of any
Grantor to perform or observe any of the provisions hereof.

                (b) Without limitation of its indemnification obligations under
the other Indenture Documents, each Grantor jointly and severally agrees to
indemnify the



                                                                              22

Collateral Agent, the Trustee, the Holders and each Affiliate of the foregoing
persons (each such Person being called an "Indemnitee") against, and hold each
of them harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable fees, disbursements and other charges of
counsel, incurred by or asserted against any of them arising out of, in any way
connected with, or as a result of, the execution, delivery or performance of
this Agreement or any claim, litigation, investigation or proceeding relating
hereto or to the Collateral, whether or not any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
have resulted from the gross negligence or willful misconduct of such
Indemnitee.

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

                Section 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

                Section 7.08. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent, the Trustee and the Holders under the other
Indenture Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provisions of this
Agreement or any other Indenture Document or consent to any departure by any
Grantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Grantor in any case shall entitle such Grantor or any
other Grantor to any other or further notice or demand in similar or other
circumstances.

                (b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except (i) in accordance with the Indenture pursuant
to an agreement or agreements in writing entered into by the Collateral Agent
and the Grantor or Grantors with respect to which such waiver, amendment or
modification is to apply, subject to the limitations in the Intercreditor
Agreement, or (ii) as otherwise provided in the Intercreditor Agreement.



                                                                              23

                Section 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER INDENTURE
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER INDENTURE DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 7.09.

                Section 7.10. Severability. In the event any one or more of the
provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

                Section 7.11. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one contract (subject to Section
7.04), and shall become effective as provided in Section 7.04. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.

                Section 7.12. Headings. Article and Section headings used herein
are for the purpose of reference only, are not part of this Agreement and are
not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.

                Section 7.13. Jurisdiction; Consent to Service of Process. (a)
Each Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Indenture Documents, or for recognition
or enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided



                                                                              24

by law. Nothing in this Agreement shall affect any right that the Collateral
Agent, the Trustee or any Holder may otherwise have to bring any action or
proceeding relating to this Agreement or the other Indenture Documents against
any Grantor or its properties in the courts of any jurisdiction.

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

                (c) Each party to this Agreement irrevocably consents to service
of process in the manner provided for notices in Section 7.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

                Section 7.14. Termination and Release. (a) This Agreement and
the Security Interest shall terminate at the time provided in Section 10.08 of
the Indenture, at which time the Collateral Agent shall execute and deliver to
the Grantors, at the Grantors' expense, all UCC termination statements and
similar documents which the Grantors shall reasonably request to evidence such
termination. Any execution and delivery of termination statements or documents
pursuant to this Section 7.14 shall be without recourse to or warranty by the
Collateral Agent. A Guarantor shall automatically be released from its
obligations hereunder and the Security Interest in the Collateral of such
Guarantor shall be automatically released in the event that all the capital
stock of such Guarantor shall be sold, transferred or otherwise disposed of
pursuant to a transaction permitted or not prohibited under the Indenture.

                (b) If any of the Collateral shall become subject to the release
provisions set forth in Section 10.03 of the Indenture or Section 5.1 of the
Intercreditor Agreement, such Collateral shall be automatically released from
the Security Interest to the extent provided in Section 10.03 of the Indenture
or Section 5.1 of the Intercreditor Agreement, as applicable. The Collateral
Agent shall execute and deliver to the Grantors, at the Grantors' expense, all
UCC termination statements and similar documents which the Grantor shall
reasonably request to evidence the termination of the Security Interest in such
Collateral. To the extent applicable, the Issuer will comply with TIA Section
314(d), relating to the release of property or securities from the Security
Interest and to any substitution therefor of any property or securities to be
subjected to the Security Interest. Any certificate or opinion required by TIA
Section 314(d) may be made by an Officer of the Issuer except in cases where TIA
Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person will be an independent engineer, appraiser or
other expert selected or approved by the Trustee in the exercise of reasonable
care.



                                                                              25

                Section 7.15. Additional Grantors. If, pursuant to Sections 4.11
and 11.07 of the Indenture, the Issuer is required to cause any Subsidiary of
the Issuer that is not a Grantor to enter into this Agreement as a Grantor, upon
execution and delivery by the Collateral Agent and such Subsidiary of an
instrument in the form of Annex 2 hereto, such Subsidiary shall become a Grantor
hereunder with the same force and effect as if originally named as a Grantor
herein. The execution and delivery of any such instrument shall not require the
consent of any Grantor hereunder. The rights and obligations of each Grantor
hereunder shall remain in full force and effect notwithstanding the addition of
any new Grantor as a party to this Agreement.

                Section 7.16. Subject to Intercreditor Agreement.
Notwithstanding anything herein to the contrary, the Lien and security interest
granted to the Collateral Agent pursuant to this Agreement and the exercise of
any right or remedy by the Collateral Agent hereunder are subject to the
provisions of the Intercreditor Agreement. In the event of any conflict between
the terms of the Intercreditor Agreement and this Agreement, the terms of the
Intercreditor Agreement shall govern.

                Section 7.17. Credit Agreement. The Collateral Agent
acknowledges and agrees, on behalf of itself and the Holders, that, any
provision of this Agreement to the contrary notwithstanding, until the
First-Lien Termination Date, the Guarantors shall not be required to act or
refrain from acting with respect to any Collateral on which the Credit Agent has
a Lien superior in priority to the Collateral Agent's Lien thereon in any manner
that would result in a default under the terms and provisions of the Credit
Agreement.



                                                                              26

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

                                             PLIANT CORPORATION,

                                             by
                                                  /s/ Brian E. Johnson
                                                  ------------------------------
                                                  Name:
                                                  Title:

                                             EACH OF THE GUARANTORS
                                             LISTED ON SCHEDULE I HERETO,

                                             by
                                                  /s/ Brian E. Johnson
                                                  ------------------------------
                                                  Name:
                                                  Title: Authorized Officer

                                             WILMINGTON TRUST COMPANY, as
                                             Collateral Agent,

                                             by
                                                  /s/ James D. Nesci
                                                  ------------------------------
                                                  Name:  James D. Nesci
                                                  Title:  Authorized Officer



                                                               Schedule I to the
                                              Second Priority Security Agreement

                                   GUARANTORS

Pliant Solutions Corporation
Pliant Packaging of Canada, LLC
Pliant Corporation International
Pliant Film Products of Mexico, Inc.
Uniplast Holdings Inc.
Uniplast U.S., Inc.
Uniplast Midwest, Inc.
Pierson Industries, Inc.
Turex, Inc.



                                                              Schedule II to the
                                              Second Priority Security Agreement

                                   COPYRIGHTS

Copyright Number                  Owner                  Title/Description
- ----------------            ------------------           -----------------
TX195582                    Pliant Corporation               Baby Talk



                                                             Schedule III to the
                                              Second Priority Security Agreement

                                    LICENSES



           LICENSOR                          LICENSEE              EXECUTION DATE            TYPE
- ---------------------------------------------------------------------------------------------------------
                                                                              
Goodyear Tire & Rubber           Tycon Proprietary Ltd (now       6/29/1992                 Trademark
Company (now Huntsman            Kohler Packaging Ltd.)
Packaging Corporation
("HPC"))

Rubbermaid Incorporated          Occidental Chemical              7/14/1993                 Trademark
(now Decora, Inc.)               Corporation (Vulcan
                                 Material Plastico)

Saltech Inc.                     Huntsman Film Products           8/25/1993                  Patent
                                 Corporation

Designs by Joan Luntz            Rubbermaid, Inc.                 2/24/1994            Design & Trademark
                                 (now Decora, Inc.)

Dean Garrett                     Huntsman Design Products         1/1/1995                   Patent

Rubbermaid, Inc.                 Sinteticos SA                    4/10/1995                 Trademark
                                 (Colombia)

HPC                              Kohler Packaging Limited         10/30/1995                Trademark

KCL Corporation                  Reynolds Consumer Prods.         1/1/1996                   Patent

Huntsman Film Products           FMC Corporation (now Hudson      3/1/1997                   Patent
Corporation                      Sharp)




                                                                               2



           LICENSOR                          LICENSEE              EXECUTION DATE            TYPE
- ----------------------------------------------------------------------------------------------------------
                                                                             
Dowbrands L.P. and KCL           Dowbrands L.P. and KCL           7/14/1997                  Patent
Corporation                      Corporation

KCL Corporation                  Illinois Tool Works, Inc.        1/3/1998                   Patent

DuPont                           Pierson Industries               1/24/2000                  Patent

Jaguar Packaging, Inc.           Pliant Corporation               11/20/2000          Patent and Trademark

Pliant Corporation               Alliant Company, LLC             10/16/2001                Trademark

Eastman Chemical Company         Eastman Chemical Company              --                    Patent
and Pliant Corporation           and Pliant Corporation

Pliant Corporation               Robbie Manufacturing                  --                    Patent

The Glad Products Company        Pliant Corporation                    --                    Patents




                                                              Schedule IV to the
                                              Second Priority Security Agreement

                                     PATENTS

                                  See attached.



                                                                               2

                               PLIANT U.S. PATENTS



         US PATENT NO                       INVENTION TITLE                        OWNER
- --------------------------------------------------------------------------------------------------------
                                                                   
Design Pat. No. 402,543         WASTE BAG                                Pliant Solutions Corporation

Design Pat. No. 422,909         SLIDER FOR A RECLOSEABLE THERMOPLASTIC   Pliant Solutions Corporation
                                BAG

4,746,689                       METHOD OF MAKING AN ANTI-FUGATIVE        Pliant Corporation
                                ANTI-FOGGING COMPOUND

4,758,099                       FLEXIBLE CONTAINER HAVING RESEALABLE     Pliant Solutions Corporation
                                CLOSURE

4,767,654                       DETACHABLE COUPON LABEL                  Pliant Solutions Corporation

4,778,634                       PROCESS FOR THE MANUFACTURE OF POROUS    Pliant Corporation
                                FILM

4,787,755                       RECLOSEABLE FLEXIBLE CONTAINER HAVING    Pliant Solutions Corporation
                                FASTENER PROFILES SEALED AT THEIR ENDS
                                TO THE OUTSIDE OF THE BAG

4,832,886                       ABRASION PROCESS FOR THE MANUFACTURE     Pliant Corporation
                                OF MICROPOROUS FILM

4,863,286                       RECLOSEABLE BAG WITH PIVOTABLE           Pliant Solutions Corporation
                                FASTENER PROFILES

4,923,750                       THERMOPLASTIC STRETCH-WRAP MATERIAL      Pliant Corporation

4,927,271                       RECLOSEABLE TAMPER EVIDENT BAG WITH      Pliant Solutions Corporation
                                HOODED CLOSURE

4,941,196                       TAMPER EVIDENT BAG                       Pliant Solutions Corporation

5,059,033                       DETACHABLE HANDLE FOR SHIPPING SACKS     Pliant Solutions Corporation




                                                                               3



         US PATENT NO                       INVENTION TITLE                        OWNER
- --------------------------------------------------------------------------------------------------------
                                                                   
5,064,893                       FLEXIBLE LABEL FILM FROM POLYETHYLENE    Pliant Corporation
                                AND CALCIUM CARBONATE-POLYMER MIXTURE

5,091,262                       STARCH FILLED COEXTRUDED DEGRADABLE      Pliant Corporation
                                POLYETHYLENE FILM

5,116,677                       THERMOPLASTIC STRETCH-WRAP MATERIAL      Pliant Corporation

5,155,967                       AUTOMATED BAG MANUFACTURING AND          Pliant Solutions Corporation
                                PACKAGING SYSTEM

5,407,277                       TAMPER EVIDENT BAG WITH AUXILIARY BAG    Pliant Solutions Corporation

5,417,035                       APPARATUS AND METHOD FOR MANUFACTURE     Pliant Solutions Corporation
                                OF FLEXIBLE RECLOSEABLE CONTAINERS

5,417,495                       RECLOSEABLE BAG                          Pliant Solutions Corporation

5,441,784                       PAPER BASE WALLCOVERINGS                 Pliant Solutions Corporation

5,459,186                       PEELABLE THERMOPLASTIC FILM              Pliant Corporation

5,495,946                       WICKETLESS SADDLE PACK OF PLASTIC BAGS   Pliant Corporation

5,522,690                       AUTOMATIC WICKETING APPARATUS            Pliant Corporation

5,526,934                       WICKETLESS PLASTIC BAG PACK WITH         Pliant Corporation
                                TAPERED WELD HOLE

5,561,966                       APPARATUS AND METHOD FOR MANUFACTURE     Pliant Solutions Corporation
                                OF FLEXIBLE RECLOSEABLE CONTAINERS

5,664,299                       RECLOSEABLE FASTENER ASSEMBLY            Pliant Solutions Corporation

5,707,472                       COMPOSITE FOR IN-MOLD TRANSFER           Pliant Solutions Corporation
                                PRINTING AND PROCESS FOR IN-MOLD
                                PRINTING OF MOLDED PLASTIC OR RUBBER
                                ARTICLES THEREWITH

5,729,929                       AGRICULTURAL MULCH FILMS AND METHODS     Pliant Corporation
                                FOR THEIR USE

5,736,249                       NON-STICK POLYMER-COATED ARTICLES OF     Pliant Solutions Corporation
                                MANUFACTURE




                                                                               4



         US PATENT NO                       INVENTION TITLE                        OWNER
- --------------------------------------------------------------------------------------------------------
                                                                   
5,738,478                       AUTOMATIC WICKETING APPARATUS            Pliant Corporation

5,814,402                       PRESSURE SENSITIVE DRY TRANSFER          Pliant Solutions Corporation
                                GRAPHICS ARTICLE AND METHOD OF
                                MANUFACTURE

5,836,056                       RECLOSEABLE FASTENER ASSEMBLY            Pliant Solutions Corporation

5,871,281                       ZIPPER SLIDER PIVOTING WEDGE             Pliant Solutions Corporation

5,910,535                       WATER BASED COATING COMPOSITION HAVING   Pliant Solutions Corporation
                                SACRIFICIAL LAYER FOR STAIN REMOVAL

5,911,553                       AUTOMATIC WICKETING APPARATUS            Pliant Corporation

5,929,005                       GRAFFITI REMOVER WHICH COMPRISES AN      Pliant Solutions Corporation
                                ACTIVE SOLVENT, A SECONDARY SOLVENT,
                                AN EMOLLIENT AND A PARTICULATE FILLER
                                AND METHOD FOR ITS USE

5,935,692                       COMPOSITE FOR IN MOLD TRANSFER           Pliant Solutions Corporation
                                PRINTING

5,941,474                       SYSTEM, APPARATUS AND METHOD FOR         Pliant Corporation
                                UNLOADING AND LOADING WINDER SHAFTS

5,950,285                       ENDSTOP AND DOCKING MEANS FOR            Pliant Solutions Corporation
                                THERMOPLASTIC BAGS

5,956,815                       SLIDER ZIPPER RECLOSEABLE FASTENER       Pliant Solutions Corporation

5,956,924                       METHOD AND APPARATUS FOR PLACING A       Pliant Solutions Corporation
                                PRODUCT IN A FLEXIBLE RECLOSEABLE
                                CONTAINER

5,985,391                       CARRIER RELEASE SHEET FOR MOLDING        Pliant Corporation
                                COMPOUND

6,057,276                       GRAFFITI REMOVER WHICH COMPRISES AN      Pliant Solutions Corporation
                                ACTIVE SOLVENT, A SECONDARY SOLVENT,
                                AN EMOLLIENT AND A PARTICULATE FILLER
                                AND METHOD FOR ITS USE




                                                                               5



         US PATENT NO                       INVENTION TITLE                        OWNER
- --------------------------------------------------------------------------------------------------------
                                                                   
6,084,020                       NON-STICK POLYMER-COATED ARTICLES OF     Pliant Solutions Corporation
                                MANUFACTURE, AND PROCESS AND COATINGS
                                FOR THE PRODUCTION THEREOF

6,086,995                       SELF-WOUND SELF-ADHESIVE SURFACE         Pliant Solutions Corporation
                                COVERING MATERIAL

6,120,849                       PROCESS FOR PRODUCING COATED ARTICLES    Pliant Solutions Corporation
                                OF MANUFACTURE

6,153,304                       HYDROPHOBIC COATING SYSTEM FOR           Pliant Solutions Corporation
                                APPLICATION TO AN INORGANIC, ORGANIC
                                OR METALLIC SUBSTRATE

6,178,602                       SLIDER ZIPPER RECLOSEABLE FASTENER       Pliant Solutions Corporation

6,209,287                       METHOD AND APPARATUS FOR PLACING A       Pliant Solutions Corporation
                                PRODUCT IN A FLEXIBLE RECLOSEABLE
                                CONTAINER

6,216,423                       METHOD AND APPARATUS FOR PLACING A       Pliant Solutions Corporation
                                PRODUCT IN A FLEXIBLE RECLOSEABLE
                                CONTAINER

6,257,763                       TAMPER EVIDENT ZIPPER SLIDER             Pliant Solutions Corporation

6,273,663                       AUTOMATIC WICKETING APPARATUS            Pliant Corporation

6,312,777                       METHODS AND COMPOSITION FOR MAKING A     Pliant Solutions Corporation
                                PRESSURE SENSITIVE ADHESIVE COATED
                                LAMINATE

6,363,692                       METHOD AND APPARATUS FOR PLACING A       Pliant Corporation
                                PRODUCT IN A FLEXIBLE RECLOSEABLE
                                CONTAINER

6,438,926                       METHOD AND APPARATUS FOR PLACING A       Pliant Corporation
                                PRODUCT IN A FLEXIBLE RECLOSEABLE
                                CONTAINER

6,499,272                       METHOD FOR PLACING A PRODUCT IN A        Pliant Solutions Corporation
                                FLEXIBLE RECLOSEABLE CONTAINER

6,562,425                       CARRIER RELEASE SHEET FOR STYRENE        Pliant Corporation
                                MOLDING PROCESS AND PROCESS AND SYSTEM




                                                                               6

                         PLIANT U.S. PATENT APPLICATIONS



 U.S. APPL. SER. NO.                           TITLE                                  OWNER
- -------------------------------------------------------------------------------------------------------------
                                                                          
08/865,945              MULTILAYER POLYAMIDE FILM STRUCTURE                     Pliant Corporation

09/406,494              CAREER RELEASE SHEET FOR MOLDING COMPOUND               Pliant Corporation

09/715,874              POLYMER COMPOSITE PACKAGING FILM FOR FRESH MEAT AND     Pliant Corporation
                        VEGETABLE PRODUCE

10/092,381              LOW GAUGE STRETCH WRAP FILM                             Pliant Corporation

10/098,186              METHOD AND APPARATUS FOR PLACING A PRODUCT IN A         Plaint Solutions Coproration
                        FLEXIBLE RECLOSABLE CONTAINER

10/107,694              EXTENDED LIP WICKET SLIDER DELI BAG                     Pliant Corporation

10/126,051              NONORIENTED STIFF PACKAGING FILM WITH SUPERIOR TEAR     Pliant Corporation
                        PROPERTIES

10/209,769              METHOD AND APPARATUS FOR PLACING A PRODUCT IN A         Pliant Solutions Corporation
                        FLEXIBLE RECLOSEABLE CONTAINER

10/228,236              SCORED TAMPER EVIDENT FASTENER TAPE                     Pliant Corporation

10/232,844              METHOD AND APPARATUS FOR PLACING A PRODUCT IN A         Pliant Corporation
                        FLEXIBLE RECLOSABLE CONTAINER

10/290,109              METHOD AND APPARATUS FOR PLACING A PRODUCT IN A         Pliant Corporation
                        FLEXIBLE RECLOSABLE CONTAINER

10/325,483              METHOD AND APPARATUS FOR PLACING A PRODUCT IN A         Pliant Corporation
                        FLEXIBLE RECLOSABLE CONTAINER

10/325,596              METHOD AND APPARATUS FOR PLACING A PRODUCT IN A         Pliant Corporation
                        FLEXIBLE RECLOSABLE CONTAINER

10/351,253              FOLDOVER CONDIMENT POUCH FILMS                          Pliant Corporation

10/402,492              DOUBLE GUSSETED TAMPER EVIDENT SLIDER BAG               Pliant Corporation




                                                                               7



 U.S. APPL. SER. NO.                           TITLE                                  OWNER
- --------------------------------------------------------------------------------------------------
                                                                          
10/405,052              METHOD AND APPARATUS FOR PLACING A PRODUCT IN A         Pliant Corporation
                        FLEXIBLE RECLOSABLE CONTAINER

60/330,140              SLIDERS FOR RECLOSABLE CONTAINERS                       Pliant Corporation

60/389,193              PEEL SEAL TEMPER EVIDENT SLIDER BAGS                    Pliant Corporation

60/389,860              PEEL SEAL TAMPER EVIDENT BAG                            Pliant Corporation

60/411,908              CUTTING SLIDER                                          Pliant Corporation

60/439,286              SHELF LINER WITH POLYMERIC FILM SUBSTRATE               Pliant Corporation

60/446,181              ATTACHABLE CLOSURE DEVICE                               Pliant Corporation




                                                               Schedule V to the
                                              Second Priority Security Agreement

                                   TRADEMARKS

                                 [See attached]





MASTER FILE REPORT                      PCMASTER REPORTER                             21MY2003  14 46            PAGE: 1
TRADEMARKS OF PLIANT CORPORATION

                                                    CURR REG
TRADEMARK                  COUNTRY        STATUS       NO       REG DT   CURR APP NO   APP DT   CLASS  EXPIRES      CURRENT OWNER
- ---------                -------------  ----------  ---------  --------  -----------  --------  -----  --------  -------------------
                                                                                      
PI AND DESIGN            United States  REGISTERED    924,927  07DE1991   72/377,625  02DE1970     16  07DE2001  PIERSON INDUSTRIES,
                                                                                                                 INC.
VERSI-PLY                United States  REGISTERED    867,561  01AP1989   72/290,644  08FE1968     16  01AP2009  PIERSON INDUSTRIES,
                                                                                                                 INC.
703DC                    United States  REGISTERED    1483437  05AP1988       679664  20AU1987     17  05AP2008  PLIANT CORPORATION
ALLIANT                  United States  INACTIVE                          76/227,249  20MR2001    016            PLIANT CORPORATION
ALLIANT                  United States  REGISTERED  2,657,111  03DE2002   76/227,813  20MR2001    020  03DE2012  PLIANT CORPORATION
ALLIANT AND DESIGN       United States  REGISTERED  2,687,393  11FE2003   76/313,927  18SE2001    016  11FE2013  PLIANT CORPORATION
ALLIANT AND DESIGN       United States  REGISTERED  2,687,392  11FE2003   76/313,926  18SE2001    020  11FE2013  PLIANT CORPORATION
ALLIANT RECLOSABLE       United States  REGISTERED  2,681,829  28JA2003   76/313,702  18SE2001    016  28JA2013  PLIANT CORPORATION
TECHNOLOGIES
ALLIANT RECLOSABLE       United States  REGISTERED  2,684,637  04FE2003   76/313,703  18SE2001     20  04FE2013  PLIANT CORPORATION
TECHNOLOGIES
ARCTICWRAP               United States  REGISTERED  1,564,492  07NO1989                            16  07NO2009  PLIANT CORPORATION
BFO                      United States  REGISTERED  1,600,830  12JE1990   73/778,909  06FE1989     17  12JE2010  PLIANT CORPORATION
BIRDTITE                 United States  FILED                             76/351,761  20DE2001     16            PLIANT CORPORATION
BLAST                    United States  REGISTERED  2,608,039  13AU2002   76/054,374  23MY2000    016  13AU2012  PLIANT CORPORATION
BLESSINGS                United States  REGISTERED  2,301,570  21DE1999   75/460,116  01AP1998     17  21DE2009  PLIANT CORPORATION
CHEEZFILM                United States  REGISTERED  1,857,675  11OC1994   74/450,529  21OC1993     16  110C2004  PLIANT CORPORATION
CHEEZFILM                United States  INACTIVE    1,404,004  05AU1986                            16  05AU2006  PLIANT CORPORATION
CHOICE-WRAP              United States  REGISTERED     857929  01OC1968   72/266/325  09MR1967     17  01OC2008  PLIANT CORPORATION
CLOUD NINE AND DESIGN    United States  REGISTERED  1,359,201  10SE1985      478,223  30AP1984     17  10SE2005  PLIANT CORPORATION
CO-EX PLASTICS           United States  REGISTERED  1,539,303  16MY1989   73/730,779  26MY1988     16  16MY2009  PLIANT CORPORATION
DP AND DESIGN            United States  REGISTERED     977946  05FE1974   72/424,331  15MY1972     17  05FE2004  PLIANT CORPORATION
DUBL-PAK                 United States  REGISTERED    852,101  09JL1968   72/215,251  29MR1965     16  09JL2008  PLIANT CORPORATION
EDIGARD                  United States  INACTIVE                          75/451,597  17MR1998     10            PLIANT CORPORATION
ELASTIFILM               United States  REGISTERED    1100744  29AU1978   73/158,208  08FE1978     16  29AU2008  PLIANT CORPORATION
ELASTIFILM ULTRA         United States  REGISTERED  2,238,366  13AP1999   75/372,639  14OC1997     16  13AP2009  PLIANT CORPORATION
FREEZENE                 United States  FILED                             76/272,245  15JE2001     17            PLIANT CORPORATION
FRY-PAK                  United States  REGISTERED    1959770  05MR1996   74/563,535  19AU1994     16  05MR2006  PLIANT CORPORATION
GROWFILM                 United States  REGISTERED    1206169  24AU1982      323,088  10AU1981     17  24AU2002  PLIANT CORPORATION
H AND DESIGN             United States  REGISTERED  2,284,747  12OC1999   75/435,760  17FE1998     17  12OC2009  PLIANT CORPORATION
H AND DESIGN             United States  REGISTERED  2,284,746  12OC1999   75/435,759  17FE1998     17  12OC2009  PLIANT CORPORATION
HL                       United States  REGISTERED  1,600,831  12JE1990   73/779,067  06FE1989     17  12JE2011  PLIANT CORPORATION






MASTER FILE REPORT                      PCMASTER REPORTER                             21MY2003  14 46            PAGE: 2
TRADEMARKS OF PLIANT CORPORATION

                                                    CURR REG
TRADEMARK                   COUNTRY       STATUS        NO      REG DT   CURR APP NO   APP DT   CLASS   EXPIRES     CURRENT OWNER
- ---------                -------------  ----------  ---------  --------  -----------  --------  -----  --------  -------------------
                                                                                      
LAB SEAL                 United States  REGISTERED  2,547,349  12MR2002   76/284,688  13JL2001     09  12MR2012  PLIANT CORPORATION
MAXILENE                 United States  REGISTERED  1,267,132  14FE1984      404,687  03DE1982     17  14FE2004  PLIANT CORPORATION
OMNIFILM                 United States  REGISTERED  1,208,308  14SE1982   73/339,450  30NO1981     16  14SE2012  PLIANT CORPORATION
OPTIFRESH                United States  INACTIVE                          75/451,583  17MR1998     17            PLIANT CORPORATION
OPTX                     United States  REGISTERED  2,652,495  19NO2002   76/131,982  20SE2000     16  19NO2012  PLIANT CORPORATION
P DESIGN                 United States  REGISTERED  2,691,463  25FE2003   76/139,696  29SE2000     17  25FE2013  PLIANT CORPORATION
P DESIGN (COLORIZED)     United States  REGISTERED  2,664,147  17DE2002   76/146,413  12OC2000     17  17DE2012  PLIANT CORPORATION
P PLIANT CORPORATION
 AND DESIGN              United States  REGISTERED  2,693,866  04MR2003   76/139,697  29SE2000     17  04MR2013  PLIANT CORPORATION
P PLIANT CORPORATION
 AND DESIGN              United States  FILED                             76/146,412  12OC2000     17            PLIANT CORPORATION
P PLIANT CORPORATION
 FILMS. PA               United States  REGISTERED  2,669,886  31DE2002   76/139,698  29SE2000     17  31DE2012  PLIANT CORPORATION
P PLIANT CORPORATION
 FILMS. PA               United States  REGISTERED  2,693,875  04MR2003   76,146,414  12OC2000     17  04MR2013  PLIANT CORPORATION
PERMA-BLOCK              United States  REGISTERED  1,947,873  16JA1996   74/435,949  15SE1993     17  16JA2006  PLIANT CORPORATION
PHASE PLUS               United States  REGISTERED  1,916,417  05SE1995   74/579,970  29SE1994     16  05SE2005  PLIANT CORPORATION
PLIANT CORPORATION       United States  REGISTERED  2,560,107  09AP2002   76/049,537  16MY2000    017  09AP2012  PLIANT CORPORATION
PLYLENE                  United States  REGISTERED  1,098,786  08AU1978      147,331  04NO1977     17  08AU2008  PLIANT CORPORATION
POLLY*STAR               United States  REGISTERED  1,602,283  19JE1990   73/778,903  19JE1990     22  19MY2010  PLIANT CORPORATION
PRIME-WRAP               United States  REGISTERED     819118  22NO1966   72/239,517  24FE1966     37  22NO2006  PLIANT CORPORATION
READI-WRAP               United States  FILED                             78/193,595  11DE2002     16            PLIANT CORPORATION
RELLIANT                 United States  FILED                             76/283,422  11JL2001     26            PLIANT CORPORATION
RELLIANT                 United States  FILED                             76/283,421  11JL2001     16            PLIANT CORPORATION
RELLIANT SERIES 100      United States  INACTIVE                          76/303,636  21AU2001     20            PLIANT CORPORATION
RELLIANT SERIES 100      United States  INACTIVE                          76/303,633  21AU2001     16            PLIANT CORPORATION
RELLIANT SERIES 200      United States  FILED                             76/303,631  21AU2001     16            PLIANT CORPORATION
RELLIANT SERIES 200      United States  FILED                             76/303,632  21AU2001     20            PLIANT CORPORATION
RELLIANT SERIES 60       United States  INACTIVE                          76/303,634  21AU2001     16            PLIANT CORPORATION
RELLIANT SERIES 60       United States  FILED                             76/303,635  21AU2001     20            PLIANT CORPORATION
RELLIANT SLIDER
 TECHNOLOGIES A          United States  FILED                             76/313,555  18SE2001     20            PLIANT CORPORATION
RELLIANT SLIDER
 TECHNOLOGIES A          United States  FILED                             76/313,554  18SE2001     16            PLIANT CORPORATION






MASTER FILE REPORT                      PCMASTER REPORTER                             21MY2003  14 46            PAGE: 3
TRADEMARKS OF PLIANT CORPORATION

                                                    CURR REG
TRADEMARK                   COUNTRY       STATUS        NO      REG DT   CURR APP NO   APP DT   CLASS   EXPIRES      CURRENT OWNER
- ---------                -------------  ----------  ---------  --------  -----------  --------  -----  --------  -------------------
                                                                                      
REVOLUTION               United States  FILED                             76/267,751  06JE2001    017            PLIANT CORPORATION
SECURALL                 United States  REGISTERED  1,381,419  04FE1986   73/547,573  12JL1985     17  04FE2006  PLIANT CORPORATION
SHO CASE                 United States  REGISTERED  1,678,544  10MR1992   73/779,093  06FE1989     17  10MR2012  PLIANT CORPORATION
STRATA                   United States  REGISTERED    1485267  19AP1988   73/681,751  31AU1987     17  19AP2008  PLIANT CORPORATION
TAURUS AND DESIGN        United States  INACTIVE    1,198,793  22JE1982      278,432  19SE1980     22  22JE2002  PLIANT CORPORATION
TOUGH GUARD              United States  REGISTERED     987894  09JL1974   72/460,278  14JE1973     16  09JL2004  PLIANT CORPORATION
ULTRA FREEZENE           United States  FILED                             76/272,246  15JE2001     17            PLIANT CORPORATION
UNIVOH                   United States  REGISTERED  2,077,576  08JL1997   75/149,426  13AU1996     16  08JL2007  PLIANT CORPORATION
VITAFILM                 United States  REGISTERED    422,922  20AU1946   71/479,120  29JA1945     37  20AU2006  PLIANT CORPORATION
VITAFRESH                United States  REGISTERED    1185722  12JA1982   73/247,088  07AP1980     16  12JA2012  PLIANT CORPORATION
VITASPENSER              United States  REGISTERED  2,049,615  01AP1967   74/619,153  09JA1995     20  01AP2007  PLIANT CORPORATION
VITAWRAP                 United States  REGISTERED     839152  21NO1967   72/260,546  12DE1966     16  21NO2007  PLIANT CORPORATION
WINWRAP                  United States  REGISTERED  1,882,217  07MR1995   74/487,444  07FE1994     17  07MR2005  PLIANT CORPORATION
YIELDMASTER              United States  REGISTERED  2,243,544  04MY1999                            17  04MY2009  PLIANT CORPORATION
COBRA                    United States  REGISTERED  1,516,393  13DE1988      675,861  31JL1987     17  13DE2008  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
CON-TACT                 United States  REGISTERED    998,439  19NO1974        4,205  23OC1973     16  19NO2004  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
CON-TACT                 United States  REGISTERED    642,136  26FE1957       13,886  13AU1956     50  26FE2007  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
CON-TACT                 United States  REGISTERED    630,559  10JL1956   71/699,344  02DE1955     20  10JL2006  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
CON-TACT (STYLIZED)      United States  REGISTERED    615,845  08NO1955   71/670,713  27JL1954     24  08NO2005  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
CON-TACT (STYLIZED)      United States  REGISTERED    658,898  25FE1958       26,132  13MR1957     50  25FE2008  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
CON-TACT (STYLIZED)      United States  REGISTERED    627,275  22MY1956   71/688,978  06JE1955     20  22MY2006  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
CON-TACT CRYSTAL CLING   United States  FILED                             78/192,656  09DE2002     16            PLIANT SOLUTIONS
                                                                                                                 CORPORATION
CON-TACT GRIP LINER      United States  REGISTERED  2,401,497  07NO2000   75/676,137  06AP1999     20  07NO2010  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
DECORA                   United States  INACTIVE    2,065,354  27MY1997   74/470,165  12DE1993     16  27MY2007  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
DECORA ART               United States  REGISTERED  2,168,574  23JE1998   75/240,720  12FE1997     16  23JE2008  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
DECORA GLASS ART         United States  REGISTERED  2,157,664  12MY1998   75/189,863  30OC1996     16  12MY2008  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
DECORA TILE ART          United States  REGISTERED  2,159,670  19MY1998   75/189,865  30OC1996     16  19MY2008  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
DECORA WALL ART          United States  REGISTERED  2,149,797  07AP1998   75/189,864  30OC1996     16  07AP2008  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
DECOTAC                  United States  REGISTERED  2,153,000  21AP1998  75/126,/233  27JE1996     16  21AP2008  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
EASYTAC                  United States  INACTIVE    1,932,035  31OC1995   74/430,443  25AU1993     16  31OC2005  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
FROSTY                   United States  REGISTERED  2,377,388  15AU2000   75/759,955  26JL1999     27  15AU2010  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
IDEAS BY THE ROOMFUL     United States  REGISTERED  2,332,543  21MR2000   75/687,506  21AP1999     16  21MR2010  PLIANT SOLUTIONS
                                                                                                                 CORPORATION






MASTER FILE REPORT                      PCMASTER REPORTER                             21MY2003  14 46            PAGE: 4
TRADEMARKS OF PLIANT CORPORATION

                                                    CURR REG
TRADEMARK                   COUNTRY       STATUS        NO      REG DT   CURR APP NO   APP DT   CLASS  EXPIRES      CURRENT OWNER
- ---------                -------------  ----------  ---------  --------  -----------  --------  -----  --------  -------------------
                                                                                       
K-SEAL                   United States  REGISTERED  1,364,548  08OC1985   73/530,953  08AP1985     16  08OC2005  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
KCL                      United States  REGISTERED  1,469,023  15DE1987   73/656,457  20AP1987     16  15DE2007  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
KCL                      United States  REGISTERED  1,477,181  16FE1988      656,453  20AP1987     42  16FE2008  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
PEEL & STICK             United States  DOCKETED                                                                 PLIANT SOLUTIONS
                                                                                                                 CORPORATION
QUILTSOFT                United States  INACTIVE    1,556,829  19SE1989      748,381  25AU1998     17  18SE2000  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
STRIP-N-STICK            United States  INACTIVE    1,613,904  18SE1990      811,089  30JE1989     22  18SE2000  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
WALLPAPER FOR WINDOWS    United States  REGISTERED  2,376,441  15AU2000   75/404,394  12DE1997     42  15AU2010  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
WE ARE HOME              United States  REGISTERED  2,525,677  01JA2002   75/701,785  06MY1999     20  01JA2012  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
WEARLON                  United States  INACTIVE    1,813,855  28DE1993   74/280,272  28MY1992     28            PLIANT SOLUTIONS
                                                                                                                 CORPORATION
WEARLON                  United States  REGISTERED  1,869,137  27DE1994   74/415,905  22JL1993      1  27DE2004  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
WHERE TECHNOLOGY
DECORATES                United States  REGISTERED  2,178,269  04AU1998   75/300,693  30MY1997     16  04AU2008  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
ZIP N' FIT               United States  REGISTERED  1,193,625  13AP1982   73/254,295  17MR1980     17  13AP2002  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
ZIP-LIP                  United States  INACTIVE    1,727,507  27OC1992   74/163,568  06MY1991     16  27OC2002  PLIANT SOLUTIONS
                                                                                                                 CORPORATION
ZIPS                     United States  REGISTERED  1,797,375  05OC1993   74/306,672  24AU1992     16  05OC2003  PLIANT SOLUTIONS
                                                                                                                 CORPORATION




                                                                  Annex 1 to the
                                              Second Priority Security Agreement

                                    [Form Of]
                             PERFECTION CERTIFICATE

        Reference is made to (a) the Indenture dated as of May 30, 2003 (as
amended, supplemented or otherwise modified from time to time, the "Indenture"),
among Pliant Corporation, a Utah corporation (the "Company"), the Guarantors and
Wilmington Trust Company ("Wilmington Trust"), as trustee, (b) the Second
Priority Security Agreement dated as of May 30, 2003 (as amended, supplemented
or otherwise modified from time to time, the "Second Priority Security
Agreement"), among the Company, the Guarantors and Wilmington Trust, as
collateral agent (in such capacity, the "Collateral Agent"), (c) the Second
Priority Pledge Agreement dated as of May 30, 2003 (as amended, supplemented or
otherwise modified from time to time, the "Second Priority Pledge Agreement"),
among the Company, the Subsidiary Pledgors and the Collateral Agent and (d) the
Intercreditor Agreement dated as of May 30, 2003 (as amended, supplemented or
otherwise modified from time to time, the "Intercreditor Agreement"), among the
Company, the Collateral Agent and the Credit Agent (as defined in the Second
Priority Security Agreement). Capitalized terms used but not defined herein have
the meanings assigned to them in the Indenture or the Second Priority Security
Agreement, as applicable.

        The undersigned, an Officer of the Company, hereby certifies, solely in
his capacity as an Officer of the Company, on behalf of the Company, to the
Collateral Agent and each other Secured Party as follows:

1. Names.

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

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

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

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



                                                                               2

(e) Set forth below is the organizational identification number, if any, issued
by the jurisdiction of formation of each Grantor that is a registered
organization:

      Grantor                                                Organizational
      -------                                             Identification Number
                                                          ---------------------

(f) Set forth below is the Federal Taxpayer Identification Number of each
Grantor:

      Grantor                                               Federal Taxpayer
      -------                                             Identification Number
                                                          ---------------------

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

                Grantor           Mailing Address         County          State
                -------           ---------------         ------          -----

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

                Grantor           Mailing Address         County          State
                -------           ---------------         ------          -----

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

      Grantor                                             Jurisdiction
      -------                                             ------------

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

                Grantor           Mailing Address         County          State
                -------           ---------------         ------          -----

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

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

3. Intentionally Omitted.



                                                                               3

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

5. UCC Filings. UCC financing statements in substantially the form of Schedule 5
hereto have been prepared for filing in the proper Uniform Commercial Code
filing office in the jurisdiction in which each Grantor is located and, to the
extent any of the Collateral is comprised of fixtures in the proper local
jurisdiction, as set forth with respect to such Grantor in Schedule 5 hereto.

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

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

8. Debt Instruments. Attached hereto as Schedule 8 is a true and correct list of
all instruments, including any promissory notes, and other evidence of
indebtedness held by the Issuer and each Subsidiary of the Issuer, including all
intercompany notes between the Issuer and each Subsidiary of the Issuer and each
Subsidiary of the Issuer and each other such Subsidiary.

9. Advances. Attached hereto as Schedule 9 is (a) a true and correct list of all
advances made by the Issuer to any Subsidiary of the Issuer or made by any
Subsidiary of the Issuer to the Issuer or to any other Subsidiary of the Issuer
(other than those identified on Schedule 8), which advances will be on and after
the date hereof evidenced by one or more intercompany notes pledged to the
Collateral Agent under the Second Priority Pledge Agreement and (b) a true and
correct list of all unpaid intercompany transfers of goods sold and delivered by
or to the Issuer or any Subsidiary of the Issuer.

10. Mortgage Filings. Attached hereto as Schedule 10 is a schedule setting
forth, with respect to each Mortgaged Property, (a) the exact name of the Person
that owns such property as such name appears in its certificate of incorporation
or other organizational document, (b) if different from the name identified
pursuant to clause (a), the exact name of the current record owner of such
property reflected in the records of the filing office for such property
identified pursuant to the following clause and (c) the filing office in which a
Mortgage with respect to such property must be filed or recorded in order for
the Collateral Agent to obtain a perfected security interest therein.

11. Intellectual Property. Attached hereto as Schedule 11(A) is a schedule
setting forth all of each Grantor's Patents and registered Trademarks and Patent
and Trademark



                                                                               4

applications, including the name of the registered owner or applicant, as
applicable, and the registration or application number, as applicable, of each
Patent and registered Trademark or Patent or Trademark application owned by any
Grantor, in proper form for filing with the United States Patent and Trademark
Office, and a schedule setting forth all of each Grantor's material Patent
Licenses and material Trademark Licenses. Attached hereto as Schedule 11(B) is a
schedule setting forth all of each Grantor's registered Copyrights, including
the name of the registered owner and the registration number of each Copyright
owned by any Grantor, in proper form for filing with the United States Copyright
Office, and a schedule setting forth all of each Grantor's material Copyright
Licenses that grant rights with respect to registered Copyrights.



                                                                               5

                IN WITNESS WHEREOF, the undersigned have duly executed this
certificate on this 30th day of May, 2003.

                                                     PLIANT CORPORATION,

                                                              by

                                                              Name:
                                                              Title:



                                                                  Annex 2 to the
                                              Second Priority Security Agreement

                        SUPPLEMENT NO. __ dated as of , to the Second Priority
                Security Agreement dated as of May 30, 2003, among PLIANT
                CORPORATION, a Utah corporation (the "Issuer"), each subsidiary
                of the Issuer listed on Schedule I thereto (each such subsidiary
                individually a "Guarantor" and collectively, the "Guarantors";
                the Guarantors and the Issuer are referred to collectively
                herein as the "Grantors") and WILMINGTON TRUST COMPANY, a
                Delaware banking corporation ("Wilmington Trust") as collateral
                agent (in such capacity, the "Collateral Agent") for the Secured
                Parties (as defined herein).

                A. Reference is made to (a) the Indenture dated as of May 30,
2003 (as amended, supplemented or otherwise modified from time to time, the
"Indenture"), among the Issuer, the Guarantors and Wilmington Trust, (in such
capacity, the "Trustee") and (b) the Intercreditor Agreement dated as of May 30,
2003 (as amended, supplemented or otherwise modified from time to time, the
"Intercreditor Agreement"), among the Issuer, the Collateral Agent and the
Credit Agent.

                B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Second Priority
Security Agreement and the Indenture.

                C. The Grantors have entered into the Second Priority Security
Agreement in order to induce the Trustee to enter into the Indenture and the
Initial Purchasers to purchase the Notes. Pursuant to Section 4.11 of the
Indenture, the Company is required to cause certain of its Subsidiaries that are
not Grantors to enter into this Agreement as a Grantor. Section 7.15 of the
Second Priority Security Agreement provides that additional Subsidiaries of the
Issuer may become Grantors under the Second Priority Security Agreement by
execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary (the "New Grantor") is executing this Supplement in
accordance with the requirements of the Indenture to become a Grantor under the
Second Priority Security Agreement as consideration for the purchase of the
Notes by the Initial Purchasers.

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

                Section 1. In accordance with Section 7.15 of the Second
Priority Security Agreement, the New Grantor by its signature below becomes a
Grantor under the Second Priority Security Agreement with the same force and
effect as if originally named therein as a Grantor and the New Grantor hereby
(a) agrees to all the terms and provisions of the Second Priority Security
Agreement applicable to it as a Grantor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Grantor
thereunder are true and correct on and as of the date hereof. In



                                                                               2

furtherance of the foregoing, the New Grantor, as security for the payment and
performance in full of the Obligations (as defined in the Second Priority
Security Agreement), does hereby create and grant to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, their successors
and assigns, a security interest in and lien on all of the New Grantor's right,
title and interest in and to the Collateral (as defined in the Second Priority
Security Agreement) of the New Grantor, subject to the provisions of the
Intercreditor Agreement (as provided in Section 7.16 of the Second Priority
Security Agreement). Each reference to a "Grantor" in the Second Priority
Security Agreement shall be deemed to include the New Grantor. The Second
Priority Security Agreement is hereby incorporated herein by reference.

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

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

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

                Section 5. Except as expressly supplemented hereby, the Second
Priority Security Agreement shall remain in full force and effect.

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

                Section 7. In the event any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and in the Second Priority Security Agreement shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.



                                                                               3

                Section 8. All communications and notices hereunder shall be in
writing and given as provided in Section 7.01 of the Second Priority Security
Agreement. All communications and notices hereunder to the New Grantor shall be
given to it at the address set forth under its signature below.

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



                                                                               4

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

                                                    [Name of New Grantor],

                                                     by
                                                        ------------------------
                                                        Name:
                                                        Title:
                                                        Address:

                                                    WILMINGTON TRUST COMPANY, as
                                                    Collateral Agent,

                                                     by
                                                         -----------------------
                                                         Name:
                                                         Title:



                                                                      SCHEDULE I
                                                     to Supplement No.___ to the
                                              Second Priority Security Agreement

                             LOCATION OF COLLATERAL

                Description                            Location
                -----------                            --------

EX-4.9

                                                                     EXHIBIT 4.9

                            SECOND PRIORITY PLEDGE AGREEMENT dated as of May 30,
                    2003, among PLIANT CORPORATION, a Utah corporation (the
                    "Issuer"), each Subsidiary of the Issuer listed on Schedule
                    I hereto (each such Subsidiary individually a "Subsidiary
                    Pledgor" and, collectively, the "Subsidiary Pledgors"; the
                    Issuer and the Subsidiary Pledgors are referred to
                    collectively herein as the "Pledgors") and WILMINGTON TRUST
                    COMPANY, a Delaware banking corporation ("Wilmington
                    Trust"), as collateral agent (in such capacity, the
                    "Collateral Agent") for the Secured Parties (as defined in
                    the Second Priority Security Agreement referred to below).
                    Capitalized terms used but not defined herein shall have the
                    meanings assigned to such terms in the Indenture (as defined
                    below).

                                   WITNESSETH:

                WHEREAS, pursuant to the terms, conditions and provisions of (a)
the Indenture dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the "Indenture"), among the Issuer, the
Subsidiary Pledgors and Wilmington Trust, as trustee (the "Trustee"), (b) the
Purchase Agreement dated as of May 22, 2003, among the Issuer, the Subsidiary
Pledgors and J.P.Morgan Securities Inc., Credit Suisse First Boston LLC and
Deutsche Bank Securities Inc. (the "Initial Purchasers") and (c) the Second
Priority Security Agreement dated as of May 30, 2003, (as amended, supplemented
or otherwise modified from time to time, the "Second Priority Security
Agreement"), among the Issuer, the Grantors party thereto and the Collateral
Agent, the Issuer is issuing $250,000,000 aggregate principal amount of 11 1/8%
Senior Secured Notes due 2009 and may issue, from time to time, additional notes
in accordance with the provisions of the Indenture (collectively, the "Notes")
which will be guaranteed on a senior secured basis by each of the Pledgors;

                WHEREAS, pursuant to the Pledge Agreement dated as of September
30, 1997, as amended and restated as of May 31, 2000 (as amended, supplemented
or otherwise modified from time to time, the "First Priority Pledge Agreement"),
among the Issuer, each of the subsidiaries of the Issuer party thereto or which
becomes a party thereto pursuant to the Credit Agreement referred to below
(together with the Issuer, each a "Credit Agreement Pledgor" and, collectively,
the "Credit Agreement Pledgors") and Deutsche Bank Trust Company Americas
(formerly known as Bankers Trust Company), as collateral agent, the Credit
Agreement Pledgors have granted to the Credit Agent (as defined below) a
first-priority lien and security interest in the Collateral (as defined below)
in connection with the Credit Agreement dated as of September 30, 1997, as
amended and restated as of May 31, 2000 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Issuer, Aspen
Industrial, S.A. de C.V., a Mexico corporation, the lenders from time to time
party thereto (the



                                                                               2

"Lenders"), Deutsche Bank Trust Company Americas, as administrative agent and
collateral agent (in such capacity, together with any successor Credit Agent as
provided and defined in the Intercreditor Agreement, the "Credit Agent") for the
Lenders, and JPMorgan Chase Bank, as Syndication Agent.

                WHEREAS, the Issuer, the Collateral Agent and the Credit Agent
have entered into an Intercreditor Agreement, dated as of the date hereof (the
"Intercreditor Agreement"), pursuant to which the lien upon and security
interest in the Collateral granted by this Agreement are and shall be
subordinated in all respects to the lien upon and security interest in the
Collateral granted pursuant to, and subject to the terms and conditions of, the
Senior Lender Documents (as defined in the Intercreditor Agreement);

                WHEREAS, each Pledgor is executing and delivering this Agreement
pursuant to the terms of the Indenture to induce the Trustee to enter into the
Indenture and the Initial Purchasers to purchase the Notes; and

                WHEREAS, each Pledgor has duly authorized the execution,
delivery and performance of this Agreement.

                NOW, THEREFORE, for and in consideration of the premises, and of
the mutual covenants herein contained, and in order to induce the Trustee to
enter into the Indenture and the Initial Purchasers to purchase the Notes, each
Pledgor and the Collateral Agent, on behalf of itself and each Secured Party,
and each of their respective successors or assigns, hereby agree as follows:

                SECTION 1. Pledge. As security for the payment and performance,
as the case may be, in full of all obligations of the Issuer and the Subsidiary
Pledgors under the Indenture, the Notes and the other Indenture Documents (as
defined in the Second Priority Security Agreement), including obligations to the
Trustee and the Collateral Agent, whether for payment of principal of, interest
on or additional interest, if any, on the Notes and all other monetary
obligations of the Issuer and the Subsidiary Pledgors under the Indenture, the
Notes and the other Indenture Documents whether for fees, expenses,
indemnification or otherwise (referred to collectively as the "Obligations"),
each Pledgor hereby transfers, grants, bargains, sells, conveys, hypothecates,
pledges, sets over and (subject to the Intercreditor Agreement) delivers unto
the Collateral Agent, its successors and assigns, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a second-priority security interest in all of the Pledgor's
right, title and interest in, to and under (a) all the shares of capital stock,
partnership interests, membership interests in a limited liability company,
beneficial interests in a trust or other equity ownership interests in a person
(collectively, the "Equity Interests") owned by it that have been pledged to the
Credit Agent pursuant to the First Priority Pledge Agreement, all of which have
been delivered to and are held by the Credit Agent (with the exception of Equity
Interests consisting of uncertificated securities) and are listed on Schedule II
hereto, and any Equity Interests obtained in the future by such Pledgor and the
certificates representing all such shares (collectively, the "Pledged Stock");
(b)(i) all the debt securities owned by it that have been pledged to the Credit
Agent pursuant to the First Priority Pledge Agreement, all of which are listed



                                                                               3

opposite the name of the Pledgor on Schedule II hereto, and have been delivered
to and are held by the Credit Agent, (ii) any debt securities in the future
issued to the Pledgor and (iii) the promissory notes and any other instruments
evidencing such debt securities (collectively, the "Pledged Debt Securities");
(c) subject to Section 5, all payments of principal or interest, dividends,
cash, instruments and other property from time to time received, receivable or
otherwise distributed, in respect of, in exchange for or upon the conversion of
the securities referred to in clauses (a) and (b) above; (d) subject to Section
5, all rights and privileges of the Pledgor with respect to the securities and
other property referred to in clauses (a), (b) and (c) above; and (e) all
proceeds of any of the foregoing (the items referred to in clauses (a) through
(e) above being collectively referred to as the "Collateral"). Notwithstanding
any of the foregoing, the Pledged Stock shall not include (i) more than 65% of
the issued and outstanding shares of common stock of any Foreign Subsidiary that
is not a Pledgor or (ii) to the extent that applicable law requires that a
Subsidiary of the Pledgor issue directors' qualifying shares, such qualifying
shares.

                Any security interest in Pledged Stock or Pledged Debt
Securities of any Subsidiary Pledgor shall be limited at any time to that
portion of capital stock or other security which value (defined as the principal
amount, par value, book value as carried by the Issuer or market value,
whichever is greatest), when considered in the aggregate with all other capital
stock or other securities of such Subsidiary Pledgor subject to a security
interest under the Indenture, does not exceed 19.99% of the principal amount of
the then outstanding Notes issued by the Issuer; provided, in the event that
Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or
interpreted by the Securities and Exchange Commission (the "SEC") to require (or
is replaced with another rule or regulation or any other law, rule or regulation
is adopted, which would require) the filing with the SEC (or any other
governmental agency) of separate financial statements of any Subsidiary of the
Issuer due to the fact that such Subsidiary's Pledged Stock or Pledged Debt
Securities secures the Notes, then such Pledged Stock or Pledged Debt Securities
of such Subsidiary shall automatically be deemed not to be part of the
Collateral but only to the extent necessary to not be subject to such
requirement; provided, further in such event, the Security Documents (as defined
in the Second Priority Security Agreement) may be amended or modified, without
the consent of any Holder, to the extent necessary to release the second
priority security interests on the shares of capital stock or other securities
that are so deemed to no longer constitute part of the Collateral.

                Upon delivery to the Credit Agent (or, if the First-Lien
Termination Date (as defined in the Second Priority Security Agreement) has
occurred, the Collateral Agent), (a) any stock certificates, notes or other
securities now or hereafter included in the Collateral (the "Pledged
Securities") have been or shall be accompanied by stock powers duly executed in
blank or other instruments of transfer satisfactory to the Credit Agent (or, if
the First-Lien Termination Date has occurred, the Collateral Agent) and by such
other instruments and documents as the Credit Agent (or, if the First-Lien
Termination Date has occurred, the Collateral Agent) may reasonably request and
(b) all other property comprising part of the Collateral shall be accompanied by
proper instruments of assignment duly executed by the applicable Pledgor and
such other



                                                                               4

instruments or documents as the Credit Agent (or, if the First-Lien Termination
Date has occurred, the Collateral Agent) may reasonably request. Each delivery
of Pledged Securities shall be accompanied by a schedule describing the
securities then being pledged hereunder, which schedule shall be attached hereto
as Schedule II and made a part hereof. Each schedule so delivered shall
supplement any prior schedules so delivered.

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

                SECTION 2. Delivery of the Collateral. (a) Each Pledgor agrees
promptly to deliver or cause to be delivered to the Credit Agent (or, if the
First-Lien Termination Date has occurred, the Collateral Agent) any and all
Pledged Securities, and any and all certificates or other instruments or
documents representing the Collateral, unless such Pledged Securities,
certificates or other instruments or documents have previously been delivered to
the Credit Agent (or, if the First-Lien Termination Date has occurred, the
Collateral Agent).

                        (b) Each Pledgor will cause any Indebtedness for
borrowed money owed to the Pledgor by the Issuer or any Subsidiary to be
evidenced by a duly executed promissory note that is pledged to the Collateral
Agent and delivered to the Credit Agent (or, if the First-Lien Termination Date
has occurred, the Collateral Agent) for the benefit of the Secured Parties
pursuant to the terms thereof.

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

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

                (b) except for the security interest granted hereunder and
except as permitted by the Indenture, the Pledgor (i) is and will at all times
continue to be the direct owner, beneficially and of record, of the Pledged
Securities indicated on Schedule II, (ii) holds the same free and clear of all
Liens other than Permitted Liens, (iii) will make no assignment, pledge,
hypothecation or transfer of, or create or permit to exist any security interest
in or Lien (other than Permitted Liens) on, the Collateral, other than pursuant
hereto or to the Senior Lender Documents (as defined in the Intercreditor
Agreement) in accordance with the Intercreditor Agreement in respect of
Permitted Liens, and (iv) subject to Section 5 and the Intercreditor Agreement,
will cause any and all Collateral, whether for value paid by the Pledgor or
otherwise, to be forthwith deposited (unless such Collateral was previously
deposited with the Credit Agent (or, if



                                                                               5

the First-Lien Termination Date has occurred, the Collateral Agent)) and pledged
or assigned hereunder;

                (c) the Pledgor (i) has the power and authority to pledge the
Collateral in the manner hereby done or contemplated and (ii) will defend its
title or interest thereto or therein against any and all Liens (other than
Permitted Liens), however arising, of all Persons whomsoever;

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

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

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

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

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

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

                (j) all Collateral consisting of Pledged Securities,
certificates or other documents representing or evidencing the Collateral has
been delivered to the Credit Agent (or, if the First-Lien Termination Date has
occurred, the Collateral Agent) in accordance with Section 2.

                SECTION 4. Registration in Nominee Name; Denominations. The
Credit Agent (or, if the First-Lien Termination Date has occurred, the
Collateral Agent), on behalf of the Secured Parties, shall have the right (in
its sole and absolute discretion)



                                                                               6

to hold the Pledged Securities in its own name as pledgee, the name of its
nominee (as pledgee or as sub-agent) or the name of the Pledgors, endorsed or
assigned in blank or in favor of the Credit Agent (or, if the First-Lien
Termination Date has occurred, the Collateral Agent). Each Pledgor will promptly
give to the Collateral Agent copies of any notices or other communications
received by it with respect to Pledged Securities registered in the name of such
Pledgor. The Credit Agent (or, if the First-Lien Termination Date has occurred,
the Collateral Agent) shall at all times have the right to exchange the
certificates representing Pledged Securities for certificates of smaller or
larger denominations for any purpose consistent with this Agreement and the
Intercreditor Agreement.

                SECTION 5. Voting Rights; Dividends and Interest, etc. (a)
Unless and until an Event of Default shall have occurred and be continuing:

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

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

                (iii) Each Pledgor shall be entitled to receive and retain any
and all cash dividends, interest and principal paid on the Pledged Securities to
the extent and only to the extent that such cash dividends, interest and
principal are permitted by, and otherwise paid in accordance with, the terms and
conditions of the Indenture, the other Indenture Documents and applicable laws.
All noncash dividends, interest and principal, and all dividends, interest and
principal paid or payable in cash or otherwise in connection with a partial or
total liquidation or dissolution, return of capital, capital surplus or paid-in
surplus, and all other distributions (other than distributions referred to in
the preceding sentence) made on or in respect of the Pledged Securities, whether
paid or payable in cash or otherwise, whether resulting from a subdivision,
combination or reclassification of the outstanding capital stock of the issuer
of any Pledged Securities or received in exchange for Pledged Securities or any
part thereof, or in redemption thereof, or as a result of any merger,
consolidation, acquisition or other exchange of assets to which such issuer may
be a party or otherwise, shall be and become part of the Collateral, and, if
received by any Pledgor, shall not be commingled by such Pledgor with any of its
other funds or property but shall be held separate and apart therefrom, shall be
held in trust for the benefit of the Collateral Agent and shall be forthwith
delivered to the Credit



                                                                               7

Agent (or, if the First-Lien Termination Date has occurred, the Collateral
Agent) for the benefit of the Secured Parties in the same form as so received
(with any necessary endorsement).

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

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



                                                                               8

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

                The Collateral Agent shall give a Pledgor 10 days' prior written
notice (which each Pledgor agrees is reasonable notice within the meaning of
Section 9-611 of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of such Pledgor's Collateral. Such notice, in the
case of a public sale, shall state the time and place for such sale and, in the
case of a sale at a broker's board or on a securities exchange, shall state the
board or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such board or
exchange. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix and state in the notice of such sale. At any such sale, the Collateral, or
portion thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make any sale of any
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of such Collateral shall have been given. The Collateral Agent
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for sale, and such sale may, without further notice, be made at the time
and place to which the same was so adjourned. In case any sale of all or any
part of the Collateral is made on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the sale price is paid in
full by the purchaser or purchasers thereof, but the Collateral Agent shall not
incur any liability in case any such purchaser or purchasers shall fail to take
up and pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. At any public (or, to the extent
permitted by applicable law, private) sale made pursuant to this Section 6, any
Secured Party may bid for or purchase, free from any right of redemption, stay
or appraisal on the part of any Pledgor (all said rights being also hereby
waived and released), the Collateral or any part thereof offered for sale and
may make payment on account thereof by using any claim then due and payable to
it from such Pledgor as a credit against the purchase price, and it may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without



                                                                               9

further accountability to such Pledgor therefor. For purposes hereof, (a) a
written agreement to purchase the Collateral or any portion thereof shall be
treated as a sale thereof, (b) the Collateral Agent shall be free to carry out
such sale pursuant to such agreement and (c) such Pledgor shall not be entitled
to the return of the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall have entered into
such an agreement all Events of Default shall have been remedied and the
Obligations paid in full. As an alternative to exercising the power of sale
herein conferred upon it, the Collateral Agent may, in accordance with, and to
the extent consistent with, the Intercreditor Agreement, proceed by a suit or
suits at law or in equity to foreclose upon the Collateral and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. Any sale pursuant to the provisions of this Section 6
shall be deemed to conform to the commercially reasonable standards as provided
in Section 9-611 of the Uniform Commercial Code as in effect in the State of New
York or its equivalent in other jurisdictions.

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

                FIRST, to the payment of all costs and expenses incurred by the
        Trustee or the Collateral Agent (in its capacity as such hereunder or
        under any other Indenture Document) in connection with such collection
        or sale or otherwise in connection with this Agreement, any other
        Indenture Document or any of the Obligations (or any such costs and
        expenses incurred by a trustee or a collateral agent in connection with
        Other Second-Lien Obligations), including all court costs and the
        reasonable fees and expenses of its agents and legal counsel, the
        repayment of all advances made by the Trustee or the Collateral Agent
        hereunder or under any other Indenture Document on behalf of any Pledgor
        and any other costs or expenses incurred in connection with the exercise
        of any right or remedy hereunder or under any other Indenture Document
        and any other amounts due to the Trustee or the Collateral Agent under
        Section 7.07 of the Indenture;

                SECOND, to the payment in full of the Obligations owed to the
        Holders and any Other Second-Lien Obligations owed to holders of such
        Indebtedness (the amounts so applied to be distributed among the Holders
        and any holders of Other Second-Lien Obligations pro rata in accordance
        with the amounts of the Obligations owed to the Holders and Other
        Second-Lien Obligations owed to holders of such Indebtedness on the date
        of any such distribution); and

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



                                                                              10

                The Collateral Agent shall have absolute discretion as to the
time of application of any such proceeds, moneys or balances in accordance with
this Agreement. The Collateral Agent may fix a record date and payment date for
any payment to Holders pursuant to this Section 7. At least 15 days before such
record date, the Collateral Agent shall mail to each Holder and the Issuer a
notice that states the record date, the payment date and the amount to be paid.
Upon any sale of the Collateral by the Collateral Agent (including pursuant to a
power of sale granted by statute or under a judicial proceeding), the receipt of
the purchase money by the Collateral Agent or of the officer making the sale
shall be a sufficient discharge to the purchaser or purchasers of the Collateral
so sold and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.

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

                (b) Without limitation of its indemnification obligations under
the other Indenture Documents, each Pledgor agrees to indemnify the Collateral
Agent, the Trustee, the Holders and each Affiliate of the foregoing Persons
(each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees, other charges and
disbursements, incurred by or asserted against any Indemnitee arising out of, in
any way connected with, or as a result of (i) the execution or delivery of this
Agreement or any other Indenture Document or any agreement or instrument
contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations thereunder or the consummation of the Transactions and
the other transactions contemplated thereby or (ii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnitee is a party thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses resulted from the gross negligence or wilful
misconduct of such Indemnitee.

                (c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 8 shall remain operative and in full force and effect
regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or any
other Indenture Document or any investigation made by or on behalf of the
Collateral Agent or any other Secured Party. All amounts due



                                                                              11

under this Section 8 shall be payable on written demand therefor and shall bear
interest at the rate specified in the Notes.

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

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

                SECTION 10. Waivers; Amendment. (a) No failure or delay of the
Collateral Agent in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent hereunder
and of the Collateral Agent and the other Secured Parties under the other
Indenture Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provisions of this
Agreement or consent to any departure by any Pledgor therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver or consent shall be effective only in the specific instance
and for the



                                                                              12

purpose for which given. No notice or demand on any Pledgor in any case shall
entitle such Pledgor to any other or further notice or demand in similar or
other circumstances.

                (b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except (i) in accordance with the Indenture and
pursuant to a written agreement entered into between the Collateral Agent and
the Pledgor or Pledgors with respect to which such waiver, amendment or
modification is to apply, subject to the limitations in the Intercreditor
Agreement, or (ii) as otherwise provided in the Intercreditor Agreement.

                SECTION 11. Securities Act, etc. In view of the position of the
Pledgors in relation to the Pledged Securities, or because of other current or
future circumstances, a question may arise under the Securities Act, as now or
hereafter in effect, or any similar statute hereafter enacted analogous in
purpose or effect (such Act and any such similar statute as from time to time in
effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Securities permitted hereunder. Each Pledgor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Securities could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Pledgor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Securities, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Securities for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Pledgor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its discretion, (a) may proceed to make such a sale whether or not a
registration statement for the purpose of registering such Pledged Securities or
part thereof shall have been filed under the Federal Securities Laws and (b) may
approach and negotiate with a single potential purchaser to effect such sale.
Each Pledgor acknowledges and agrees that any such sale might result in prices
and other terms less favorable to the seller than if such sale were a public
sale without such restrictions. In the event of any such sale, the Collateral
Agent shall incur no responsibility or liability for selling all or any part of
the Pledged Securities at a price that the Collateral Agent, in its discretion,
may in good faith deem reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might have been realized if the
sale were deferred until after registration as aforesaid or if more than a
single purchaser were approached. The provisions of this Section 11 will apply
notwithstanding the existence of a public or private market upon which the
quotations or sales prices may exceed substantially the price at which the
Collateral Agent sells.

                SECTION 12. Registration, etc. Each Pledgor agrees that, upon
the occurrence and during the continuance of an Event of Default hereunder, if,
in accordance with, and to the extent consistent with, the terms of the
Intercreditor Agreement, for any reason the Collateral Agent desires to sell any
of the Pledged



                                                                              13

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

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

                SECTION 14. Termination or Release. (a) This Agreement and the
security interests granted hereby shall terminate at the time provided for in
Section 10.08 of the Indenture.



                                                                              14

                (b) Upon any sale or other transfer by any Pledgor of any
Collateral that is permitted under the Indenture or the Intercreditor Agreement
to any Person that is not a Pledgor, or, if any of the Collateral shall
otherwise become subject to the release provisions set forth in Section 10.03 of
the Indenture or Section 5.1 of the Intercreditor Agreement, such Collateral
shall be automatically released from the security interest created by this
Agreement to the extent provided for in Section 10.03 of the Indenture or
Section 5.1 of the Intercreditor Agreement, as applicable. To the extent
applicable, the Issuer will comply with Section 314(d) of the TIA (as defined in
the Second Priority Security Agreement), relating to the release of property or
securities from the Lien and Security Interest and to any substitution therefor
of any property or securities to be subjected to the Lien created by this
Agreement. Any certificate or opinion required by TIA Section 314(d) may be made
by an Officer (as defined in the Second Priority Security Agreement) of the
Issuer except in cases where TIA Section 314(d) requires that such certificate
or opinion be made by an independent Person, which Person will be an independent
engineer, appraiser or other expert selected or approved by the Trustee in the
exercise of reasonable care.

                (c) In connection with any termination or release pursuant to
paragraph (a) or (b), the Collateral Agent shall execute and deliver to any
Pledgor, at such Pledgor's expense, all UCC termination statements and similar
documents that such Pledgor shall reasonably request to evidence such
termination or release. Any execution and delivery of documents pursuant to this
Section 14 shall be without recourse to or warranty by the Collateral Agent.

                SECTION 15. Notices. All communications and notices hereunder
shall be in writing and given as provided in Section 12.02 of the Indenture. All
communications and notices hereunder to any Subsidiary Pledgor shall be given to
it at the address for notices set forth on Schedule I.

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

                SECTION 17. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of any Pledgor that
are contained in this Agreement shall bind and inure to the benefit of its
successors and assigns. This Agreement shall become effective as to any Pledgor
when a counterpart hereof executed on behalf of such Pledgor shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding upon
such Pledgor and the Collateral Agent and their respective successors and
assigns, and shall inure to the benefit of such Pledgor, the Collateral Agent
and the other Secured Parties, and their respective successors and



                                                                              15

assigns, except that no Pledgor shall have the right to assign its rights
hereunder or any interest herein or in the Collateral (and any such attempted
assignment shall be void), except as expressly contemplated by this Agreement or
the other Indenture Documents. If all of the capital stock of a Pledgor is sold,
transferred or otherwise disposed of pursuant to a transaction permitted or not
prohibited under the Indenture Documents, such Pledgor shall be released from
its obligations under this Agreement without further action. This Agreement
shall be construed as a separate agreement with respect to each Pledgor and may
be amended, modified, supplemented, waived or released with respect to any
Pledgor without the approval of any other Pledgor and without affecting the
obligations of any other Pledgor hereunder.

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

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



                                                                              16

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

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

                SECTION 21. Rules of Interpretation. The rules of interpretation
specified in Section 1.03 of the Second Priority Security Agreement shall be
applicable to this Agreement. Section headings used herein are for convenience
of reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting, this
Agreement.

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

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

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



                                                                              17

                SECTION 23. Waiver Of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INDENTURE
DOCUMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER INDENTURE DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION.

                SECTION 24. Additional Pledgors. If, pursuant to Sections 4.11
and 11.07 of the Indenture, the Company is required to cause any Subsidiary of
the Company that is not a Subsidiary Pledgor to become a Subsidiary Pledgor,
upon execution and delivery by the Collateral Agent and such Subsidiary of an
instrument in the form of Schedule III, such Subsidiary shall become a
Subsidiary Pledgor hereunder with the same force and effect as if originally
named as a Subsidiary Pledgor herein. The execution and delivery of such
instrument shall not require the consent of any Pledgor hereunder. The rights
and obligations of each Pledgor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Pledgor as a party to this
Agreement.

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

                SECTION 26. Credit Agreement. The Collateral Agent acknowledges
and agrees, on behalf of itself and the Holders (as defined in the Second
Priority Security Agreement), that, any provision of this Agreement to the
contrary notwithstanding, until the First-Lien Termination Date, the Pledgors
shall not be required to act or refrain from acting with respect to any
Collateral on which the Credit Agent has a Lien superior in priority to the
Collateral Agent's Lien thereon in any manner that would result in a default
under the terms and provisions of the Credit Agreement.



                                                                              18

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

                                               PLIANT CORPORATION,

                                                by
                                                   /s/ Brian E. Johnson
                                                   -----------------------------
                                                   Name:
                                                   Title:

                                               THE SUBSIDIARY PLEDGORS LISTED
                                               ON SCHEDULE I HERETO,

                                                by
                                                   /s/ Brian E. Johnson
                                                   -----------------------------
                                                   Name:
                                                   Title:  Authorized Officer

                                               WILMINGTON TRUST COMPANY, as
                                               Collateral Agent,

                                                by
                                                   /s/ James D. Nesci
                                                   -----------------------------
                                                   Name: James D. Nesci
                                                   Title: Authorized Officer



                                                               Schedule I to the
                                                Second Priority Pledge Agreement

                               SUBSIDIARY PLEDGORS

             Name                                     Address
             ----                                     -------

Pliant Solutions Corporation                   1475 Woodfield Road,
                                               Suite 700
                                               Schaumburg, IL 60173

Pliant Packaging of Canada, LLC                1475 Woodfield Road,
                                               Suite 700
                                               Schaumburg, IL 60173

Pliant Corporation International               1475 Woodfield Road,
                                               Suite 700
                                               Schaumburg, IL 60173

Pliant Film Products of Mexico, Inc.           1475 Woodfield Road,
                                               Suite 700
                                               Schaumburg, IL 60173

Uniplast Holdings Inc.                         1475 Woodfield Road,
                                               Suite 700
                                               Schaumburg, IL 60173

Uniplast U.S., Inc.                            1475 Woodfield Road,
                                               Suite 700
                                               Schaumburg, IL 60173

Uniplast Midwest, Inc.                         1475 Woodfield Road,
                                               Suite 700
                                               Schaumburg, IL 60173

Turex, Inc.                                    1475 Woodfield Road,
                                               Suite 700
                                               Schaumburg, IL 60173

Pierson Industries, Inc.                       1475 Woodfield Road,
                                               Suite 700
                                               Schaumburg, IL 60173



                                                              Schedule II to the
                                                Second Priority Pledge Agreement

                                EQUITY INTERESTS



           Issuer                Certificate         Registered Owner            Number         Percentage
                                   Number                                      of Shares        of Shares
- ----------------------------------------------------------------------------------------------------------
                                                                                       
     Huntsman Container               8             Huntsman Packaging           1,000             100%
  Corporation International                            Corporation
    (now known as Pliant                           (now known as Pliant
 Corporation International)                            Corporation)

  Huntsman Film Products of           2             Huntsman Packaging           1,000             100%
        Mexico, Inc.                                   Corporation
  (now known as Pliant Film                        (now known as Pliant
  Products of Mexico, Inc.)                            Corporation)

  Huntsman KCL Corporation,           1             Huntsman Packaging           1,000             100%
            Inc.                                       Corporation
    (now known as Pliant                           (now known as Pliant
   Solutions Corporation)                              Corporation)

  ASPEN Industrial, S.A. de           8             Huntsman Packaging        361,731,315          65%
        C.V. (Mexico)                                  Corporation
                                                   (now known as Pliant
                                                       Corporation)

Pliant Corporation of Canada         C-6            Pliant Corporation             65              65%
      Ltd. (Canada)

 Huntsman Film Products UK,           7             Huntsman Container             65              65%
        Limited (UK)                            Corporation International
  (now known as Pliant Film                        (now known as Pliant
   Products, UK, Limited)                       Corporation International)

 Huntsman Film Products Pty.        ACT 5           Huntsman Packaging          975,000            65%
      Ltd. (Australia)                                 Corporation
    (now known as Pliant                           (now known as Pliant
   Corporation Pty, Ltd.)                              Corporation)

   Uniplast Holdings Inc.            26            Pliant Corporation          1,497,696           100%

     Uniplast U.S., Inc.             --           Uniplast Holdings Inc.         1,000             100%

   Uniplast Industries Co.           31           Uniplast Holdings Inc.        997,480            100%

  Pierson Industries, Inc.           --            Uniplast U.S., Inc.           12,500            100%

         Turex, Inc.                 23            Uniplast U.S., Inc.             61              100%

   Uniplast Midwest, Inc.            --            Uniplast U.S., Inc.           1,000             100%

  Pliant Asia & Pacific Rim           3            Pliant Corporation              2
          Pte Ltd.                                                                                 100%


        .       Pliant Corporation is the owner of the uncertificated equity
                interests of Pliant Packaging of Canada, LLC.

                                 DEBT SECURITIES

        1.      Intercompany Promissory Notes among the Grantors.

        2.      Amended and Restated Promissory Note issued by Scott K. Sorensen
                to the Borrower in the original principal amount of $786,700.

        3.      Amended and Restated Promissory Note by Ronald G. Moffitt to the
                Borrower in the original principal amount of $262,200.



        4.      Secured Promissory Note by Richard P. Durham to the Borrower in
                the original principal amount of $2,430,798.

        5.      Secured Promissory Note issued by Jack E. Knott to the Borrower
                in the original principal amount of $3,744,260.

        6.      Secured Promissory Note issued by Ronald G. Moffitt to the
                Borrower in the original principal amount of $301,956.

        7.      Secured Promissory Note dated as of August 30, 2002, issued by
                Poly West Converting, Inc. to the Borrower in the original
                principal amount of $25,000.

        8.      Amended and Restated Promissory Note dated as of June 30, 2002,
                issued by Richard J. Hoffend, Jr., Nyal L. Cannon and David W.
                Salerno to the Borrower in the original principal amount of
                $1,243,627.

        9.      Promissory Note dated May 21, 2003, issued by CTI Industries
                Corporation to Pliant Corporation in the original principal
                amount of $672,974.11.



                                                                 Schedule III to
                                         to the Second Priority Pledge Agreement

                        SUPPLEMENT NO. dated as of , to the SECOND PRIORITY
                PLEDGE AGREEMENT dated as of May 30, 2003, among PLIANT
                CORPORATION, a Utah corporation (the "Issuer"), and each
                subsidiary of the Issuer listed on Schedule I hereto (each such
                subsidiary individually a "Subsidiary Pledgor" and collectively,
                the "Subsidiary Pledgors"; the Issuer and the Subsidiary
                Pledgors are referred to collectively herein as the "Pledgors")
                and WILMINGTON TRUST COMPANY, a Delaware banking corporation
                ("Wilmington Trust"), as collateral agent (in such capacity, the
                "Collateral Agent") for the Secured Parties (as defined in the
                Second Priority Security Agreement referred to below)

                A. Reference is made to (a) the Indenture dated as of May 30,
2003, (as amended, supplemented or otherwise modified from time to time, the
"Indenture"), among the Issuer, the guarantors party thereto and Wilmington
Trust, as trustee (in such capacity, the "Trustee"), (b) the Second Priority
Security Agreement dated as of May 30, 2003, (as amended, supplemented or
otherwise modified from time to time, the "Second Priority Security Agreement"),
among the Issuer, the grantors party thereto and the Collateral Agent and (c)
the Intercreditor Agreement dated as of May 30, 2003 (as amended, supplemented
or otherwise modified from time to time, the "Intercreditor Agreement"), among
the Issuer, the Collateral Agent and the Credit Agent (as defined in the Second
Priority Security Agreement).

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

                C. The Pledgors have entered into the Second Priority Pledge
Agreement pursuant to the terms of the Indenture in order to induce the Trustee
to enter into the Indenture and the Initial Purchasers to purchase the Notes.
Pursuant to Section 4.11 of the Indenture, the Company is required to cause
certain of its Subsidiaries to enter into the Second Priority Pledge Agreement
as a Subsidiary Pledgor. Section 24 of the Second Priority Pledge Agreement
provides that such Subsidiaries may become Subsidiary Pledgors under the Second
Priority Pledge Agreement by execution and delivery of an instrument in the form
of this Supplement. The undersigned Subsidiary (the "New Pledgor") is executing
this Supplement in accordance with the requirements of the Indenture to become a
Subsidiary Pledgor under the Second Priority Pledge Agreement as consideration
for the purchase of the Notes by the Initial Purchasers and the Holders.



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

                SECTION 1. In accordance with Section 24 of the Second Priority
Pledge Agreement, the New Pledgor by its signature below becomes a Pledgor under
the Second Priority Pledge Agreement with the same force and effect as if
originally named therein as a Pledgor and the New Pledgor hereby agrees (a) to
all the terms and provisions of the Second Priority Pledge Agreement applicable
to it as a Pledgor thereunder and (b) represents and warrants that the
representations and warranties made by it as a Pledgor thereunder are true and
correct on and as of the date hereof. In furtherance of the foregoing, the New
Pledgor, as security for the payment and performance in full of the Obligations
(as defined in the Second Priority Pledge Agreement), does hereby create and
grant to the Collateral Agent, its successors and assigns, for the benefit of
the Secured Parties, their successors and assigns, a security interest in and
lien on all of the New Pledgor's right, title and interest in and to the
Collateral (as defined in the Second Priority Pledge Agreement) of the New
Pledgor, subject to the provisions of the Intercreditor Agreement (as provided
in Section 7.25 of the Second Priority Pledge Agreement). Each reference to a
"Subsidiary Pledgor" or a "Pledgor" in the Second Priority Pledge Agreement
shall be deemed to include the New Pledgor. The Second Priority Pledge Agreement
is hereby incorporated herein by reference.

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

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

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

                SECTION 5. Except as expressly supplemented hereby, the Second
Priority Pledge Agreement shall remain in full force and effect.

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

                SECTION 7. In the event any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable in
any respect, neither



party hereto shall be required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable, but the validity,
legality and enforceability of the remaining provisions contained herein and in
the Second Priority Pledge Agreement shall not in any way be affected or
impaired (it being understood that the invalidity of a provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision in
any other jurisdiction). The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.

                SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in Section 15 of the Second Priority Pledge
Agreement. All communications and notices hereunder to the New Pledgor shall be
given to it at the address set forth under its signature hereto.

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



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

                                              [Name of New Pledgor],

                                               by
                                                  ------------------------------
                                                   Name:
                                                   Title:
                                                   Address:

                                              WILMINGTON TRUST COMPANY, as
                                              Collateral Agent,

                                               by
                                                  ------------------------------
                                                   Name:
                                                   Title:
                                                   Address:



                                                                      SCHEDULE I
                                                     to Supplement No.___ to the
                                                Second Priority Pledge Agreement

                      Pledged Securities of the New Pledgor

                                EQUITY INTERESTS

                Number of          Registered      Number and        Percentage
Issuer          Certificate        Owner           Class of Shares    of Shares
- ------          -----------        ----------      ---------------   -----------


                                 DEBT SECURITIES

               Principal           Date of             Maturity
Issuer         Amount              Note                Date
- ------         ---------           -------             --------

EX-4.12

                                                                    EXHIBIT 4.12

                               PLIANT CORPORATION

                                  $250,000,000

                      11 1/8% Senior Secured Notes due 2009

                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

                                                                    May 30, 2003

J.P. MORGAN SECURITIES INC.
DEUTSCHE BANK SECURITIES INC.
CREDIT SUISSE FIRST BOSTON LLC
c/o J.P. Morgan Securities Inc.
270 Park Avenue, 5th floor
New York, New York  10017

Ladies and Gentlemen:

                Pliant Corporation, a Utah corporation (the "Company"), proposes
to issue and sell to J.P. Morgan Securities Inc. ("JPMorgan"), Deutsche Bank
Securities Inc. ("DBSI") and Credit Suisse First Boston LLC ("CSFB" and,
together with JPMorgan and DBSI, the "Initial Purchasers"), upon the terms and
subject to the conditions set forth in a purchase agreement dated May 22, 2003
(the "Purchase Agreement"), $250,000,000 principal amount of the Company's 11
1/8% Senior Secured Notes due 2009 (the "Notes") to be guaranteed on a senior
secured basis by certain of the Company's subsidiaries signatory hereto (the
"Note Guarantors"). Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Purchase Agreement.

                As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Company and the Note Guarantors agree with
the Initial Purchasers, for the benefit of the holders (including the Initial
Purchasers and the Market-Maker (as defined herein)) of the Notes, the Exchange
Notes (as defined herein) and the Private Exchange Notes (as defined herein)
(collectively, the "Holders"), as follows:

                1. Registered Exchange Offer. Unless, because of any change in
law or applicable interpretations thereof by the Commission's staff, the Company
and the Note Guarantors determine in good faith after consultation with counsel
that they are not permitted to effect the Registered Exchange Offer (as defined
herein), the Company and the Note Guarantors shall (i) prepare and, not later
than 75 days following the date of original issuance of the Notes (the "Issue
Date"), file with the Commission a registration statement (the "Exchange Offer
Registration Statement") on an appropriate form under the Securities Act with
respect to a proposed offer to the Holders of the Notes (the "Registered
Exchange Offer") to issue and deliver to such Holders, in exchange for the
Notes, a like aggregate principal amount of debt securities of the Company (the
"Exchange Notes") that are identical in all material respects to the Notes,
except for the transfer restrictions relating to the Notes, (ii) use
commercially reasonable efforts to cause the Exchange Offer Registration
Statement to become effective under the Securities Act


END$$

                                                                               2

no later than 150 days after the Issue Date and the Registered Exchange Offer to
be consummated no later than 190 days after the Issue Date and (iii) keep the
Registered Exchange Offer open for not less than 20 business days (or longer, if
required by applicable law) after the date on which notice of the Registered
Exchange Offer is mailed to the Holders (such period being called the "Exchange
Offer Registration Period"). The Exchange Notes will be issued under the
Indenture or an indenture (the "Exchange Notes Indenture") among the Company,
the Note Guarantors and the Trustee or such other bank or trust company that is
reasonably satisfactory to the Initial Purchasers, as trustee (the "Exchange
Notes Trustee"), such indenture to be identical in all material respects to the
Indenture, except for the transfer restrictions relating to the Notes (as
described above). All references in this Agreement to "prospectus" shall, except
where the context otherwise requires, include any prospectus (or amendment or
supplement thereto) filed with the Commission pursuant to Section 6 of this
Agreement.

                Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Notes for Exchange Notes (assuming that such Holder (a) is
not an affiliate (within the meaning of Rule 405 under the Securities Act) of
the Company or an Exchanging Dealer (as defined herein) not complying with the
requirements of the next sentence, (b) is not an Initial Purchaser holding Notes
that have, or that are reasonably likely to have, the status of an unsold
allotment in an initial distribution, (c) acquires the Exchange Notes in the
ordinary course of such Holder's business, (d) has no arrangements or
understandings with any person to participate in the distribution of the
Exchange Notes and (e) if such Holder is not an Exchanging Dealer (as defined
below), it is not engaged in, and does not intend to engage in, a distribution
of the Exchange Notes) and to trade such Exchange Notes from and after their
receipt without any limitations or restrictions under the Securities Act and
without material restrictions under the securities laws of the several states of
the United States. The Company, the Note Guarantors, the Initial Purchasers and
each Exchanging Dealer acknowledge that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, each Holder that is a
broker-dealer electing to exchange Notes, acquired for its own account as a
result of market-making activities or other trading activities, for Exchange
Notes (an "Exchanging Dealer"), is required to deliver a prospectus containing
substantially the information set forth in Annex A hereto on the cover, in Annex
B hereto in the "Exchange Offer Procedures" section and the "Purpose of the
Exchange Offer" section (if any) and in Annex C hereto in the "Plan of
Distribution" section of such prospectus in connection with a sale of any such
Exchange Notes received by such Exchanging Dealer pursuant to the Registered
Exchange Offer.

                If, prior to the consummation of the Registered Exchange Offer,
any Holder shall notify the Company in writing that it holds any Notes acquired
by it that have, or that are reasonably likely to be determined to have, the
status of an unsold allotment in an initial distribution, or any Holder notifies
the Company in writing that it believes that it is not entitled to participate
in the Registered Exchange Offer (other than because it has an understanding or
arrangement with any person to participate in the distribution of the Exchange
Notes) and such Holder has not received a written opinion from counsel to the
Company, reasonably acceptable to such Holder to the effect that such Holder is
legally permitted to participate in the Registered Exchange Offer, the Company
shall, upon the request of any such Holder, simultaneously with the delivery of
the Exchange Notes in the Registered Exchange Offer, issue and deliver to any
such Holder, in exchange for the Notes held by such Holder (the "Private
Exchange"), a like aggregate principal amount of debt securities of the Company
(the "Private Exchange Notes")


END$$

                                                                               3

that are identical in all material respects to the Exchange Notes, except for
the transfer restrictions relating to such Private Exchange Notes. The Private
Exchange Notes will be issued under the same indenture as the Exchange Notes,
and, if permitted under the policies established at such time by the CUSIP
Service Bureau of Standard & Poor's Corporation, the Company shall use
commercially reasonable efforts to cause the Private Exchange Notes to bear the
same CUSIP number as the Exchange Notes.

                In connection with the Registered Exchange Offer, the Company
shall:

                (a) mail to each Holder a copy of the prospectus forming part of
        the Exchange Offer Registration Statement, together with an appropriate
        letter of transmittal and related documents;

                (b) keep the Registered Exchange Offer open for not less than 20
        business days (or longer, if required by applicable law) after the date
        on which notice of the Registered Exchange Offer is mailed to the
        Holders;

                (c) utilize the services of a depositary for the Registered
        Exchange Offer with an address in the Borough of Manhattan, The City of
        New York;

                (d) permit Holders to withdraw tendered Notes at any time prior
        to the close of business, New York City time, on the last business day
        on which the Registered Exchange Offer shall remain open; and

                (e) otherwise comply in all respects with all laws that are
        applicable to the Registered Exchange Offer.

                As soon as practicable after the close of the Registered
Exchange Offer and any Private Exchange, as the case may be, the Company shall:

                (a) accept for exchange all Notes tendered and not validly
        withdrawn pursuant to the Registered Exchange Offer and the Private
        Exchange;

                (b) deliver to the Trustee for cancelation all Notes so accepted
        for exchange; and

                (c) cause the Trustee or the Exchange Notes Trustee, as the case
        may be, promptly to authenticate and deliver to each Holder, Exchange
        Notes or Private Exchange Notes, as the case may be, equal in principal
        amount to the Notes of such Holder so accepted for exchange.

                The Company and the Note Guarantors shall use commercially
reasonable efforts to keep the Exchange Offer Registration Statement effective
and to amend and supplement the prospectus contained therein in order to permit
such prospectus to be used by all persons (including Exchanging Dealers) subject
to the prospectus delivery requirements of the Securities Act for 180 days after
the consummation of the Registered Exchange Offer (such 180 days, the
"Applicable Period").

                The Indenture or the Exchange Notes Indenture, as the case may
be, shall provide that the Notes, the Exchange Notes and the Private Exchange
Notes shall vote and consent


END$$

                                                                               4

together on all matters as one class and that none of the Notes, the Exchange
Notes or the Private Exchange Notes will have the right to vote or consent as a
separate class on any matter.

                Interest on each Exchange Note and Private Exchange Note issued
pursuant to the Registered Exchange Offer and in the Private Exchange will
accrue from the last interest payment date on which interest was paid on the
Notes surrendered in exchange therefor or, if no interest has been paid on the
Notes, from the Issue Date.

                Each Holder participating in the Registered Exchange Offer shall
be required to represent to the Company and the Note Guarantors in writing
(which may be contained in the applicable letter of transmittal) that at the
time of the consummation of the Registered Exchange Offer (i) any Exchange Notes
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Notes or the Exchange Notes within the
meaning of the Securities Act, (iii) such Holder is not an affiliate (within the
meaning of Rule 405 under the Securities Act) of the Company or, if it is such
an affiliate, such Holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable and (iv) if
such Holder is a broker-dealer, that it will deliver a prospectus in connection
with any resale of such Exchange Notes during the Applicable Period.

                Notwithstanding any other provisions hereof, the Company and the
Note Guarantors will ensure that (i) any Exchange Offer Registration Statement
and any amendment thereto and any prospectus forming part thereof and any
supplement thereto complies in all material respects with the Securities Act and
the rules and regulations of the Commission thereunder, (ii) any Exchange Offer
Registration Statement and any amendment thereto does not, when it becomes
effective, contain 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 and (iii) any prospectus forming part of any Exchange
Offer Registration Statement, and any supplement to such prospectus, does not,
as of the consummation of the Registered Exchange Offer, include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.

                2. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff the Company and the
Note Guarantors determine in good faith after consultation with counsel that
they are not permitted to effect the Registered Exchange Offer as contemplated
by Section 1 hereof, or (ii) any Notes validly tendered pursuant to the
Registered Exchange Offer are not exchanged for Exchange Notes within 190 days
after the Issue Date, or (iii) the Initial Purchasers so request with respect to
Notes or Private Exchange Notes not eligible to be exchanged for Exchange Notes
in the Registered Exchange Offer and held by them following the consummation of
the Registered Exchange Offer, or (iv) any applicable law or interpretations do
not permit any Holder to participate in the Registered Exchange Offer (other
than because such Holder has an understanding or arrangement with any person to
participate in the distribution of the Exchange Notes), or (v) any Holder that
participates in the Registered Exchange Offer notifies the Company in writing
within 30 days following the consummation of the Registered Exchange Offer that
such Holder may not resell the Exchange Notes acquired by it in the Registered
Exchange Offer to the public without delivering a prospectus and the prospectus
contained in the Exchange Offer Registration


END$$

                                                                               5

Statement is not legally available for such resales by such Holder, or (vi) the
Company so elects, then the following provisions shall apply:

                (a) The Company and the Note Guarantors shall use commercially
        reasonable efforts to file as promptly as practicable (but in no event
        more than 60 days after so required or requested pursuant to this
        Section 2; provided that in the case of any filing in response to clause
        (i), (iii) or (iv) of the preceding paragraph, the Company and the Note
        Guarantors shall not be required to make any such filing earlier than 75
        days following the Issue Date (the date of such filing, the "Shelf
        Filing Date")) with the Commission, and thereafter shall use
        commercially reasonable efforts to cause to be declared effective on or
        prior to 115 days after the Shelf Filing Date (but, in the case of any
        filing in response to clause (i), (iii), (iv) or (vi) of the preceding
        paragraph, in no event earlier than the 190th day after the Issue Date),
        a shelf registration statement on an appropriate form under the
        Securities Act relating to the offer and sale of the Transfer Restricted
        Notes (as defined below) by the Holders thereof from time to time in
        accordance with the methods of distribution set forth in such
        registration statement (hereafter, a "Shelf Registration Statement" and,
        together with any Exchange Offer Registration Statement, a "Registration
        Statement").

                (b) The Company and the Note Guarantors shall use commercially
        reasonable efforts to keep the Shelf Registration Statement continuously
        effective in order to permit the prospectus forming part thereof to be
        used by Holders of Transfer Restricted Notes for a period ending on the
        earlier of (i) two years from the Issue Date or such shorter period that
        will terminate when all the Transfer Restricted Notes covered by the
        Shelf Registration Statement have been sold pursuant thereto and (ii)
        the date on which the Notes become eligible for resale without volume
        restrictions pursuant to Rule 144 under the Securities Act (in any such
        case, such period being called the "Shelf Registration Period"). The
        Company and the Note Guarantors shall be deemed not to have used
        commercially reasonable efforts to keep the Shelf Registration Statement
        effective during the requisite period if any of them voluntarily take
        any action that would result in Holders of Transfer Restricted Notes
        covered thereby not being able to offer and sell such Transfer
        Restricted Notes during that period, unless (A) such action is required
        by applicable law or (B) such action was permitted by Section 2(c).

                (c) Notwithstanding the provisions of Section 2(b) (but subject
        to the provisions of Section 3(b)), the Company and the Note Guarantors
        may for valid business reasons, including without limitation, a
        potential acquisition, divestiture of assets or other material corporate
        transaction, issue a notice that the Shelf Registration Statement is no
        longer effective or the prospectus included therein is no longer usable
        for offers and sales of Transfer Restricted Notes and may issue any
        notice suspending use of the Shelf Registration Statement required under
        applicable securities laws to be issued. The provisions of this Section
        2(c) shall also be applicable to the Exchange Offer Registration
        Statement during the Applicable Period; provided that the Applicable
        Period shall be extended for the number of days (which shall not exceed
        60) that the use of the Exchange Offer Registration Statement is
        suspended.

                (d) Notwithstanding any other provisions hereof, the Company and
        the Note Guarantors shall ensure that (i) any Shelf Registration
        Statement and any amendment thereto and any prospectus forming part
        thereof and any supplement thereto complies in all material respects
        with the Securities Act and the rules and regulations of the


END$$

                                                                               6

        Commission thereunder, (ii) any Shelf Registration Statement and any
        amendment thereto (in either case, other than with respect to
        information included therein in reliance upon or in conformity with
        written information furnished to the Company by or on behalf of any
        Holder specifically for use therein (the "Holders' Information")) does
        not contain 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 and (iii) any prospectus forming part
        of any Shelf Registration Statement, and any supplement to such
        prospectus (in either case, other than with respect to Holders'
        Information), does not include an untrue statement of a material fact or
        omit to state a material fact necessary in order to make the statements
        therein, in the light of the circumstances under which they were made,
        not misleading.

                3. Liquidated Damages. (a) The parties hereto agree that the
Holders of Transfer Restricted Notes will suffer damages if the Company and the
Note Guarantors fail to fulfill their obligations under Section 1 or Section 2,
as applicable, and that it would not be feasible to ascertain the extent of such
damages. Accordingly, if (i) the applicable Registration Statement is not filed
with the Commission on or prior to the date specified in this Agreement, (ii)
the Exchange Offer Registration Statement or the Shelf Registration Statement,
as the case may be, is not declared effective on or prior to the date specified
in this Agreement, (iii) the Registered Exchange Offer is not consummated on or
prior to 190 days after the Issue Date (other than in the event the Company is
requested or required or elected to file a Shelf Registration Statement), or
(iv) the Shelf Registration Statement is filed and declared effective on or
prior to the date specified in this Agreement but shall thereafter cease to be
effective (at any time that the Company and the Note Guarantors are obligated to
maintain the effectiveness thereof) without being succeeded within 60 days by an
additional Registration Statement or a post-effective amendment to the Shelf
Registration Statement filed and declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the interest rate on the
Transfer Restricted Securities will be increased by 1.00% per annum (the amount
paid as a result of such increase being herein referred to as "liquidated
damages") until (i) the applicable Registration Statement is filed, (ii) the
Exchange Offer Registration Statement is declared effective and the Registered
Exchange Offer is consummated, (iii) the Shelf Registration Statement is
declared effective or (iv) the Shelf Registration Statement again becomes
effective, an additional Registration Statement becomes effective or a
post-effective amendment to the Shelf Registration Statement becomes effective,
as the case may be. Following the cure of all Registration Defaults, the accrual
of liquidated damages will cease. As used herein, the term "Transfer Restricted
Notes" means (i) each Note until the date on which such Note has been exchanged
for a freely transferable Exchange Note in the Registered Exchange Offer (it
being understood that the requirement that an Exchanging Dealer deliver a
prospectus in connection with sales of Exchange Notes acquired in the Registered
Exchange Offer shall not mean that the Exchange Note is not freely transferable
for purposes of this Section 3), (ii) each Note or Private Exchange Note until
the date on which it has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or (iii)
each Note or Private Exchange Note until the date on which it is distributed to
the public pursuant to Rule 144 under the Securities Act or is saleable pursuant
to Rule 144(k) under the Securities Act. Notwithstanding anything to the
contrary in this Section 3(a), the Company shall not be required to pay
liquidated damages to a Holder of Transfer Restricted Notes if such Holder
failed to comply with its obligations to make the representations set forth in
the second to last paragraph of Section 1 or failed to provide the information
required to be provided by it, if any, pursuant to Section 4(o).


END$$

                                                                               7

                (b) Notwithstanding the foregoing provisions of Section 3(a),
the Company and the Note Guarantors may for valid business reasons, including
without limitation, a potential acquisition, divestiture of assets or other
material corporate transaction, issue a notice that the Shelf Registration
Statement is no longer effective or the prospectus included therein is no longer
usable for offers and sales of Transfer Restricted Notes and may issue any
notice suspending use of the Shelf Registration Statement required under
applicable securities laws to be issued and, in the event that the aggregate
number of days in any consecutive twelve-month period for which all such notices
are issued and effective exceeds 60 days in the aggregate, then the interest
rate on the Transfer Restricted Notes covered by the Shelf Registration
Statement will be increased by 1.00% per annum (the amount paid as a result of
such increase being herein referred to as "liquidated damages"). Upon the
Company and the Note Guarantors declaring that the Shelf Registration Statement
is useable after the period of time described in the preceding sentence, accrual
of liquidated damages shall cease; provided, however, that if after any such
cessation of the accrual of liquidated damages the Shelf Registration Statement
again ceases to be useable beyond the period permitted above, liquidated damages
will again accrue pursuant to the foregoing provisions.

                (c) The Company shall notify the Trustee and the Paying Agent
under the Indenture immediately upon the happening of each and every
Registration Default. The Company and the Note Guarantors shall pay the
liquidated damages due on the Transfer Restricted Notes by depositing with the
Paying Agent (which may not be the Company for these purposes), in trust, for
the benefit of the Holders thereof, prior to 10:00 a.m., New York City time, on
the next interest payment date specified by the Indenture and the Notes, sums
sufficient to pay the liquidated damages then due. The liquidated damages due
shall be payable on each interest payment date specified by the Indenture and
the Notes to the record holder entitled to receive the interest payment to be
made on such date. Each obligation to pay liquidated damages shall be deemed to
accrue from and including the date of the applicable Registration Default.

                (d) The parties hereto agree that the liquidated damages
provided for in this Section 3 constitute a reasonable estimate of and are
intended to constitute the sole damages that will be suffered by Holders of
Transfer Restricted Notes by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.

                4. Registration Procedures. In connection with any Registration
Statement, the following provisions shall apply:

                (a) The Company shall (i) furnish to the Initial Purchasers,
        prior to the filing thereof with the Commission, a copy of the Exchange
        Offer Registration Statement and each amendment thereof and each
        supplement, if any, to the prospectus included therein and shall use
        commercially reasonable efforts to reflect in each such document, when
        so filed with the Commission, such comments as the Initial Purchasers
        may reasonably propose; (ii) include information substantially as set
        forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange
        Offer Procedures" section and the "Purpose of the Exchange Offer"
        section (if any) and in Annex C hereto in the "Plan of Distribution"
        section of the prospectus forming a part of the Exchange Offer
        Registration Statement, and include information substantially as set
        forth in Annex D hereto in the


END$$

                                                                               8

        Letter of Transmittal delivered pursuant to the Registered Exchange
        Offer; and (iii) if requested in writing by any Initial Purchaser,
        include the information required by Items 507 or 508 of Regulation S-K,
        as applicable, in the prospectus forming a part of the Exchange Offer
        Registration Statement.

                (b) The Company shall advise the Initial Purchasers, each
        Exchanging Dealer and the Holders (if applicable) and, if requested by
        any such person, confirm such advice in writing (which advice pursuant
        to clauses (ii)-(v) hereof shall be accompanied by an instruction to
        suspend the use of the prospectus until the requisite changes have been
        made):

                        (i) when any Registration Statement and any amendment
                thereto has been filed with the Commission and when such
                Registration Statement or any post-effective amendment thereto
                has become effective;

                        (ii) of any request by the Commission for amendments or
                supplements to any Registration Statement or the prospectus
                included therein or for additional information;

                        (iii) of the issuance by the Commission of any stop
                order suspending the effectiveness of any Registration Statement
                or the initiation of any proceedings for that purpose;

                        (iv) of the receipt by the Company of any notification
                with respect to the suspension of the qualification of the
                Notes, the Exchange Notes or the Private Exchange Notes for sale
                in any jurisdiction or the initiation or threatening of any
                proceeding for such purpose; and

                        (v) of the happening of any event that requires the
                making of any changes in any Registration Statement or the
                prospectus included therein in order that the statements therein
                are not misleading and do not omit to state a material fact
                required to be stated therein or necessary to make the
                statements therein not misleading.

                (c) The Company and the Note Guarantors will make every
        reasonable effort to obtain the withdrawal at the earliest possible time
        of any order suspending the effectiveness of any Registration Statement.

                (d) The Company will furnish to each Holder of Transfer
        Restricted Notes included within the coverage of any Shelf Registration
        Statement, without charge, at least one conformed copy of such Shelf
        Registration Statement and any post-effective amendment thereto,
        including financial statements and schedules and, if any such Holder so
        requests in writing, all exhibits thereto (including those, if any,
        incorporated by reference).

                (e) The Company will, during the Shelf Registration Period,
        promptly deliver to each Holder of Transfer Restricted Notes included
        within the coverage of any Shelf Registration Statement, without charge,
        as many copies of the prospectus (including each preliminary prospectus)
        included in such Shelf Registration Statement and any amendment or
        supplement thereto as such Holder may reasonably request; and the


END$$

                                                                               9

        Company consents to the use of such prospectus or any amendment or
        supplement thereto by each of the selling Holders of Transfer Restricted
        Notes in connection with the offer and sale of the Transfer Restricted
        Notes covered by such prospectus or any amendment or supplement thereto.

                (f) The Company will furnish to the Initial Purchasers, each
        Exchanging Dealer who so requests in writing, and to any other Holder
        who so requests in writing, without charge, at least one conformed copy
        of the Exchange Offer Registration Statement and any post-effective
        amendment thereto, including financial statements and schedules and, if
        the Initial Purchasers or Exchanging Dealer or any such Holder so
        requests in writing, all exhibits thereto (including those, if any,
        incorporated by reference).

                (g) The Company will, during the Exchange Offer Registration
        Period or the Shelf Registration Period, as applicable, promptly deliver
        to the Initial Purchasers, each Exchanging Dealer and such other persons
        that are required to deliver a prospectus following the Registered
        Exchange Offer, without charge, as many copies of the final prospectus
        included in the Exchange Offer Registration Statement or the Shelf
        Registration Statement and any amendment or supplement thereto as the
        Initial Purchasers, such Exchanging Dealer or other persons may
        reasonably request in writing; and the Company and the Note Guarantors
        consent to the use of such prospectus or any amendment or supplement
        thereto by the Initial Purchasers, such Exchanging Dealer or other
        persons, as applicable, as aforesaid.

                (h) Prior to the effective date of any Registration Statement,
        the Company and the Note Guarantors will use commercially reasonable
        efforts to register or qualify, or cooperate with the Holders of Notes,
        Exchange Notes or Private Exchange Notes included therein and their
        respective counsel in connection with the registration or qualification
        of, such Notes, Exchange Notes or Private Exchange Notes for offer and
        sale under the securities or blue sky laws of such jurisdictions as any
        such Holder reasonably requests in writing and do any and all other acts
        or things necessary or advisable to enable the offer and sale in such
        jurisdictions of the Notes, Exchange Notes or Private Exchange Notes
        covered by such Registration Statement; provided that the Company and
        the Note Guarantors will not be required to qualify generally to do
        business in any jurisdiction where they are not then so qualified or to
        take any action which would subject them to general service of process
        or to taxation in any such jurisdiction where they are not then so
        subject.

                (i) The Company and the Note Guarantors will cooperate with the
        Holders of Notes, Exchange Notes or Private Exchange Notes to facilitate
        the timely preparation and delivery of certificates representing Notes,
        Exchange Notes or Private Exchange Notes to be sold pursuant to any
        Registration Statement free of any restrictive legends and in such
        denominations and registered in such names as the Holders thereof may
        request in writing prior to sales of Notes, Exchange Notes or Private
        Exchange Notes pursuant to such Registration Statement.

                (j) If any event contemplated by Section 4(b)(ii) through (v)
        occurs during the period for which the Company and the Note Guarantors
        are required to maintain an effective Registration Statement, the
        Company and the Note Guarantors will promptly prepare and file with the
        Commission a post-effective amendment to the Registration Statement or a
        supplement to the related prospectus or file any other required document


END$$

                                                                              10

        so that, as thereafter delivered to purchasers of the Notes, Exchange
        Notes or Private Exchange Notes from a Holder, the prospectus will not
        include an untrue statement of a material fact or omit to state a
        material fact necessary in order to make the statements therein, in the
        light of the circumstances under which they were made, not misleading.

              (k) If any event contemplated by Section 2(c) or 3(b) occurs

        during the period for which the Company and the Note Guarantors are
        required to maintain an effective Registration Statement, the Company
        and the Note Guarantors will, to the extent required after the end of
        the applicable periods referred to in Sections 2(c) and 3(b), promptly
        prepare and file with the Commission a post-effective amendment to the
        Registration Statement or a supplement to the related prospectus or
        file any other required document so that, as thereafter delivered to
        purchasers of the Notes, Exchange Notes or Private Exchange Notes from
        a Holder, the prospectus will not include an untrue statement of a
        material fact or omit to state a material fact necessary in order to
        make the statements therein, in the light of the circumstances under
        which they were made, not misleading.

              (l) Not later than the effective date of the applicable
        Registration Statement, the Company will provide a CUSIP number for the
        Notes, the Exchange Notes and the Private Exchange Notes, as the case
        may be, and provide the applicable trustee with certificates for the
        Notes, the Exchange Notes or the Private Exchange Notes, as the case may
        be, in a form eligible for deposit with The Depository Trust Company.

                (m) The Company and the Note Guarantors will comply with all
        applicable rules and regulations of the Commission and the Company and
        the Note Guarantors will make generally available to their security
        holders as soon as practicable after the effective date of the
        applicable Registration Statement an earning statement of the Company
        satisfying the provisions of Section 11(a) of the Securities Act;
        provided that in no event shall such earning statement be delivered
        later than 45 days after the end of a 12-month period (or 90 days, if
        such period is a fiscal year) beginning with the first month of the
        Company's first fiscal quarter commencing after the effective date of
        the applicable Registration Statement, which statement shall cover such
        12-month period.

                (n) The Company and the Note Guarantors will cause the Indenture
        or the Exchange Notes Indenture, as the case may be, to be qualified
        under the Trust Indenture Act as required by applicable law in a timely
        manner.

                (o) The Company may require each Holder of Transfer Restricted
        Notes to be registered pursuant to any Shelf Registration Statement to
        furnish to the Company such information concerning the Holder and the
        distribution of such Transfer Restricted Notes as the Company may from
        time to time reasonably require for inclusion in such Shelf Registration
        Statement, and the Company may exclude from such registration the
        Transfer Restricted Notes of any Holder that fails to furnish such
        information within a reasonable time after receiving such request. Each
        Holder of Transfer Restricted Notes as to which a Shelf Registration
        Statement is being effected, by its participation in the Shelf
        Registration Statement, shall be deemed to agree to furnish the Company
        and the Note Guarantors all information concerning such Holder required
        to be described in order to make the information previously furnished by
        such Holder to the Company and the Note Guarantors not materially
        misleading.


END$$

                                                                              11

                (p) In the case of (A) a Shelf Registration Statement, each
        Holder of Transfer Restricted Notes to be registered pursuant thereto
        agrees by acquisition of such Transfer Restricted Notes that, and (B)
        the Exchange Offer Registration Statement during the Applicable Period
        only, each Holder of Exchange Notes subject to the prospectus delivery
        requirements of the Securities Act agrees that, upon receipt of any
        notice from the Company pursuant to Sections 2(c), 3(b) or 4(b)(ii)
        through (v), such Holder will discontinue disposition of such Transfer
        Restricted Notes or Exchange Notes, as applicable, until such Holder's
        receipt of copies of the supplemental or amended prospectus contemplated
        by Section 4(j) or 4(k), as the case may be, or until advised in writing
        by the Company that the use of the applicable prospectus may be resumed
        (the "Advice"). If the Company shall give any notice under Sections
        2(c), 3(b) or 4(b)(ii) through (v) during the period that the Company is
        required to maintain an effective Registration Statement (the
        "Effectiveness Period"), such Effectiveness Period shall be extended by
        the number of days during such period from and including the date of the
        giving of such notice to and including the date when each seller of
        Transfer Restricted Notes or Exchange Notes, as applicable, covered by
        such Registration Statement shall have received (x) the copies of the
        supplemental or amended prospectus contemplated by Section 4(j) or 4(k),
        as the case may be, (if an amended or supplemental prospectus is
        required) or (y) the Advice (if no amended or supplemental prospectus is
        required).

                (q) In the case of a Shelf Registration Statement, the Company
        and the Note Guarantors shall enter into such customary agreements
        (including, if requested by Holders of a majority in aggregate principal
        amount of the Notes, an underwriting agreement in customary form) and
        take all such other action, if any, as Holders of a majority in
        aggregate principal amount of the Notes, Exchange Notes and Private
        Exchange Notes covered by the Shelf Registration Statement or the
        managing underwriters (if any) shall reasonably request in order to
        facilitate any disposition of Notes, Exchange Notes or Private Exchange
        Notes pursuant to such Shelf Registration Statement. Notwithstanding
        anything to the contrary contained in this Agreement, the Company and
        the Note Guarantors shall not be required to engage in more than one
        underwritten offering pursuant to this Agreement.

                (r) In the case of a Shelf Registration Statement, the Company
        shall (i) make reasonably available for inspection by a representative
        of, and Special Counsel (as defined below) acting for, Holders of a
        majority in aggregate principal amount of the Notes, Exchange Notes and
        Private Exchange Notes covered by the Shelf Registration Statement and
        any underwriter participating in any disposition of Notes, Exchange
        Notes or Private Exchange Notes pursuant to such Shelf Registration
        Statement, all relevant financial and other records, pertinent corporate
        documents and properties of the Company and its subsidiaries and (ii)
        use commercially reasonable efforts to have its officers, directors,
        employees, accountants and counsel supply all relevant information
        reasonably requested by such representative, Special Counsel or any such
        underwriter (an "Inspector") in connection with such Shelf Registration
        Statement.

                (s) In the case of a Shelf Registration Statement, the Company
        shall, if requested by Holders of a majority in aggregate principal
        amount of the Notes, Exchange Notes and Private Exchange Notes covered
        by the Shelf Registration Statement, their Special Counsel or the
        managing underwriters (if any) in connection with such Shelf
        Registration Statement, use commercially reasonable efforts to cause (i)
        its counsel to deliver an


END$$

                                                                              12

        opinion relating to the Shelf Registration Statement and the Notes,
        Exchange Notes or Private Exchange Notes, as applicable, in customary
        form, (ii) its officers to execute and deliver all customary documents
        and certificates requested by Holders of a majority in aggregate
        principal amount of the Notes, Exchange Notes and Private Exchange Notes
        being sold, its Special Counsel or the managing underwriters (if any)
        and (iii) its independent public accountants to provide a comfort letter
        or letters in customary form, subject to receipt of appropriate
        documentation as contemplated, and only if permitted, by Statement of
        Auditing Standards No. 72.

                5. Registration Expenses. The Company and the Note Guarantors
will jointly and severally bear all expenses incurred in connection with the
performance of their obligations under Sections 1, 2, 3 and 4 and the Company
will reimburse the Initial Purchasers or the Holders, as applicable, for the
reasonable fees and disbursements of one firm of attorneys (in addition to any
local counsel) chosen by the Holders of a majority in aggregate principal amount
of the Notes, the Exchange Notes and the Private Exchange Notes covered by each
Registration Statement (the "Special Counsel") acting for the Initial Purchasers
or Holders in connection therewith. The Company and the Note Guarantors are not
required to pay any commissions or concessions of any broker-dealers.

                6. Market-Making. (a) For so long as any of the Notes, Exchange
Notes or Private Exchange Notes are outstanding and JPMorgan (in such capacity,
the "Market-Maker") or any of its affiliates (as defined in the rules and
regulations of the Commission) owns any equity securities of the Company, the
Note Guarantors or any of their affiliates and proposes to make a market in the
Notes, Exchange Notes or Private Exchange Notes as part of its business in the
ordinary course, the following provisions shall apply for the sole benefit of
the Market-Maker:

                (i) The Company and the Note Guarantors shall (A) on the date
        that the Exchange Offer Registration Statement is filed with the
        Commission, file a registration statement (the "Market-Making
        Registration Statement") (which may be the Exchange Offer Registration
        Statement or the Shelf Registration Statement if permitted by the rules
        and regulations of the Commission) and use commerically reasonable
        efforts to cause such Market-Making Registration Statement to be
        declared effective by the Commission on or prior to the consummation of
        the Exchange Offer; (B) periodically amend such Market-Making
        Registration Statement so that the information contained therein
        complies with the requirements of Section 10(a) under the Securities
        Act; (C) if reasonably requested in writing by the Market-Maker, within
        45 days following the end of each of the Company's fiscal quarters
        (other than the fourth quarter), file a supplement to the prospectus
        contained in the Market-Making Registration Statement that sets forth
        the financial results of the Company for such quarter; (D) amend the
        Market-Making Registration Statement or amend or supplement the related
        prospectus when necessary to reflect any material changes in the
        information provided therein; and (E) amend the Market-Making
        Registration Statement when required to do so in order to comply with
        Section 10(a)(3) of the Securities Act; provided, however, that (1)
        prior to filing the Market-Making Registration Statement, any amendment
        thereto or any amendment or supplement to the related prospectus (other
        than a supplement filed pursuant to clause (C) of this paragraph unless
        the Market-Maker reasonably requests), the Company will furnish to the
        Market-Maker copies of all such documents proposed to be filed, which
        documents will be subject to the review of the Market-Maker and its
        counsel, (2) the Company and the Note Guarantors will not file the
        Market-Making Registration


END$$

                                                                              13

        Statement, any amendment thereto or any supplement to the related
        prospectus (other than a supplement filed pursuant to clause (C) of this
        paragraph unless the Market-Maker reasonably requests) to which the
        Market-Maker and its counsel shall reasonably object unless the Company
        and the Note Guarantors are advised by counsel that such Market-Making
        Registration Statement, amendment or supplement is required to be filed
        and (3) the Company will provide the Market-Maker and its counsel with
        copies of the Market-Making Registration Statement and each amendment
        and supplement filed.

                (ii) The Company shall notify the Market-Maker and, if requested
        by the Market-Maker, confirm such advice in writing, (A) when any
        post-effective amendment to the Market-Making Registration Statement or
        any amendment or supplement to the related prospectus has been filed,
        and, with respect to any post-effective amendment, when the same has
        become effective; (B) of any request by the Commission for any
        post-effective amendment to the Market-Making Registration Statement,
        any supplement or amendment to the related prospectus or for additional
        information; (C) the issuance by the Commission of any stop order
        suspending the effectiveness of the Market-Making Registration Statement
        or the initiation of any proceedings for that purpose; (D) of the
        receipt by the Company of any notification with respect to the
        suspension of the qualification of the Notes or Exchange Notes for sale
        in any jurisdiction or the initiation or threatening of any proceedings
        for such purpose; (E) of the happening of any event that makes any
        statement made in the Market-Making Registration Statement, the related
        prospectus or any amendment or supplement thereto untrue or that
        requires the making of any changes in the Market-Making Registration
        Statement, such prospectus or any amendment or supplement thereto, in
        order to make the statements therein not misleading; and (F) of any
        advice from a nationally recognized statistical rating organization that
        such organization has placed the Company under surveillance or review
        with negative implications or has determined to downgrade the rating of
        the Notes, Exchange Notes or Private Exchange Notes or any other debt
        obligation of the Company whether or not such downgrade shall have been
        publicly announced.

                (iii) If any event contemplated by Section 6(a)(ii)(B) through
        (E) occurs during the period for which the Company and the Note
        Guarantors are required to maintain an effective Market-Making
        Registration Statement, the Company and the Note Guarantors shall
        promptly prepare and file with the Commission a post-effective amendment
        to the Market-Making Registration Statement or an amendment or
        supplement to the related prospectus or file any other required document
        so that the prospectus will not include an untrue statement of a
        material fact or omit to state a material fact necessary in order to
        make the statements therein, in the light of the circumstances under
        which they were made, not misleading.

                (iv) In the event of the issuance of any stop order suspending
        the effectiveness of the Market-Making Registration Statement or of any
        order suspending the qualification of the Notes, Exchange Notes or
        Private Exchange Notes for sale in any jurisdiction, the Company and the
        Note Guarantors shall use promptly commercially reasonable efforts to
        obtain its withdrawal.

                (v) The Company shall furnish to the Market-Maker, without
        charge, (i) at least one conformed copy of the Market-Making
        Registration Statement and any post-effective amendment thereto; and
        (ii) as many copies of the related prospectus and any amendment or
        supplement thereto as the Market-Maker may reasonably request.


END$$

                                                                              14

                (vi) The Company and the Note Guarantors shall consent to the
        use of the prospectus contained in the Market-Making Registration
        Statement or any amendment or supplement thereto by the Market-Maker in
        connection with its market making activities.

                (vii) For so long as the Notes, Exchange Notes or Private
        Exchange Notes shall be outstanding, the Company shall furnish to the
        Market-Maker (A) as soon as practicable after the end of each of the
        Company's fiscal years, the number of copies reasonably requested by the
        Market-Maker of the Company's annual report for such year, (B) as soon
        as available, the number of copies reasonably requested by the
        Market-Maker of each report (including, without limitation, reports on
        Forms 10-K, 10-Q and 8-K) or definitive proxy statements of the Company
        filed under the Exchange Act or mailed to stockholders and (C) all
        public reports and all reports and financial statements furnished by the
        Company to the Nasdaq National Market System or any U.S. national
        securities exchange or quotation service upon which the Notes or
        Exchange Notes may be listed pursuant to requirements of or agreements
        with such exchange or quotation service or to the Commission pursuant to
        the Exchange Act or any rule or regulation of the Commission thereunder.

                (viii) Notwithstanding the foregoing provisions of Section 6,
        the Company and the Note Guarantors may for valid business reasons,
        including without limitation, a potential acquisition, divestiture of
        assets or other material corporate transaction, issue a notice that the
        Market-Making Registration Statement is no longer effective or the
        prospectus included therein is no longer usable for offers and sales of
        Notes, Exchange Notes or Private Exchange Notes and may issue any notice
        suspending use of the Market-Making Registration Statement required
        under applicable securities laws to be issued; provided that the use of
        the Market-Making Registration Statement shall not be suspended for more
        than 60 days in the aggregate in any consecutive 12 month period. The
        Market-Maker agrees that upon receipt of any notice from the Company
        pursuant to Section 6(a)(ii)(B) through (E) or this Section 6(a)(viii),
        it will discontinue use of the Market-Making Registration Statement
        until receipt of copies of the supplemented or amended prospectus
        relating thereto or until advised in writing by the Company that the use
        of the Market-Making Registration Statement may be resumed.

                (b) In connection with the Market-Making Registration Statement,
the Company shall (i) make reasonably available for inspection by a
representative of, and counsel acting for, the Market-Maker all relevant
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries and (ii) use its commerically reasonable efforts to
have its officers, directors, employees, accountants and counsel supply all
relevant information reasonably requested by such representative or counsel or
the Market-Maker.

                (c) Prior to the effective date of the Market-Making
Registration Statement, the Company and the Note Guarantors will use
commercially reasonable efforts to register or qualify, or cooperate with the
Market-Maker and its counsel in connection with the registration or
qualification of, the Notes, Exchange Notes or Private Exchange Notes for offer
and sale under the securities or blue sky laws of such jurisdictions as the
Market-Maker reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such jurisdictions
of the Notes, Exchange Notes or Private Exchange Notes covered by the
Market-Making Registration Statement; provided that the Company and the Note
Guarantors will not be required to qualify generally to do business in any
jurisdiction where they are not then so


END$$

                                                                              15

qualified or to take any action which would subject them to general service of
process or to taxation in any such jurisdiction where they are not then so
subject.

                (d) The Company represents and agrees that the Market-Making
Registration Statement, any post-effective amendments thereto, any amendments or
supplements to the related prospectus and any documents filed by them under the
Exchange Act will, when they become effective or are filed with the Commission,
as the case may be, conform in all respects to the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission thereunder and will not, as of the effective date of such
Market-Making Registration Statement or post-effective amendments and as of the
filing date of amendments or supplements to such prospectus or filings under the
Exchange Act, contain 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, in the light of the circumstances under which they were made, not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Market-Making Registration
Statement or the related prospectus in reliance upon and in conformity with
written information furnished to the Company by the Market-Maker specifically
for inclusion therein, which information the parties hereto agree will be
limited to the statements concerning the market-making activities of the
Market-Maker to be set forth on the cover page and in the "Plan of distribution"
section of the prospectus (the "Market-Maker's Information").

                (e) At the time of effectiveness of the Market-Making
Registration Statement and concurrently with each time the Market-Making
Registration Statement or the related prospectus shall be amended or such
prospectus shall be supplemented, the Company shall (if requested in writing by
the Market-Maker) furnish the Market-Maker and its counsel with a certificate of
its Chairman of the Board of Directors or its President and Chief Financial
Officer to the effect that:

                (i) the Market-Making Registration Statement has been declared
        effective; (ii) in the case of an amendment to the Market-Making
        Registration Statement, such amendment has become effective under the
        Securities Act as of the date and time specified in such certificate, if
        applicable; in the case of an amendment or supplement to the related
        prospectus, such amendment or supplement to the prospectus was filed
        with the Commission pursuant to the subparagraph of Rule 424(b) under
        the Securities Act specified in such certificate on the date specified
        therein; (iii) to the knowledge of such officers, no stop order
        suspending the effectiveness of the Market-Making Registration Statement
        has been issued and no proceeding for that purpose is pending or
        threatened by the Commission; (iv) such officers have carefully examined
        the Market-Making Registration Statement and the prospectus (and, in the
        case of an amendment or supplement, such amendment or supplement) and as
        of the date of such Market-Making Registration Statement, amendment or
        supplement, as applicable, the Market-Making Registration Statement and
        the prospectus, as amended or supplemented, if applicable, did not
        include any untrue statement of a material fact and did not omit to
        state a material fact required to be stated therein or necessary to make
        the statements therein not misleading.

                (f) At the time of effectiveness of the Market-Making
Registration Statement and concurrently with each time the Market-Making
Registration Statement or the related prospectus shall be amended or such
prospectus shall be supplemented, the Company shall (if requested in writing by
the Market-Maker) furnish the Market-Maker and its counsel with the written
opinion of counsel for the Company satisfactory to the Market-Maker to the
effect that:


END$$

                                                                              16

                (i) the Market-Making Registration Statement has been declared
        effective; (ii) in the case of an amendment to the Market-Making
        Registration Statement, such amendment has become effective under the
        Securities Act as of the date and time specified in such opinion, if
        applicable; in the case of an amendment or supplement to the related
        prospectus, such amendment or supplement to the prospectus was filed
        with the Commission pursuant to the subparagraph of Rule 424(b) under
        the Securities Act specified in such opinion on the date specified
        therein; (iii) to the knowledge of such counsel, no stop order
        suspending the effectiveness of the Market-Making Registration Statement
        has been issued and no proceeding for that purpose is pending or
        threatened by the Commission; and (iv) such counsel has reviewed the
        Market-Making Registration Statement and the prospectus (and, in the
        case of an amendment or supplement, such amendment or supplement) and
        participated with officers of the Company and independent public
        accountants for the Company in the preparation of such Market-Making
        Registration Statement and prospectus (and, in the case of an amendment
        or supplement, such amendment or supplement) and has no reason to
        believe that (except for the financial statements and other financial
        and statistical data contained therein as to which no belief is
        required) as of the date of such Market-Making Registration Statement,
        amendment or supplement, as applicable, the Market-Making Registration
        Statement and the prospectus, as amended or supplemented, if applicable,
        contained any untrue statement of a material fact or omitted to state a
        material fact required to be stated therein or necessary to make the
        statements therein not misleading.

                (g) At the time of effectiveness of the Market-Making
Registration Statement and concurrently with each time the Market-Making
Registration Statement or the related prospectus shall be amended or such
prospectus shall be supplemented to include audited annual financial
information, the Company shall (if requested in writing by the Market-Maker)
furnish the Market-Maker and its counsel with a letter of Ernst & Young LLP (or
other independent public accountants for the Company or the Note Guarantors of
nationally recognized standing) in form satisfactory to the Market-Maker,
addressed to the Market-Maker and dated the date of delivery of such letter, (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission and, (ii) in all other respects, substantially in the form of
the letter delivered to the Initial Purchasers pursuant to Section 5(g) of the
Purchase Agreement, with, in the case of an amendment or supplement to include
audited financial information, such changes as may be necessary to reflect the
amended or supplemented financial information.

                (h) The Company and the Note Guarantors, on the one hand, and
the Market-Maker, on the other hand, hereby agree to indemnify each other, and,
if applicable, contribute to the other, in accordance with Sections 7 and 8 of
this Agreement.

                (i) The Company will comply with the provisions of this Section
6 at its own expense and will reimburse the Market-Maker for its expenses
associated with this Section 6 (including reasonable fees of counsel).

                (j) The agreements contained in this Section 6 and the
representations, warranties and agreements contained in this Agreement shall
survive all offers and sales of the Notes and Exchange Notes and shall remain in
full force and effect, regardless of any termination or cancelation of this
Agreement or any investigation made by or on behalf of any indemnified party.


END$$

                                                                              17

                (k) For purposes of this Section 6, any reference to the terms
"amend", "amendment" or "supplement" with respect to the Market-Making
Registration Statement or the prospectus contained therein shall be deemed to
refer to and include the filing under the Exchange Act of any document deemed to
be incorporated therein by reference.

                7. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by the Initial Purchasers or Exchanging Dealer, as
applicable, or in connection with the Market-Making Registration Statement, the
Company and the Note Guarantors shall jointly and severally indemnify and hold
harmless each Holder (including, without limitation, each of the Initial
Purchasers, the Market-Maker or such Exchanging Dealer), its affiliates, its
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls such Holder within the meaning of the Securities
Act or the Exchange Act (collectively referred to for purposes of this Section 7
and Section 8 as a Holder) from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of Notes, Exchange Notes or Private Exchange Notes), to
which that Holder may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or Market-Making Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (iii) in the case of
the Market-Maker, any material breach by the Company of the representations,
warranties and agreements contained in Section 6, and shall reimburse each
Holder promptly upon demand for any legal or other expenses reasonably incurred
by that Holder in connection with investigating or defending or preparing to
defend against or appearing as a third party witness in connection with any such
loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company and the Note Guarantors shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with any Holders' Information or Market-Maker's
Information, respectively; and provided, further, that with respect to any such
untrue statement in or omission from any related preliminary prospectus, the
indemnity agreement contained in this Section 7(a) shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage, liability or action received Notes, Exchange Notes or Private Exchange
Notes to the extent that such loss, claim, damage, liability or action of or
with respect to such Holder results from the fact that both (A) a copy of the
final prospectus was not sent or given to such person at or prior to the written
confirmation of the sale of such Notes, Exchange Notes or Private Exchange Notes
to such person and (B) the untrue statement in or omission from the related
preliminary prospectus was corrected in the final prospectus unless, in either
case, such failure to deliver the final prospectus was a result of
non-compliance by the Company with Section 4(d), 4(e), 4(f), 4(g) or 6(a)(v), as
applicable.

                (b) In (i) the event of a Shelf Registration Statement, each
Holder or (ii) connection with the Market-Making Registration Statement, the
Market-Maker, as applicable, shall indemnify and hold harmless the Company, its
affiliates, its respective officers, directors,


END$$

                                                                              18

employees, representatives and agents, and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 7(b) and Section 8 as the
Company), from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company may become
subject, whether commenced or threatened, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any such Registration Statement or Market-Making
Registration Statement, respectively, or any prospectus forming part thereof or
in any amendment or supplement thereto or (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with any Holders' Information or
Market-Maker's Information, respectively, furnished to the Company by such
Holder, and shall reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that no such Holder shall be liable
for any indemnity claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Notes, Exchange Notes or Private
Exchange Notes pursuant to such Shelf Registration Statement or prospectus.

                (c) Promptly after receipt by an indemnified party under this
Section 7 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 7(a) or 7(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 7 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 7. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 7 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably


END$$

                                                                              19

satisfactory to the indemnified party to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
separate firm of attorneys (in addition to any local counsel) at any one time
for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 7(a) and 7(b), shall
use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.

                8. Contribution. If the indemnification provided for in Section
7 is unavailable or insufficient to hold harmless an indemnified party under
Section 7(a) or 7(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (a) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company from the initial offering
and sale of the Notes, on the one hand, and by a Holder from receiving Notes,
Exchange Notes or Private Exchange Notes, as applicable, registered under the
Securities Act or, if applicable, by the Market-Maker from the filing and
effectiveness of a Market-Making Registration Statement, on the other, or (b) if
the allocation provided by clause (a) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (a) above but also the relative fault of the Company and
the Note Guarantors, on the one hand, and such Holder, on the other, with
respect to the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to the Company and the Note Guarantors or information supplied by the
Company and the Note Guarantors, on the one hand, or to any Holders' Information
or Market-Maker's Information, respectively, supplied by such Holder, on the
other, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 8 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8 shall be deemed
to include, for purposes of this Section 8, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 8, an indemnifying party that is a


END$$

                                                                              20

Holder of Notes, Exchange Notes or Private Exchange Notes or the Market-Maker
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Notes, Exchange Notes or Private Exchange Notes
sold by such indemnifying party to any purchaser exceeds the amount of any
damages which such indemnifying party has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

                9. Rules 144 and 144A. The Company and the Note Guarantors shall
use commercially reasonable efforts to file the reports required to be filed by
them under the Securities Act and the Exchange Act in a timely manner and, if at
any time the Company and the Note Guarantors are not required to file such
reports, they will, upon the written request of any Holder of Transfer
Restricted Notes or the Market-Maker, make publicly available other information
so long as necessary to permit sales of such Holder's or the Market-Maker's
securities pursuant to Rules 144 and 144A. The Company and the Note Guarantors
covenant that they will take such further action as any Holder of Transfer
Restricted Notes or the Market-Maker may reasonably request, all to the extent
required from time to time to enable such Holder or the Market-Maker to sell
Transfer Restricted Notes without registration under the Securities Act within
the limitation of the exemptions provided by Rules 144 and 144A (including,
without limitation, the requirements of Rule 144A(d)(4)). Upon the written
request of any Holder of Transfer Restricted Notes, the Company and the Note
Guarantors shall deliver to such Holder or the Market-Maker a written statement
as to whether they have complied with such requirements. Notwithstanding the
foregoing, nothing in this Section 9 shall be deemed to require the Company to
register any of its securities pursuant to the Exchange Act.

                10. Underwritten Registrations. If any of the Transfer
Restricted Notes covered by any Shelf Registration Statement are to be sold in
an underwritten offering, the investment banker or investment bankers and
manager or managers that will administer the offering will be selected by the
Holders of a majority in aggregate principal amount of such Transfer Restricted
Notes included in such offering, subject to the consent of the Company and the
Note Guarantors (which shall not be unreasonably withheld or delayed), and such
Holders shall be responsible for all underwriting commissions and discounts in
connection therewith.

                No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Notes on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.

                11. Miscellaneous. (a) Amendments and Waivers. The provisions of
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Notes, the Exchange Notes and the Private Exchange
Notes, taken as a single class (and, with respect to the provisions of Section
6, the written consent of the Market-Maker). Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose Notes, Exchange Notes or
Private Exchange


END$$

                                                                              21

Notes are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of a majority in aggregate principal amount of the Notes, the Exchange
Notes and the Private Exchange Notes being sold by such Holders pursuant to such
Registration Statement whose rights are so affected.

                (b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier or air courier guaranteeing next-day delivery:

                (1) if to a Holder, at the most current address given by such
        Holder to the Company in accordance with the provisions of this Section
        11(b), which address initially is, with respect to each Holder, the
        address of such Holder maintained by the registrar under the Indenture,
        with a copy in like manner to JPMorgan, DBSI and CSFB;

                (2) if to the Initial Purchasers or the Market-Maker, initially
        at their addresses set forth in the Purchase Agreement; and

                (3) if to the Company or the Note Guarantors, initially at the
        address of the Company set forth in the Purchase Agreement.

                All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business day
after being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.

                The Company and the Note Guarantors or the Initial Purchasers
may, by written notice to the other, designate additional or different addresses
for subsequent notices or communications.

                (c) Successors And Assigns. This Agreement shall be binding upon
the Company and its successors and assigns.

                (d) Counterparts. This Agreement may be executed in any number
of counterparts (which may be delivered in original form or by telecopier) and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

                (e) Definition of Terms. For purposes of this Agreement, (a) the
term "business day" means any day on which the New York Stock Exchange, Inc. is
open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.

                (f) Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

                (g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


END$$

                                                                              22

                (h) Remedies. In the event of a breach by the Company, the Note
Guarantors or by any Holder of any of their obligations under this Agreement,
each Holder, the Company or the Note Guarantors, as the case may be, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages (other than the recovery of damages for a breach by the Company or the
Note Guarantors of their obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of its rights under this Agreement. The
Company, the Note Guarantors and each Holder agree that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by each
such person of any of the provisions of this Agreement and hereby further agree
that, in the event of any action for specific performance in respect of such
breach, each such person shall waive the defense that a remedy at law would be
adequate.

                (i) No Inconsistent Agreements. Each of the Company and the Note
Guarantors represents, warrants and agrees with the Initial Purchasers that (i)
it has not entered into, and shall not, on or after the date of this Agreement,
enter into any agreement that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof,
(ii) it has not previously entered into any agreement which remains in effect
granting any registration rights with respect to any of its debt securities to
any person and (iii) (with respect to the Company) without limiting the
generality of the foregoing, without the written consent of the Holders of a
majority in aggregate principal amount of the then outstanding Transfer
Restricted Notes and the Market-Maker, it shall not grant to any person the
right to request the Company to register any debt securities of the Company
under the Securities Act unless the rights so granted are not in conflict or
inconsistent with the provisions of this Agreement.

                (j) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders of Transfer Restricted Notes in
such capacity) shall have the right to include any securities of the Company in
any Shelf Registration or Registered Exchange Offer other than Transfer
Restricted Notes.

                (k) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.


END$$

                                                                              23

                Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Note Guarantors and the Initial Purchasers.

                                        Very truly yours,

                                        PLIANT CORPORATION,

                                        by /s/ Brian E. Johnson
                                          --------------------------------
                                          Name:  Brian E. Johnson
                                          Title:  Executive Vice President and
                                                  Chief Financial Officer

                                        PLIANT CORPORATION INTERNATIONAL,
                                        PLIANT FILM PRODUCTS OF MEXICO, INC.,
                                        PLIANT SOLUTIONS CORPORATION,
                                        UNIPLAST HOLDINGS INC.,
                                        UNIPLAST U.S., INC.,
                                        TUREX, INC.,
                                        PIERSON INDUSTRIES, INC.,
                                        UNIPLAST MIDWEST, INC.,

                                        by /s/ Brian E. Johnson
                                          --------------------------------
                                          Name:  Brian E. Johnson
                                          Title:  Executive Vice President and
                                                  Treasurer

                                        PLIANT PACKAGING OF CANADA, LLC,

                                        by /s/ Brian E. Johnson
                                          --------------------------------
                                          Name:  Brian E. Johnson
                                          Title:  Vice President


END$$
                                                                              24

Accepted:

J.P. MORGAN SECURITIES INC.

by /s/ Pierre Maman
  --------------------------------
         Authorized Signatory

DEUTSCHE BANK SECURITIES INC.

by /s/ James Paris
  --------------------------------
         Authorized Signatory

by /s/ Catherine Madigan
  --------------------------------
         Authorized Signatory

CREDIT SUISSE FIRST BOSTON LLC

by /s/ Rob Kobre
  --------------------------------
         Authorized Signatory


END$$

                                                                         ANNEX A

                Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of Exchange Notes received in exchange for Notes
where such Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date (as defined herein), it
will make this Prospectus available to any broker-dealer for use in connection
with any such resale. See "Plan of Distribution".


END$$

                                                                         ANNEX B

                Each broker-dealer that receives Exchange Notes for its own
account in exchange for Notes, where such Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of distribution".


END$$

                                                                         ANNEX C

                              PLAN OF DISTRIBUTION

                Each broker-dealer that receives Exchange Notes for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of 180 days after the Expiration Date, it will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale.

                The Company will not receive any proceeds from any sale of
Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for
their own account pursuant to the Registered Exchange Offer may be sold from
time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Notes. Any broker-dealer that resells Exchange Notes that were received by it
for its own account pursuant to the Registered Exchange Offer and any broker or
dealer that participates in a distribution of such Exchange Notes may be deemed
to be an "underwriter" within the meaning of the Securities Act and any profit
on any such resale of Exchange Notes and any commission or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that, by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.

                For a period of 180 days after the Expiration Date the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Notes) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.


END$$

                                                                         ANNEX D

                  :      CHECK HERE IF YOU ARE A BROKER-DEALER AND
                         WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE
                         PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
                         SUPPLEMENTS THERETO.

                  Name:
                  Address:

If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Notes. If the undersigned is a broker-dealer that will receive Exchange Notes
for its own account in exchange for Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.

EX-10.6

                                                                    Exhibit 10.6

                                AMENDMENT NO. 4 AND ACKNOWLEDGEMENT dated as of
                        June 5, 2003 (this "Amendment"), to the STOCKHOLDERS'
                        AGREEMENT dated as of May 31, 2000 (as amended,
                        modified, supplemented or restated prior to the date
                        hereof, the "Original Agreement"), among PLIANT
                        CORPORATION, a Utah corporation (the "Company"), and
                        certain of the stockholders of the Company signatory
                        thereto.

     By executing and delivering this Amendment, the undersigned signatories
hereto hereby agree as set forth below. Capitalized terms used but not defined
herein shall have the respective meanings ascribed to them in the Original
Agreement.

Section 1. Amendment.

     Section 3.2(g) of the Original Agreement shall be amended and restated in
its entirety to read as set forth below.

          "(g) Securities of the Company which are issued, or may be issued,
     pursuant to (i) the 2003 Securities Purchase Agreement and (ii) the 2003
     JPMP (BHCA) Commitment Agreement, provided that in each case, such
     Securities (or any Securities issued in full or partial replacement
     thereof) shall constitute Offered Securities and be subject to the
     requirements of Section 3.1 as if such Securities were issued pursuant to
     Section 3.1(d) on September 25, 2003.

Section 2. Acknowledgement and Waiver.

     The Company and the Stockholders acknowledge that prior to September 25,
2003, the provisions set forth in Section 2.2(d) (Certain Transfers), Section
2.3 (Co-Sale Rights) and Section 2.4 (Right of First Refusal) of the Original
Agreement shall not apply to the Transfer by JPMP (BHCA) of any Stockholder
Shares acquired by JPMP (BHCA) pursuant to the 2003 JPMP (BHCA) Commitment
Agreement or the 2003 Securities Purchase Agreement and the Stockholders hereby
waive their rights under Sections 2.2(d), 2.3 and 2.4 with respect to such
Stockholder Shares during such period.

Section 3. No other Amendments.

     Except as modified by this Amendment, the Original Agreement shall remain
in full force and effect, enforceable in accordance with its terms. This
Amendment is not a consent to any waiver or modification of any other terms or
conditions of the Original Agreement or any of the instruments or documents
referred to in the Original Agreement and shall not prejudice any right or
rights which the parties thereto may now or hereafter have under or in
connection with the Original Agreement or any of the instruments or documents
referred to therein.








Section 4. Effectiveness; Counterparts

     This Amendment 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 the Company, the Requisite Trust
Holders and the Requisite Investor Holders (by facsimile or otherwise), it being
understood that all of the foregoing need not sign the same counterpart. Any
counterpart or other signature to this Amendment that is delivered by facsimile
shall be deemed for all purposes as constituting good and valid execution and
delivery by such party of this Amendment.

Section 5. Governing Law.

     This Amendment shall be governed by and construed and enforced in
accordance with the laws of the State of New York without giving effect to any
choice or conflict of law provision or rule (whether in the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.

                                     *******

                                        2





     IN WITNESS WHEREOF, the parties have duly executed this Amendment No. 4 to
the Stockholders' Agreement as of the date first above written.

                               PLIANT CORPORATION



                               By: /s/ Brian E. Johnson
                                   ---------------------
                                   Name:  Brian E. Johnson
                                   Title: Executive Vice President and
                                          Chief Financial Officer


                               SOUTHWEST INDUSTRIAL FILMS, 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: /s/ Timothy Walsh
                                   -----------------
                                   Name:
                                   Title:


                               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: /s/ Timothy Walsh
                                   -----------------
                                   Name:
                                   Title:





                                            WACHOVIA CAPITAL PARTNERS, LLC


                                            By: /s/ Robert G. Calton
                                                ------------------------
                                                Name:  Robert G. Calton
                                                Title: Partner


                                            WACHOVIA CAPITAL PARTNERS 2001, LLC


                                            By: /s/ Robert G. Calton
                                                ------------------------
                                                Name:  Robert G. Calton
                                                Title: Partner


                                            NEW YORK LIFE CAPITAL PARTNERS,
                                            L.P.


                                            By: NYLCAP Manager LLC,
                                                its Investment Manager


                                            By: /s/ Steven Benevento
                                                ------------------------
                                                Name:
                                                Title:


                                            THE NORTHWESTERN MUTUAL LIFE
                                            INSURANCE COMPANY


                                            By:
                                                Name:
                                                Title:


                                            THE CHRISTENA KAREN H. DURHAM
                                            TRUST


                                            By: /s/ Richard P. Durham
                                                ------------------------
                                                Name:  Richard P. Durham
                                                Title: Trustee







                                        PERRY ACQUISITION PARTNERS-3, L.P.


                                        By: Perry Investors-3, LLC,
                                            its General Partner

                                        By: Perry Capital, LLC,
                                            its Managing Member

                                        By: Perry Corp.,
                                            its Managing Member


                                        By:  /s/ Randall Borkenstein
                                             -----------------------------------
                                             Name:  Randall Borkenstein
                                             Title: Managing Director and Chief
                                                    Financial Officer



                                        PERRY ACQUISITION PARTNERS-2, L.P.

                                        By: Perry Investors-2, LLC


                                        By:  /s/ Randall Borkenstein
                                             -----------------------------------
                                             Name:  Randall Borkenstein
                                             Title: Managing Director and Chief
                                                    Financial Officer



                                        DURHAM CAPITAL, LTD.


                                        By:  /s/ Richard P. Durham
                                             -----------------------------------
                                             Name:  Richard P. Durham
                                             Title: General Partner



                                        SORENSEN CAPITAL, LLC


                                        By:
                                             -----------------------------------
                                             Name:
                                             Title:







                                         RONALD G. MOFFITT IRA


                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:



                                               /s/ Jack E. Knott
                                         ---------------------------------------
                                         Jack E. Knott


                                               /s/ Richard P. Durham
                                         ---------------------------------------
                                         Richard P. Durham


                                         ---------------------------------------
                                         Ronald G. Moffitt


                                         ---------------------------------------
                                         Scott K. Sorensen


                                               /s/ Brian E. Johnson
                                         ---------------------------------------
                                         Brian E. Johnson

EX-10.24

                                                                   EXHIBIT 10.24

                                AMENDMENT No. 6 dated as of May 22, 2003 (this
                        "Amendment"), to the Credit Agreement dated as of
                        September 30, 1997, as Amended and Restated as of May
                        31, 2000 (as so amended and restated and as further
                        amended by Amendment No. 1 thereto dated as of September
                        30, 2000, Amendment No. 2 thereto dated as of July 10,
                        2001, Amendment No. 3 thereto dated as of April 2, 2002,
                        Amendment No. 4 thereto dated as of September 30, 2002,
                        and Amendment No. 5 thereto dated as of March 24, 2003,
                        the "Credit Agreement"), among PLIANT CORPORATION
                        (formerly known as Huntsman Packaging Corporation), a
                        Utah corporation (the "Borrower"), ASPEN INDUSTRIAL,
                        S.A. DE C.V., a Mexico corporation (the "Mexico
                        Borrower", and together with the Borrower, the
                        "Borrowers"), the financial institutions party to the
                        Credit Agreement as Lenders (the "Lenders"), DEUTSCHE
                        BANK TRUST COMPANY AMERICAS (formerly known as Bankers
                        Trust Company), as Administrative Agent and Collateral
                        Agent, and JPMORGAN CHASE BANK (formerly known as The
                        Chase Manhattan Bank), as Syndication Agent.

                A. The Borrower has requested that the Lenders agree to amend
certain provisions of the Credit Agreement as set forth herein.

                B. The undersigned Lenders are willing so to amend the Credit
Agreement pursuant to the terms and subject to the conditions set forth herein.

                C. Capitalized terms used and not otherwise defined herein shall
have the meanings assigned thereto in the Credit Agreement, as amended hereby.

                SECTION 1. Amendments to Section 1.01. (a) Section 1.01 of the
Credit Agreement is hereby amended by adding the following defined terms in the
appropriate alphabetical order, to read as follows:

                (i) "First Lien Leverage Ratio" means, on any date, the ratio of
        (a) the portion of Total Debt accounted for by (i) Indebtedness incurred
        under this Agreement as of such date and (ii) Securitization Obligations
        as of such date to (b) Consolidated EBITDA for the period of four
        consecutive fiscal quarters of the Borrower ended on such date, all
        determined on a consolidated basis in accordance with GAAP.

                (ii) "Intercreditor Agreement" means the intercreditor agreement
        entered into among the Borrower, the Collateral Agent and the trustee
        under the Senior Second Lien Note Indenture (or any other trustee or
        agent to which Liens are granted under the Second Lien Security
        Documents), providing for, among other things, (a) the priority of the
        Liens granted pursuant to the Security Documents



                                                                               2

        over the Liens granted pursuant to the Second Lien Security Documents
        and (b) restrictions on the exercise of remedies under the Second Lien
        Security Documents , in form and substance reasonably satisfactory to
        the Administrative Agent and the Syndication Agent.

                (iii) "Second Lien Security Documents" means any and all
        security agreements, pledge agreements, mortgages and other agreements
        and documents pursuant to which any Liens are granted to secure any
        Indebtedness or other obligations in respect of the Senior Second Lien
        Notes.

                (iv) "Senior Second Lien Note Documents" means the Senior Second
        Lien Notes, the Senior Second Lien Note Indenture, the Second Lien
        Security Documents, the Intercreditor Agreement and all other
        instruments, agreements and documents evidencing, guaranteeing or
        otherwise governing the terms of the Senior Second Lien Notes.

                (v) "Senior Second Lien Note Indenture" means the indenture
        pursuant to which the Senior Second Lien Notes are issued.

                (vi) "Senior Second Lien Notes" means senior secured notes
        issued by the Borrower and having terms substantially as described under
        the heading "Description of notes" in the Preliminary Offering
        Memorandum for such notes dated May 14, 2003, provided that (a) no
        Subsidiary will Guarantee such notes unless such Subsidiary also
        Guarantees the Obligations, (b) such notes bear interest at a rate of
        interest that is a market rate at the time of issuance thereof and (c)
        the maturity date of such notes is at least one year after the Tranche B
        Term Loan Maturity Date.

                (b) The definition of "Change in Control" in Section 1.01 of the
Credit Agreement is hereby amended by (i) deleting the word "or" immediately
before clause (e) of such definition and (ii) adding the following clause (f)
immediately following clause (e) of such definition:

                ; or (f) there shall occur a "Change of Control" as defined
        under the Senior Second Lien Note Documents

                (c) The definition of "Consolidated Interest Expense" in Section
1.01 of the Credit Agreement is hereby amended by restating the proviso in such
definition in its entirety as follows:

                provided that "Consolidated Interest Expense" shall not include
        non-cash interest expense in respect of the Senior Second Lien Notes or
        New Senior Subordinated Notes arising because (i) the Senior Second Lien
        Notes or the New Senior Subordinated Notes and the Warrants were issued
        at a discount to their face value or (ii) a portion of the issue price
        of the New Senior Subordinated Notes and the Warrants is being allocated
        to the Warrants.



                                                                               3

                (d) The definition of "Excluded Charges" in Section 1.01 of the
Credit Agreement is hereby amended and restated in its entirety as follows:

                "Excluded Charges" means (a) the non-recurring charges incurred
        or to be incurred in respect of the restructurings, plant closings or
        similar actions that have occurred or are expected to be taken in
        connection with the Borrower's facilities specified in Schedule 1.01(c),
        (b) any other such non-recurring charges incurred in respect of any
        restructurings, plant closings or similar actions during the eighteen
        month period commencing on the Effective Date, provided that the cash
        portion of charges referred to in this clause (b) shall be limited to
        $8,000,000, (c) for the purposes of calculating (i) the Leverage Ratio
        for purposes of Section 6.14, (ii) the interest coverage ratio for
        purposes of Section 6.15 and (iii) the First Lien Leverage Ratio for
        purposes of Section 6.18 for any four fiscal quarters of the Borrower
        ending on or after June 30, 2001, and on or before June 30, 2003, any
        other such non-recurring charges incurred in respect of any
        restructurings, plant closings or similar actions arising out of the
        Uniplast Acquisition, provided that the cash portion of charges referred
        to in this clause (c) shall be limited to the lesser of (x) $15,000,000
        and (y) the amount thereof accrued prior to April 2, 2002, and (d) for
        the purposes of calculating (i) the Leverage Ratio for purposes of
        Section 6.14, (ii) the interest coverage ratio for purposes of Section
        6.15 and (iii) the First Lien Leverage Ratio for purposes of Section
        6.18 for any four fiscal quarters of the Borrower ending on or after
        March 31, 2002, and on or before September 30, 2003, any other such
        non-recurring charges incurred in respect of any restructurings, plant
        closings or similar actions, provided that (x) the non-recurring charges
        referred to in this clause (d) (other than any such non-recurring
        charges also referred to in clause (c) of this definition) shall be
        limited to $20,000,000 in the aggregate, and (y) the cash portion of the
        non-recurring charges referred to in this clause (d) (other than any
        such non-recurring charges also referred to in clause (c) of this
        definition) shall be limited to $15,000,000 during any four consecutive
        fiscal quarters of the Borrower.

                (e) The definition of "Loan Documents" in Section 1.01 of the
Credit Agreement is hereby amended and restated in its entirety as follows:

                "Loan Documents" means this Agreement, the Guarantee Agreement,
        the Indemnity, Subrogation and Contribution Agreement, the Intercreditor
        Agreement, the Security Documents and each Bank Hedging Agreement.

                (f) The definition of "Permitted Acquisition" in Section 1.01 of
the Credit Agreement is hereby amended by restating clause (e)(1) of such
definition in its entirety as follows:

                (1) the Borrower and its Restricted Subsidiaries are in
        compliance with the covenants contained in Sections 6.15 and, if
        applicable, 6.18 and



                                                                               4

                (g) The definition of "Prepayment Event" in Section 1.01 of the
Credit Agreement is hereby amended by inserting the text "(other than clause
(xiv) of Section 6.01)" in clause (d)(i) of such definition immediately after
the text "permitted by Section 6.01".

                (h) The definition of "Trigger Event" in Section 1.01 of the
Credit Agreement is hereby amended and restated in its entirety as follows:

                "Trigger Event" means, (a) with respect to the last day of the
        fiscal quarter of the Borrower ending on March 31, 2003, that (i) the
        Leverage Ratio as of such day is not in compliance with Section 6.14 or
        (ii) the Senior Debt Leverage Ratio as of such day exceeds the Target
        Senior Leverage Ratio with respect to such day, (b) with respect to the
        last day of any fiscal quarter of the Borrower ending on or after June
        30, 2003, and on or before December 31, 2003, that the First Lien
        Leverage Ratio as of such day is not in compliance with Section 6.18 and
        (c) with respect to the last day of any fiscal quarter of the Borrower
        ending after December 31, 2003, and on or before December 31, 2004, that
        (i) the First Lien Leverage Ratio as of such day is in excess of 2.25 to
        1.00 (if such fiscal quarter ends on March 31, 2004), or 2.00 to 1.00
        (if such fiscal quarter ends after March 31, 2004) or (ii) that the
        Leverage Ratio as of such day is not in compliance with Section 6.14.

                SECTION 2. Amendment to Section 2.10. Section 2.10 of the Credit
Agreement is hereby amended by adding the following proviso immediately before
the period at the end of paragraph (e) of such Section:

        ; provided further, that any prepayment of Term Borrowings of any Class
        made pursuant to Section 2.11(b) shall, in each case, to the extent made
        using Net Proceeds received from the issuance of the Senior Second Lien
        Notes, be applied, first, to reduce the scheduled repayments of Term
        Borrowings of such Class to be made pursuant to this Section (other than
        those that have been reduced to zero by operation of this paragraph) in
        direct order of maturity unless and until all such scheduled repayments
        scheduled to be made on or before December 31, 2004, have been
        eliminated as a result of reductions hereunder and, second, to reduce
        the remaining scheduled repayments of Term Borrowings of such Class to
        be made pursuant to this Section after December 31, 2004, and on or
        before December 31, 2005, ratably and, third, to reduce the remaining
        scheduled repayments of Term Borrowings of such Class to be made
        pursuant to this Section ratably.

                SECTION 3. Amendments to Section 2.11. (a) Section 2.11(b) of
the Credit Agreement is hereby amended by (i) replacing the first sentence of
such Section with the following two sentences:

                Subject to the provisions of Sections 2.11(e) and 5.08, in the
        event and on each occasion that any Net Proceeds are received by or on
        behalf of the Borrower or any Subsidiary in respect of any Prepayment
        Event (other than Net Proceeds



                                                                               5

        received from the issuance of the Senior Second Lien Notes, Specified
        Equity Offering Proceeds and Net Proceeds that are or will be applied in
        accordance with clause (v) of Section 6.09(a)), the Borrower and the
        Mexico Borrower, as applicable, shall, within three Business Days after
        such Net Proceeds are received, prepay Term Borrowings in an aggregate
        amount equal to the entire amount of such Net Proceeds. In the event
        that any Net Proceeds are received by or on behalf of the Borrower or
        any Subsidiary from the issuance of the Senior Second Lien Notes, the
        Borrower shall on the Business day on which such Net Proceeds are
        received, apply such Net Proceeds to (i) first, prepay Revolving Loans
        and Swingline Loans until the aggregate amount of Revolving Loans and
        Swingline Loans prepaid pursuant to this clause (i) equals the lesser of
        (A) $75,000,000 and (B) the aggregate amount of all then outstanding
        Revolving Loans and Swingline Loans, and (ii) second, prepay (A) Tranche
        A Term Loans in an aggregate amount equal to 50% of the total amount of
        such Net Proceeds not applied pursuant to clause (i) of this sentence
        and (B) Tranche B Term Loans in an aggregate amount equal to 50% of the
        total amount of such Net Proceeds not applied pursuant to clause (i) of
        this sentence.

and (ii) replacing the text "second sentence" and the text "third sentence" in
the last sentence of such Section with the text "third sentence" and the text
"fourth sentence", respectively.

                (b) Section 2.11(f) of the Credit Agreement is hereby amended by
replacing the second proviso in such Section with the following:

                provided that if such prepayment is (x) a mandatory prepayment
        pursuant to paragraph (b) or (c) of this Section (other than a mandatory
        prepayment in respect of the Net Proceeds of the issuance of Senior
        Second Lien Notes), any Tranche B Lender may elect, to the extent Term
        Borrowings of any other Class or Classes remain outstanding on the
        prepayment date, by notice to the Administrative Agent by telephone
        (confirmed by telecopy) at least one Business Day prior to the
        prepayment date, to decline all or any portion of any prepayment of its
        Tranche B Term Loans pursuant to this Section, in which case the
        aggregate amount of the prepayment that would have been applied to
        prepay Tranche B Term Borrowings but was so declined shall be applied to
        prepay Term Borrowings of each other Class then outstanding pro rata
        based on the aggregate principal amount of outstanding Borrowings of
        each such Class, or (y) a mandatory prepayment pursuant to paragraph (b)
        of this Section in respect of the Net Proceeds of the issuance of Senior
        Second Lien Notes, any Tranche B Lender may elect, by notice to the
        Administrative Agent by telephone (confirmed by telecopy) at least one
        Business Day prior to the prepayment date, to decline all or any portion
        of any prepayment of its Tranche B Term Loans pursuant to this Section,
        in which case the aggregate amount of the prepayment that would have
        been applied to prepay Tranche B Term Borrowings but was so declined
        shall be applied to prepay Tranche A Term Borrowings then outstanding,
        provided that if the aggregate amount so declined exceeds the amount of
        Tranche A Term Borrowings outstanding on the prepayment date after
        giving effect to all



                                                                               6

        prepayments of Tranche A Term Borrowings made or to be made pursuant to
        the second sentence of Section 2.11(b), then the excess shall be applied
        to prepay the Tranche B Term Loans held by the Tranche B Lenders so
        declining in proportion to the amounts so declined by such Tranche B
        Lenders;

                (c) Section 2.11(h) of the Credit Agreement is hereby amended
and restated in its entirety as follows:

                (h) If, at 3:00 p.m., New York City time, on any Business Day
        the amount, determined reasonably and in good faith by the Borrower (the
        "Cash Amount"), equal to (i) the aggregate amount of "cash and cash
        equivalents" and "marketable securities" of the Borrower and the
        Subsidiaries (other than Foreign Subsidiaries), in each case that would
        be required to be reflected on a consolidated balance sheet of the
        Borrower and the Subsidiaries prepared as of such time in accordance
        with GAAP (excluding any such "cash" that is not available funds), minus
        (ii) the aggregate amount of payments in such cash and cash equivalents
        that will be made (and will reduce such cash and cash equivalents) on
        such Business Day, is more than $5,000,000, then on such Business Day
        the Borrower shall, to the extent (but only to the extent) that any
        Revolving Borrowings and Swingline Loans are then outstanding, prepay
        Revolving Borrowings and Swingline Loans to the extent necessary so
        that, after giving effect to such prepayment and the receipt by the
        Borrower of the proceeds of any Revolving Borrowings and Swingline Loans
        made or to be made on such Business Day, the Cash Amount will not exceed
        $5,000,000.

                SECTION 4. Amendment to Article III (Representations and
Warranties). Article III of the Credit Agreement is hereby amended by adding the
following as Section 3.18:

                SECTION 3.18. Senior Secured Obligations. All the Obligations
        constitute "Credit Agreement Obligations" under and as defined in the
        Senior Second Lien Note Indenture. The Liens granted pursuant to the
        Security Documents are prior to the Liens granted pursuant to the Second
        Lien Security Documents.

                SECTION 5. Amendment to Section 4.02. Section 4.02 of the Credit
Agreement is hereby amended by adding the following as Section 4.02(d):

                (d) The Administrative Agent shall have received an Officers'
        Certificate (as defined in the indenture under which the New Senior
        Subordinated Notes were issued, the indenture under which any Additional
        Senior Subordinated Notes were issued and the indenture under which the
        Senior Second Lien Notes were issued) of the Borrower (delivered, and
        containing a statement that it was delivered, in good faith after
        reasonable investigation) to the effect that such Borrowing, or the
        issuance, amendment, renewal or extension of such Letter of Credit, does
        not violate the provisions of any such indenture.



                                                                               7

                SECTION 6. Amendment to Section 5.14. Section 5.14 of the Credit
Agreement is hereby amended by (i) replacing the word "and" with the text ","
immediately prior to clause (c) of such Section and (ii) inserting the following
clause (d) immediately prior to the text "is effectively subject" in such
Section:

                and (d) from and after the date of issuance of the Senior Second
Lien Notes, the outstanding Senior Second Lien Notes

                SECTION 7. Amendment to Section 5.15. Section 5.15 of the Credit
Agreement is hereby amended by replacing the last sentence of such Section with
the following sentence:

                For purposes of this Section, "Compliance Amount" means, at any
        time, the greater of (a) $5,000,000 for the first Trigger Event or
        $1,000,000 for each subsequent Trigger Event and (b) (i) if the
        applicable Trigger Event relates to the fiscal quarter of the Borrower
        ending on March 31, 2003, the greater of (A) the amount, if any, by
        which Total Debt (determined without regard to any reduction pursuant to
        clause (c) of the definition of "Total Debt") as of the last day of the
        most recently completed fiscal quarter of the Borrower exceeded the
        maximum amount of Total Debt as of such day that could have existed
        without causing an Event of Default as of such day under Section 6.14
        (calculated using Consolidated EBITDA for the period of four consecutive
        fiscal quarters of the Borrower ended on such day) and (B) the amount,
        if any, by which the portion of Total Debt (determined without regard to
        any reduction pursuant to clause (c) of the definition of "Total Debt")
        accounted for by Senior Debt as of the last day of the most recently
        completed fiscal quarter of the Borrower exceeded the maximum amount of
        the portion of Total Debt accounted for by Senior Debt as of such day
        that could have existed without causing the Senior Debt Leverage Ratio
        to be in excess of the Target Senior Leverage Ratio as of such day
        (calculated using Consolidated EBITDA for the period of four consecutive
        fiscal quarters of the Borrower ended on such day), (ii) if the
        applicable Trigger Event relates to a fiscal quarter of the Borrower
        ending on or after June 30, 2003, and on or before December 31, 2003,
        the amount, if any, by which the portion of Total Debt (determined
        without regard to any reduction pursuant to clause (c) of the definition
        of "Total Debt") accounted for by (x) Indebtedness incurred under this
        Agreement and (y) Securitization Obligations (determined without regard
        to any reduction pursuant to clause (c) of the definition of "Total
        Debt") as of the last day of the most recently completed fiscal quarter
        of the Borrower exceeded the maximum amount of Total Debt accounted for
        by (x) Indebtedness incurred under this Agreement as of such day and (y)
        Securitization Obligations as of such day that could have existed
        without causing an Event of Default as of such day under Section 6.18
        (calculated using Consolidated EBITDA for the period of four consecutive
        fiscal quarters of the Borrower ended on such day) or (iii) if the
        applicable Trigger Event relates to a fiscal quarter of the Borrower
        ending after December 31, 2003, the greater of (A) the amount, if any,
        by which the portion of Total Debt (determined without regard to any
        reduction pursuant to clause (c) of the definition of "Total Debt")
        accounted for by (x) Indebtedness incurred under



                                                                               8

        this Agreement and (y) Securitization Obligations (determined without
        regard to any reduction pursuant to clause (c) of the definition of
        "Total Debt") as of the last day of the most recently completed fiscal
        quarter of the Borrower exceeded the maximum amount of Total Debt
        accounted for by (x) Indebtedness incurred under this Agreement as of
        such day and (y) Securitization Obligations as of such day that could
        have existed without causing the First Lien Leverage Ratio to be in
        excess of 2.25 to 1.00 (if such fiscal quarter ends on March 31, 2004)
        or 2.00 to 1.00 (if such fiscal quarter ends after March 31, 2004) as of
        such day (calculated using Consolidated EBITDA for the period of four
        consecutive fiscal quarters of the Borrower ended on such day) and (B)
        the amount, if any, by which Total Debt (determined without regard to
        any reduction pursuant to clause (c) of the definition of "Total Debt")
        as of the last day of the most recently completed fiscal quarter of the
        Borrower exceeded the maximum amount of Total Debt as of such day that
        could have existed without causing an Event of Default as of such day
        under Section 6.14 (calculated using Consolidated EBITDA for the period
        of four consecutive fiscal quarters of the Borrower ended on such day).

                SECTION 8. Amendment to Section 6.01. Section 6.01 of the Credit
Agreement is hereby amended by (i) inserting the text "any Guarantee of the
Senior Subordinated Notes or the Senior Second Lien Notes" immediately after the
text "same terms as the Senior Subordinated Notes and" in clause (ii) of the
proviso to clause (iv) of such Section, (ii) deleting the word "and" at the end
of clause (xii) of such Section and (iii) inserting the following clause (xiv)
after clause (xiii) of such Section:

                ; and (xiv) the Senior Second Lien Notes in an aggregate
        principal amount not exceeding $250,000,000

                SECTION 9. Amendment to Section 6.03. Section 6.03 of the Credit
Agreement is hereby amended by (i) deleting the word "and" at the end of clause
(h) and (ii) inserting the following clause (j) after clause (i) of such
section:

                ; and (j) Liens granted under the Second Lien Security
        Documents; provided that (i) such Liens secure only obligations under
        the Senior Second Lien Note Documents, except that such obligations
        shall not include obligations under any Indebtedness (or obligations
        under any Hedging Agreements) except to the extent incurred pursuant to
        Section 6.01(xiv), (ii) such Liens do not apply to any asset other than
        Collateral that is subject to a prior Lien granted under a Security
        Document and (iii) all such Liens and Second Lien Security Documents
        shall be subject to the terms of the Intercreditor Agreement.

                SECTION 10. Amendment to Section 6.09. Section 6.09(b) of the
Credit Agreement is hereby amended and restated in its entirety as follows:

                (b) The Borrower will not, and will not permit any Subsidiary
        to, make or agree to pay or make, directly or indirectly, any payment or
        other distribution (whether in cash, securities or other property) of or
        in respect of principal of or interest on any Senior Second Lien Note or
        Senior Subordinated Note, or any



                                                                               9

        payment or other distribution (whether in cash, securities or other
        property), including any sinking fund or similar deposit, on account of
        the purchase, redemption, retirement, acquisition, cancelation or
        termination of any Senior Second Lien Note or Senior Subordinated Note,
        except (i) payment of regularly scheduled interest payments as and when
        due in respect of the Senior Second Lien Notes and Senior Subordinated
        Notes and (ii) purchases of any Remaining Notes from time to time
        following the Effective Date at prices not exceeding the price payable
        pursuant to the Debt Tender Offer, including pursuant to a change of
        control offer pursuant to the Existing Indenture arising as a result of
        the Transactions.

                SECTION 11. Amendment to Section 6.11. Section 6.11 of the
Credit Agreement is hereby amended by (i) replacing the word "and" immediately
before clause (xi) of the first proviso in such Section with the text ";" and
(ii) inserting the following clause (xii) after clause (xi) of the first proviso
in such Section:

                and (xii) the foregoing shall not apply to restrictions imposed
by the Senior Second Lien Note Documents

                SECTION 12. Amendment to Section 6.12. Section 6.12 of the
Credit Agreement is hereby amended by (i) inserting the text "or (except for
amendments to the Second Lien Security Documents permitted by the Intercreditor
Agreement) the Senior Second Lien Notes or the other Senior Second Lien Note
Documents" immediately before the text "(other than amendments to the Existing
Notes Indenture" in clause (b) of such Section and (ii) inserting the text "or
the Intercreditor Agreement" immediately after each appearance in such Section
of the text "any Security Document".

                SECTION 13. Amendment to Section 6.14. The table set forth in
Section 6.14 of the Credit Agreement is hereby amended and restated in its
entirety as follows:

                Period                                              Ratio
                ------                                              -----

                January 1, 2003 through March 31, 2003          6.60 to 1.00
                January 1, 2004 through March 31, 2004          6.60 to 1.00
                April 1, 2004 through June 30, 2004             6.40 to 1.00
                July 1, 2004 through September 30, 2004         6.30 to 1.00
                October 1, 2004 through December 31, 2004       6.00 to 1.00
                January 1, 2005 through December 31, 2005       5.50 to 1.00
                January 1, 2006 through December 31, 2006       5.00 to 1.00
                January 1, 2007 through December 31, 2007       4.50 to 1.00
                January 1, 2008 through December 31, 2008       4.00 to 1.00

                SECTION 14. Amendment to Section 6.15. The table set forth in
Section 6.15 of the Credit Agreement is hereby amended and restated in its
entirety as follows:

                Period                                              Ratio
                ------                                              -----

                January 1, 2003 through March 31, 2003          1.40 to 1.00



                                                                              10

                April 1, 2003 through June 30, 2003             1.25 to 1.00
                July 1, 2003 through September 30, 2003         1.25 to 1.00
                October 1, 2003 through December 31, 2003       1.30 to 1.00
                January 1, 2004 through March 31, 2004          1.35 to 1.00
                April 1, 2004 through June 30, 2004             1.35 to 1.00
                July 1, 2004 through September 30, 2004         1.40 to 1.00
                October 1, 2004 through December 31, 2004       1.45 to 1.00
                January 1, 2005 through December 31, 2005       1.60 to 1.00
                January 1, 2006 through December 31, 2006       1.75 to 1.00
                January 1, 2007 through December 31, 2007       1.85 to 1.00
                January 1, 2008 through December 31, 2008       2.00 to 1.00

                SECTION 15. Amendment to Section 6.16. Section 6.16 of the
Credit Agreement is hereby amended and restated in its entirety as follows:

                SECTION 6.16. Designated Senior Debt. The Borrower shall not
        designate any Indebtedness (other than indebtedness under the Loan
        Documents and indebtedness in respect of the Senior Second Lien Notes
        incurred in compliance with Section 6.01(xiv) of this Agreement) as
        "Designated Senior Debt" for purposes of and as defined in the New
        Senior Subordinated Note Documents.

                SECTION 16. Amendment to Article VI. Article VI of the Credit
Agreement is hereby amended by adding the following as Section 6.18:

                SECTION 6.18. First Lien Leverage Ratio. The Borrower will not
        permit the First Lien Leverage Ratio as of the last day of any fiscal
        quarter ending on or after June 30, 2003, and on or before December 31,
        2003, to be in excess of 2.25 to 1.00.

                SECTION 17. Addition of Subsidiary Borrowers. (a) The parties to
this Amendment hereby agree that any Revolving Borrowings or Swingline Loans
that the Lenders are obligated to make pursuant to the Credit Agreement (as
amended, supplemented or otherwise modified from time to time), will (at the
request of the Borrower made in the applicable Borrowing Request) be made to
Uniplast Holdings Inc., a Delaware corporation, Uniplast U.S., Inc., a Delaware
corporation, Pierson Industries, Inc., a Massachusetts corporation, Turex, Inc.,
a Rhode Island corporation, or Uniplast Midwest, Inc., an Indiana corporation
(each, a "Subsidiary Borrower" and, collectively, the "Subsidiary Borrowers"),
provided that (i) such Revolving Borrowings and Swingline Loans made to any
Subsidiary Borrower shall be treated as Revolving Borrowings and Swingline
Loans, respectively, for all purposes of such Credit Agreement (including,
without limitation, calculating the Revolving Exposures of the Lenders), (ii)
the portion of the total Revolving Exposures for all Lenders outstanding at any
time and attributable to Revolving Borrowings and Swingline Loans made to the
Subsidiary Borrowers pursuant to this paragraph will not exceed $9,400,000,
(iii) the proceeds of such Revolving Borrowings and Swingline Loans will be used
only in a manner that results in their being eligible as "Permitted Debt" under
Section 4.03(b)(iv) of the indenture under



                                                                              11

which the New Senior Subordinated Notes were issued (and the comparable section
of the indenture under which the Additional Senior Subordinated Notes were
issued), (iv) the Borrower and each Subsidiary Borrower will, and each hereby
agrees to, be jointly and severally liable in respect of the Revolving
Borrowings and Swingline Loans made to such Subsidiary Borrower, and all
Obligations (including, without limitation, in respect of principal, interest
and fees arising from such Revolving Borrowings and Swingline Loans), and the
Borrower and each Subsidiary Borrower hereby acknowledges and agrees that it
shall be liable to pay all Revolving Borrowings and Swingline Loans made to such
Subsidiary Borrower, and all Obligations (including, without limitation, in
respect of principal, interest and fees arising from such Revolving Borrowings
and Swingline Loans) as and when due, (v) the obligations of the Borrower and
the Mexico Borrower under the Loan Documents shall remain in full force and
effect and (vi) the Borrower will continue to own, directly or indirectly, 100%
of the equity of each Subsidiary Borrower at all times when any Revolving Loans,
Swingline Loans or interest on Revolving Loans or Swingline Loans made to such
Subsidiary Borrower remains outstanding.

        (b) For all purposes of Articles I, II, VII, VIII and IX of the Credit
Agreement, unless the context requires otherwise, references to "the Borrower"
shall be deemed to include a reference to each Subsidiary Borrower in respect of
the Revolving Borrowings and Swingline Loans made to such Subsidiary Borrower.

        (c) Each Subsidiary Borrower hereby (i) agrees to all the terms and
provisions of the Credit Agreement applicable to it as a Borrower thereunder and
(ii) represents and warrants that the representations and warranties made by it
as a Borrower thereunder (other than such representations and warranties that
relate to a date earlier than the date hereof) are true and correct on and as of
the date hereof.

        (d) Any failure by the Borrower or the Subsidiary Borrowers to comply
with the terms of this Section 16 (other than clauses (iii) and (vi) of the
proviso to paragraph (a) of this Section 16) shall constitute an Event of
Default under the Credit Agreement to the extent such failure would constitute
an Event of Default if such Borrower or Subsidiary Borrower was a Borrower
thereunder, and any failure by the Borrower or any Subsidiary Borrower to comply
with clause (iii) or (vi) of the proviso to paragraph (a) of this Section 16
shall constitute an Event of Default under the Credit Agreement.

        (e) Each of the Borrower and the Subsidiary Borrowers agrees that the
provisions of Sections 1, 2, 4, 5, 6, 7, 8 and 10(b) of the Guarantee Agreement
will apply, mutatis mutandis, to its joint and several obligations under this
Section 16 as if references in such Sections of the Guarantee Agreement to the
Guarantors were to it.

        (f) Each Subsidiary Borrower reaffirms and agrees that the guarantee of
such Subsidiary Borrower pursuant to the Guarantee Agreement is in full force
and effect.

                SECTION 18. Amendment to Security Documents. (a) Notwithstanding
anything contained in the Security Documents to the contrary, no Collateral that
constitutes Common Collateral (as defined in the Intercreditor Agreement) will
be released from the Liens created pursuant to the Security Documents (except
upon



                                                                              12

termination of the Security Documents in accordance with their terms when the
Obligations have been indefeasibly paid in full, the Lenders have no further
commitment to lend, the LC Exposure has been reduced to zero and the Issuing
Bank has no further commitment to issue Letters of Credit under the Credit
Agreement), unless, prior to or simultaneously with the release of such Liens
created pursuant to the Security Documents, all Liens on such Common Collateral
securing the Obligations (as defined in the Intercreditor Agreement) in respect
of the Senior Second Lien Notes and the Senior Second Lien Note Documents (other
than the Intercreditor Agreement) have been or will be simultaneously released
(whether pursuant to the Intercreditor Agreement, any other Senior Second Lien
Note Document or otherwise and whether automatically or by action of any trustee
or other Person).

        (b) The Pledge Agreement is hereby amended by replacing the text "the
shares of capital stock owned by it and listed on Schedule II hereto and any
shares of capital stock of any Subsidiary obtained in the future by the Pledgor
and the certificates representing all such shares (the "Pledged Stock")" in
clause (a) of the first paragraph of Section 1 of the Pledge Agreement with the
text "all the shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or
other equity ownership interests in a person (collectively the "Equity
Interests") owned by it and listed on Schedule II hereto and any Equity
Interests obtained in the future by the Pledgor and the certificates
representing all such shares (the "Pledged Stock")".

                SECTION 19. Representations and Warranties. Each Borrower
represents and warrants to the Administrative Agent and to each of the Lenders
that:

        (a) This Amendment has been duly authorized, executed and delivered by
it and constitutes a legal, valid and binding obligation of each Loan Party
party hereto, enforceable against such Loan Party in accordance with its terms.

        (b) After giving effect to this Amendment, the representations and
warranties set forth in Article III of the Credit Agreement are true and correct
in all material respects on and as of the date hereof with the same effect as if
made on and as of the date hereof, except to the extent such representations and
warranties expressly relate to an earlier date.

        (c) After giving effect to this Amendment, no Event of Default or
Default has occurred and is continuing.

                SECTION 20. Amendment Fee. In consideration of the agreements of
the Lenders contained in this Amendment, the Borrower agrees to pay to the
Administrative Agent, for the account of each Lender that delivers an executed
counterpart of this Amendment prior to 5:00 p.m, New York City time, on May 20,
2003, an amendment fee (the "Amendment Fee") of 12.5 basis points on the
aggregate amount of the Commitments and outstanding Term Loans of such Lender
(in the case of all such Loans, calculated following all prepayment of Loans in
respect of the Net Proceeds of the issuance of Senior Second Lien Notes).



                                                                              13

                SECTION 21. Conditions to Effectiveness. This Amendment shall
become effective as of May 22, 2003, when (a) the Administrative Agent shall
have received (i) counterparts of this Amendment that, when taken together, bear
the signatures of the Borrowers, the Subsidiary Loan Parties, the Required
Lenders, Lenders holding a majority in interest of the outstanding Tranche B
Term Loans and Lenders holding a majority in interest of the outstanding Mexico
Term Loans and (ii) the Amendment Fee, (b) the representations and warranties
set forth in Section 19 hereof are true and correct (as set forth on an
officer's certificate delivered to the Administrative Agent), (c) the
Intercreditor Agreement shall have been executed and delivered by all parties
thereto and shall be in full force and effect, (d) the terms and conditions of
the Senior Second Lien Notes and the other Senior Second Lien Note Documents
(including terms and conditions relating to payment, covenants, events of
default, remedies and maturity) shall be reasonably satisfactory to the
Administrative Agent and the Syndication Agent, (e) the Administrative Agent
shall have received a favorable written opinion (addressed to the Administrative
Agent, the Syndication Agent and the Lenders) of counsel to the Borrower, in
form and substance reasonably satisfactory to the Administrative Agent, with
respect to this Amendment, the Subsidiary Borrower and the Intercreditor
Agreement, (f) the Equity Purchaser shall have executed and delivered to the
Administrative Agent a written consent of the Equity Purchaser to this
Amendment, in form and substance reasonably satisfactory to the Administrative
Agent and the Syndication Agent, and such written consent shall be in full force
and effect, and the Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent, the Syndication Agent and the
Lenders) of counsel to the Equity Purchaser, in form and substance reasonably
satisfactory to the Administrative Agent, with respect to such written consent,
(g) the gross cash proceeds from the issuance of the Senior Second Lien Notes
shall not be less than $250,000,000 (or, if the Senior Second Lien Notes are
issued at a discount that is a market discount at the time of issuance thereof,
$250,000,000 less the amount of such discount) and (h) all fees and expenses
required to be paid or reimbursed by the Borrowers pursuant hereto or the Credit
Agreement or otherwise, including all invoiced fees and expenses of counsel to
the Administrative Agent and the Syndication Agent, shall have been paid or
reimbursed, as applicable.

                SECTION 22. Credit Agreement. Except as specifically amended
hereby, the Credit Agreement shall continue in full force and effect in
accordance with the provisions thereof as in existence on the date hereof. After
the date hereof, any reference to the Credit Agreement shall mean the Credit
Agreement as amended hereby. This Amendment shall be a Loan Document for all
purposes.

                SECTION 23. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                SECTION 24. Counterparts. This Amendment may be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one agreement. Delivery of an
executed signature page to



                                                                              14

this Amendment by facsimile transmission shall be effective as delivery of a
manually signed counterpart of this Amendment.

                SECTION 25. Expenses. The Borrower agrees to reimburse the
Administrative Agent and the Syndication Agent for their out-of-pocket expenses
in connection with this Amendment, including the reasonable fees, charges and
disbursements of Cravath, Swaine & Moore LLP, counsel for the Syndication Agent.

                SECTION 26. Headings. The headings of this Amendment are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof.



                IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first written above.

                                        PLIANT CORPORATION, formerly known
                                        as Huntsman Packaging Corporation,

                                           by /s/ Brian E. Johnson
                                              ----------------------------------
                                              Name:
                                              Title:

                                        ASPEN INDUSTRIAL, S.A. DE C.V.,

                                           by /s/ Brian E. Johnson
                                              ----------------------------------
                                              Name:
                                              Title:

                                        PLIANT CORPORATION INTERNATIONAL,

                                           by /s/ Brian E. Johnson
                                              ----------------------------------
                                              Name:
                                              Title:

                                        PLIANT FILM PRODUCTS OF MEXICO, INC.,

                                           by /s/ Brian E. Johnson
                                              ----------------------------------
                                              Name:
                                              Title:

                                        PLIANT SOLUTIONS CORPORATION,

                                           by /s/ Brian E. Johnson
                                              ----------------------------------
                                              Name:
                                              Title:

                                        PLIANT PACKAGING OF CANADA, LLC,

                                           by /s/ Brian E. Johnson
                                              ----------------------------------
                                              Name:
                                              Title:



                                        UNIPLAST HOLDINGS INC.,

                                           by /s/ Brian E. Johnson
                                              ----------------------------------
                                              Name:
                                              Title:

                                        UNIPLAST U.S., INC.,

                                           by /s/ Brian E. Johnson
                                              ----------------------------------
                                              Name:
                                              Title:

                                        PIERSON INDUSTRIES, INC.,

                                           by /s/ Brian E. Johnson
                                              ----------------------------------
                                              Name:
                                              Title:

                                        TUREX, INC.,

                                           by /s/ Brian E. Johnson
                                              ----------------------------------
                                              Name:
                                              Title:

                                        UNIPLAST MIDWEST, INC.,

                                           by /s/ Brian E. Johnson
                                              ----------------------------------
                                              Name:
                                              Title:

                                        DEUTSCHE BANK TRUST COMPANY
                                        AMERICAS, formerly known as Bankers
                                        Trust Company, individually and as
                                        Administrative Agent,

                                           by /s/ Marco Orlando
                                              ----------------------------------
                                              Name:  Marco Orlando
                                              Title: Director



                                        JPMORGAN CHASE BANK, formerly
                                        known as The Chase Manhattan Bank, as
                                        Syndication Agent,

                                           by: /s/ Peter A. Dedousis
                                               ---------------------------------
                                               Name:  Peter A. Dedousis
                                               Title: Managing Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution IKB INTERNATIONAL S.A.

                                           By: /s/ Stephen Jessett
                                               ---------------------------------
                                           Name:  Stephen Jessett
                                           Title: Director

                                           by: /s/ Manfred Ziwey
                                               ---------------------------------
                                           Name:  Manfred Ziwey
                                           Title: Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                  May     , 2003

To Approve the Amendment:


Name of Institution  ERSTE BANK, NEW YORK BRANCH

                                           by: /s/ Gregory T. Aptman
                                               ---------------------------------
                                               Name:  Gregory T. Aptman
                                               Title: Vice President

                                           by: /s/ Bryan Lynch
                                               ---------------------------------
                                               Name:  Bryan Lynch
                                               Title: First Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution  NATEXIS BANQUES POPULAIRES

                                           by: /s/ Joseph A. Miller
                                               ---------------------------------
                                               Name:  Joseph A. Miller
                                               Title: Assistant Vice President

                                           by: /s/ William J. Burke
                                               ---------------------------------
                                               Name:  William J. Burke
                                               Title: Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May  , 2003

To Approve the Amendment:


Name of Institution  Clydesdale CLO 2001-1, Ltd.

                                           by: Nomura Corporate Research and
                                               Asset Management Inc., as
                                               Collateral Manager

                                           by: /s/ Elizabeth MacLean
                                               ---------------------------------
                                               Name:  Elizabeth MacLean
                                               Title: Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May  , 2003

To Approve the Amendment:


Name of Institution  Nomura Bond & Loan Fund

                                           by: UFJ Trust Company of New York,
                                               as Trustee

                                           by: Nomura Corporate Research and
                                               Asset Management Inc., as
                                               Attorney in Fact

                                           by: /s/ Elizabeth MacLean
                                               ---------------------------------
                                               Name:  Elizabeth MacLean
                                               Title: Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                      May  ,2003

To Approve the Amendment:


Name of Institution  Archimedes Funding II, LTD.

                                           by: ING Capital Advisors, LLC,
                                               as Collateral Manager

                                           by: /s/ Gordon Cook
                                               ---------------------------------
                                               Name:  Gordon Cook
                                               Title: Senior Vice President and
                                                      Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May  , 2003

To Approve the Amendment:


Name of Institution ING-ORX CLO, LTD.

                                           by: ING Capital Advisors, LLC,
                                               as Collateral Manager

                                           by: /s/ Gordon Cook
                                               ---------------------------------
                                               Name:  Gordon Cook
                                               Title: Senior Vice President and
                                                      Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                     May  , 2003

To Approve the Amendment:


Name of Institution  Balanced High-Yield Fund I, LTD.

                                           by: ING Capital Advisors, LLC,
                                               as Asset Manager

                                           by: /s/ Gordon Cook
                                               ---------------------------------
                                               Name:  Gordon Cook
                                               Title: Senior Vice President and
                                                      Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution  MONY Life Insurance Company

                                           by: MONY Capital Management, Inc..,
                                               as Investment Adviser

                                           by: /s/ Suzanne E. Walton
                                               ---------------------------------
                                               Name:  Suzanne E. Walton
                                               Title: Senior Managing Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                     May  , 2003

To Approve the Amendment:


Name of Institution  Smoky River CDO, L.P.

                                           by: RCB Leveraged Capital, as
                                               Portfolio Advisor

                                           by: /s/ Melissa Marano
                                               ---------------------------------
                                               Name:  Melissa Marano
                                               Title: Partner



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  HELLER FINANCIAL, INC.

                                           by: /s/ Robert M. Kadlick
                                               ---------------------------------
                                               Name:  Robert M. Kadlick
                                               Title: Duly Authorized Signatory



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

Name of Institution  Van Kampen Senior Income Trust

                                           by: Van Kampen Investment Advisory
                                               Corp.

                                           by: /s/ Darvin D. Pierce
                                               ---------------------------------
                                               Name:  Darvin D. Pierce
                                               Title: Execu`tive Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

Name of Institution  Van Kampen Senior Floating Rate Fund

                                           by: Van Kampen Investment Advisory
                                               Corp.

                                           by: /s/ Brad Langs
                                               ---------------------------------
                                               Name:  Brad Langs
                                               Title: Executive Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

Name of Institution  Van Kampen Prime Rate Income Trust

                                           by: Van Kampen Investment Advisory
                                               Corp.

                                           by: /s/ Christina Jamieson
                                               ---------------------------------
                                               Name:  Christina Jamieson
                                               Title: Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

Name of Institution  Van Kampen CLO 1, Limited

                                           by: Van Kampen Investment Advisory
                                               Corp., as Collateral Manager

                                           by: /s/ William Lenga
                                               ---------------------------------
                                               Name:  William Lenga
                                               Title: Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

Name of Institution  Van Kampen CLO II, Limited

                                           by: Van Kampen Investment Advisory
                                               Corp., as Collateral Manager

                                           by: /s/ William Lenga
                                               ---------------------------------
                                               Name:  William Lenga
                                               Title: Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  ING Prime Rate Trust.

                                           by: ING Investments, LLC,
                                               as its Investment Manager

                                           by: /s/ Charles E. LeMieux
                                               ---------------------------------
                                               Name:  Charles E. LeMieux
                                               Title: Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  ML CLO XII Pilgrim America (Cayman) LTD

                                           by: ING Investments, LLC,
                                               as its Investment Manager

                                           by: /s/ Charles E. LeMieux
                                               ---------------------------------
                                               Name:  Charles E. LeMieux
                                               Title: Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Pilgrim CLO 1999-1 LTD.

                                           by: ING Investments, LLC,
                                               as its Investment Manager

                                           by: /s/ Charles E. LeMieux
                                               ---------------------------------
                                               Name:  Charles E. LeMieux
                                               Title: Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Flagship CLO II

                                           by: /s/ Mark S. Pelletier
                                               ---------------------------------
                                               Name:  Mark S. Pelletier
                                               Title: Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  WINGED FOOT FUNDING TRUST

                                           by: /s/ Diana M. Himes
                                               ---------------------------------
                                               Name:  Diana M. Himes
                                               Title: Authorized Agent



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:

Name of Institution  OLYMPIC FUNDING TRUST, SERIES 1999-1

                                           by: /s/ Diana M. Himes
                                               ---------------------------------
                                               Name:  Diana M. Himes
                                               Title: Authorized Agent



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  MUIRFIELD TRADING LLC

                                           by: /s/ Diana M. Himes
                                               ---------------------------------
                                               Name:  Diana M. Himes
                                               Title: Assistant Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution  BANK ONE, NA

                                           by: /s/ Mark F. Nelson
                                               ---------------------------------
                                               Name:  Mark F. Nelson
                                               Title: Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution  CREDIT INDUSTRIEL ET COMMERCIAL

                                           by: /s/ Sean Mounier
                                               ---------------------------------
                                               Name:  Sean Mounier
                                               Title: First Vice President

                                           by: /s/ Brian O'Leary
                                               ---------------------------------
                                               Name:  Brian O'Leary
                                               Title: Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution  SEQUILS--Cumberland I, LTD.

                                           by: Deerfield Capital Management LLC,
                                               as Collateral Manager

                                           by: /s/ Mark E. Wittnebel
                                               ---------------------------------
                                               Name:  Mark E. Wittnebel
                                               Title: Sr. Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution  Rosemont CLO, LTD.

                                           by: Deerfield Capital Management LLC,
                                               as Collateral Manager

                                           by: /s/ Mark E. Wittnebel
                                               ---------------------------------
                                               Name:  Mark E. Wittnebel
                                               Title: Sr. Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  BRYN MAWR CLO, LTD.

                                           by: Deerfield Capital Management LLC,
                                               as Collateral Manager

                                           by: /s/ Mark E. Wittnebel
                                               ---------------------------------
                                               Name:  Mark E. Wittnebel
                                               Title: Sr. Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  National City Bank

                                           by: /s/ Andrew J. Pernsteiner
                                               ---------------------------------
                                               Name:  Andrew J. Pernsteiner
                                               Title: Account Officer



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  AURUM CLO 2002-1 LTD.

                                           by: Columbia Management Advisors,
                                               Inc. (f/k/a Stein Roe & Farnham
                                               Incorporated), as Investment
                                               Advisor

                                           by: /s/ Kathleen A. Zarn
                                               ---------------------------------
                                               Name:  Kathleen A. Zarn
                                               Title: Senior Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Liberty Floating Rate Advantage Fund

                                           by: Columbia Management Advisors,
                                               Inc. (f/k/a Stein Roe & Farnham
                                               Incorporated), as Investment
                                               Advisor

                                           by: /s/ Kathleen A. Zarn
                                               ---------------------------------
                                               Name:  Kathleen A. Zarn
                                               Title: Senior Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  LCM I Limited Partnership

                                           by: Lyon Capital Management LLC, as
                                               Attorney-in-Fact

                                           by: /s/ Farboud Tavangar
                                               ---------------------------------
                                                     LYON CAPITAL MANAGEMENT LLC
                                               Name:  Farboud Tavangar
                                               Title: Senior Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  ALLSTATE LIFE INSURANCE COMPANY

                                           by: /s/ Chris Goergen
                                               ---------------------------------
                                               Name:  Chris Goergen
                                               Title: Authorized Signatory

                                           by: /s/ Jerry D. Zinkula
                                               ---------------------------------
                                               Name:  Jerry D. Zinkula
                                               Title: Authorized Signatory



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  AIMCO CLO SERIES 2001-A

                                           by: /s/ Chris Goergen
                                               ---------------------------------
                                               Name:  Chris Goergen
                                               Title: Authorized Signatory

                                           by: /s/ Jerry D. Zinkula
                                               ---------------------------------
                                               Name:  Jerry D. Zinkula
                                               Title: Authorized Signatory



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  AIMCO CDO Series 2000-A

                                           by: /s/ Chris Goergen
                                               ---------------------------------
                                               Name:  Chris Goergen
                                               Title: Authorized Signatory

                                           by: /s/ Jerry D. Zinkula
                                               ---------------------------------
                                               Name:  Jerry D. Zinkula
                                               Title: Authorized Signatory



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution  U. S. BANK NATIONAL ASSOCIATION

                                           by: /s/ Scott J. Bell
                                               ---------------------------------
                                               Name:  Scott J. Bell
                                               Title: Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  FIRSTRUST BANK

                                           By: /s/ Kent D. Nelson
                                               ---------------------------------
                                               Name:  Kent D. Nelson
                                               Title: SVP



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Zions First National Bank

                                           by: /s/ Jim C. Stanchfield
                                               ---------------------------------
                                               Name:  Jim C. Stanchfield
                                               Title: Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Hanover Square CLO LTD.


                                           by: Blackstone Dept. Advisors L.P.,
                                               as Collateral Manager

                                           by: /s/ Dean T. Criares
                                               ---------------------------------
                                               Name:  Dean T. Criares
                                               Title: Managing Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  SIERRA CLO I, LTD.

                                           by: /s/ John M. Cooperton
                                               ---------------------------------
                                               Name:  John M. Cooperton
                                               Title: Chief Operating Officer
                                                      Centre Pacific LLP
                                                      (Manager)



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Metropolitan Life Insurance Company

                                           by: /s/ James R. Dingler
                                               ---------------------------------
                                               Name:  James R. Dingler
                                               Title: Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution: First Allmerica Financial Life Insurance Company

                                           by: CypressTree Investment Management
                                               Company, Inc., as Attorney-in-
                                               Fact

                                           by: /s/ Jeffrey Megar
                                               ---------------------------------
                                               Name:  Jeffrey Megar
                                               Title: Principal



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution  Centurion CDO II, Ltd.

                                           by: American Express Asset Management
                                               Group, Inc. as Collateral Manager

                                           by: /s/ Leanne Stavralds
                                               ---------------------------------
                                               Name:  Leanne Stavralds
                                               Title: Director - Operations



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution  Centurion CDO III, Ltd.

                                           by: American Express Asset Management
                                               Group, Inc. as Collateral Manager

                                           by: /s/ Leanne Stavralds
                                               ---------------------------------
                                               Name:  Leanne Stavralds
                                               Title: Director - Operations



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:

Sequils - Centurion V, Ltd.

Name of Institution  Sequils - Centurion V, Ltd.

                                           by: American Express Asset Management
                                               Group, Inc. as Collateral Manager

                                           by: /s/ Leanne Stavralds
                                               ---------------------------------
                                               Name:  Leanne Stavralds
                                               Title: Director - Operations



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution  Centurion CDO VI, Ltd.

                                           by: American Express Asset Management
                                               Group, Inc. as Collateral Manager

                                           by: /s/ Leanne Stavralds
                                               ---------------------------------
                                               Name:  Leanne Stavralds
                                               Title: Director - Operations



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May 20, 2003

To Approve the Amendment:


Name of Institution  Webster Bank

                                           by: /s/ John Gilsenan
                                               ---------------------------------
                                               Name:  John Gilsenan
                                               Title: Vice President




                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  SunAmerica Senior Floating Rate Fund, Inc.

                                           by: Stanfield Capital Partners, LLC
                                               as subadvisor

                                           by: /s/ Christopher A. Bondy
                                               ---------------------------------
                                               Name:  Christopher A. Bondy
                                               Title: Partner



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Hamilton CDO, Ltd.

                                           by: Stanfield Capital Partners LLC
                                               As its Collateral Manager

                                           by: /s/ Christopher A. Bondy
                                               ---------------------------------
                                               Name:  Christopher A. Bondy
                                               Title: Partner



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Windsor Loan Funding, Limited

                                           by: Stanfield Capital Partners LLC
                                               as its Investment Manager

                                           by: /s/ Christopher A. Bondy
                                               ---------------------------------
                                               Name:  Christopher A. Bondy
                                               Title: Partner



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Stanfield/RMF Transatlantic CDO Ltd.

                                           by: Stanfield Capital Partners LLC
                                               As its Collateral Manager

                                           by: /s/ Christopher A. Bondy
                                               ---------------------------------
                                               Name:  Christopher A. Bondy
                                               Title: Partner



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment


Name of Institution  Stanfield Arbitrage CDO, Ltd.

                                           by: Stanfield Capital Partners LLC
                                               as the Collateral Manager

                                           by: /s/ Christopher A. Bondy
                                               ---------------------------------
                                               Name:  Christopher A. Bondy
                                               Title: Partner



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Stanfield Carrera CLO, Ltd.


                                           by: Stanfield Capital Partners LLC
                                               as its Asset Manager

                                           by: /s/ Christopher A. Bondy
                                               ---------------------------------
                                               Name:  Christopher A. Bondy
                                               Title: Partner



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:

Name of Institution  Stanfield Quattro CLO, Ltd.

                                           by: Stanfield Capital Partners LLC
                                               as its Collateral Manager

                                           by: /s/ Christopher A. Bondy
                                               ---------------------------------
                                               Name:  Christopher A. Bondy
                                               Title: Partner



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Stanfield CLO Ltd.

                                           by: Stanfield Capital Partners LLC
                                               as its Collateral Manager

                                           by: /s/ Christopher A. Bondy
                                               ---------------------------------
                                               Name:  Christopher A. Bondy
                                               Title: Partner



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  GALAXY CLO 1999-1 Ltd.

                                           by: /s/ W. Jeffrey Baxter
                                               ---------------------------------
                                               Name:  W. Jeffrey Baxter
                                               Title: Authorized Agent



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Brant Point II CBO 2001 LTD, as Term Leader

                                           by: Sankaty Advisors, LLC
                                               As Collateral Manager

                                           by: /s/ Diane J. Exter
                                               ---------------------------------
                                               Name:  Diane J. Exter
                                               Title: Managing Director
                                                      Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Great Point CLO 1999-1 LTD, as Term Lender

                                           by: Sankaty Advisors, LLC
                                               as Collateral Manager

                                           by: /s/ Diane J. Exter
                                               ---------------------------------
                                               Name:  Diane J. Exter
                                               Title: Managing Director
                                                      Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Race Point CLO, Limited, as Term Lender

                                           by: Sankaty Advisors, LLC
                                               as Collateral Manager

                                           by: /s/ Diane J. Exter
                                               ---------------------------------
                                               Name:  Diane J. Exter
                                               Title: Managing Director
                                                      Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Race Point II CLO, Limited, as Term Lender

                                           by: Sankaty Advisors, LLC
                                               as Collateral Manager

                                           by: /s/ Diane J. Exter
                                               ---------------------------------
                                               Name:  Diane J. Exter
                                               Title: Managing Director
                                                      Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Sankaty High Yield Partners II, L.P.

                                           by: /s/ Diane J. Exter
                                               ---------------------------------
                                               Name:  Diane J. Exter
                                               Title: Managing Director
                                                      Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Sankaty High Yield Partners III, L.P.

                                           by: /s/ Diane J. Exter
                                               ---------------------------------
                                               Name:  Diane J. Exter
                                               Title: Managing Director
                                                      Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Castle Hill I - INGOTS, Ltd., as Term Lender

                                           by: Sankaty Advisors, LLC
                                               as Collateral Manager

                                           by: /s/ Diane J. Exter
                                               ---------------------------------
                                               Name:  Diane J. Exter
                                               Title: Managing Director
                                                      Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Castle Hill II - INGOTS, Ltd., as Term Lender

                                           by: Sankaty Advisors, LLC
                                               as Collateral Manager

                                           by: /s/ Diane J. Exter
                                               ---------------------------------
                                               Name:  Diane J. Exter
                                               Title: Managing Director
                                                      Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  HARBOUR TOWN FUNDING TRUST

                                           by: /s/ Ann E. Morris
                                               ---------------------------------
                                               Name:  Ann E. Morris
                                               Title: Authorized Agent



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  HARBOUR TOWN FUNDING LLC

                                           by: /s/ Ann E. Morris
                                               ---------------------------------
                                               Name:  Ann E. Morris
                                               Title: Asst Vice President



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  OAK HILL SECURITIES FUND, L.P.

                                           by: Oak Hill Securities GenPar, L.P.
                                               Its General Partner

                                           by: Oak Hill Securities MGP, Inc.
                                               Its General Partner

                                           By: /s/ Scott D. Krase
                                               ---------------------------------
                                               Name:  Scott D. Krase
                                               Title: Authorized Signatory



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  OAK HILL CREDIT PARTNERS I, LIMITED

                                           by: Oak Hill CLO Management I, LLC
                                               Its Investment Manager

                                           by: /s/ Scott D. Krase
                                               ---------------------------------
                                               Name:  Scott D. Krase
                                               Title: Authorized Signatory



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  OAK HILL SECURITIES FUND II, L.P.

                                           by: Oak Hill Securities GenPar II,
                                               L.P. Its General Partner

                                           by: Oak Hill Securities MGP II, Inc.
                                               Its General Partner

                                           by: /s/ Scott D. Krase
                                               ---------------------------------
                                               Name:  Scott D. Krase
                                               Title: Authorized Signatory



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  OAK HILL CREDIT PARTNERS II, LIMITED

                                           by: Oak Hill CLO Management II, LLC
                                               as Investment Manager

                                           by:
                                               ---------------------------------
                                               Name:  Scott D. Krase
                                               Title: Authorized Signatory



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Morgan Stanley Prime Income Trust

                                           By: /s/ Sheila A. Finnerty
                                               ---------------------------------
                                               Name:  Sheila A. Finnerty
                                               Title: Executive Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  KATONAH I, LTD.

                                           by: /s/ Ralph Della Rocca
                                               ---------------------------------
                                               Name:  Ralph Della Rocca
                                               Title: Authorized Officer
                                                      Katonah Capital, L.L.C.
                                                      As Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  KATONAH II, LTD.

                                           By: /s/ Ralph Della Rocca
                                               ---------------------------------
                                               Name:  Ralph Della Rocca
                                               Title: Authorized Officer
                                                      Katonah Capital, L.L.C.
                                                      As Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  KATONAH III, LTD.

                                           By: /s/ Ralph Della Rocca
                                               ---------------------------------
                                               Name:  Ralph Della Rocca
                                               Title: Authorized Officer
                                                      Katonah Capital, L.L.C.
                                                      As Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  KATONAH IV, LTD.

                                           by: /s/ Ralph Della Rocca
                                               ---------------------------------
                                               Name:  Ralph Della Rocca
                                               Title: Authorized Officer
                                                      Katonah Capital, L.L.C.
                                                      As Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  KATONAH V, LTD.

                                           By: /s/ Ralph Della Rocca
                                               ---------------------------------
                                               Name:  Ralph Della Rocca
                                               Title: Authorized Officer
                                                      Katonah Capital, L.L.C.
                                                      As Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  THE BANK OF NOVA SCOTIA

                                           By: /s/ Mark Sparrow
                                               ---------------------------------
                                               Name:  Mark Sparrow
                                               Title: Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  D25 Maplewood (Cayman) GIA - Long Term Pool

                                           by: David L. Babson & Co., Inc.
                                               as Collateral Manager

                                           by: /s/ Glenn P. Duffy
                                               ---------------------------------
                                               Name:  Glenn P. Duffy, CFA
                                               Title: Managing Director



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:

Name of Institution  OCTAGON INVESTMENT PARTNERS II, LLC

                                           by: Octagon Credit Investors, LLC
                                               as its investment manager

                                           By: /s/ Michael B. Nechamkin
                                               ---------------------------------
                                               Name:  Michael B. Nechamkin
                                               Title: Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  OCTAGON INVESTMENT PARTNERS III, LTD.

                                           By: Octagon Credit Investors, LLC
                                               as Portfolio Manager

                                           By: /s/ Michael B. Nechamkin
                                               ---------------------------------
                                               Name:  Michael B. Nechamkin
                                               Title: Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  OCTAGON INVESTMENT PARTNERS IV, LTD.


                                           by: Octagon Creditor Investors, LLC
                                               as collateral manager

                                           by: /s/ Michael B. Nechamkin
                                               ---------------------------------
                                               Name:  Michael B. Nechamkin
                                               Title: Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  OCTAGON INVESTMENT PARTNERS V, LTD.

                                           by: Octagon Credit Investors, LLC
                                               as Portfolio Manager

                                           by: /s/ Michael B. Nechamkin
                                               ---------------------------------
                                               Name:  Michael B. Nechamkin
                                               Title: Portfolio Manager



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  KZH CYPRESSTREE-1 LLC

                                           By: /s/ Susan Lee
                                               ---------------------------------
                                               Name:  Susan Lee
                                               Title: Authorized Agent



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  KZH ING-2 LLC

                                           By: /s/ Susan Lee
                                               ---------------------------------
                                               Name:  Susan Lee
                                               Title: Authorized Agent



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  KZH SOLEIL LLC

                                           By: /s/ Susan Lee
                                               ---------------------------------
                                               Name:  Susan Lee
                                               Title: Authorized Agent



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  KZH STERLING LLC

                                           By: /s/ Susan Lee
                                               ---------------------------------
                                               Name:  Susan Lee
                                               Title: Authorized Agent



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  KZH SOLEIL-2 LLC

                                           By: /s/ Susan Lee
                                               ---------------------------------
                                               Name:  Susan Lee
                                               Title: Authorized Agent



                                                               SIGNATURE PAGE TO
                                                           AMENDMENT DATED AS OF
                                                                    May   , 2003

To Approve the Amendment:


Name of Institution  Wells Fargo Bank, National Association

                                           By: /s/ Tyler G. Harvey
                                               ---------------------------------
                                               Name:  Tyler G. Harvey
                                               Title: Vice President

EX-10.25

                                                                   EXHIBIT 10.25

                             INTERCREDITOR AGREEMENT

                         INTERCREDITOR  AGREEMENT,  dated  as of May  30,  2003,
                    among DEUTSCHE BANK TRUST COMPANY AMERICAS, as Credit Agent,
                    WILMINGTON   TRUST   COMPANY,   as   Trustee,   and   PLIANT
                    CORPORATION.

                              W I T N E S S E T H :

        WHEREAS, the Company (such term and each other capitalized term used
herein having the meanings set forth in Section 1 below), certain lenders,
Deutsche Bank Trust Company Americas, as administrative agent and collateral
agent, JPMorgan Chase Bank, as syndication agent, and The Bank of Nova Scotia,
as documentation agent, are parties to the Credit Agreement dated as of
September 30, 1997, as amended and restated as of May 31, 2000, as amended (as
further amended, supplemented or otherwise modified from time to time, the
"Existing Credit Agreement");

        WHEREAS, the Obligations of the Company under the Existing Credit
Agreement are secured (together with certain other obligations) by various
assets of the Company and certain Subsidiaries thereof;

        WHEREAS, the Company, certain Subsidiaries of the Company and the
Trustee have entered into the Indenture dated as of May 30, 2003 (as amended,
supplemented or otherwise modified from time to time, the "Indenture"), pursuant
to which the Notes shall be governed;

        WHEREAS, the Company and certain lenders under the Existing Credit
Agreement have entered into an Amendment dated as of May 22, 2003 (the
"Amendment"), to the Existing Credit Agreement that, among other things,
permits, subject to certain terms and conditions, (a) the issuance of
$250,000,000 in principal amount of the Notes by the Company and (b) a second
priority Lien on the Common Collateral to secure certain of the Noteholder
Claims; and

        WHEREAS, it is a condition precedent to the effectiveness of the
Amendment that the parties hereto enter into this Agreement;

        Now, THEREFORE, in consideration of the foregoing, the mutual covenants
and obligations herein set forth and for other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:

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

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

        "Amendment" has the meaning set forth in the recitals hereto.



                                                                               2

        "Bank Indebtedness" means any and all amounts payable under or in
respect of the Credit Agreement and any Refinancing Indebtedness (as defined in
the Indenture) with respect thereto, as amended from time to time, including
principal, premium (if any), interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not a claim for post-filing interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees and
all other amounts payable thereunder or in respect thereof. It is understood and
agreed that Refinancing Indebtedness in respect of the Credit Agreement may be
Incurred (as defined in the Indenture) from time to time after termination of
the Credit Agreement.

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

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

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

        "Commodity Hedge Obligations" means, with respect to any Person, all
obligations of such Person in respect of any commodity price protection
agreement or other commodity price hedging arrangement or other similar
agreement or arrangement.

        "Common Collateral" means all of the assets of any Grantor, whether
real, personal or mixed, constituting both Senior Lender Collateral and
Noteholder Collateral.

        "Company" means Pliant Corporation, a Utah corporation.

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

        "Credit Agent" means Deutsche Bank Trust Company Americas (formerly
known as Bankers Trust Company) in its capacity as collateral agent under the
Existing Credit Agreement and the Security Documents (as defined in the Existing
Credit Agreement) and also includes its successors hereunder as collateral agent
for the Senior Lenders (or if there is more than one such successor agent, such
agents representing the Senior Lenders holding a majority of the Senior Lender
Claims) under the Senior Credit Agreement in accordance with Section 5.6,
exercising substantially the same rights and powers, or if there is no acting
Credit Agent under the Senior Credit Agreement, the Required Lenders.

        "Credit Agreement" means the credit agreement dated as of September 30,
1997, as amended and restated as of May 31, 2000 (and further amended by
Amendments No. 1 through 6), among the Company, Aspen Industrial, S.A. de C.V.,
the financial institutions party



                                                                               3

thereto as lenders, Deutsche Bank Trust Company Americas, as administrative
agent and collateral agent, and JPMorgan Chase Bank, as syndication agent,
together with related documents thereto including any guarantee agreements and
security documents, as further amended, modified, supplemented, restated,
renewed, refunded, replaced, restructured, repaid or refinanced from time to
time (including any agreement extending the maturity thereof or increasing the
amount of available borrowings thereunder or adding Restricted Subsidiaries (as
defined in the Indenture) of the Company as additional borrowers or guarantors
thereunder) whether with the original agents and lenders or otherwise and
whether provided under the original credit agreement or other credit agreements
or otherwise.

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

        "Discharge of Senior Lender Claims" means, except to the extent
otherwise provided in Section 5.6, payment in full in cash of (a) the principal
of and interest and premium, if any, on all Indebtedness outstanding under the
First-Lien Credit Facilities or, with respect to letters of credit outstanding
thereunder, delivery of cash collateral or backstop letters of credit in respect
thereof in compliance with such First-Lien Credit Facilities, as applicable, in
each case after or concurrently with termination of all commitments to extend
credit thereunder and (b) any other Senior Lender Claims that are due and
payable or otherwise accrued and owing at or prior to the time such principal
and interest are paid.

        "Existing Credit Agreement" has the meaning set forth in the recitals
hereto.

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

        "Future First-Lien Credit Facility" means any First-Lien Credit Facility
(other than the Existing Credit Agreement) that is designated by the Company as
a "First-Lien Credit Facility" for purposes of the Indenture.

        "Future Other First-Lien Obligations" means all Obligations of the
Company or any other Grantor in respect of Cash Management Obligations or
Hedging Obligations that are designated by the Company as "Credit Agreement
Obligations" for purposes of the Indenture (other than any Senior Lender Cash
Management Obligations and Senior Lender Hedging Obligations).



                                                                               4

        "Grantors" means the Company and each of the Subsidiaries that has
executed and delivered a Noteholder Collateral Document or a Senior Collateral
Document.

        "Hedging Obligations" means, with respect to any Person, all obligations
and liabilities of such Person in respect of (a) interest rate or currency swap
agreements, interest rate or currency cap agreements, interest rate or currency
collar agreements, (b) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates and/or currency exchange rates or
(c) Commodity Hedge Obligations.

        "Indebtedness" means and includes all obligations that constitute
"Indebtedness" within the meaning of the Indenture or the Senior Credit
Agreement.

        "Indenture" has the meaning set forth in the recitals hereto.

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

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

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

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

        "Noteholder Collateral Documents" means the Noteholder Pledge Agreement,
the Noteholder Security Agreement, the Noteholder Mortgages and any other
document or instrument pursuant to which a Lien is granted by any Grantor to
secure any Noteholder Claims or under which rights or remedies with respect to
any such Lien are governed.

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



                                                                               5

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

        "Noteholder Pledge Agreement" means the Second Priority Pledge
Agreement, dated as of May 30, 2003, among the Company, the other Grantors and
the Trustee.

        "Noteholder Security Agreement" means the Second Priority Security
Agreement, dated as of May 30, 2003, among the Company, the other Grantors and
the Trustee.

        "Noteholders" means the Persons holding Noteholder Claims.

        "Notes" means (a) the initial $250,000,000 in principal amount of
11 1/8% Senior Secured Notes due 2009 to be issued by the Company, (b) the
exchange notes issued in exchange therefor as contemplated by the Registration
Rights Agreement dated as of May 30, 2003, and the Initial Purchasers (as
defined therein) and (c) any additional notes issued under the Indenture by the
Company, to the extent permitted by the Indenture and the Senior Credit
Agreement.

        "Obligations" means any and all obligations with respect to the payment
of (a) any principal of or interest (including interest accruing on or after the
commencement of any Insolvency or Liquidation Proceeding, whether or not a claim
for post-filing interest is allowed in such proceeding) or premium on any
Indebtedness, including any reimbursement obligation in respect of any letter of
credit, (b) any fees, indemnification obligations, expense reimbursement
obligations or other liabilities payable under the documentation governing any
Indebtedness, (c) any obligation to post cash collateral in respect of letters
of credit and any other obligations or (d) any Cash Management Obligations or
Hedging Obligations.

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

        "Pledged Collateral" means (a) the Common Collateral in the possession
of the Credit Agent (or its agents or bailees), to the extent that possession
thereof is necessary to perfect a Lien thereon under the Uniform Commercial
Code, and (b) the "Pledged Securities" under, and as defined in, the Noteholder
Pledge Agreement.

        "Recovery" has the meaning set forth in Section 6.5.

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



                                                                               5

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

        "Senior Credit Agreement" means the Existing Credit Agreement; provided
that if at any time a Discharge of Senior Lender Claims occurs with respect to
the Existing Credit Agreement (without giving effect to Section 5.6), then, to
the extent provided in Section 5.6, the term "Senior Credit Agreement" means the
Future First-Lien Credit Facility designated by the Company as the "Senior
Credit Agreement" in accordance with such Section.

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

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

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

        "Senior Lender Documents" means the Senior Credit Agreement, the Senior
Collateral Documents, and each of the other agreements, documents and
instruments (including each agreement, document or instrument providing for or
evidencing a Senior Lender Hedging Obligation or Senior Lender Cash Management
Obligation) providing for or evidencing any other Obligation under the Credit
Agreement or any Future First-Lien Credit Facility or any



                                                                               7

Future Other First-Lien Obligations, and any other related document or
instrument executed or delivered pursuant to any Senior Lender Document at any
time or otherwise evidencing any Indebtedness arising under any Senior Lender
Document.

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

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

        "Subsidiary" means any "Subsidiary" of the Company, as defined in the
Indenture or the Senior Credit Agreement.

        "Trustee" means Wilmington Trust Company, in its capacity as trustee
under the Indenture and collateral agent under the Noteholder Collateral
Documents, and also includes its successors hereunder as collateral agent for
the Noteholders under the Noteholder Collateral Documents.

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

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

        Section 2. Lien Priorities.

        2.1     Subordination. Notwithstanding the date, manner or order of
grant, attachment or perfection of any Liens granted to the Trustee or the
Noteholders on the Common Collateral or of any Liens granted to the Credit Agent
or the Senior Lenders on the Common Collateral and notwithstanding any provision
of the UCC, or any applicable law or the Noteholder Documents or the Senior
Lender Documents or any other circumstance whatsoever, the Trustee, on behalf of
itself and the Noteholders, hereby agrees that: (a) any Lien on the Common
Collateral securing any Senior Lender Claims now or hereafter held by or on
behalf of



                                                                               8

the Credit Agent or any Senior Lenders or any agent or trustee therefor shall be
senior in all respects and prior to any Lien on the Common Collateral securing
any of the Noteholder Claims; and (b) any Lien on the Common Collateral now or
hereafter held by or on behalf of the Trustee or any Noteholders or any agent or
trustee therefor regardless of how acquired, whether by grant, statute,
operation of law, subrogation or otherwise, shall be junior and subordinate in
all respects to all Liens on the Common Collateral securing any Senior Lender
Claims. All Liens on the Common Collateral securing any Senior Lender Claims
shall be and remain senior in all respects and prior to all Liens on the Common
Collateral securing any Noteholder Claims for all purposes, whether or not such
Liens securing any Senior Lender Claims are subordinated to any Lien securing
any other obligation of the Company, any other Grantor or any other Person.

        2.2     Prohibition on Contesting Liens. Each of the Trustee, for itself
and on behalf of each Noteholder, and the Credit Agent, for itself and on behalf
of each Senior Lender, agrees that it shall not (and hereby waives any right to)
contest or support any other Person in contesting, in any proceeding (including
any Insolvency or Liquidation Proceeding), the priority, validity or
enforceability of (a) a Lien held by or on behalf of any of the Senior Lenders
in the Senior Lender Collateral or (b) a Lien held by or on behalf of any of the
Noteholders in the Common Collateral (in the case of this clause (b), to secure
Obligations in respect of Notes referred to in clause (a), (b) or (c) of the
definition of the term "Notes" in Section 1(a)), as the case may be; provided
that nothing in this Agreement shall be construed to prevent or impair the
rights of the Credit Agent or any Senior Lender to enforce this Agreement,
including the priority of the Liens securing the Senior Lender Claims as
provided in Section 2.1.

        2.3     No New Liens. So long as the Discharge of Senior Lender Claims
has not occurred, the parties hereto agree that, after the date hereof, if the
Trustee shall hold any Lien on any assets of the Company or any other Grantor
securing any Noteholder Claims that are not also subject to the first-priority
Lien of the Credit Agent under the Senior Lender Documents, the Trustee, upon
demand by the Credit Agent or the Company, will either release such Lien or
assign it to the Credit Agent as security for the Senior Lender Claims (in which
case the Trustee may retain a junior lien on such assets subject to the terms
hereof).

        Section 3. Enforcement.

        3.1     Exercise of Remedies.

        (a)     So long as the Discharge of Senior Lender Claims has not
occurred, whether or not any Insolvency or Liquidation Proceeding has been
commenced by or against the Company or any other Grantor, (i) the Trustee and
the Noteholders will not exercise or seek to exercise any rights or remedies
(including set-off) with respect to any Common Collateral, institute any action
or proceeding with respect to such rights or remedies (including any action of
foreclosure), contest, protest or object to any foreclosure proceeding or action
brought by the Credit Agent or any Senior Lender, the exercise of any right
under any lockbox agreement, control agreement, landlord waiver or bailee's
letter or similar agreement or arrangement to which the Trustee or any
Noteholder is a party, or any other exercise by any such party, of any rights
and remedies relating to the Common Collateral under the Senior Lender Documents
or otherwise, or object to the forbearance by the Senior Lenders from bringing
or pursuing any foreclosure proceeding or action or any other exercise of any
rights or remedies relating to the



                                                                               9

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

        (b)     The Trustee, on behalf of itself and the Noteholders, agrees
that it will not take or receive any Common Collateral or any proceeds of Common
Collateral in connection with the exercise of any right or remedy (including
set-off) with respect to any Common Collateral, unless and until the Discharge
of Senior Lender Claims has occurred. Without limiting the generality of the
foregoing, unless and until the Discharge of Senior Lender Claims has occurred,
except as expressly provided in the proviso in clause (ii) of Section 3.1(a),
the sole right of the Trustee and the Noteholders with respect to the Common
Collateral is to hold a Lien on the Common Collateral pursuant to the Noteholder
Documents for the period and to the extent granted therein and to receive a
share of the proceeds thereof, if any, after the Discharge of the Senior Lender
Claims has occurred.

        (c)     Subject to the proviso in clause (ii) of Section 3.1(a), (i) the
Trustee, for itself and on behalf of the Noteholders, agrees that the Trustee
and the Noteholders will not take any action that would hinder any exercise of
remedies undertaken by the Credit Agent or the Senior Lenders under the Senior
Loan Documents, including any sale, lease, exchange, transfer or other
disposition of the Common Collateral, whether by foreclosure or otherwise, and
(ii) the Trustee, for itself and on behalf of the Noteholders, hereby waives any
and all rights it or the Noteholders may have as a junior lien creditor or
otherwise to object to the manner in which the Credit Agent or the Senior
Lenders seek to enforce or collect the Senior Lender Claims or the Liens granted
in any of the Senior Lender Collateral, regardless of whether any action or
failure to act by or on behalf of the Credit Agent or Senior Lenders is adverse
to the interest of the Noteholders.

        (d)     The Trustee hereby acknowledges and agrees that no covenant,
agreement or restriction contained in any Noteholder Document shall be deemed to
restrict in any way the rights and remedies of the Credit Agent or the Senior
Lenders with respect to the Common Collateral as set forth in this Agreement and
the Senior Lender Documents.



                                                                              10

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

        Section 4. Payments.

        4.1     Application of Proceeds. As long as the Discharge of Senior
Lender Claims has not occurred, the Common Collateral or proceeds thereof
received in connection with the sale or other disposition of, or collection on,
such Common Collateral upon the exercise of remedies, shall be applied by the
Credit Agent to the Senior Lender Claims in such order as specified in the
relevant Senior Lender Documents until the Discharge of Senior Lender Claims has
occurred. Upon the Discharge of the Senior Lender Claims, the Credit Agent shall
deliver to the Trustee any proceeds of Common Collateral held by it in the same
form as received, with any necessary endorsements or as a court of competent
jurisdiction may otherwise direct to be applied by the Trustee to the Noteholder
Claims in such order as specified in the relevant Noteholder Documents.

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

        Section 5. Other Agreements.

        5.1     Releases.

        (a)     If:

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

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



                                                                              11

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

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

            (v)    the Company so requests in respect of Common Collateral with
    a fair value, as determined in good faith by the Board of Directors of the
    Company, of up to $2.0 million in any calendar year; subject to a cumulative
    carryover for any amount not used in any prior calendar year,

            then

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

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

        5.2     Insurance. Unless and until the Discharge of Senior Lender
Claims has occurred, the Credit Agent and the Senior Lenders shall have the sole
and exclusive right, subject to the rights of the Grantors under the Senior
Lender Documents, to adjust settlement for any insurance policy covering the
Common Collateral in the event of any loss thereunder and to approve any award
granted in any condemnation or similar proceeding affecting the Common
Collateral. Unless and until the Discharge of Senior Lender Claims has occurred,
all proceeds of any such policy and any such award if in respect to the Common
Collateral shall be paid to the Credit Agent for the benefit of the Senior
Lenders to the extent required under the Senior Lender Documents and thereafter
to the Trustee for the benefit of the Noteholders to the extent required under
the applicable Noteholder Documents and then to the owner of the subject
property or as a court of competent jurisdiction may otherwise direct. If the
Trustee or any Noteholder shall, at any time, receive any proceeds of any such
insurance policy or any such award in contravention



                                                                              12

of this Agreement, it shall pay such proceeds over to the Credit Agent in
accordance with the terms of Section 4.2.

        5.3     Amendments to Noteholder Collateral Documents.

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

    "Notwithstanding anything herein to the contrary, the lien and
    security interest granted to the Trustee pursuant to this Agreement and the
    exercise of any right or remedy by the Trustee hereunder are subject to the
    provisions of the Intercreditor Agreement, dated as of May 30, 2003 (as
    amended, supplemented or otherwise modified from time to time, the
    "Intercreditor Agreement"), among Pliant Corporation, Deutsche Bank Trust
    Company Americas (formerly known as Bankers Trust Company), as Credit Agent,
    and Wilmington Trust Company, as Trustee. In the event of any conflict
    between the terms of the Intercreditor Agreement and this Agreement, the
    terms of the Intercreditor Agreement shall govern."

In addition, the Trustee agrees that each Noteholder Mortgage covering any
Common Collateral shall contain such other language as the Credit Agent may
reasonably request to reflect the subordination of such Noteholder Mortgage to
the Senior Collateral Document covering such Common Collateral.

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

        5.4     Rights As Unsecured Creditors. Notwithstanding anything to the
contrary in this Agreement, the Trustee and the Noteholders may exercise rights
and remedies as an unsecured creditor against the Company or any Subsidiary that
has guaranteed the Noteholder Claims in accordance with the terms of the
Noteholder Documents and applicable law as if the Common Collateral was not
Noteholder Collateral. Nothing in this Agreement shall prohibit the



                                                                              13

receipt by the Trustee or any Noteholders of the required payments of interest
and principal so long as such receipt is not the direct or indirect result of
the exercise by the Trustee or any Noteholder of rights or remedies as a secured
creditor or enforcement in contravention of this Agreement of any Lien held by
any of them. In the event the Trustee or any Noteholder becomes a judgment lien
creditor in respect of Common Collateral as a result of its enforcement of its
rights as an unsecured creditor, such judgment lien shall be subordinated to the
Liens securing Senior Lender Claims on the same basis as the other Liens
securing the Noteholder Claims are so subordinated to such Senior Lender Claims
under this Agreement. Nothing in this Agreement impairs or otherwise adversely
affects any rights or remedies the Credit Agent or the Senior Lenders may have
with respect to the Senior Lender Collateral.

        5.5     Bailee for Perfection.

        (a)     The Credit Agent agrees to hold the Pledged Collateral that is
part of the Common Collateral in its possession or control (or in the possession
or control of its agents or bailees) as bailee for the Trustee and any assignee
solely for the purpose of perfecting the security interest granted in such
Pledged Collateral pursuant to the Noteholder Pledge Agreement, subject to the
terms and conditions of this Section 5.5.

        (b)     Except as otherwise specifically provided herein, until the
Discharge of Senior Lender Claims has occurred, the Credit Agent shall be
entitled to deal with the Pledged Collateral in accordance with the terms of the
Senior Lender Documents as if the Liens under the Noteholder Collateral
Documents did not exist. The rights of the Trustee and the Noteholders shall at
all times be subject to the terms of this Agreement and to the Credit Agent's
rights under the Senior Lender Documents.

        (c)     The Credit Agent shall have no obligation whatsoever to the
Trustee or any Noteholder to assure that the Pledged Collateral is genuine or
owned by any of the Grantors or to preserve rights or benefits of any Person
except as expressly set forth in this Section 5.5. The duties or
responsibilities of the Credit Agent under this Section 5.5 shall be limited
solely to holding the Pledged Collateral as bailee for the Trustee for purposes
of perfecting the Lien held by the Trustee.

        (d)     The Credit Agent shall not have by reason of the Noteholder
Collateral Documents or this Agreement or any other document a fiduciary
relationship in respect of the Trustee or any Noteholder.

        (e)     Upon the Discharge of Senior Lender Claims, the Credit Agent
shall deliver to the Trustee the remaining Pledged Collateral (if any) together
with any necessary endorsements (or otherwise allow the Trustee to obtain
control of such Pledged Collateral) or as a court of competent jurisdiction may
otherwise direct.

        5.6     When Discharge of Senior Lender Claims Deemed to Not Have
Occurred. If at any time after the Discharge of Senior Lender Claims has
occurred with respect to the Existing Credit Agreement the Company designates
any Future First-Lien Credit Facility to be the "Senior Credit Agreement"
hereunder, then such Discharge of Senior Lender Claims shall automatically be
deemed not to have occurred for all purposes of this Agreement (other than



                                                                              14

with respect to any actions taken prior to the date of such designation as a
result of the occurrence of such first Discharge of Senior Lender Claims), and
such Future First-Lien Credit Facility shall automatically be treated as the
Senior Credit Agreement for all purposes of this Agreement, including for
purposes of the Lien priorities and rights in respect of Common Collateral set
forth herein and the granting by the Credit Agent of amendments, waivers and
consents hereunder. Upon receipt of notice of such designation (including the
identity of the new Credit Agent), the Trustee shall promptly (i) enter into
such documents and agreements (including amendments or supplements to this
Agreement) as the Company or such new Credit Agent shall request in order to
provide to the new Credit Agent the rights of the Credit Agent contemplated
hereby and (ii) deliver to the Credit Agent the Pledged Collateral together with
any necessary endorsements (or otherwise allow such Credit Agent to obtain
control of such Pledged Collateral).

        Section 6. Insolvency or Liquidation Proceedings.

        6.1     Financing Issues. If the Company or any other Grantor shall be
subject to any Insolvency or Liquidation Proceeding and the Credit Agent shall
desire to permit the use of cash collateral or to permit the Company or any
other Grantor to obtain financing under Section 363 or Section 364 of Title 11
of the United States Code or any similar Bankruptcy Law ("DIP Financing"), then
the Trustee, on behalf of itself and the Noteholders, agrees that it will raise
no objection to such use of cash collateral or DIP Financing and will not
request adequate protection or any other relief in connection therewith (except
to the extent permitted by Section 6.3) and, to the extent the Liens securing
the Senior Lender Claims under the Senior Credit Agreement or, if no Senior
Credit Agreement exists, under the other Senior Lender Documents are
subordinated or pari passu with such DIP Financing, will subordinate its Liens
in the Common Collateral to such DIP Financing (and all Obligations relating
thereto) on the same basis as the other Liens securing the Noteholder Claims are
so subordinated to Senior Lender Claims under this Agreement.

        6.2     Relief from the Automatic Stay. Until the Discharge of Senior
Lender Claims has occurred, the Trustee, on behalf of itself and the
Noteholders, agrees that none of them shall seek relief from the automatic stay
or any other stay in any Insolvency or Liquidation Proceeding in respect of the
Common Collateral, without the prior written consent of the Credit Agent and the
Required Lenders.

        6.3     Adequate Protection. The Trustee, on behalf of itself and the
Noteholders, agrees that none of them shall contest (or support any other Person
contesting) (a) any request by the Credit Agent or the Senior Lenders for
adequate protection or (b) any objection by the Credit Agent or the Senior
Lenders to any motion, relief, action or proceeding based on the Credit Agent's
or the Senior Lenders' claiming a lack of adequate protection. Notwithstanding
the foregoing contained in this Section 6.3, in any Insolvency or Liquidation
Proceeding, (i) if the Senior Lenders (or any subset thereof) are granted
adequate protection in the form of additional collateral in connection with any
DIP Financing or use of cash collateral under Section 363 or Section 364 of
Title 11 of the United States Code or any similar Bankruptcy Law, then the
Trustee, on behalf of itself and any of the Noteholders, may seek or request
adequate protection in the form of a replacement Lien on such additional
collateral,



                                                                              15

which Lien is subordinated to the Liens securing the Senior Lender Claims and
such DIP Financing (and all Obligations relating thereto) on the same basis as
the other Liens securing the Noteholder Claims are so subordinated to the Senior
Lender Claims under this Agreement, and (ii) in the event the Trustee, on behalf
of itself and the Noteholders, seeks or requests adequate protection and such
adequate protection is granted in the form of additional collateral, then the
Trustee, on behalf of itself or any of the Noteholders, agrees that the Credit
Agent shall also be granted a senior Lien on such additional collateral as
security for the Senior Lender Claims and any such DIP Financing and that any
Lien on such additional collateral securing the Noteholder Claims shall be
subordinated to the Liens on such collateral securing the Senior Lender Claims
and any such DIP Financing (and all Obligations relating thereto) and any other
Liens granted to the Senior Lenders as adequate protection on the same basis as
the other Liens securing the Noteholder Claims are so subordinated to such
Senior Lender Claims under this Agreement.

        6.4     No Waiver. Nothing contained herein shall prohibit or in any way
limit the Credit Agent or any Senior Lender from objecting in any Insolvency or
Liquidation Proceeding or otherwise to any action taken by the Trustee or any of
the Noteholders, including the seeking by the Trustee or any Noteholder of
adequate protection or the asserting by the Trustee or any Noteholder of any of
its rights and remedies under the Noteholder Documents or otherwise.

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

        Section 7. Reliance; Waivers; etc.

        7.1     Reliance. The consent by the Senior Lenders to the execution and
delivery of the Noteholder Documents to which the Senior Lenders have consented
and the grant to the Trustee on behalf of certain of the Noteholders of a Lien
on the Common Collateral and all loans and other extensions of credit made or
deemed made on and after the date hereof by the Senior Lenders to the Company or
any Subsidiary shall be deemed to have been given and made in reliance upon this
Agreement. The Trustee, on behalf of itself and the Noteholders, acknowledges
that it and the Noteholders have, independently and without reliance on the
Credit Agent or any Senior Lender, and based on documents and information deemed
by them appropriate, made their own credit analysis and decision to enter into
the Indenture, this Agreement and the transactions contemplated hereby and
thereby and they will continue to make their own credit decision in taking or
not taking any action under the Indenture or this Agreement.



                                                                              16

        7.2     No Warranties or Liability. The Trustee, on behalf of itself and
the Noteholders, acknowledges and agrees that each of the Credit Agent and the
Senior Lenders have made no express or implied representation or warranty,
including with respect to the execution, validity, legality, completeness,
collectibility or enforceability of any of the Senior Lender Documents, the
ownership of any Common Collateral or the perfection or priority of any Liens
thereon. The Senior Lenders will be entitled to manage and supervise their
respective loans and extensions of credit under the Senior Lender Documents in
accordance with law and as they may otherwise, in their sole discretion, deem
appropriate, and the Senior Lenders may manage their loans and extensions of
credit without regard to any rights or interests that the Trustee or any of the
Noteholders have in the Common Collateral or otherwise, except as otherwise
provided in this Agreement. Neither the Credit Agent nor any Senior Lender shall
have any duty to the Trustee or any of the Noteholders to act or refrain from
acting in a manner that allows, or results in, the occurrence or continuance of
an event of default or default under any agreements with the Company or any
Subsidiary thereof (including the Noteholder Documents), regardless of any
knowledge thereof that they may have or be charged with.

        7.3     No Waiver of Lien Priorities.

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

        (b)     Without in any way limiting the generality of the foregoing
paragraph (but subject to the rights of the Company and the other Grantors under
the Senior Lender Documents), the Senior Lenders, the Credit Agent and any of
them, may, at any time and from time to time, without the consent of, or notice
to, the Trustee or any Noteholder, without incurring any liabilities to the
Trustee or any Noteholder and without impairing or releasing the Lien priorities
and other benefits provided in this Agreement (even if any right of subrogation
or other right or remedy of the Trustee or any Noteholder is affected, impaired
or extinguished thereby) do any one or more of the following:

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



                                                                              17

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

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

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

        (c)     The Trustee, on behalf of itself and the Noteholders, also
agrees that the Senior Lenders and the Credit Agent shall have no liability to
the Trustee or any Noteholder, and the Trustee, on behalf of itself and the
Noteholders, hereby waives any claim against any Senior Lender or the Credit
Agent, arising out of any and all actions that the Senior Lenders or the Credit
Agent may take or permit or omit to take with respect to: (i) the Senior Lender
Documents, (ii) the collection of the Senior Lender Claims or (iii) the
foreclosure upon, or sale, liquidation or other disposition of, any Senior
Lender Collateral. The Trustee, on behalf of itself and the Noteholders, agrees
that the Senior Lenders and the Credit Agent have no duty to them in respect of
the maintenance or preservation of the Senior Lender Collateral, the Senior
Lender Claims or otherwise; and

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

        7.4     Obligations Unconditional. All rights, interests, agreements and
obligations of the Credit Agent and the Senior Lenders and the Trustee and the
Noteholders, respectively, hereunder shall remain in full force and effect
irrespective of:

        (a)     any lack of validity or enforceability of any Senior Lender
Documents or any Noteholder Documents;

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



                                                                              18

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

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

        (e)     any other circumstances that otherwise might constitute a
defense available to, or a discharge of, the Company or any other Grantor in
respect of the Senior Lender Claims, or of the Trustee or any Noteholder in
respect of this Agreement.

        Section 8. Miscellaneous.

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

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

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

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



                                                                              19

        8.4     Information Concerning Financial Condition of the Company and
the Subsidiaries. The Credit Agent and the Senior Lenders, on the one hand, and
the Trustee and the Noteholders, on the other hand, shall each be responsible
for keeping themselves informed of (a) the financial condition of the Company
and the Subsidiaries and all endorsers and/or guarantors of the Noteholder
Claims or the Senior Lender Claims and (b) all other circumstances bearing upon
the risk of nonpayment of the Noteholder Claims or the Senior Lender Claims. The
Credit Agent and the Senior Lenders shall have no duty to advise the Trustee or
any Noteholder of information known to it or them regarding such condition or
any such circumstances or otherwise. In the event that the Credit Agent or any
of the Senior Lenders, in its or their sole discretion, undertakes at any time
or from time to time to provide any such information to the Trustee or any
Noteholder, it or they shall be under no obligation (w) to make, and the Credit
Agent and the Senior Lenders shall not make, any express or implied
representation or warranty, including with respect to the accuracy,
completeness, truthfulness or validity of any such information so provided, (x)
to provide any additional information or to provide any such information on any
subsequent occasion, (y) to undertake any investigation or (z) to disclose any
information that, pursuant to accepted or reasonable commercial finance
practices, such party wishes to maintain confidential or is otherwise required
to maintain confidential.

        8.5     Subrogation. The Trustee, on behalf of itself and the
Noteholders, hereby waives any rights of subrogation it may acquire as a result
of any payment hereunder until the Discharge of Senior Lender Claims has
occurred.

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

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

        8.8     Notices. All notices to the Noteholders and the Senior Lenders
permitted or required under this Agreement may be sent to the Trustee and the
Credit Agent, respectively.



                                                                              20

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

        8.9     Further Assurances. The Trustee, on behalf of itself and the
Noteholders, agrees that each of them shall take such further action and shall
execute and deliver to the Credit Agent and the Senior Lenders such additional
documents and instruments (in recordable form, if requested) as the Credit Agent
or the Senior Lenders may reasonably request to effectuate the terms of and the
lien priorities contemplated by this Agreement.

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

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

        8.12    Specific Performance. The Credit Agent may demand specific
performance of this Agreement. The Trustee, on behalf of itself and the
Noteholders, hereby irrevocably waives any defense based on the adequacy of a
remedy at law and any other defense that might be asserted to bar the remedy of
specific performance in any action that may be brought by the Credit Agent.

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

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

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

        8.16    No Third Party Beneficiaries. This Agreement and the rights and
benefits hereof shall inure to the benefit of each of the parties hereto and
their respective successors and assigns and shall inure to the benefit of each
of the holders of Senior Lender



                                                                              21

Claims and Noteholder Claims. No other Person shall have or be entitled to
assert rights or benefits hereunder.

        8.17    Effectiveness. This Agreement shall become effective when
executed and delivered by the parties hereto. This Agreement shall be effective
both before and after the commencement of any Insolvency or Liquidation
Proceeding. All references to the Company or any other Grantor shall include the
Company or any other Grantor as debtor and debtor-in-possession and any receiver
or trustee for the Company or any other Grantor (as the case may be) in any
Insolvency or Liquidation Proceeding.

        8.18    Credit Agent and Trustee. It is understood and agreed that (a)
Deutsche Bank Trust Company Americas is entering into this Agreement in its
capacity as Credit Agent and the provisions of Article VIII of the Existing
Credit Agreement applicable to Deutsche Bank Trust Company Americas as
administrative agent thereunder shall also apply to Deutsche Bank Trust Company
Americas as Credit Agent hereunder, and (b) Wilmington Trust Company is entering
in this Agreement in its capacity as Trustee and the provisions of Article 7 of
the Indenture applicable to the Trustee thereunder shall also apply to the
Trustee hereunder.

        8.19    Designations. For purposes of the provisions hereof and the
Indenture requiring the Company to designate Indebtedness for the purposes of
the term "Credit Agreement Obligations" under the Indenture, "First-Lien Credit
Facilities" or any other designations for any other purposes hereunder or under
the Indenture, any such designation shall be sufficient if the relevant
designation is set forth in writing, signed on behalf of the Company by an
officer thereof and delivered to the Trustee and the Credit Agent. For all
purposes hereof and the Indenture, the Company hereby designates the Credit
Facilities provided pursuant to the Existing Credit Agreement as the First-Lien
Credit Facility and any Obligations (as defined in the Security Documents (as
defined in the Existing Credit Agreement)), including any Obligations in respect
of the Existing Credit Agreement, as "Credit Agreement Obligations" under the
Indenture.

        8.20    Relative Rights. Notwithstanding anything in this Agreement to
the contrary, nothing in this Agreement is intended to or will (a) amend, waive
or otherwise modify the provisions of the Senior Credit Agreement or any other
Senior Lender Documents entered into in connection with the Senior Credit
Agreement or permit the Company or any Subsidiary to take any action, or fail to
take any action, to the extent such action or failure would otherwise constitute
a breach of, or default under, the Senior Credit Agreement or any other Senior
Lender Documents entered into in connection with the Senior Credit Agreement,
(b) change the relative priorities of the Senior Lender Claims or the Liens
granted under the Senior Lender Documents on the Common Collateral (or any other
assets) as among the Senior Lenders, (c) otherwise change the relative rights of
the Senior Lenders in respect of the Common Collateral as among such Senior
Lenders or (d) obligate the Company or any Subsidiary to take any action, or
fail to take any action, that would otherwise constitute a breach of, or default
under, the Senior Credit Agreement or any other Senior Lender Document entered
into in connection with the Senior Credit Agreement..



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


                               Credit Agent:
                               DEUTSCHE BANK TRUST COMPANY AMERICAS,
                               as Credit Agent,

                               By:  /s/ Marco Orlando
                                    ------------------------
                                    Name: Marco Orlando
                                    Title:  Director

                               Address:

                               222 S. Riverside Plaza
                               MS CH105-2900
                               Chicago, IL 60606
                               Attention:  Marla Heller
                               Telecopy No.:  (312) 537-1324

                               Trustee:
                               WILMINGTON TRUST COMPANY,
                               as Trustee,

                               By:  /s/ James D. Nesci
                                    ------------------------
                                    Name: James D. Nesci
                                    Title: Authorized Officer

                               Address:

                               Rodney Square North
                               1100 North Market Street
                               Wilmington, DE 19890-0001
                               Attention:  Mary St. Amand
                               Telecopy No.:  (302) 636-4140



                               PLIANT CORPORATION

                               By:  /s/ Brian E. Johnson
                                    ------------------------
                                    Name:
                                    Title:

                               Address:

                               1475 Woodsfield Road, Suite 700
                               Schamburg, IL 60173
                               Attention:  Chief Financial Officer
                               Telecopy No.:  (847) 969-3361

EX-12.1

                                                                    Exhibit 12.1

                               Pliant Corporation

                       Statement Regarding Computation of
                      Ratios of Earnings to Fixed Charges

                                 (in millions)

                                            Fiscal Year Ended December 31,
                                         -----------------------------------
                                          1998    1999   2000   2001   2002
                                         ------  ------ ------ ------ ------
Earnings:
   Income (loss) before taxes             11.1    32.4  (72.5)   4.7  (44.9)
   Fixed charges (from below)             39.4    46.2   70.8   78.6   78.8
                                         -----   -----  -----  -----  -----

     Earnings                             50.5    78.6   (1.7)  83.3   33.9
                                         =====   =====  =====  =====  =====

Fixed Charges:
   Interest expense                       37.5    44.0   68.5   76.0   75.3

   Estimated interest portion of
     operating leases (assumed 1/3)        1.9     2.2    2.3    2.6    3.5
                                         -----   -----  -----  -----  -----

     Fixed charges                        39.4    46.2   70.8   78.6   78.8
                                         =====   =====  =====  =====  =====

   Ratio of earnings to fixed charges      1.3x    1.7x     -    1.1x     -

   Deficiency of earnings to fixed
     charges                                 -       -  (72.5)     -  (44.9)

EX-23.3

                                                                    Exhibit 23.3

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 28, 2003, except for Note 6, as to which the
date is March 25, 2003, and Notes 5 and 14, as to which the date is May 7, 2003,
with respect to the December 31, 2002 consolidated financial statements and
schedule of Pliant Corporation and to the use of our report dated July 19, 2002
with respect to the March 31, 2002 consolidated financial statements of Decora
Industries, Inc. included in the Registration Statement on Form S-1 and related
Prospectus of Pliant Corporation for the registration of $320,000,000 of 13%
senior subordinated notes.


/s/ Ernst & Young LLP

Chicago, Illinois
June 20, 2003

EX-23.4

                                                                    Exhibit 23.4

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of
Pliant Corporation, of our reports dated June 20, 2001 and June 30, 2000
relating to the financial statements of Decora Industries, Inc. which appear in
such Registration Statement. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.


/s/ PricewaterhouseCoopers LLP

Cleveland, Ohio
June 24, 2003